Document:

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                    EXHIBIT 10.6 - DEFERRED COMPENSATION PLAN
                            OF ERIE INDEMNITY COMPANY
               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2001)

                                   ARTICLE ONE

                                  INTRODUCTION

This Deferred Compensation Plan (the "Plan") is an unfunded, non-qualified,
deferred compensation arrangement created for a select group of management and
highly compensated employees of the Company and its Affiliates.

The Plan has been amended from time to time and was last amended and restated
effective January 1, 1997.

Effective as of December 31, 2000, the Supplemental 401(k) Plan has been merged
into the Plan. Deferred compensation credited on behalf of eligible employees
under the Supplemental 401(k) Plan shall be credited under the Plan effective
January 1, 2001 and shall be payable under the terms of the Plan as in effect on
the date payments are to commence hereunder.

This amendment and restatement of the Plan shall constitute an amendment,
restatement and continuation of the Plan and the Supplemental 401(k) Plan. This
amendment and restatement is generally effective as of January 1, 2001. However,
certain provisions of this amendment and restatement are effective as of some
other date. The provisions of this amendment and restatement with stated
effective dates prior to January 1, 2001, shall be deemed to amend the
corresponding provisions, if any, of the Plan or the Supplemental 401(k) 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 or the Supplemental 401(k) Plan as in effect on the date
of the event.

                                   ARTICLE TWO

                                   DEFINITIONS

The following words or phrases are defined terms whenever they appear in the
Plan:

2.1 "Administrator" shall mean the person or committee, appointed by the Chief
Executive Officer of the Company, who shall be responsible for the functions
assigned to him under the Plan.

2.2 "Affiliate" shall mean a corporation or partnership in which more than 50%
of the equity is owned directly or indirectly by the Company including, without
limitation, the following: Erie Family Life Insurance Company, Erie Insurance
Company, EI Holding Corp., EI Service Corp., Erie Insurance Company of New York,
Erie Insurance Property & Casualty Company and Flagship City Insurance Company.

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2.3 "Amendment Form" shall mean the Deferred Compensation Agreement Amendment
Form described in Section 5.3.

2.4 "Board of Directors" shall mean the Board of Directors of the Erie Indemnity
Company.

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

2.6 "Committee" shall mean the Executive Compensation Committee of the Board of
Directors or its successor as designated by the Board of Directors.

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

2.8 "Compensation" shall mean "Compensation" as defined under the Qualified Plan
provided, however, that for purposes of the Plan, any limitation on recognized
Compensation under Section 401(a)(17) of the Code shall be ignored. Except as
otherwise specified by the Board of Directors, any change in the definition of
Compensation under the Qualified Plan (other than a change related to Section
401(a)(17) of the Code) shall automatically be considered a change to the Plan,
effective as of the effective date of change under the Qualified Plan, and the
Plan shall thereafter be administered in accordance with such change.

2.9 "Deferred Compensation Account" shall mean the bookkeeping account described
in Section 4.1.

2.10 "Election Form" shall mean the Deferred Compensation Plan Election Form
described in Section 3.2 and/or such form described in Section 3.3.

2.11 "Participant" shall mean each employee of the Company or an Affiliate who
participates in the Plan in accordance with the terms and conditions of the
Plan.

2.12 "Plan" shall mean the Deferred Compensation Plan of Erie Indemnity Company,
as the same incorporates, for periods on and after January 1, 2001, the Erie
Insurance Group Supplemental 401(k) Plan, including any amendments hereto.

2.13 "Plan Year" shall mean the plan year applicable under the Qualified Plan.
Any change in plan year under the Qualified Plan shall automatically be
considered a change to the Plan, effective as of the effective date of change
under the Qualified Plan.

2.14 "Qualified Plan" shall mean the Erie Insurance Group Employee Savings Plan,
as amended.

2.15 "Supplemental Company Contribution" shall mean the contribution credit
described in Section 4.3(b) and determined in reference to a formula set forth
in the Qualified Plan. Except as otherwise specified by the Board of Directors,
any change in the employer matching contribution formula under the Qualified
Plan shall automatically be considered a change to the Plan, effective as of the
effective date of change under the Qualified Plan, and the Plan shall thereafter
be administered in accordance with such change.

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2.16 "Supplemental Employee Contribution" shall mean the contribution credit
described in Section 4.3(a) and determined in reference to a formula set forth
in the Qualified Plan. Except as otherwise specified by the Board of Directors,
any change in the elective contribution formula under the Qualified Plan shall
automatically be considered a change to the Plan, effective as of the effective
date of change under the Qualified Plan, and the Plan shall thereafter be
administered in accordance with such change.

2.17 "Supplemental 401(k) Plan" shall mean the Erie Insurance Group Supplemental
401(k) Plan, as amended. Effective as of December 31, 2000, the Supplemental
401(k) Plan has been merged into, and continued under, the Plan.

2.18 "Valuation Date" shall mean the close of business as of each business day.

                                  ARTICLE THREE

                          ELIGIBILITY AND PARTICIPATION

3.1 ELIGIBILITY

The individuals who are eligible to participate in the Plan are those employees
selected by the Committee. The Committee shall make its selection of employees
eligible to participate at a meeting held at least 30 days before January 1 of
the year next beginning or at such special meetings called for the purpose of
determining the eligibility of new employees hired by the Company or its
Affiliates.

The Committee, in its sole discretion, shall determine to what extent an
employee shall be eligible to participate under the provisions of Section 4.2
and/or Section 4.3 hereof. Except as otherwise provided by the Committee, an
employee who has been selected by the Committee as eligible to participate under
Section 4.2 and/or Section 4.3 of the Plan shall continue such eligibility from
year to year of his employment with the Company or Affiliate, regardless of
whether the employee elects to participate or not, unless the Committee, in its
discretion, terminates all or part of that employee's eligibility. Acting in its
sole discretion, the Committee may divide eligible employees into groups and
specify different Plan features (such as maximum levels of participation) for
each group.

3.2 PARTICIPATION UNDER DEFERRED COMPENSATION PROVISIONS

An employee who is eligible under the provisions of Section 3.1 to participate
under the provisions of Section 4.2 may elect to participate, alter the extent
of his participation, or suspend or terminate his participation by delivering a
properly completed and executed Election Form to the Administrator. This form
shall specify:

      a) The amount of annual salary to be deferred and/or the amount of any
         bonus to be deferred;

      b) The Participant's investment designation in accordance with Section
         4.5;

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      c) The method by which the amounts credited to his Deferred Compensation
         Account are to be paid;

      d) The date at which payment of the amounts credited to his Deferred
         Compensation Account is to occur (in the event of a lump sum
         distribution) or commence (in the event of a form of distribution other
         than a lump sum); and

      e) The beneficiary designated by the Participant to receive payment of the
         amounts credited to his Deferred Compensation Account in the event the
         Participant dies before distribution of the amounts credited to his
         Deferred Compensation Account is completed.

The election under paragraph (a) shall be irrevocable with respect to the
calendar year to which it applies. The election under paragraph (b) may be
changed as provided in Section 4.5 and shall be subject to the provisions of
Section 3.4. The elections under paragraphs (c) and (d) shall be irrevocable
except as provided in Section 5.3 hereof and shall be subject to the provisions
of Section 3.4. The election under paragraph (e) may be changed by the
Participant at any time by delivering a new designation of beneficiary to the
Administrator, on such form or forms as may be satisfactory to the
Administrator. A designation of beneficiary shall be subject to the provisions
of Section 3.4. A Participant's beneficiary designation shall be considered
revoked in the event that the primary beneficiary and all contingent
beneficiaries selected by a Participant die prior to the Participant.

3.3 PARTICIPATION UNDER SUPPLEMENTAL 401(k) PROVISIONS

Effective January 1, 2001, an employee who is eligible under the provisions of
Section 3.1 to participate under the provisions of Section 4.3 may elect to
participate, alter the extent of his participation, or suspend or terminate his
participation by delivering a properly completed and executed Election Form to
the Administrator. This form shall specify:

      a) The amount of his future Compensation to be deferred;

      b) The Participant's investment designation in accordance with Section
         4.5;

      c) The method by which amounts credited to his Deferred Compensation
         Account are to be paid;

      d) The date at which payment of the amounts credited to his Deferred
         Compensation Account is to occur (in the event of a lump sum
         distribution) or commence (in the event of a form of distribution other
         than a lump sum); and

      e) The beneficiary designated by the Participant to receive payment of the
         amounts credited to his Deferred Compensation Account in the event the
         Participant dies before distribution of the amounts credited to his
         Deferred Compensation Account is completed.

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The election under paragraph (a) shall be irrevocable with respect to the
calendar year to which it applies. The election under paragraph (b) may be
changed as provided in Section 4.5 and shall be subject to the provisions of
Section 3.4. The elections under paragraphs (c) and (d) shall be irrevocable
except as provided in Section 5.3 hereof and shall be subject to the provisions
of Section 3.4. The election under paragraph (e) may be changed by the
Participant at any time by delivering a new designation of beneficiary to the
Administrator, on such form or forms as may be satisfactory to the
Administrator. A designation of beneficiary shall be subject to the provisions
of Section 3.4. A Participant's beneficiary designation shall be considered
revoked in the event that the primary beneficiary and all contingent
beneficiaries selected by a Participant die prior to the Participant.

3.4 COORDINATION OF ELECTIONS

Notwithstanding any provision of this Article Three to the contrary, an employee
who is eligible to participate under the provisions of Sections 4.2 and 4.3 and
who elects to participate under both Sections shall be required to coordinate
and combine certain elections (stated below) into a single election that shall
be applicable both to salary and/or bonuses deferred under Section 4.2 and
Compensation deferred under Section 4.3. The elections that shall be coordinated
into a single election under this Section 3.4 are:

      a) A Participant's investment designation described in Sections 3.2(b) and
         3.3(b);

      b) A Participant's method of payment election described in Sections 3.2(c)
         and 3.3(c);

      c) A Participant's election regarding the time payment is made or
         commences, as described in Sections 3.2(d) and 3.3(d); and

      d) A Participant's beneficiary designation described in Sections 3.2(e)
         and 3.3(e).

The effective date of this Section 3.4 with respect to any Participant shall be
the effective date of the Participant's initial deferral under Section 4.2 or
his initial deferral under Section 4.3, whichever is later.

3.5 EFFECTIVE DATE FOR PARTICIPATION

The effective date for participation in the Plan by an employee who is eligible
shall be the first day of the calendar year next beginning after the date the
Administrator receives the employee's Election Form. The effective date for
participation in the Plan by a newly hired employee who is eligible shall be the
date that he begins active employment with the Company or an Affiliate as long
as the Administrator has received the employee's Election Form prior to this
date. The deferral of a Participant's salary under Section 4.2 and/or the
deferral of a Participant's Compensation under Section 4.3 shall begin or end,
as appropriate, as of the first day of the full pay period coincident with or
next following the effective date of his participation as described in this
paragraph. The deferral of any Participant bonus under Section 4.2 shall be
effective as of the date such bonus would otherwise be payable to the
Participant.

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                                  ARTICLE FOUR

                              COMPENSATION DEFERRED

4.1 DEFERRED COMPENSATION ACCOUNT

A deferred compensation account shall be established for each employee who
becomes a Participant in the Plan. Effective January 1, 2001, the compensation
each Participant elects to defer under Section 4.2 and/or any Supplemental
Employee Contributions and Supplemental Company Contributions under Section 4.3
as well as hypothetical interest earned on such deferred compensation shall be
maintained in this "Deferred Compensation Account." This Deferred Compensation
Account shall be kept only for bookkeeping and accounting purposes and no
Company funds shall be transferred or designated to this account.

Effective as of December 31, 2000, the separate accounts maintained on behalf of
a Participant under the Supplemental 401(k) Plan shall be merged into the
Deferred Compensation Account hereunder. Any election made with respect to such
separate accounts that is in effect as of December 31, 2000 shall be deemed to
apply to the entire balance of the Participant's Deferred Compensation Account
on or after January 1, 2001 unless the Participant has previously made a valid
election applicable to the Deferred Compensation Account maintained on his
behalf and such election remains in effect as of January 1, 2001. A Participant
may choose to change or amend elections applicable to Deferred Compensation
Accounts in the manner provided in Sections 4.5 and 5.3.

4.2 AMOUNT OF SALARY/BONUS DEFERRAL

An employee who is eligible to participate under the provisions of this Section
4.2 may elect to defer receipt of up to 25% of his annual salary for services as
an employee of the Company or an Affiliate. In addition to, or in lieu of, a
deferral of annual salary, a Participant may elect to defer receipt of up to
100% of any bonus to be payable by the Company or an Affiliate. Such elections
shall be made by the end of the calendar year which precedes the calendar year
in which the deferral election is effective. Compensation deferred under this
Section 4.2 shall be credited to the Participant's Deferred Compensation Account
on the date such compensation would otherwise have been payable to the
Participant.

4.3 AMOUNT OF SUPPLEMENTAL 401(k) CONTRIBUTIONS

      a) Effective January 1, 2001 an employee who is eligible to participate
         under the provisions of this Section 4.3 may elect to have Supplemental
         Employee Contributions made to the Plan on his behalf. An eligible
         employee shall elect to participate in the Plan within such time and in
         accordance with such means as are designated by the Administrator. The
         amount of Supplemental Employee Contribution credited hereunder with
         respect to a participating employee for any given year shall be
         determined by the Administrator, in its discretion, and shall be in
         reference to the amount by which the elective contributions made on
         behalf of such employee for such year under the Qualified Plan is
         limited by the application of Section 402(g) of the Code.

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      b) Effective January 1, 2001, in the event that the allocation of employer
         matching contributions under the Qualified Plan on behalf of a
         Participant is limited for any given Plan Year due to the limitation on
         elective contributions made on such Participant's behalf under the
         Qualified Plan under Section 402(g) of the Code, the amount by which
         such employer matching contributions are limited shall be determined by
         the Administrator, in its discretion, and such amount shall be credited
         under the Plan as a matching contribution on Supplemental Employee
         Contributions and shall be designated as Supplemental Company
         Contributions.

      c) Compensation deferred under this Section 4.3 shall be credited to the
         Participant's Deferred Compensation Account as of the date such
         compensation would otherwise have been treated as a contribution
         allocation under the Qualified Plan.

4.4 HYPOTHETICAL INTEREST

Deferred compensation is assumed to earn interest and this hypothetical interest
shall be credited as of each Valuation Date on the amount shown in each
Participant's Deferred Compensation Account on such Valuation Date in accordance
with the valuation procedure adopted by the Administrator. The hypothetical
interest to be credited to each Participant shall be determined by the
Administrator and computed in reference to the appreciation or depreciation
experienced since the immediately preceding Valuation Date by the hypothetical
investment funds which the Administrator may offer to Participants under Section
4.5.

The crediting of hypothetical interest shall occur so long as there is a balance
in the Participant's Deferred Compensation Account regardless of whether the
Participant has terminated employment with the Company or Affiliates or has
died. The Administrator may prescribe any reasonable method or procedure for the
accounting of hypothetical interest.

4.5 PARTICIPANT INVESTMENT DESIGNATION

      a) A Participant (and any eligible employee first electing to participate
         in the Plan) shall designate on such form or forms as may be
         satisfactory to the Administrator, that portion of his compensation to
         be deferred under Sections 4.2 and 4.3 and, separately, that portion of
         any existing Deferred Compensation Account maintained on his behalf
         which shall be credited with hypothetical interest in reference to each
         of the hypothetical investment funds that may be offered by the
         Administrator, in the discretion of the Administrator. Such
         designations shall specify, in 1% increments, the percentages to be
         credited in reference to each of the hypothetical investment funds
         offered. Such designations shall remain in effect until the Participant
         submits a new designation within such time and in accordance with such
         means as is determined pursuant to a uniform policy adopted by the
         Administrator. Under such policy, the new designations shall be
         effective as of a given date specified by the Administrator. In the
         event a Participant fails to make an effective designation under this

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         Section 4.5(a), the Administrator, acting in its discretion, shall make
         such designation on behalf of the Participant.

      b) In accepting participation in the Plan, a Participant agrees on behalf
         of himself and his beneficiary(ies) to assume all risk in connection
         with any decrease in value of the hypothetical investment funds in
         reference to which hypothetical interest is credited to the
         Participant's Deferred Compensation Account. The Company, the
         Affiliates and the Administrator shall not be liable to any Participant
         or beneficiary for the under-performance of any hypothetical investment
         fund offered under the Plan.

      c) The Administrator may, in its discretion, offer additional hypothetical
         investment funds to Participants and may cease to offer any such fund
         at such time as it deems appropriate. In the event the Administrator
         decides to discontinue offering an investment fund under the Plan,
         those Participants on whose behalf hypothetical interest is then being
         credited on the basis of the discontinued hypothetical investment fund
         shall be required to designate, from such selection of funds as may be
         offered by the Administrator, a fund or funds as a replacement for the
         investment fund being discontinued. Such designation shall be made in
         accordance with Section 4.5(a) hereof. Hypothetical interest credited
         on behalf of any Participant who is affected by the discontinuation of
         a hypothetical investment fund but who fails to make the replacement
         designation provided in this Section 4.5(c) shall mirror, to the extent
         of the Participant's interest in such discontinued fund, such
         hypothetical investment fund or funds as the Administrator may choose
         in its discretion.

      d) Title to and beneficial ownership of any assets which the Company or
         any Affiliate may earmark to pay the contingent deferred compensation
         hereunder shall at all times remain in the Company or Affiliate. The
         Participant, his beneficiary(ies) and any heirs, successors and assigns
         shall not have any legal or equitable right, interest or control over
         or any property interest whatsoever in any specific assets of the
         Company or any Affiliate or related entity on account of having an
         interest under the Plan. Any and all of the Company's assets, and any
         life insurance policies, annuity contracts or the proceeds therefrom
         which may be acquired by the Company shall be, and remain, the general
         unpledged, unrestricted assets of the Company. In no event shall the
         Company or any Affiliate be required to purchase any specific shares or
         interest in any investment fund.

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4.6 STATEMENTS

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

                                  ARTICLE FIVE

                        PAYMENT OF DEFERRED COMPENSATION

5.1 PAYMENT

Upon termination of employment with the Company and all Affiliates, the balance
of the Participant's Deferred Compensation Account shall be paid to him
according to the method and at the times selected by the Participant in his
Election Form or, if applicable, in the most recent, properly executed and
effective Amendment Form which the Participant has delivered to the
Administrator prior to the Participant's termination of employment.

5.2 METHODS OF PAYMENT

The Participant may elect any of the following methods of payment of his
Deferred Compensation Account:

      a) A lump sum distribution;

      b) Payments in approximately equal annual installments for a period not to
         exceed 10 years;

      c) Payments in approximately equal monthly installments for a period not
         to exceed 10 years; and

      d) Payment of a dollar amount or percentage (as specified by the
         Participant) of the Participant's Deferred Compensation Account in the
         form of a single sum payment with the balance of such Account being
         paid under either the method described in Section 5.2(b) or the method
         described in Section 5.2(c). (Available for elections on and after
         November 16, 2000.)

In the event the Participant dies before receiving the entire distribution owed
to him, the balance in the Participant's Deferred Compensation Account on his
date of death shall be paid as soon as practicable in a lump sum to the
beneficiary designated by the Participant in the most recent, properly executed,
beneficiary designation which the Participant has delivered to the Administrator
prior to the Participant's death. If no beneficiary designation is in effect on
the death of the Participant, the balance in the Participant's Deferred
Compensation Account shall be paid to the estate of the Participant.

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5.3 AMENDMENT TO PAYMENT ELECTION

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

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

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

5.4 EMERGENCY CIRCUMSTANCES

Notwithstanding any other provision of this Plan, if the Committee determines,
after consideration of a Participant's application, that the Participant has a
financial necessity of such a substantial nature that a current payment of
compensation deferred under this Plan is warranted, the Committee may in its
sole and absolute discretion direct that all or a portion of the Participant's
Deferred Compensation Account balance be paid to him. The payment shall be made
in the manner and at the times specified by the Committee for payment; provided,
however, such payment shall not be in excess of that amount which is, in the
discretion of the Committee, required to satisfy the financial necessity.

                                   ARTICLE SIX

                          AMENDMENT AND DISCONTINUANCE

The Company expects to continue the Plan indefinitely, but reserves the right to
amend or discontinue the Plan at any time, if, in its sole judgment, such
amendment or discontinuance is necessary or desirable. Any such amendment or
discontinuance shall be made pursuant to a resolution of the Board of Directors
and shall be effective as of the date specified in such resolution. Without a
consent of the Participant, no amendment or discontinuance of the Plan shall
adversely affect the balance of a Participant's Deferred Compensation Account at
the time of amendment or discontinuance. In the event of a discontinuance of the
Plan, the Company (or

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any transferee, or successor entity of the Company) shall be obligated to pay
Deferred Compensation Account balances to Participants and beneficiaries at such
time or times and in such forms as provided under the terms of the Plan.

                                  ARTICLE SEVEN

                               GENERAL PROVISIONS

7.1 NO EFFECT ON EMPLOYMENT RIGHTS

Nothing contained herein shall be construed as creating any contract of
employment between the Company or any Affiliate and any Participant nor shall
any provision hereof confer upon any Participant the right to be retained in the
service of the Company or any Affiliate nor limit the right of the Company or
any Affiliate to discharge or otherwise deal with Participants without regard to
the existence of the Plan.

7.2 GENERAL CONTRACTUAL OBLIGATION

It is the intent of this Plan, and each Participant understands, that no trust
has been created for his or her benefit and that no Participant has any interest
in any asset of the Company, any Affiliate or any related entity. The Company's
obligation to pay to the Participant the sums deferred together with any
interest thereon is a general contract obligation. Nothing contained in the Plan
shall constitute a guaranty by the Company, any Affiliate, or any other entity
or person that the assets of the Company will be sufficient to pay these
amounts. The status of the Participant is that of an unsecured creditor to the
extent of the total amount of his compensation deferred plus hypothetical
interest credited as above described.

7.3 BINDING ON COMPANY, PARTICIPANTS AND THEIR SUCCESSORS

The Plan shall be binding upon and inure to the benefit of the Company and
Affiliates, their successors and assigns and Participants and their heirs,
executors, administrators and legal representatives. In the event of the merger
or consolidation of the Company with or into any other corporation, or in the
event substantially all of the assets of the Company shall be transferred to
another corporation, the successor corporation resulting from the merger or
consolidation, or the transferee of such assets, as the case may be, shall, as a
condition to the consummation of the merger, consolidation or transfer, assume
the obligations of the Company hereunder and shall be substituted for the
Company hereunder.

7.4 SPENDTHRIFT PROVISIONS

The interest of a Participant or his beneficiary under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, either voluntarily or involuntarily, prior to
actual receipt thereof by the payee; any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge any such interest herein
prior to such receipt shall be void. Deferred Compensation Accounts hereunder
shall not be subject to garnishment, attachment or other legal or equitable
process nor shall they be an asset in bankruptcy; provided, however, that no
amount shall be payable from this Plan to a Participant,

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or any person claiming by or through a Participant, unless and until any and all
amounts representing debts or other obligations owed to the Company or any
Affiliate by the Participant have been fully paid and satisfied. Neither the
Company nor any Affiliate shall be liable in any manner for or subject to the
debts, contracts, liabilities, torts or engagements of any person who has a
Deferred Compensation Account maintained on his behalf under the Plan.

7.5 DISCLOSURE

Each Participant, upon his written request, shall receive a copy of the Plan and
the Administrator will make available for inspection by any Participant a copy
of any written rules and regulations used by the Administrator in administering
the Plan.

7.6 GOVERNING LAW

The Plan is established under and will be construed according to the laws of the
Commonwealth of Pennsylvania to the extent that such laws are not preempted by
the Employee Retirement Income Security Act of 1974, as amended, and regulations
promulgated thereunder.

7.7 INCAPACITY OF RECIPIENT

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

7.8 ELECTIONS, APPLICATIONS, NOTICES

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

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personally delivered to such individual, or (b) three business days after it is
sent by registered or certified mail, postage prepaid, addressed to such
individual at the last address shown for him on the Company's records. Any
notice required hereunder may be waived by the person entitled thereto.

7.9 COUNTERPARTS

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

7.10 SEVERABILITY

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

7.11 HEADINGS

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

7.12 CONSTRUCTION

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

                                  ARTICLE EIGHT

                                 ADMINISTRATION

8.1 GENERAL ADMINISTRATION

The Administrator shall be charged with the administration of the Plan. The
Administrator shall have all such powers as may be necessary to discharge its
duties relative to the administration of the Plan, including by way of
illustration and not limitation, discretionary authority to interpret and
construe the Plan, to determine and decide all questions of fact, and all
disputes arising under the Plan including, but not limited to, the eligibility
of any employee to participate hereunder, the validity of any election as may be
necessary or appropriate hereunder and the right of any Participant or
beneficiary to receive payment of all or any portion of a Deferred Compensation
Account maintained hereunder. The Administrator shall have all power necessary
to adopt, alter and repeal such administrative rules, regulations and practices
governing the operation of the Plan as it, in its sole discretion, may from time
to time deem advisable. The Administrator shall not be liable to any person for
any action taken or omitted in connection with the interpretation and
administration of the Plan unless attributable to willful misconduct. The
Administrator shall be entitled to conclusively rely upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan. Any individual serving as Administrator shall
not

                                       13
<PAGE>
participate in any action or determination regarding solely his own benefits
payable hereunder. Except as provided in Section 8.3, decisions of the
Administrator made in good faith shall be final, conclusive and binding upon all
parties.

8.2 CLAIMS PROCEDURE

Whenever the Administrator denies, in whole or in part, a claim for benefits
filed by any person (hereinafter referred to as a "Claimant"), the Administrator
shall transmit a written notice setting forth (i) the specific reasons for the
denial of the claim, (ii) references to the specific provisions of the Plan on
which the denial is based, (iii) a description of any additional needed material
or information and why such material or information is necessary, and (iv)
further steps which the Claimant can take in order to have his claim reviewed
(including a statement that the Claimant or his duly authorized representative
may review the Plan document and submit issues and comments regarding the claim
to the Administrator). In addition, the written notice shall contain the date on
which the notice was sent and a statement advising the Claimant that, within
ninety (90) days of the date on which such notice is received, he may request a
review of the Administrator's decision.

8.3 CLAIMS REVIEW

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

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

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

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

      d) a statement by the Claimant setting forth the basis upon which he
         believes the Administrator should reverse its previous denial of his
         claim for benefits and accept his claim as made;

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

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

                                       14
<PAGE>
If the Claimant has requested a hearing on the claim, such hearing shall be held
within thirty (30) days after the date determined pursuant to clause (b) hereof.
Within sixty (60) days of the date determined pursuant to clause (b) hereof (or,
if special circumstances or the request for a hearing require an extension of
time, within ninety (90) days of such date), the Administrator shall conduct a
full and fair review of the decision denying the Claimant's claim for benefits
and shall deliver its decision to the Claimant in writing. Such written decision
shall set forth the specific reasons for the decision, including references to
the specific provisions of this Plan which were relied upon. The decision will
be final and binding on all persons concerned.

                                  ARTICLE NINE

                       MERGER OF SUPPLEMENTAL 401(k) PLAN

Effective as of December 31, 2000, the Supplemental 401(k) Plan shall be merged
into and become a part of this Plan. Each Participant who had earned a benefit
under the Supplemental 401(k) Plan as of such date of merger shall have his
right to such benefit preserved under the Plan and, for periods on and after
January 1, 2001, shall look solely to the terms of the Plan for purposes of
determining his rights and responsibilities regarding such benefit.

Executed at Erie, Pennsylvania this 22nd day of December, 2000, effective
January 1, 2001.

                                               ERIE INSURANCE GROUP

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

                                               Title: President and CEO
                                                     -------------------------
ATTEST:

/s/ Douglas F. Ziegler
------------------------------------
Douglas F. Ziegler
Senior V.P., Treasurer and
   Chief Investment Officer

                                       15<PAGE>
                      EXHIBIT 10.7 - ERIE INSURANCE GROUP
                             EMPLOYEE SAVINGS PLAN

                                  INTRODUCTION

The Erie Indemnity Company (the "Company") adopted the Erie Insurance Group
Employee Savings Plan (the "Plan") effective January 1, 1989. The Company has
subsequently amended the Plan from time to time and was last amended and
restated the Plan effective as of May 1, 1998.

This amendment and restatement of the Plan shall constitute an amendment,
restatement and continuation of the Plan. This amendment and restatement is
generally effective as of January 1, 2001. However, certain provisions of this
amendment and restatement are effective as of some other date. The provisions of
this amendment and restatement with stated effective dates prior to January 1,
2001, shall be deemed to amend the corresponding provisions, if any, of the Plan
as in effect before this amendment and restatement and all amendments thereto as
of such dates. Events occurring before the applicable effective date of any
provision of this amendment and restatement shall be governed by the applicable
provision of the Plan as in effect on the date of the event.

The purpose of the Plan is to provide a pre-tax long term savings vehicle for
eligible employees and to provide participants with an opportunity to contribute
toward additional retirement security according to the provisions of Section
401(k) of the Internal Revenue Code of 1986, as amended.

                                       i
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
INTRODUCTION                                                                    Page
<S>                                                                             <C>

ARTICLE ONE - DEFINITIONS
    1.1   Administrator or Plan Administrator......................................1
    1.2   Affiliate................................................................1
    1.3   Board....................................................................1
    1.4   Code.....................................................................1
    1.5   Company..................................................................1
    1.6   Compensation.............................................................1
    1.7   Covered Employee.........................................................2
    1.8   Effective Date...........................................................2
    1.9   Employee.................................................................2
    1.10  Employer.................................................................2
    1.11  Employer Matching Contribution...........................................2
    1.12  Erie Indemnity Stock.....................................................2
    1.13  Erie Indemnity Stock Fund................................................2
    1.14  ERISA....................................................................2
    1.15  Highly Compensated.......................................................3
    1.16  Hour of Service..........................................................3
    1.17  Interactive Electronic Communication.....................................4
    1.18  Leased Employee..........................................................4
    1.19  Normal Retirement Date...................................................4
    1.20  Notice...................................................................5
    1.21  Participant..............................................................5
    1.22  Plan.....................................................................5
    1.23  Plan Year................................................................5
    1.24  Qualified Domestic Relations Order or QDRO...............................5
    1.25  Safe Harbor Matching Contribution........................................6
    1.26  Spousal Consent..........................................................6
    1.27  Tax Deferred Contribution................................................6
    1.28  Test Compensation........................................................6
    1.29  Top Paid Group...........................................................7
    1.30  Total Account............................................................7
    1.31  Trust Agreement..........................................................7
    1.32  Trust Fund...............................................................8
    1.33  Trustee..................................................................8
    1.34  Valuation Date...........................................................8
    1.35  Year of Eligibility Service..............................................8
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                             <C>
ARTICLE TWO - PARTICIPATION
    2.1   Participation............................................................9
    2.2   Rehired Employees........................................................9
    2.3   Employment Transfers.....................................................9

ARTICLE THREE - EMPLOYER CONTRIBUTIONS
    3.1   Tax Deferred Contributions..............................................11
    3.2   Dollar Limitation on Tax Deferred Contributions.........................11
    3.3   Actual Deferral Percentage Limitation on Tax Deferred Contributions.....13
    3.4   Treatment of Tax Deferred Contributions in Excess of Actual
          Deferred Percentage Limitation..........................................15
    3.5   Coordination of Distributions of Excess Tax Deferred Contributions......17
    3.6   Employer Matching Contributions.........................................17
    3.7   Actual Contribution Percentage Limitation on Employer Matching
             Contributions........................................................17
    3.8   Treatment of Employer Matching Contributions in Excess of
             Actual Contribution Percentage Limitation............................18
    3.9   Combined Alternative Limitation on Tax Deferred Contributions
             and Employer Matching Contributions..................................20
    3.10  Safe Harbor Matching Contributions......................................21
    3.11  Source of Employer Contributions........................................22
    3.12  Investment of Employer Contributions....................................22
    3.13  Recovery of Contributions...............................................23
    3.14  Other Provisions Relating to Employer Contributions.....................23

ARTICLE FOUR - ROLLOVER CONTRIBUTIONS
    4.1   Rollover Contributions .................................................25
    4.2   Vesting of Rollover Contributions ......................................25

ARTICLE FIVE - PARTICIPANT ACCOUNTS AND VALUATION OF FUNDS
    5.1   Establishment of Participant Accounts ..................................26
    5.2   Procedure as of Each Valuation Date ....................................26
    5.3   Investment Elections ...................................................26
    5.4   Erie Indemnity Stock Fund...............................................28

ARTICLE SIX - VESTING & DISTRIBUTIONS
    6.1   Vesting ................................................................30
    6.2   Distributions Upon Retirement, or Other Termination of Employment.......30
    6.3   Payment of Amounts Distributed .........................................31
    6.4   Direct Rollovers........................................................33
</TABLE>

                                      iii
<PAGE>
<TABLE>
<S>                                                                             <C>
ARTICLE SEVEN - WITHDRAWALS
    7.1   Withdrawals Generally ..................................................35
    7.2   Hardship Withdrawal ....................................................35
    7.3   Safe Harbor Distribution ...............................................36
    7.4   Hardship Withdrawal Priority............................................36
    7.5   Modifications to Hardship Withdrawal Standards..........................36

ARTICLE EIGHT - THE TRUST FUND
    8.1   Trust Agreement ........................................................38
    8.2   Appointment of Independent Accountants .................................38
    8.3   Appointment of Investment Manager ......................................38
    8.4   Investment Committee ...................................................38
    8.5   Voting of Erie Indemnity Stock..........................................39

ARTICLE NINE - ADMINISTRATION OF THE PLAN
    9.1   The Administrator ......................................................41
    9.2   Powers of Administrator.................................................41
    9.3   Delegation of Duties....................................................43
    9.4   Conclusiveness of Various Documents.....................................43
    9.5   Actions to be Uniform...................................................43
    9.6   Liability and Indemnification...........................................43

ARTICLE TEN - CLAIMS PROCEDURE
    10.1  Claim for Benefit ......................................................45
    10.2  Review of Denial of Claim ..............................................45
    10.3  Decision by Administrator ..............................................45

ARTICLE ELEVEN - MISCELLANEOUS
    11.1  Non-Alienation of Benefits .............................................47
    11.2  Risk to Participants and Source of Payments ............................48
    11.3  Expenses ...............................................................48
    11.4  Rights of Participants .................................................48
    11.5  Statement of Accounts ..................................................48
    11.6  Designation of Beneficiary .............................................49
    11.7  Payment to Incompetents ................................................49
    11.8  Authority to Determine Payee ...........................................50
    11.9  Severability ...........................................................50
    11.10 Employer Records........................................................50
    11.11 Limitation on Contributions ............................................50
    11.12 IRC 414(u) Compliance Provision.........................................52

ARTICLE TWELVE - AMENDMENT, TERMINATION OR MERGER OF THE PLAN
    12.1  Right to Amend .........................................................53
    12.2  Right to Terminate .....................................................53
    12.3  Merger, Transfer of Assets or Liabilities...............................54
</TABLE>

                                       iv
<PAGE>
<TABLE>
<S>                                                                             <C>
ARTICLE THIRTEEN - TOP HEAVY PROVISIONS
    13.1  Top Heavy Provisions ...................................................55
    13.2  Minimum Contribution ...................................................56
    13.3  Plan Year in Which Plan is Top Heavy ...................................57
    13.4  Plan Year in Which Plan Ceases to be Top Heavy .........................57
    13.5  Limited Application of this Article.....................................57

ARTICLE FOURTEEN - LOANS
    14.1  Availability of Loans ..................................................58
    14.2  Terms and Conditions of Participant Loans ..............................58
    14.3  Loan Accounts...........................................................60
</TABLE>

                                       v
<PAGE>
                                   ARTICLE ONE

                                   DEFINITIONS

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

1.1   "Administrator" or "Plan Administrator" means the Administrator appointed
      by the Board in accordance with the provisions of Article Nine.

1.2   "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.

1.3   "Board" means the Board of Directors of the Company.

1.4   "Code" means the Internal Revenue Code of 1986, as amended from time to
      time.

1.5   "Company" means Erie Indemnity Company, a corporation organized and
      existing under the laws of Pennsylvania.

1.6   "Compensation" for any period means the aggregate amount of base salary or
      wages paid by an Employer to an Employee during the period. For this
      purpose, "base salary or wages" shall exclude overtime compensation,
      bonuses and commissions but shall be deemed to include any amounts
      contributed by the Employer pursuant to a salary reduction agreement and
      which is not includible in the gross income of the Participant under Code
      Sections 125 and 402(e)(3) for the Plan Year in question. Effective for
      each Plan Year, 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
      January 1, 1989 and prior to January 1, 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 January 1, 1994, $150,000 as
      adjusted for such year as provided under Section 401(a)(17)(B) of the
      Code.

      For 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 1.15) shall apply, except that in applying such rules, the term
      "family" shall include only the spouse of the 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

                                     - 1 -
<PAGE>
      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.

1.7   "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; and

      (b)   for periods prior to January 1, 2001, any such Employee who is
            compensated on an hourly basis.

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

1.8   "Effective Date" means January 1, 1989.

1.9   "Employee" shall mean any common-law employee of an Employer or an
      Affiliate; provided, however, that for purposes of Section 1.15 "Employee"
      shall include any self-employed individual performing services for an
      Employer or Affiliate who is treated as an employee under Section
      401(c)(1) of the Code.

1.10  "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.

1.11  "Employer Matching Contribution" means the Employer contribution made
      pursuant to Section 3.6.

1.12  "Erie Indemnity Stock" means the Class A common stock of the Company which
      is a qualifying employer security within the meaning of Section 407(d)(5)
      of ERISA.

1.13  "Erie Indemnity Stock Fund" means the investment fund described in Section
      5.4.

1.14  "ERISA" means the Employee Retirement Income Security Act of 1974, as
      amended.

1.15  "Highly Compensated" means, for periods beginning before January 1, 1997,
      any Employee who meets any of the following requirements in either the
      prior Plan Year (the "lookback year") or the current Plan Year (the
      "determination year"):

                                     - 2 -
<PAGE>
      (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 a 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 attaining age 55.

      In addition, the Test Compensation paid to any family member (spouse,
      lineal ascendant or descendant and their spouses) of an Employee or former
      Employee who is a more than five percent owner or is 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 determination year merely by compensation or
      officer status unless he was in the top 100 Employees on the basis of Test
      Compensation. The amounts indicated in (b) and (c) above 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 on and after January 1,
      1997, "Highly Compensated" shall mean any Employee who is a more than five
      percent (5%) owner of an Employer or both earned $80,000 or more in Test
      Compensation from the Employer in 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). 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.

1.16  "Hour of Service" shall include the following:

      (a)   Each hour for which an Employee is directly or indirectly paid or
            entitled to payment from an Employer or an Affiliate as an Employee
            for the performance of duties during an applicable computation
            period (these hours must be credited to the Employee in the
            computation period during which the duties were performed and not
            when paid, if different); and

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

                                     - 3 -
<PAGE>
      (c)   Each hour for which an Employee is directly or indirectly paid or
            entitled to payment from an Employer or an Affiliate for reasons,
            such as vacation, sickness or disability, other than for the
            performance of duties (these hours shall be calculated and credited
            pursuant to Section 2530.200b-2 of the Department of Labor
            regulations which are incorporated herein by reference).

1.17  "Interactive Electronic Communication" means a communication between a
      Participant or beneficiary and the person or entity designated by the
      Administrator to perform recordkeeping and other administrative services
      on behalf of the Plan pursuant to a system maintained by such person or
      entity and communicated to each Participant and beneficiary whereby each
      such individual may make elections and exercise options as described
      herein with respect to all or a portion of his Total Account through the
      use of such system and a personal identification number. If a Participant
      or beneficiary (i) consents to participate in Interactive Electronic
      Communication procedures adopted by the Administrator and (ii)
      acknowledges that actions taken by him through the use of his personal
      identification number pursuant to the Interactive Electronic Communication
      procedure constitute his signature for purposes of initiating transactions
      such as investment option changes, and increases, decreases, and
      suspensions of Tax Deferred Contributions, the Participant or beneficiary,
      as the case may be, will be deemed to have given his written consent and
      authorization to any such action resulting from the use of the Interactive
      Electronic Communication system by the Participant or beneficiary.

1.18  "Leased Employee" means any person (other than an Employee of an Employer)
      who pursuant to an agreement between the Employer and any other person
      ("leasing organization") has performed services for the Employer (or for
      the Employer and related persons determined in accordance with Section
      414(n)(6) of the Code) on a substantially full-time basis for a period of
      at least one year and, 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.

1.19  "Normal Retirement Date" means the first day of the month next following
      the month in which the Participant attains age 65 (his "Normal Retirement
      Age").

1.20  "Notice" means, unless otherwise specifically provided herein, (i) written
      Notice on an appropriate form provided by the Administrator that is, in
      the discretion of the Administrator, properly completed and executed by
      the party giving such Notice and which is delivered by hand or by mail to
      the Administrator or to such party designated by the terms of the Plan or
      by the Administrator to receive the Notice, or (ii) Notice by Interactive
      Electronic Communication to

                                     - 4 -
<PAGE>
      the person or entity designated by the Administrator to perform
      recordkeeping and other administrative services on behalf of the Plan. The
      form of Notice satisfactory in any given circumstance under the Plan shall
      be determined by the Administrator, in its discretion, and shall be
      applied uniformly to all Participants and beneficiaries. Notice to any
      party as provided herein shall be deemed to be given when it is actually
      received (either physically or by Interactive Electronic Communication, as
      the case may be) by the party to whom such Notice is given.

1.21  "Participant" means any Covered Employee who participates in the Plan as
      provided in Section 3.1 (an "active" Participant) or Section 4.1, and
      further, shall include any current or former Covered Employee who has
      suspended his Tax Deferred Contributions or has terminated or retired if
      such individual has a vested Total Account balance maintained on his
      behalf under the Plan.

1.22  "Plan" means this Erie Insurance Group Employee Savings Plan as herein set
      forth with all amendments, modifications and supplements hereafter made.

1.23  "Plan Year" means the calendar year.

1.24  "Qualified Domestic Relations Order" or "QDRO" means any judgment, decree
      or order (including approval of a property settlement agreement) which is
      made pursuant to a State Domestic Relations Law (including a community
      property law) and which:

      (a)   relates to provision of child support, alimony payments, or marital
            property rights of a spouse, former spouse, child or other dependent
            of a Participant;

      (b)   recognizes or creates an alternate payee's right to, or assigns to
            an alternate payee the right to receive all or a portion of the
            benefits payable with respect to a Participant under this Plan; and

      (c)   clearly specifies:

            (i)   name and last known address of the Participant and of each
                  alternate payee;

            (ii)  the amount, percentage, or manner in which such could be
                  determined, of the Participant's benefits to be paid to such
                  alternate payee by the Plan;

            (iii) the number of payments or time periods the QDRO covers; and

            (iv)  each plan to which the QDRO applies.

      A QDRO cannot require the Plan to provide a type or form of benefit, or
      any option not otherwise provided by the Plan, nor can it require the Plan
      to provide increased benefits. A QDRO cannot require payment to an
      alternate payee by virtue of a previous QDRO.

      A written procedure will be established to determine the qualified status
      of domestic relations orders and to administer distributions thereunder.

                                     - 5 -
<PAGE>
1.25  "Safe Harbor Matching Contribution" means the Employer contribution made
      pursuant to Section 3.10.

1.26  "Spousal Consent" means a written consent given by a Participant's
      legally-recognized spouse to a Participant's designation of a specified
      beneficiary or beneficiaries (including the designation of any class of
      beneficiaries or any contingent beneficiaries) under Section 11.6(a), the
      Participant's election of an immediate distribution under Section 6.2, or
      the Participant's request for a withdrawal (in excess of $3,500) or loan
      under Sections 7.2 and 14.2, respectively. Any Spousal Consent shall be
      effective only with respect to such spouse. Such consent shall be duly
      witnessed by a Plan representative or a notary public and shall
      acknowledge the effect on the spouse of the Participant's election. The
      Participant may revoke, without limitation, any such designation, election
      or request without the need for Spousal Consent at any time before the
      date as of which the Participant is to receive a distribution from the
      Plan or, if applicable, before the effective date of a withdrawal or loan.
      Any new designation, election or request by a Participant as provided
      above will require a new Spousal Consent. The requirement for Spousal
      Consent may be waived by the Administrator if it is established that there
      is no spouse, the spouse cannot be located, the Participant has a court
      order evidencing a legal separation from or abandonment by the spouse, or
      for such other circumstances as shall be prescribed by applicable law.

1.27  "Tax Deferred Contribution" means the Employer contribution made pursuant
      to Section 3.1.

1.28  "Test Compensation" means, for any Plan Year, an Employee's compensation,
      reported under Sections 6041 and 6051 of the Code on Form W-2, as paid by
      an Employer or an Affiliate for the calendar year ending with or within
      such Plan Year, including any amounts contributed pursuant to a salary
      reduction election on behalf of a Covered Employee to a plan described in
      Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) 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 1.6), 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.

      Applicable to years beginning before January 1, 1998, Test Compensation
      for purposes of Section 11.11 shall exclude all amounts contributed
      pursuant to a salary reduction election on behalf of a Covered Employee.

1.29  "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 months of service by the end of
            such year;

      (b)   Employees who work less than 17-1/2 hours per week for such year;

                                     - 6 -
<PAGE>
      (c)   Employees who normally do not work more than six months in a year;

      (d)   Employees under age 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.

1.30  "Total Account" means the total amounts held under the Plan for a
      Participant, consisting of the following sub-accounts:

      (a)   "Tax Deferred Account" the portion of the Participant's Total
            Account consisting of Tax Deferred Contributions made in accordance
            with Section 3.1, plus (minus) any investment earnings (losses) on
            such contributions and less any distributions or withdrawals made
            from this account in accordance with Articles Six and Seven,
            respectively.

      (b)   "Employer Account" the portion of the Participant's Total Account
            consisting of Employer Matching Contributions made in accordance
            with Section 3.6, plus (minus) any investment earnings (losses) on
            such contributions and less any distributions or withdrawals made
            from this account in accordance with Articles Six and Seven,
            respectively.

      (c)   "Rollover Account" the portion of the Participant's Total Account
            consisting of Rollover Contributions made in accordance with Section
            4.1, plus (minus) any investment earnings (losses) on such
            contributions and less any distributions or withdrawals made from
            this account in accordance with Articles Six and Seven,
            respectively.

      (d)   "Safe Harbor Matching Account" the portion of the Participant's
            Total Account consisting of Safe Harbor Matching Contributions made
            in accordance with Section 3.10, plus (minus) any investment
            earnings (losses) on such contributions and less any distributions
            made from this account in accordance with Article Six.

1.31  "Trust Agreement" means the Trust Agreement between the Company and a
      Trustee as provided in Section 8.1, together with all amendments,
      modifications and supplements hereafter made.

1.32  "Trust Fund" means the fund established under the terms of the Trust
      Agreement with the Trustee for the purpose of holding and investing the
      assets of the Plan. The Trust Fund shall consist of such investment funds
      or vehicles as the Administrator may, in its discretion, designate from
      time to time and may include such investments as may be selected by a
      Participant or beneficiary under a self-directed "open option" arrangement
      authorized by the Administrator.

      Nothing herein shall prohibit the Trust Fund from holding reasonable
      amounts in cash or cash equivalents in any fund or vehicle offered under
      the Plan. The portion of the Trust Fund to be

                                     - 7 -
<PAGE>
      invested in the various funds or vehicles shall be determined by
      Participant investment elections made pursuant to Article Five. The
      Administrator may, in its discretion, offer additional investment funds or
      vehicles to all Participants and may cease to offer any investment fund or
      vehicle at such time as it deems appropriate.

      Except as otherwise indicated, the Trust Fund shall be deemed to include
      that portion of a Total Account which a Participant or beneficiary elects
      to invest in a group annuity contract provided by the Erie Family Life
      Insurance Company.

1.33  "Trustee" means the Trustee or Trustees acting as such under a Trust
      Agreement, including any successor or successors.

1.34  "Valuation Date" means, for periods prior to the Conversion Date, the last
      day of each calendar month and, for periods on and after the Conversion
      Date, the close of business as of each business day.

1.35  "Year of Eligibility Service" means an "Eligibility Computation Period" in
      which an Employee completes at least 1,000 Hours of Service.

      The "Eligibility Computation Period" with respect to an Employee shall
      mean the 12 consecutive month period that begins on the first day on which
      the Employee is credited with an Hour of Service in the employment of an
      Employer or Affiliate ("Employment Commencement Date") and ends on the
      first anniversary thereof, and each Plan Year thereafter beginning with
      the Plan Year that includes the first anniversary of the Employee's
      Employment Commencement Date. In the event an Employee completes 1,000
      Hours of Service during the Eligibility Computation Period that begins on
      his Employment Commencement Date and completes 1,000 Hours of Service
      during the Eligibility Computation Period that begins on the January 1
      that next follows his Employment Commencement Date, such Employee shall be
      credited with two Years of Eligibility Service.

                                     - 8 -
<PAGE>
                                   ARTICLE TWO

                                  PARTICIPATION

2.1   Participation

      (a)   Any Employee shall be eligible to participate in the Plan on the
            first day of a pay period, provided he is a Covered Employee and is
            actively employed by an Employer on such date and, provided further,
            that he makes proper application for participation within a
            reasonable time prior to the start of such pay period by completing
            and filing with the Administrator such forms as may be prescribed by
            the Administrator.

      (b)   Notwithstanding the foregoing, effective January 1, 2001, any
            Covered Employee who is compensated on an hourly basis and who is
            classified by an Employer as other than a regular hourly employee
            shall be eligible to participate in the Plan on the January 1 or
            July 1 coincident with or next following such Employee's completion
            of each of the following requirements, provided he remains a Covered
            Employee as of such January 1 or July 1:

            (i)   His attainment of age 21 years; and

            (ii)  His completion of one Year of Eligibility Service.

            If the Employee is not a Covered Employee on the date he otherwise
            would have become eligible to participate in the Plan, such Employee
            shall automatically become eligible to participate in the Plan upon
            his return to employment as a Covered Employee.

2.2   Rehired Employees

      An Employee who had been an "active" Participant in the Plan, who
      terminates his employment and is subsequently re-employed may become
      eligible to participate in the Plan under Section 3.1 on the first day of
      any pay period following re-employment, provided he is a Covered Employee
      and is actively employed by an Employer on such date and, provided
      further, that he makes proper application for participation within a
      reasonable time prior to the start of such pay period by completing and
      filing with the Administrator such forms as may be prescribed by the
      Administrator.

2.3   Employment Transfers

      (a)   Upon the transfer of a Covered Employee to other employment with an
            Employer or Affiliate whereby he ceases to be a Covered Employee
            hereunder, such individual's ability to have Tax Deferred
            Contributions made to the Plan on his behalf (and to receive
            Employer Matching Contributions) with respect to Compensation earned
            on and after this date of transfer shall cease and such Participant
            shall be considered an "inactive" Participant under the Plan.

                                     - 9 -
<PAGE>
      (b)   Upon the transfer of an individual from other employment with an
            Employer or Affiliate such that the individual becomes a Covered
            Employee hereunder, such individual shall be eligible to participate
            in the Plan as provided in Section 2.1 hereof.

                                     - 10 -
<PAGE>
                                  ARTICLE THREE

                             EMPLOYER CONTRIBUTIONS

3.1   Tax Deferred Contributions

      (a)   Each Covered Employee who is eligible to participate in the Plan and
            who has elected to become a Participant (in accordance with Article
            Two) may, at the time of making application to become a Participant,
            elect to reduce his future Compensation on a fixed, whole
            percentage, from one percent (1%) to eight percent (8%) of that
            Compensation otherwise payable in future pay periods. Effective with
            respect to pay periods commencing on and after December 14, 2000, a
            Participant may elect to reduce his future Compensation by a stated
            percentage, from one percent (1%) to fifteen percent (15%) of that
            Compensation otherwise payable in future pay periods. Such election
            shall be made in accordance with procedures adopted by the
            Administrator and communicated to Participants.

            Subject to the limitations set forth in Sections 3.2, 3.3, 3.4, 3.9
            and 11.11, the Participant's Compensation shall be reduced in
            accordance with the foregoing election and shall be designated as a
            Tax Deferred Contribution to the Plan. Tax Deferred Contributions
            shall be withheld by the Participant's Employer each pay period by
            regular payroll deduction in accordance with the Employer's payroll
            withholding procedures and shall be credited to the Participant's
            Tax Deferred Account as of the date the contributions are received
            by the Trustee or otherwise deposited in the Trust Fund. Such
            contributions shall be deposited in the Trust Fund as soon as such
            amounts can reasonably be segregated from the Employer's general
            assets.

      (b)   Participant Tax Deferred Contributions constitute Employer
            contributions under the Plan and are intended to qualify as elective
            contributions under Section 401(k) of the Code. Tax Deferred
            Contributions may be made only with respect to an amount which the
            Participant could otherwise elect to receive in cash and which is
            not currently available to the Participant as of the date an
            election specified in this Section 3.1 is made. In the event a
            Participant has no Compensation for any payroll period, no Tax
            Deferred Contribution may be made for such period. Any Tax Deferred
            Contribution made on behalf of a Covered Employee in any given Plan
            Year that is taken into account for purposes of the actual deferral
            percentage limitation described in Section 3.3(b) shall be
            attributable to services performed by the Covered Employee in such
            Plan Year and shall relate to Compensation which would have been
            paid in such Plan Year or within two and one-half (2-1/2) months
            following such Plan Year but for the deferral election.

3.2   Dollar Limitation on Tax Deferred Contributions

      (a)   Any provision of this Plan to the contrary notwithstanding, no
            Employer shall be permitted, during any calendar year, to make with
            respect to such calendar year, Tax Deferred Contributions on behalf
            of a Participant under the Plan (when combined with

                                     - 11 -
<PAGE>
            the Participant's elective deferrals under any other plans,
            contracts, or arrangements) that will exceed the limitation in
            affect for such year under Section 402(g)(1) of the Code, as
            adjusted in accordance with Section 402(g)(5) of the Code.

      (b)   In the event any amount of Tax Deferred Contributions for a calendar
            year exceeds the limitation applicable under this Section 3.2 for
            such calendar year, such excess amount (hereafter described for
            purposes of this Section, as "Excess Deferrals"), as adjusted for
            any income or loss allocable thereto in accordance with regulations,
            shall to the extent possible be distributed to such Participant, as
            provided in subparagraphs (i), (ii), (iii) and (iv) below:

            (i)   At a date not later than the March 1st of the calendar year
                  immediately following the calendar year to which such Excess
                  Deferrals are attributable, any Participant to whom this
                  Section 3.2 applies may notify, in writing, the Administrator
                  by submitting a form as may be provided by the Administrator
                  which shall specify the amount of the Participant's Excess
                  Deferrals for the given calendar year and shall contain a
                  certified statement by the Participant indicating that if such
                  amount is not distributed, such Excess Deferrals will exceed
                  the limit imposed on the Participant by Section 402(g) of the
                  Code for the year in which the Tax Deferred Contribution
                  occurred.

                  Notwithstanding the foregoing and solely for the purpose of
                  facilitating a distribution of Excess Deferrals as required by
                  regulation, in the event a Participant has Excess Deferrals in
                  a given year calculated by taking into account his Tax
                  Deferred Contributions hereunder and his elective deferrals
                  under any other plan, contract, or arrangement maintained by
                  an Employer or Affiliate, the Participant will be deemed to
                  have notified the Administrator in the manner provided in this
                  subparagraph.

            (ii)  At a date not later than the April 15 of the calendar year
                  immediately following the calendar year to which such Excess
                  Deferrals are attributable, the Plan may distribute to the
                  Participant the amount of the Excess Deferrals allocated to
                  the Plan as adjusted for any income or loss allocable to such
                  excess. Any Excess Deferrals distributed pursuant to this
                  subparagraph are to be included in the gross income of the
                  Participant for the year to which such Excess Deferrals
                  relate. Any income that is allocable to such Excess Deferrals
                  (as determined in accordance with rules promulgated by the
                  Secretary of the Treasury or his delegate) that is distributed
                  pursuant to this subparagraph is to be included in the gross
                  income of the Participant for the year in which such amount is
                  distributed. In making a distribution as permitted under this
                  Section, the Employer shall specifically designate the
                  distribution as that consisting of Excess Deferrals within the
                  meaning of Section 402(g)(1) of the Code. Any distribution of
                  less than the entire amount of Excess Deferrals plus income or
                  loss attributable to such deferral contributions shall be
                  treated as a pro rata distribution of such excess deferral
                  contributions and income/loss.

                                     - 12 -
<PAGE>
            (iii) To the extent provided by the Secretary of the Treasury or his
                  delegate, such Excess Deferrals distributed pursuant to this
                  subparagraph are to be taken into account for purposes of
                  applying the actual deferral percentage test specified in
                  Section 3.3(b) (except if such excess is both prohibited under
                  Section 401(a)(30) of the Code and is attributable to a
                  non-Highly Compensated Employee), and for any other purpose of
                  the Code which may be prescribed by the Secretary of the
                  Treasury or his delegate. No corrective distribution under
                  this Section shall be recognized for purposes of determining
                  whether the minimum distribution requirements of Section
                  401(a)(9) of the Code are satisfied with respect to any
                  Participant.

            (iv)  Any distribution in accordance with this Section 3.2 shall be
                  made without regard to any notice or consent otherwise
                  required under Sections 411(a)(11) or 417 of the Code.

3.3   Actual Deferral Percentage Limitation on Tax Deferred Contributions (Plan
      Years beginning before January 1, 2001)

      (a)   Any provision of Section 3.1(a) to the contrary notwithstanding and
            effective for Plan Years beginning before January 1, 2001, the Tax
            Deferred Contribution percentages under Section 3.1(a) shall be
            modified as provided in paragraph (d) if the requirements of
            paragraph (b) are not satisfied.

      (b)   An actual deferral percentage shall be determined for each Covered
            Employee who is eligible to make Tax Deferred Contributions. Such
            percentage shall be equal to the total Tax Deferred Contribution
            (and, if elected by the Company, Employer Matching Contribution)
            made on the Covered Employee's behalf for the Plan Year divided by
            his Test Compensation in the Plan Year. With respect to Covered
            Employees who are eligible to make Tax Deferred Contributions but
            make no such contributions under this Plan, such actual deferral
            percentage shall be zero.

            Notwithstanding the foregoing, if for any Plan Year beginning before
            January 1, 1997, any eligible Highly Compensated Covered Employee is
            subject to the family aggregation rules of Section 414(q)(6) of the
            Code because he is either a five percent (5%) owner or one of the
            top 10 Highly Compensated Employees on the basis of Test
            Compensation, the actual deferral percentage of such Employee, as so
            aggregated for such year, shall be determined by combining the Tax
            Deferred Contributions and Test Compensation of all family members
            (as described in Section 1.15) eligible to participate in the Plan.

            The average of the actual deferral percentages for eligible Highly
            Compensated Covered Employees (High Average), when compared to the
            average of the actual deferral percentages for eligible non-Highly
            Compensated Covered Employees (Low Average), must meet one of the
            following requirements:

                                     - 13 -
<PAGE>
            (i)   The High Average is no greater than the Low Average times one
                  and one-quarter (1-1/4); or

            (ii)  The excess of the High Average over the Low Average is not
                  greater than two (2) percentage points and the High Average is
                  no greater than the Low Average times two (2).

            The provisions of this paragraph (b) shall be deemed to include the
            provisions of Section 401(k)(3) of the Code and Section
            1.401(k)-1(b) of the Income Tax Regulations which are hereby
            incorporated by reference.

      (c)   If two or more plans which include cash or deferred arrangements are
            considered as one plan for purposes of Section 410(b) of the Code,
            such arrangements included in such plans shall be treated as one
            arrangement for purposes of this Section 3.3 If any Highly
            Compensated Covered Employee is a participant under two or more cash
            or deferred arrangements maintained by an Employer or Affiliate, all
            such arrangements shall be treated as one cash or deferred
            arrangements for purposes of determining the actual deferral
            percentage of such Covered Employee. For purposes of this section,
            actual deferral percentages shall be calculated to the nearest
            one-hundredth of one percent.

      (d)   To the extent Tax Deferred Contributions (and Employer Matching
            Contributions, if applicable) made with respect to Highly
            Compensated Covered Employees cause the High Average to fail to meet
            paragraph (b) above, such Tax Deferred Contributions (individually
            determined pursuant to Section 3.4(a) and as adjusted for earnings
            or loss thereon in accordance with regulations promulgated by the
            Secretary of the Treasury or his delegate) shall return to the
            Employer solely for the purpose of enabling the Employer to withhold
            any federal, state, or local taxes due on such amounts. Thereafter,
            the Employer shall treat all remaining amounts in accordance with
            the provisions of Sections 3.4(b) below. The Administrator may also,
            at any time, authorize a suspension or reduction of Tax Deferred
            Contributions made pursuant to Section 3.1 hereof in accordance with
            rules promulgated by the Administrator. These rules may include
            administrative provisions authorizing the suspension or reduction of
            Tax Deferred Contributions above a specified dollar amount or
            percentage of Compensation.

      (e)   The extent to which Tax Deferred Contributions cause the High
            Average to fail to meet paragraph (b) above shall be determined by
            the Administrator in a reasonable and consistent manner. The
            Administrator shall not be liable to any Participant (or his
            beneficiary, if applicable) for any losses caused by inaccurately
            estimating the amount of any Participant's Tax Deferred
            Contributions in excess of the limitations established in Sections
            3.2(a) and 3.3(b) and the earnings or losses attributable to such
            Tax Deferred Contributions.

      (f)   In the event the Administrator determines that an amount to be
            deferred pursuant to the election provided in Section 3.1 would
            cause an Employer's contributions under this and/or any other
            tax-qualified retirement plan maintained by an Employer or Affiliate
            to exceed the applicable deduction limitations contained in Section
            404 of the Code, or to

                                     - 14 -
<PAGE>
            exceed the maximum annual addition determined in accordance with
            Section 11.11, the Administrator may treat such amount in accordance
            with the rules in paragraph (d) above.

3.4   Treatment of Tax Deferred Contributions in Excess of Actual Deferral
      Percentage Limitation (Plan Years beginning before January 1, 2001)

      (a)   If the actual deferral percentage limitation of Section 3.3(b) is
            not satisfied with respect to any given Plan Year beginning before
            January 1, 1997, the amount of Tax Deferred Contributions that are
            in excess of such limitation and are attributable to a Highly
            Compensated Covered Employee shall be determined as follows:

            (i)   the actual deferral percentage of the Highly Compensated
                  Covered Employee with the highest actual deferral percentage
                  is reduced to the extent necessary to:

                  (A)   cause such Employee's actual deferral percentage to
                        equal that of the Highly Compensated Covered Employee
                        with the next highest actual deferral percentage; or

                  (B)   enable the Plan to satisfy the actual deferral
                        percentage limitation, if such reduction is less than
                        that required by (A) above.

            (ii)  The process described in (i) above shall be repeated until the
                  Plan satisfies the actual deferral percentage limitation.

            (iii) Notwithstanding the foregoing, the determination of excess Tax
                  Deferred Contributions with respect to a given Highly
                  Compensated Covered Employee whose actual deferral percentage
                  is determined under the family aggregation rules described in
                  Section 3.3(b) hereof shall be accomplished by reducing the
                  actual deferral percentage as required by the foregoing
                  provisions of this paragraph (a) and by allocating the excess
                  Tax Deferred Contributions derived thereby for the family
                  group among the family members in proportion to the Tax
                  Deferred Contributions of each family member that is combined
                  to determine the actual deferral percentage for the family
                  group.

      (b)   If the actual deferral percentage limitation of Section 3.3(b) is
            not satisfied with respect to any given Plan Year beginning on or
            after January 1, 1997 and before January 1, 2001, the amount of Tax
            Deferred Contributions that are in excess of such limitation and are
            attributable to a Highly Compensated Covered Employee shall be
            determined by first computing the total dollar amount of Tax
            Deferred Contributions which must be reduced to satisfy the
            limitation and by allocating these amounts, in accordance with
            guidance promulgated by the Secretary of the Treasury or his
            delegate, to the Highly Compensated Covered Employees on behalf of
            whom the largest amounts of Tax Deferred Contributions have been
            made to the Plan for the given Plan Year.

      (c)   Those Tax Deferred Contributions attributable to a Highly
            Compensated Covered Employee that are deemed in excess of the actual
            deferral percentage limitation for any

                                     - 15 -
<PAGE>
            given Plan Year shall be distributed (along with any earnings or
            losses attributable thereto in accordance with regulations) no later
            than the last day of the Plan Year following the Plan Year to which
            such excess Tax Deferred Contributions relate. Any excess Tax
            Deferred Contribution that is in an amount greater than the de
            minimis amount prescribed by the Secretary of the Treasury or his
            delegate (and any income or loss attributable to such excess Tax
            Deferred Contribution) that is distributed pursuant to this
            paragraph by two and one-half (2-1/2) months following the Plan Year
            to which such excess amount relates shall be includible in the
            affected Covered Employee's gross income on the earliest date on
            which any Tax Deferred Contribution made on behalf of such Covered
            Employee during such Plan Year would have been received had the
            Employee declined to make the deferral election specified in Section
            3.1(a) hereof. Any excess Tax Deferred Contributions (and any income
            or loss attributable thereto) so distributed more than two and
            one-half (2-1/2) months following the Plan Year to which such excess
            amounts relate and any de minimis excess Tax Deferred Contributions
            (and any income or loss attributable thereto) distributed prior to
            such date shall be includible in the affected Covered Employee's
            gross income in the year in which such amounts are distributed.

      (d)   In making a distribution under this section, the Administrator shall
            specifically designate such distribution as a distribution
            consisting of Tax Deferred Contributions (and income or loss) in
            excess of that permitted by the actual deferral percentage
            limitation. Any distribution of less than the entire amount of
            excess Tax Deferred Contributions and income or loss attributable
            thereto (as such entire amount is determined after application of
            paragraph (a) or paragraph (b) of this Section 3.4, whichever
            applicable, and after application of Section 3.5, if applicable)
            shall be treated as a pro rata distribution of such excess
            contribution and income/loss.

      (e)   Except as otherwise provided by the Secretary of the Treasury or his
            delegate, any Tax Deferred Contribution in excess of the actual
            deferral percentage limitation shall be taken into account for
            purposes of determining the Participant's annual additions
            limitation as provided in Section 11.11 herein, and shall be taken
            into account for purposes of Section 404 of the Code,
            notwithstanding the correction of such excess amounts by
            distribution. No corrective distribution under this section shall be
            recognized for purposes of determining whether the minimum
            distribution requirements of Section 401(a)(9) of the Code are
            satisfied with respect to any Participant.

      (f)   Any distribution in accordance with this section shall be made
            without regard to any notice or consent otherwise required under
            Sections 411(a)(11) or 417 of the Code.

                                     - 16 -
<PAGE>
3.5   Coordination of Distributions of Excess Tax Deferred Contributions (Plan
      Years beginning before January 1, 2001)

      In the event that a portion of the Tax Deferred Contributions made with
      respect to a Highly Compensated Covered Employee for any given Plan Year
      beginning before January 1, 2001 exceed the applicable limitations of both
      Section 3.2(a) and Section 3.3(b), such excess amounts subject to both
      limitations shall be coordinated as follows:

      (a)   to the extent permitted, such excess amounts shall be distributed
            pursuant to Section 3.2(b) hereof; and

      (b)   to the extent that any such excess amounts remain after application
            of paragraph (a) such excess amounts shall be distributed pursuant
            to Section 3.4(c) hereof.

3.6   Employer Matching Contributions

      Effective with respect to each given pay period beginning on and after
      January 1, 1997 and prior to December 14, 2000, the Employer shall
      contribute an amount to the Trust Fund equal to fifty percent (50%) of the
      Tax Deferred Contributions made with respect to each Participant during
      such payroll period which are not in excess of six percent (6%) of the
      Participant's Compensation during such payroll period. Such contributions
      shall be designated as Employer Matching Contributions. Employer Matching
      Contributions shall be credited to Participants' Employer Accounts as of
      the date they are received by the Trustee or otherwise deposited in the
      Trust Fund.

3.7   Actual Contribution Percentage Limitation on Employer Matching
      Contributions (Plan Years beginning before January 1, 2001)

      (a)   Effective with respect to each Plan Year beginning before January 1,
            2001, an actual contribution percentage shall be determined for each
            Covered Employee who is eligible to become a Participant. Such
            percentage shall be equal to his Employer Matching Contributions for
            the Plan Year, divided by his Test Compensation in the Plan Year.
            With respect to Covered Employees who are eligible to participate in
            the Plan but have no Tax Deferred Contributions made to the Plan on
            their behalf and therefore do not have any Employer Matching
            Contributions made to the Plan on their behalf under Section 3.6,
            such actual contribution percentage shall be zero.

            Notwithstanding the foregoing, if for any Plan Year beginning before
            January 1, 1997, an eligible Highly Compensated Covered Employee is
            subject to the family aggregation rules of Section 414(q)(6) of the
            Code because he is either a five percent (5%) owner or one of the
            top 10 Highly Compensated Employees on the basis of Test
            Compensation, the actual contribution percentage of such Employee,
            as so aggregated for such year, shall be determined by combining the
            Employer Matching Contributions and Test Compensation of all family
            members (as described in Section 1.15) eligible to participate in
            the Plan.

      (b)   The average of the actual contribution percentages for eligible
            Highly Compensated Covered Employees (High Average), when compared
            to the average of the actual

                                     - 17 -
<PAGE>
            contribution percentages for eligible non-Highly Compensated Covered
            Employees (Low Average) must meet one of the following requirements:

            (i)   the High Average is no greater than the Low Average times one
                  and one-quarter (1-1/4); or

            (ii)  the excess of the High Average over the Low Average is not
                  greater than two (2) percentage points and the High Average is
                  no greater than the Low Average times two (2).

            The provisions of this paragraph (b) shall be deemed to include the
            provisions of Section 401(m)(2) of the Code and Section
            1.401(m)-1(b) of the Income Tax Regulations which are hereby
            incorporated by reference.

      (c)   If two or more plans to which Employer Matching Contributions are
            made are treated as one plan for purposes of Section 410(b) of the
            Code, such plans shall be treated as one plan for purposes of this
            Section 3.7. If any Highly Compensated Covered Employee is a
            participant in two or more plans of an Employer or Affiliate to
            which such contributions are made, all such contributions shall be
            aggregated for purposes of this section. For purposes of this
            section, actual contribution percentages shall be calculated to the
            nearest one-hundredth of one percent.

      (d)   To the extent Employer Matching Contributions cause the High Average
            to fail to meet paragraph (b) above, the Administrator may include
            such amount of Tax Deferred Contributions (if not used to satisfy
            the requirements of Section 3.3(b)) as may be necessary to satisfy
            the requirements of paragraph (b).

      (e)   The extent to which Employer Matching Contributions cause the High
            Average to fail to meet paragraph (b) above shall be determined by
            the Administrator in a reasonable and consistent manner. The
            Administrator shall not be liable to any Participant (or his
            beneficiary, if applicable) for any losses caused by inaccurately
            estimating the amount of any Employer Matching Contributions made on
            behalf of any Participant in excess of the limitation established in
            paragraph (b) above and the earnings or losses attributable to such
            Employer Matching Contributions.

3.8   Treatment of Employer Matching Contributions in Excess of Actual
      Contribution Percentage Limitation (Plan Years beginning before January 1,
      2001)

      (a)   If the actual contribution percentage limitation of Section 3.7(b)
            is not satisfied with respect to any given Plan Year beginning
            before January 1, 1997, the amount of Employer Matching
            Contributions (as such term includes any Tax Deferred Contribution
            that may be treated as an Employer Matching Contribution for
            purposes of Section 3.7(b) hereof) that are in excess of such
            limitation and are attributable to a Highly Compensated Covered
            Employee shall be determined as follows:

                                     - 18 -
<PAGE>
            (i)   the actual contribution percentage of the Highly Compensated
                  Covered Employee with the highest actual contribution
                  percentage is reduced to the extent necessary to:

                  (A)   cause such Employee's actual contribution percentage to
                        equal that of the Highly Compensated Covered Employee
                        with the next highest actual contribution percentage; or

                  (B)   enable the Plan to satisfy the actual contribution
                        percentage limitation, if such reduction is less than
                        that required by (A) above.

            (ii)  The process described in (i) above shall be repeated until the
                  Plan satisfies the actual contribution percentage limitation.

            (iii) Notwithstanding the foregoing, the determination of excess
                  Employer Matching Contributions with respect to a given Highly
                  Compensated Covered Employee whose actual contribution
                  percentage is determined under the family aggregation rules
                  described in Section 3.7(a) hereof shall be accomplished by
                  reducing the actual contribution percentage as required by the
                  foregoing provisions of this paragraph (a) and by allocating
                  the excess Employer Matching Contributions derived thereby for
                  the family group among the family members in proportion to the
                  Employer Matching Contributions made on behalf of each family
                  member that is combined to determine the actual contribution
                  percentage of the family group.

      (b)   If the actual contribution percentage limitation of Section 3.7(b)
            is not satisfied with respect to any given Plan Year beginning on or
            after January 1, 1997 and before January 1, 2001, the amount of
            Employer Matching Contributions (as such term includes any Tax
            Deferred Contribution that may be treated as an Employer Matching
            Contribution for purposes of Section 3.7(b) hereof) that are in
            excess of such limitation and are attributable to a Highly
            Compensated Covered Employee shall be determined by first computing
            the total dollar amount of Employer Matching Contributions which
            must be reduced to satisfy the limitation and by allocating these
            amounts, in accordance with guidance promulgated by the Secretary of
            the Treasury or his delegate, to the Highly Compensated Covered
            Employees on behalf of whom the largest amounts of Employer Matching
            Contributions have been made to the Plan for the given Plan Year.

      (c)   Any Employer Matching Contributions attributable to a Highly
            Compensated Covered Employee that are deemed in excess of the actual
            contribution percentage limitation for a given Plan Year (through
            application of paragraph (a) or paragraph (b) above, whichever
            applicable) shall be distributed (along with any earnings or losses
            attributable thereto in accordance with regulations) no later than
            the last day of the Plan Year following the Plan Year to which such
            excess Employer Matching Contributions relate. Any such excess
            Employer Matching Contribution that is in an amount greater than the
            de minimis amount prescribed by the Secretary of the Treasury or his
            delegate (and any income or loss attributable to such excess
            Employer Matching Contribution) that is distributed pursuant to this
            paragraph by two and one-half (2-1/2) months following the Plan Year
            to which

                                     - 19 -
<PAGE>
            such excess amounts relate shall be includible in the affected
            Covered Employee's gross income for his taxable year ending with or
            within the Plan Year for which the excess Employer Matching
            Contributions were made. Any excess Employer Matching Contributions
            (and any income or loss attributable thereto) so distributed more
            than two-and one-half (2-1/2) months following the Plan Year to
            which such excess amounts relate and any de minimis excess Employer
            Matching Contributions (and any income or loss attributable thereto)
            distributed prior to such date shall be includible in the affected
            Covered Employee's gross income in the taxable year in which such
            amounts are distributed.

      (d)   In making a distribution under paragraph (c), the Administrator
            shall specifically designate such distribution as a distribution
            consisting of Employer Matching Contributions in excess of that
            permitted by the actual contribution percentage limitation, along
            with any income or loss attributable thereto. Any distribution of
            less than the entire amount of excess Employer Matching
            Contributions shall be treated as a pro rata distribution of such
            excess contribution and income/loss.

      (e)   Except as otherwise provided by the Secretary of the Treasury or his
            delegate, any Employer Matching Contribution in excess of the actual
            contribution percentage limitation shall be taken into account for
            purposes of determining the Participant's annual additions
            limitation, as provided in Section 11.11 herein, and shall be taken
            into account for purposes of Section 404 of the Code,
            notwithstanding the correction of such excess amount by a
            distribution under this section. No corrective distribution under
            this section shall be recognized for purposes of determining whether
            the minimum distribution requirements of Section 401(a)(9) of the
            Code are satisfied with respect to any Participant.

      (f)   Any distribution in accordance with this section shall be made
            without regard to any notice or consent otherwise required under
            Sections 411(a)(11) or 417 of the Code.

3.9   Combined Alternative Limitation on Tax Deferred Contributions and Employer
      Matching Contributions (Plan Years beginning before January 1, 2001)

      Any provisions of this Article Three to the contrary notwithstanding, if,
      for any Plan Year beginning before January 1, 2001, both the High Average
      specified in Section 3.3(b) (relating to actual deferral percentages) and
      the High Average specified in Section 3.7(b) (relating to actual
      contribution percentages) exceed the Low Average specified in such
      sections by more than twenty-five percent (25%), the Administrator shall
      apply the aggregate alternative limitation in accordance with Section
      1.401(m)-2 of the Income Tax Regulations, the provisions of which are
      incorporated herein by reference. In the event such combined alternative
      limitation is not satisfied for any given Plan Year, the Company shall
      direct the Administrator to reduce the High Average of Section 3.3(b)
      and/or the High Average of Section 3.7(b) as permitted by Sections 3.4,
      3.5 and 3.8 hereof to the extent necessary to satisfy the combined
      alternative limitation.

      For purposes of this Section 3.9, the High Average specified in Sections
      3.3(b) and 3.7(b) shall

                                     - 20 -
<PAGE>
      be determined after taking into account all corrective measures permitted
      under Sections 3.2, 3.4 and 3.8.

3.10  Safe Harbor Matching Contributions

      (a)   Effective with respect to each given pay period beginning on and
            after December 14, 2000, the Employer shall contribute an amount to
            the Trust Fund equal to the sum of those amounts individually
            determined with respect to each Participant, as follows:

            (i)   One hundred percent (100%) of the Tax Deferred Contributions
                  made with respect to the Participant during such pay period
                  which do not exceed three percent (3%) of the Participant's
                  Compensation during such pay period; and

            (ii)  Fifty percent (50%) of the Tax Deferred Contributions made
                  with respect to the Participant during such pay period which
                  exceed three percent (3%), but do not exceed five percent
                  (5%), of the Participant's Compensation during such pay
                  period.

            Such contributions shall be designated as Safe Harbor Matching
            Contributions and shall be 100% vested and nonforfeitable when made.
            The Employer shall make Safe Harbor Matching Contributions as soon
            as practicable following the end of the pay period to which they
            relate and such contributions shall be credited to Participants'
            Safe Harbor Matching Accounts as of the date they are received by
            the Trustee or otherwise deposited in the Trust Fund.

      (b)   Effective with respect to each Plan Year in which the provisions of
            Section 3.10(a) are applicable, the Administrator shall provide
            Notice during the "Safe Harbor Notice Period" (as hereinafter
            defined) to each Covered Employee who is eligible to participate in
            the Plan during such Plan Year. Such Notice shall describe the
            following:

            (i)   The formula used to determine the Safe Harbor Matching
                  Contribution to be made on behalf of such Employee for such
                  Plan Year;

            (ii)  Any requirements that such Employee must satisfy to become
                  entitled to receive such contributions;

            (iii) The type and amount of Compensation that may be deferred under
                  the Plan as Tax Deferred Contributions;

            (iv)  The procedures for making or changing an election to make Tax
                  Deferred Contributions; and

            (v)   The withdrawal and vesting provisions applicable to
                  contributions under the Plan.

            For purposes hereof, the "Safe Harbor Notice Period" shall mean a
            period beginning 90 days before the first day of the applicable Plan
            Year and ending 30 days before the first

                                     - 21 -
<PAGE>
            day of the applicable Plan Year; provided, however, with respect to
            a Covered Employee who becomes eligible to participate in the Plan
            during a given Plan Year in which the provisions of Section 3.10(a)
            are applicable, the "Safe Harbor Notice Period" shall begin 90 days
            before the day such Employee may first participate in the Plan and
            shall end on the day such Employee may first participate in the
            Plan.

      (c)   For Plan Years beginning on and after January 1, 2001 in which the
            Safe Harbor Matching Contribution of Section 3.10(a) is made and the
            Notice requirement of Section 3.10(b) is satisfied, the Employer
            elects to treat the Plan as automatically satisfying the
            nondiscrimination in amount of employer contribution requirements of
            Section 401(a)(4) of the Code. Notwithstanding any provision of this
            Section 3.10 to the contrary, the Employer may suspend future Safe
            Harbor Matching Contributions at any time provided that the
            procedures for implementing such suspension are consistent with
            guidance promulgated by the Internal Revenue Service and, provided
            further, that for any Plan Year in which such suspension occurs, the
            provisions of Section 3.3, 3.4, 3.5, 3.7, 3.8 and 3.9 shall again
            become applicable to the extent then required by law.

3.11  Source of Employer Contributions

      (a)   The Employer shall make all contributions to the Plan without regard
            to current or accumulated net profits. Notwithstanding the
            foregoing, for purposes of Sections 401(a)(27) and 401(k) of the
            Code, the Plan shall continue to be considered a profit sharing
            plan. All Employer contributions shall be made in cash.

      (b)   Any provision of the Plan to the contrary notwithstanding, the total
            Employer contribution made with respect to any Plan Year, when added
            to any other contributions made by the Employer to a plan qualified
            under Section 401(a) of the Code, shall not exceed such amount which
            is deductible for such Plan Year pursuant to Sections 404(a)(3) or
            404(a)(7) of the Code. In any event, all contributions for a Plan
            Year shall be paid within the regular or extended time for filing
            the Employer's federal income tax return for the fiscal year which
            includes the Plan Year end.

3.12  Investment of Employer Contributions

      The Employer contributions made on behalf of a Participant shall be
      invested by the Trustee in accordance with the Participant's election
      under Sections 5.3(a) and 5.4(a).

                                     - 22 -
<PAGE>
3.13  Recovery of Contributions

      Except as provided in this Section 3.13, the assets of the Plan shall
      never inure to the benefit of an Employer or Affiliate and shall be held
      for the exclusive purpose of providing benefits under the Plan and
      defraying reasonable expenses of the Plan. However, no provision of this
      Plan shall:

      (a)   Prohibit the return of a contribution to an Employer or a
            Participant within one year after payment if such contribution was
            made by a mistake of fact;

      (b)   Prohibit the return of a contribution which was conditioned upon its
            deductibility under Section 404 of the Code (to the extent
            disallowed as a deduction);

      provided, however, in the case of the return of a contribution which was
      made as a result of a mistake of fact, the amount which shall be returned
      is the excess of the amount contributed over the amount which would have
      been contributed had the mistake of fact not occurred. Further, in the
      case of the return of a contribution which was conditioned upon
      deductibility, and in the case of a contribution made as the result of a
      mistake of fact, earnings attributable to the excess contribution may not
      be returned, but losses attributable thereto must reduce the amount to be
      returned. Further, in both such cases, if the withdrawal of the amount
      attributable to the mistaken or non-deductible contribution would cause
      the balance of the account of any Participant to be reduced to less than
      the balance which would have been in the account had the mistaken or
      non-deductible amount not been contributed, then the amount to be returned
      to the Employer will be limited so as to avoid such reduction.

3.14  Other Provisions Relating to Employer Contributions

      (a)   A Participant may as of any time:

            (i)   suspend the Tax Deferred Contributions made on his behalf; or

            (ii)  increase or decrease the rate of Tax Deferred Contributions
                  made on his behalf or have such contributions resumed after a
                  period of suspension.

            Such suspension or change in rate shall be effective as of the first
            day of the pay period next following the date the Participant
            delivers Notice of the same to the Administrator, provided such
            Notice is delivered to the Administrator in such time as to allow
            the Administrator a reasonable period within which to act on the
            election contained therein.

            During any period of suspension, regardless of the length of its
            duration, the Participant's Account shall be maintained in
            accordance with the procedure set forth in Article Five.

      (b)   In the event Employer Matching Contributions or Safe Harbor Matching
            Contributions have been made with respect to Tax Deferred
            Contributions that are subsequently determined to fail to meet the
            annual dollar limitation specified in Section 3.2(a) (and if such
            Excess Deferrals are distributed pursuant to Section 3.2(b)) or the
            actual deferral

                                     - 23 -
<PAGE>
            percentage limitation of Section 3.3(b) (and if such excess Tax
            Deferred Contributions are distributed pursuant to Section 3.4),
            such Employer Matching Contributions or Safe Harbor Matching
            Contributions (and any income or loss attributable thereto
            determined in accordance with regulations) shall be forfeited and
            applied to reduce future Employer Matching Contributions or Safe
            Harbor Matching Contributions.

                                     - 24 -
<PAGE>
                                  ARTICLE FOUR

                             ROLLOVER CONTRIBUTIONS

4.1   Rollover Contributions

      (a)   Under such rules and procedures as the Administrator may establish,
            any Covered Employee may make a cash contribution to this Plan of
            all or a portion of the amount received by the Covered Employee in
            the form of a lump sum distribution from a qualified trust within
            the meaning of Section 402(c)(8) of the Code or from a rollover
            account described in Section 408(d)(3) of the Code, or may make a
            direct rollover of all or a portion of an eligible rollover
            distribution within the meaning of Section 402(c)(4) of the Code.
            Such rollover contribution shall be allocated to a Rollover Account
            established on behalf of the Covered Employee. For purposes of this
            Section 4.1, the entire amount of cash to be accepted by this Plan
            as a rollover contribution must constitute all or a portion of an
            eligible rollover distribution (as defined in Section 6.4). Such
            contribution must not include after-tax amounts contributed by the
            Employee or regular IRA contributions and, with respect to rollovers
            of distributions from a qualified trust or rollover account, must be
            received by the Trustee on or before the 60th day after the day on
            which the Employee received the distribution. A rollover
            contribution may include funds which were contributed on the
            Participant's behalf under an arrangement described in Code Section
            401(k). Before accepting any rollover contributions from a Covered
            Employee, the Administrator shall determine to its satisfaction that
            such contribution does not contain amounts from sources other than
            those provided in this Section 4.1.

      (b)   In the event the Administrator has reasonably concluded that an
            amount may be accepted by the Plan as a rollover contribution under
            Section 4.1(a) but later determines that all or a portion of such
            amount is not an eligible rollover distribution (as defined in
            Section 6.4) from a qualified trust within the meaning of Section
            402(c)(8) of the Code or from a rollover account described in
            Section 408(d)(3) of the Code, the Administrator shall cause such
            ineligible amount and related investment earnings to be distributed
            to the Covered Employee (or, if applicable, beneficiary) as soon as
            administratively feasible.

4.2   Vesting of Rollover Contributions

      Amounts contributed under Section 4.1 hereof shall at all times be 100%
      vested.

                                     - 25 -
<PAGE>
                                  ARTICLE FIVE

                   PARTICIPANT ACCOUNTS AND VALUATION OF FUNDS

5.1   Establishment of Participant Accounts

      (a)   There shall be established and maintained for each Participant a
            Total Account consisting of the following accounts:

            (i)   a Tax Deferred Account;

            (ii)  an Employer Account; and

            (iii) for periods on and after January 1, 2001, a Safe Harbor
                  Matching Account.

            Under the circumstances described in Article Four, a Participant may
            also have a Rollover Account maintained on his behalf.

      (b)   Within each of the accounts listed in Section 5.1(a), separate
            records shall be kept of the portion, if any, of each account
            invested in each investment fund or vehicle then offered under the
            Plan.

5.2   Procedure as of Each Valuation Date

      As of each Valuation Date, each Participant's balance in his various
      accounts shall be adjusted in accordance with the valuation procedure
      adopted by the Administrator.

5.3   Investment Elections

      (a)   When a Covered Employee submits his application to become a
            Participant, he shall give Notice regarding the investment of Tax
            Deferred Contributions and any Employer Matching Contributions or
            Safe Harbor Matching Contributions made on his behalf under the
            Plan. The Notice shall specify, in 1% increments from 0% to 100%:

            (i)   the percentage of all future Tax Deferred Contributions to be
                  invested in each investment option which is then made
                  available for the investment of Tax Deferred Contributions;
                  and

            (ii)  the percentage of all future Employer Matching Contributions
                  or, with respect to pay periods beginning on and after
                  December 14, 2000, Safe Harbor Matching Contributions, to be
                  invested in each investment option which is then made
                  available for the investment of Employer Matching
                  Contributions or, with respect to pay periods beginning on and
                  after December 14, 2000, Safe Harbor Matching Contributions.

                                     - 26 -
<PAGE>
            A Participant may change the investment elections made under this
            Section 5.3(a) at any time by giving Notice to the Administrator or
            its designee within such time and in accordance with such means as
            are designated by the Administrator and communicated to Participants
            and Covered Employees. Such Notice of change shall be subject to the
            procedural specifications set forth above (and, if applicable,
            subject to the limitations set forth in Section 5.4) and, except as
            may otherwise be provided in the Trust Agreement, shall be effective
            with respect to contributions received by the Trustee (or otherwise
            deposited into the Trust Fund) as of the Valuation Date on which the
            Notice is received or as of the next following Valuation Date, in
            accordance with procedures established by the Administrator, and
            communicated to Participants and Covered Employees.

            A Covered Employee making a rollover contribution shall give Notice
            regarding the investment of such contribution. Such Notice shall be
            delivered on or prior to the date the rollover contribution is
            effective and shall specify, in 1% increments from 0% to 100%, the
            percentage of the rollover contribution to be invested in each
            investment option which is then made available for the investment of
            rollover contributions.

      (b)   Each Participant and beneficiary shall have the opportunity to
            change the manner in which the Total Account maintained on his
            behalf under the Plan is invested. Such opportunity shall be
            exercised by giving Notice to the Administrator or its designee
            within such time and in accordance with such means as are designated
            by the Administrator and communicated to Participants, Covered
            Employees and affected beneficiaries. Subject to any minimum dollar
            limitation which may be established by the Administrator from
            time-to-time, such Notice shall specify, in a whole dollar amount or
            in 1% increments from 0% to 100%, the dollar amount, or percentage,
            of the Total Account maintained on behalf of the Participant or
            beneficiary which is to be invested in each investment option then
            made available. Except as may otherwise be set forth in the Trust
            Agreement, such Notice shall be effective as of the Valuation Date
            on which the Notice is received by the Trustee or as of the next
            following Valuation Date, in accordance with procedures established
            by the Administrator and communicated to Participants, Covered
            Employees and affected beneficiaries. Notwithstanding any provision
            of this paragraph (b) to the contrary, (i) the election under this
            Section 5.3(b) shall be subject to any contractual limitations
            imposed on the direct transfer of assets between given investment
            funds, (ii) in no event shall any portion of the Total Account
            maintained on behalf of a Participant or beneficiary in the Erie
            Family Life Group Annuity Fund be transferred to any other
            investment fund and (iii) in no event shall any portion of the Total
            Account maintained on behalf of a Participant be transferred to the
            Erie Indemnity Stock Fund.

      (c)   Any investment elections or changes in elections under this Section
            5.3 may be limited or delayed by the Administrator or Trustee, if,
            in the judgment of such party, giving immediate effect to such
            elections would adversely affect the Total Account balances of a
            significant number of Participants.

                                     - 27 -
<PAGE>
      (d)   In the event a Participant's or beneficiary's investment election is
            incomplete, the Participant or beneficiary will be assumed to have
            chosen to invest in such default fund as is set forth in the Trust
            Agreement.

      (e)   Any investment election under the foregoing provisions of this
            Section 5.3 shall remain in effect until changed by another election
            under this Section.

      (f)   Each Participant, Covered Employee and beneficiary is solely
            responsible for the selection of his investment option. The Trustee,
            the Administrator, the Employer, and the directors, officers,
            supervisors and other employees of the Employer are not empowered to
            advise a Participant, Covered Employee or beneficiary as to the
            manner in which any portion of his Total Account shall be invested.
            The fact that an investment option is available under the Plan shall
            not be construed as a recommendation for investment in that
            investment option.

5.4   Erie Indemnity Stock Fund

      The provisions of this Section shall become applicable to the extent to
      which Participants' and beneficiaries' Employer Accounts and/or Safe
      Harbor Matching Accounts under the Plan are invested in the Erie Indemnity
      Stock Fund.

      (a)   Effective for pay periods beginning on and after May 8, 1997, the
            Administrator shall make available under the Plan an investment fund
            which shall consist exclusively of Erie Indemnity Stock; provided,
            however, that in the discretion of the Trustee, within guidelines
            set by the Administrator, a portion of such fund may be held in
            short-term interest-bearing investments or cash pending purchase of
            Erie Indemnity Stock and to provide sufficient liquidity for
            exchanges out of the fund, withdrawals and loans. Such investment
            fund shall be referred to as the "Erie Indemnity Stock Fund". Except
            as otherwise provided in this Section 5.5, a Participant shall be
            permitted to invest all or a portion of the Employer Matching
            Contributions or, with respect to pay periods beginning on and after
            December 14, 2000, the Safe Harbor Matching Contributions, made on
            his behalf in the Erie Indemnity Stock Fund in accordance with the
            provisions of Section 5.3. A Participant shall not be permitted to
            invest any portion of the Tax Deferred Contributions made on his
            behalf in the Erie Indemnity Stock Fund nor shall any Participant or
            Covered Employee be permitted to invest any portion of a rollover
            contribution in the Erie Indemnity Stock Fund. No Participant,
            Covered Employee or beneficiary may transfer any portion of the
            Total Account maintained on his behalf to the Erie Indemnity Stock
            Fund. For purposes of implementing Participant investment elections
            under Section 5.3, or a Participant's or beneficiary's distribution
            election under Section 6.3, the Trustee may, in its discretion,
            purchase or sell Erie Indemnity Stock on the open market or by
            privately-negotiated transaction; provided however, that any such
            purchase or sale shall be made only in exchange for fair market
            value as determined by the Trustee and, provided further that, no
            commission shall be charged to or paid by the Plan with respect to
            any purchase or sale of Erie Indemnity Stock between the Plan and a
            party in interest (as defined in Section 3(14) of ERISA). Any
            distributions, dividends or

                                     - 28 -
<PAGE>
            other income received by the Trustee with respect to the Erie
            Indemnity Stock Fund shall be reinvested by the Trustee in the Erie
            Indemnity Stock Fund.

      (b)   The restrictions contained in this paragraph (b) shall apply to that
            portion of the Employer Accounts and/or Safe Harbor Matching
            Accounts maintained on behalf of Participants or beneficiaries which
            are invested in the Erie Indemnity Stock Fund and, if and to the
            extent necessary, any election made by a Participant or beneficiary
            under the Plan shall be deemed modified to be consistent with this
            paragraph (b).

            (i)   Notwithstanding the provisions of Section 5.3, and Articles
                  Seven and Fourteen:

                  (A)   No Participant or beneficiary shall, on the basis of
                        material nonpublic information with respect to the
                        Company or its affiliates, make an election permitted by
                        that Section or those Articles if (1) such election
                        would result in an exchange into or out of, loans from,
                        withdrawals from, or an increase or decrease in the
                        amount of contributions to the Erie Indemnity Stock
                        Fund, and (2) the transaction resulting from such
                        election is prohibited by Rule 10b-5.

                  (B)   No officer shall make an election permitted by that
                        Section or those Articles if such election would result
                        in a transaction involving the Erie Indemnity Stock Fund
                        which is not an exempt transaction pursuant to Rule
                        16b-3.

            For purposes of this paragraph (b), the terms "Rule 10b-5" and Rule
            16b-3" shall mean the rules, as amended, having those designations
            promulgated by the United States Securities and Exchange Commission
            pursuant to the Securities Exchange Act of 1934, as amended, and the
            terms "affiliate" and "officer" shall have the meanings set forth in
            Rule 12b-2 and Rule 16a-1(f), respectively, both as so promulgated
            and amended.

                                     - 29 -
<PAGE>
                                   ARTICLE SIX

                             VESTING & DISTRIBUTIONS

6.1   Vesting

      A Participant shall be fully vested in all contributions made and
      investment earnings credited under the provisions of the Plan.

6.2   Distributions Upon Retirement or Other Termination of Employment

      (a)   Subject to the provisions of (b) below, in the event of the
            termination of a Participant's employment with the Company and
            Affiliates for any reason, the Participant (or, if deceased, his
            designated beneficiary) shall receive the vested Total Account
            maintained on behalf of the Participant in accordance with Section
            6.3 if, as of the date of determination, the balance of such vested
            Total Account is not in excess of $3,500.00. The Administrator or
            its designee shall make such determination on a periodic basis, not
            less frequent than annually. If, as of such date of determination,
            the vested Total Account maintained on behalf of a Participant
            exceeds $3,500.00, the Participant may elect, in such manner as
            provided by the Administrator, to either take or commence an
            immediate distribution of such vested Total Account (with Spousal
            Consent) in a form permitted under Section 6.3, or to defer receipt
            of the same until a later date, but not beyond the end of the
            calendar year in which he attains age 70-1/2. Such election by a
            Participant must be made in writing to the Administrator on a form
            or forms designated for such purpose. The failure of any terminating
            Participant to make an election with respect to a vested Total
            Account in excess of the $3,500 threshold shall be deemed an
            election by the Participant to defer receipt of such vested Total
            Account. A Participant who elects (or is deemed to have elected) to
            defer receipt of his vested Total Account may request a distribution
            of his vested Total Account in a form permitted under Section 6.3 at
            a subsequent date, subject to Spousal Consent. Pending distribution
            of his Total Account, such Participant shall be permitted to change
            the manner in which such Total Account is invested in accordance
            with Section 5.3(b).

      (b)   The Administrator or its designee shall notify a Participant or
            beneficiary of his election right under Section 6.2(a) and, in the
            case of a Participant who may defer payment of the vested portion of
            his Total Account in accordance with Section 6.2(a), of his right to
            defer payment. Such notification shall be provided to the
            Participant or beneficiary not less than 30 days and not more than
            90 days before payment is made; provided however, that a Participant
            or beneficiary may affirmatively elect to be paid the vested Total
            Account being maintained on his behalf (such election to include
            Spousal Consent, in the case of a Participant) within 30 days after
            the Participant or beneficiary received the notice described in this
            Section 6.2(b).

      (c)   A Participant who returns to employment with the Employer on a full
            or part-time basis prior to distribution of his vested Total Account
            under paragraph (a) shall be deemed to have cancelled his
            distribution election as of his date of reemployment.

                                     - 30 -
<PAGE>
      (d)   All payments made pursuant to this Section 6.2 shall be based on the
            Participant's vested Total Account balance on the Valuation Date as
            of which payment is made.

6.3   Payment of Amounts Distributed

      (a)   For periods before January 1, 2001 and except as otherwise provided
            in Section 6.3(c), all Plan distributions shall be paid in the form
            of a lump sum. Effective on and after January 1, 2001, distributions
            to a Participant or beneficiary may be paid in the form of:

            (i)   a lump sum;

            (ii)  monthly, quarterly or annual installments that will provide a
                  fixed amount per pay period; or

            (iii) monthly, quarterly or annual installments that will provide
                  substantially equal payments over a fixed period that is not
                  in excess of the lesser of fifteen (15) years or the
                  recipient's life expectancy, as determined by the
                  Administrator as of the date the payments begin.

            A Participant or beneficiary who has elected payment in an
            installment form under Section 6.3(a)(ii) or (iii) may elect, at
            some future date, to have the balance of the vested Total Account
            maintained on his behalf paid in the form of a lump sum. Except as
            provided in the preceding sentence, a Participant or beneficiary may
            not change his elected form of distribution following the date Plan
            payments begin. A Participant who returns to employment with the
            Employer on a full or part-time basis following commencement of an
            installment form of distribution shall be deemed to have cancelled
            his distribution election as of his date of reemployment. In no
            event may distributions from the Plan be made in the form of an
            annuity.

      (b)   The distributee shall elect to have that portion of his Employer
            Account and Safe Harbor Matching Account which is invested in the
            Erie Indemnity Stock Fund paid either (i) in whole units of Erie
            Indemnity Stock (with fractional units being distributed in cash) or
            (ii) in cash. The election of a Participant or beneficiary under
            this Section 6.3(b) shall be made in connection with the
            Participant's or beneficiary's distribution election(s) under
            Section 6.2. In the event distribution is made in the absence of a
            Participant's or beneficiary's distribution election, that portion
            of an Employer Account and Safe Harbor Matching Account which is
            invested in the Erie Indemnity Stock Fund at the time of
            distribution shall be paid in cash.

      (c)   Distribution to a 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. Notwithstanding the foregoing,
            effective January 1, 1999 with respect to any employed Participant
            who attains age 70-1/2 during or after the 1999 calendar year,
            distribution must commence no later than the April 1st of the
            calendar year following the calendar year in which the Participant
            retires; provided, however, that if the Participant is a five
            percent owner (for

                                     - 31 -
<PAGE>
            purposes of Section 416 of the Code) during the calendar year in
            which he attains age 70-1/2 or in a later calendar year,
            distribution must commence to the Participant no later than the
            April 1st of the calendar year following the calendar year in which
            the Participant attains age 70-1/2 or the calendar year in which the
            Participant becomes a five percent owner, whichever date is later.
            For periods before January 1, 2001, a Participant who is required to
            commence payments under this Section 6.3(c), and who continues to
            work on either a full or part-time basis, may elect to receive his
            Total Account in the form of 10 annual installments instead of a
            lump sum distribution. In all cases, for purposes of calculating the
            amount of a required minimum distribution, life expectancy will be
            determined without regard to the permissive recalculation rule of
            Section 401(a)(9)(D) of the Code.

            Notwithstanding the foregoing, unless the Participant elects
            otherwise, distribution of benefits under Section 6.2 will begin no
            later than the 60th day after the latest of the close of the Plan
            Year in which:

            (i)   the Participant attains age 65,

            (ii)  occurs the fifth anniversary of the Plan Year in which the
                  Participant commenced participation in the Plan, or

            (iii) the Participant terminated employment with the Company and
                  Affiliates.

      (d)   In the event the Participant dies after distribution of his interest
            has begun, but prior to distribution of his entire interest, the
            remaining portion of such interest shall be distributed in a method
            which is at least as rapid as the method being used at the date of
            the Participant's death. In the event the Participant dies prior to
            commencement of the distribution of his interest, the entire
            interest attributable to such Participant shall be distributed
            within five years after the date of his death, unless such interest
            is payable to a designated beneficiary (as defined in Code Section
            401(a)(9)), commences no later than the December 31 of the calendar
            year following the calendar year of the Participant's death and is
            payable over a period which does not exceed the life expectancy of
            such designated beneficiary, as determined by the Administrator as
            of the date payments begin.

            Notwithstanding the foregoing, if the designated beneficiary of the
            Participant is the Participant's surviving spouse, the date
            distributions are required to begin shall be no earlier than the
            date that the Participant would have attained age 70-1/2 and, if the
            spouse dies before payments begin, subsequent distribution shall be
            made as if the spouse had been the Participant.

      (e)   Any provision of the Plan to the contrary notwithstanding, all
            distributions shall be determined and made in accordance with the
            provisions of Section 401(a)(9) of the Code and the regulations
            promulgated thereunder including 1.401(a)(9)-2. Such provisions
            shall override any distribution provision of the Plan that is
            inconsistent with Code Section 401(a)(9).

                                     - 32 -
<PAGE>
6.4   Direct Rollovers

      (a)   Notwithstanding any provision of the Plan to the contrary that would
            otherwise limit a distributee's election under this Section, a
            distributee may elect, subject to provisions adopted by the
            Administrator which shall be consistent with income tax regulations,
            to have any portion of an eligible rollover distribution paid
            directly to an eligible retirement plan specified by the distributee
            in a direct rollover. The Administrator shall notify a distributee
            of his right to elect a direct rollover; such notice shall be
            furnished to the distributee between 30 days and 90 days prior to
            the date as of which the distributee is to receive a distribution
            from the Plan, provided that the distributee may affirmatively elect
            a distribution or direct rollover to occur within 30 days after the
            furnishing of such notice. Subject to Section 6.2(a), a distributee
            who has been given a timely notice and explanation of the election
            to have his eligible rollover distribution paid to an eligible
            retirement plan, and who has failed to file an election with the
            Administrator within 30 days of the delivery of such notice and
            explanation shall be presumed to have elected to have his benefit
            paid directly to him as of the Valuation Date which is, or which
            next follows, the end of such 30-day period.

      (b)   Definitions.

            (i)   Eligible Rollover Distribution: An eligible rollover
                  distribution is any distribution of all or any portion of the
                  balance to the credit of the distributee, except that an
                  eligible rollover distribution does not include any
                  distribution that is one of a series of substantially equal
                  periodic payments (not less frequently than annually) made for
                  the life (or life expectancy) of the distributee or the joint
                  lives (or joint life expectancies) of the distributee and the
                  distributee's designated beneficiary, or for a specified
                  period of 10 years or more; any distribution to the extent
                  such distribution is required under Code Section 401(a)(9);
                  for periods on and after January 1, 1999, that portion of a
                  hardship withdrawal that is attributable to Tax Deferred
                  Contributions; and the portion of any distribution that is not
                  includible in gross income (determined without regard to the
                  exclusion for net unrealized appreciation with respect to
                  employer securities).

            (ii)  Eligible Retirement Plan: An eligible retirement plan is an
                  individual retirement account described in Code Section
                  408(a), an individual retirement annuity described in Code
                  Section 408(b), an annuity plan described in Code Section
                  403(a), or a qualified trust described in Code Section 401(a),
                  that accepts the distributee's eligible rollover distribution.
                  However, in the case of an eligible rollover distribution to
                  the surviving spouse, an eligible retirement plan is an
                  individual retirement account or individual retirement
                  annuity.

            (iii) Distributee: A distributee includes an Employee or former
                  Employee. In addition, the Employee's or former Employee's
                  surviving spouse and the Employee's or former Employee's
                  spouse or former spouse who is the alternate payee under a
                  qualified domestic relations order, as defined in Code

                                     - 33 -
<PAGE>
                  Section 414(p), are distributees with regard to the interest
                  of the spouse or former spouse.

            (iv)  Direct Rollover: A direct rollover is a payment by the Plan to
                  the eligible retirement plan specified by the distributee.

                                     - 34 -
<PAGE>
                                  ARTICLE SEVEN

                                   WITHDRAWALS

7.1   Withdrawals Generally

      A Participant actively employed with the Company or an Affiliate (herein
      referred to in this Article as an "Eligible Applicant") may make written
      application to the Administrator for withdrawal of a portion of his
      account balance without terminating his employment, but only in such
      amounts and under such conditions as specified in this Article Seven. All
      such applications for a withdrawal made by an Eligible Applicant shall be
      approved or denied by the Administrator in accordance with a uniform,
      non-discriminatory policy and such action by the Administrator shall be
      final.

7.2   Hardship Withdrawal

      Upon proper written application of an Eligible Applicant in such form as
      the Administrator may specify, the Administrator may permit the Eligible
      Applicant withdraw in cash the portion of the balance of his Total Account
      representing his Rollover Account (if applicable), his Employer Account
      and his Tax Deferred Contributions without earnings thereon, provided that
      the reason for such withdrawal is to enable the Eligible Applicant to meet
      unusual or special situations in his financial affairs resulting in
      immediate and heavy financial needs of the Eligible Applicant and,
      provided further, that the Administrator must be satisfied that any
      withdrawal hereunder is not in excess of the amount necessary to meet the
      immediate and heavy financial need and is not available from other
      resources of the Eligible Applicant. The amount available for withdrawal
      shall be based on the balances of the applicable accounts (and the Tax
      Deferred Contributions made) on the Valuation Date as of which payment is
      made. In the event an Eligible Applicant is married at the time of
      application and the withdrawal request exceeds $3,500, the Administrator
      shall require Spousal Consent prior to approving the withdrawal
      application. Amounts required to meet the following items are deemed to be
      for immediate and heavy financial needs:

      (a)   payments necessary to prevent the eviction of the Eligible Applicant
            from, or foreclosure of the mortgage on, his principal residence;

      (b)   expenses for medical care described in Code Section 213(d) incurred
            by the Eligible Applicant, his spouse, or his dependents as defined
            in Code Section 152, or necessary for these persons to obtain
            medical care described in Section 213(d) of the Code;

      (c)   costs directly related to the purchase of an Eligible Applicant's
            principal residence; or

      (d)   payment of tuition, related educational fees and room and board
            expenses, for the next 12 months of post-secondary education for the
            Eligible Applicant, his spouse or his dependents.

7.3   Safe Harbor Distribution

                                     - 35 -
<PAGE>
      A distribution shall be deemed necessary to satisfy an immediate and heavy
      financial need of a Eligible Applicant if all of the following
      requirements are satisfied:

      (a)   the distribution is not in excess of the amount of the immediate and
            heavy financial need of the Eligible Applicant including any amounts
            necessary to pay any federal, state or local income taxes or
            penalties reasonably anticipated to result from such distribution;

      (b)   the Eligible Applicant has obtained all other forms of distribution
            and nontaxable loans currently available from all plans maintained
            by an Employer;

      (c)   the Eligible Applicant shall be suspended from making Tax Deferred
            Contributions to the Plan until the first day of the pay period
            occurring 12 full months from the effective date of the withdrawal;
            and

      (d)   the limitation specified in Section 3.2(a) shall be applied to the
            aggregated Tax Deferred Contributions made during the taxable years
            which include the first and last days of the suspension period and
            not separately to each such taxable year.

7.4   Hardship Withdrawal Priority

      (a)   A withdrawal pursuant to this Article Seven shall be made from the
            Total Account maintained on behalf of an Eligible Applicant in the
            order of priority set forth in this Section 7.4. That portion of a
            Eligible Applicant's Total Account which is of a lower priority
            shall be withdrawn only after those portions of the Total Account
            which are of higher priority have been completely withdrawn:

            (i)   Rollover Account;

            (ii)  Employer Account; and

            (iii) Tax-Deferred Account (excluding earnings on Tax Deferred
                  Contributions).

            In no event shall a hardship withdrawal be taken from the Safe
            Harbor Matching Account maintained on behalf of an Eligible
            Applicant.

      (b)   Subsequent to the determination under paragraph (a), withdrawals
            shall be made out of those investment options in which the
            applicable account is invested according to the withdrawal hierarchy
            designated by the Administrator and communicated to Participants.

7.5   Modifications to Hardship Withdrawal Standards

      The Company shall have full discretionary authority to modify the
      provisions of Sections 7.2, 7.3 and 7.4 provided that any modifications
      shall be evidenced by a writing approved by the Plan Administrator, shall
      be consistently applied to all pending and future applications as of the
      date

                                     - 36 -
<PAGE>
      of the modification and shall not operate so as to reduce or eliminate any
      benefit protected under Section 411(d)(6) of the Code that has accrued as
      of the date of modifications.

                                     - 37 -
<PAGE>
                                  ARTICLE EIGHT

                                 THE TRUST FUND

8.1   Trust Agreement

      The Company has entered into a Trust Agreement for the purpose of holding
      assets of the Trust Fund other than assets attributable to amounts
      invested in a group annuity contract provided by the Erie Family Life
      Insurance Company. The Trust Agreement provides, among other things, that
      all funds received by the Trustee thereunder shall be held, administered,
      invested and distributed by the Trustee, and that no part of the corpus or
      income of the Trust Fund held by the Trustee shall be used for, or
      diverted to, purposes other than for the exclusive benefit of participants
      or their beneficiaries. The Company shall have the authority to remove
      such Trustee or any successor Trustee, and any Trustee or any successor
      Trustee may resign. Upon removal or resignation of a Trustee, the Company
      shall appoint a successor Trustee.

      The Company shall have authority to direct that there shall be more than
      one Trustee under the Trust Agreement and to determine the portion of the
      assets under the Trust Agreement to be held by each such Trustee. If such
      a direction is given, the Company shall designate the additional Trustee
      or Trustees, and each Trustee shall hold and invest and keep records with
      respect to the portion of such assets held by it.

8.2   Appointment of Independent Accountants

      The Company may select a firm of independent public accountants to examine
      and report on the financial position and the results of the operations of
      the Trust Fund created under the Plan, at such times as it deems proper
      and/or necessary.

8.3   Appointment of Investment Manager

      The Company may select an independent investment manager to invest the
      portion of the Trust Fund in each of the various funds. Such investment
      manager shall be either registered as an investment manager under the
      Investment Adviser's Act of 1940, a bank, a mutual fund or an insurance
      company, and as required by the Company, shall acknowledge in writing that
      he is a fiduciary with respect to the Plan.

8.4   Investment Committee

      The Company shall appoint three or more persons to serve as the Employee
      Savings Plan Investment Committee, to be referred to herein as the
      "Investment Committee". The Investment Committee shall perform such duties
      relating to the investment of the Trust Fund as the Company delegates to
      it and the duties specified in this Section 8.4. Any one or more of the
      members of the Investment Committee may be officers or directors of an
      Employer and need not be Participants entitled to benefits under the Plan.
      The Company in its sole discretion may remove or replace any member at any
      time with or without cause. A member may resign by delivering his written
      resignation to the Company, and such resignation shall become effective

                                     - 38 -
<PAGE>
      upon its delivery or at any other date specified therein. If, at any time,
      there shall be a vacancy in the membership of the Investment Committee,
      the remaining member or members shall continue to act until such vacancy
      is filled by the Company. The Investment Committee shall hold meetings
      upon such notice, at such place or places and at such times as its members
      may from time to time determine. A simple majority of the members at the
      time in office shall constitute a quorum for the transaction of business.
      All action taken by the Investment Committee at any meeting shall be by
      vote of the simple majority of those present at such meeting, but the
      Investment Committee may act without a meeting by unanimous action of its
      members evidenced by a resolution or other written instrument signed by
      all members of the Investment Committee.

      The Investment Committee shall have the following responsibilities:

      (a)   to recommend to the Company a Trustee and to recommend any changes
            in said Trustee;

      (b)   to recommend to the Company the appointment of fund managers;

      (c)   to allocate the duties and procedures for the Trustee and investment
            managers;

      (d)   to establish a separate investment philosophy and goals for each of
            the fund managers;

      (e)   to monitor the Trustee with respect to servicing the trust in a
            fiduciary capacity; and

      (f)   to monitor the fund managers with respect to the investment
            philosophy, goals and rates of return.

8.5   Voting of Erie Indemnity Stock

      (a)   Each Participant or beneficiary who has an Employer Account
            maintained under the Plan on his behalf with an investment in the
            Erie Indemnity Stock Fund shall have the powers and responsibilities
            set forth in this Section 8.5.

      (b)   Prior to each meeting of the Class A shareholders of the Company
            during which a vote of Class A shares is to be taken, the Company
            shall cause to be sent to each person described in Section 8.5(a), a
            copy of the proxy solicitation material for such meeting, together
            with a form requesting confidential voting instructions for the
            voting of Erie Indemnity Stock held in the Erie Indemnity Stock Fund
            in proportion to the number of shares or units of the Erie Indemnity
            Stock Fund held by such a person's Employer Account. Upon receipt of
            such a person's instructions, the Trustee shall then vote in person,
            or by proxy, such Erie Indemnity Stock as so instructed.

      (c)   Instructions received from the persons described in Section 8.5(a)
            by the Trustee regarding the voting of Erie Indemnity Stock held in
            the Erie Indemnity Stock Fund shall be held in strictest confidence
            and shall not be divulged to any other person, including directors,
            officers or employees of the Company, or any Affiliate, except as
            otherwise required by law.

                                     - 39 -
<PAGE>
      (d)   Except as otherwise set forth in the Trust Agreement, the Trustee
            shall vote Erie Indemnity Stock which represents those shares or
            units of the Erie Indemnity Stock Fund for which the Trustee does
            not receive affirmative direction from Participants and
            beneficiaries in the same proportion as the Trustee votes those
            shares of Erie Indemnity Stock held in the Erie Indemnity Stock Fund
            for which it has received voting instructions.

                                     - 40 -
<PAGE>
                                  ARTICLE NINE

                           ADMINISTRATION OF THE PLAN

9.1   The Administrator

      The Plan shall be administered by a Plan Administrator who shall serve at
      the pleasure of the Board. The Board has appointed the Company's Senior
      Vice President, Treasurer and Chief Investment Officer to serve as
      Administrator. 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 person
      or group, and nothing herein contained shall be construed to prevent any
      Participant, director, officer, employee or shareholder of the Employers
      from serving as the Administrator. The Administrator will not be
      compensated from the Trust Fund for services performed in such capacity,
      but the Company will reimburse such individual for expenses reasonably
      incurred by him in such capacity. The Administrator shall be the "named
      fiduciary" for purposes of ERISA; provided, however, that Participants and
      beneficiaries with Employer Accounts under the Plan shall be considered
      "named fiduciaries" solely to the extent of those fiduciary duties and
      responsibilities which are directly related to the exercise of voting
      rights with respect to Plan interests invested in the Erie Indemnity Stock
      Fund (and not to other aspects of Plan operation and/or administration).

      Appointment by the 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.

9.2   Powers of Administrator

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

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

      (b)   To interpret the Plan.

      (c)   To decide all questions concerning the Plan and the eligibility of
            any person to participate in the Plan, his period of participation
            and/or service under the Plan, his date of birth, the value of the
            Total Account, or any part thereof, maintained on behalf of the
            person and the

                                     - 41 -
<PAGE>
            rights of any person to receive a distribution from the Plan and the
            amount of such distribution.

      (d)   To compute the amount of Tax Deferred Contributions, Employer
            Matching Contributions and Safe Harbor Matching Contributions to be
            made on behalf of any Participant in accordance with the provisions
            of the Plan.

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

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

      (g)   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 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.

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

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

      (j)   To ensure that procedures are established which are sufficient to
            safeguard the confidentiality of information relating to the
            purchase, holding, and sale of Erie Indemnity Stock held in the Erie
            Indemnity Stock Fund and the exercise of shareholder rights with
            respect to Erie Indemnity Stock held in the Erie Indemnity Stock
            Fund and to ensure such procedures are being followed.

      (k)   To appoint and remove an independent fiduciary for the purpose of
            carrying-out activities relating to any situations which the
            Administrator determines involves an unreasonable potential for
            undue Employer influence with regard to the direct or indirect
            exercise of shareholder rights with respect to Erie Indemnity Stock
            holdings in the Erie Indemnity Stock Fund.

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

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

      (n)   To delegate its powers and duties to others in accordance with
            Section 9.3.

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

                                     - 42 -
<PAGE>
      The Administrator at its discretion may either request the Company or
      direct the Fund to pay for any or all services rendered by the Trustee,
      any investment manager, and by persons appointed, employed or engaged
      under Section 9.2(f) or under the terms of the Trust Agreement.

      The Administrator's interpretations, decisions, computations and
      determinations under this Section 9.2 which are made in good faith will be
      final and conclusive upon the Employers, all Participants and all other
      persons concerned. Any action taken by the Administrator with respect to
      the rights or benefits of any person under the Plan shall be revocable by
      the Administrator as to payments or distributions not theretofore made,
      pursuant to such action, from the Trust Fund; and appropriate adjustments
      may be made in future payments or distributions to a Participant 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 a written
      filing of each specific claim.

9.3   Delegation of Duties

      The Administrator may, from time to time, designate any person to carry
      out any of the responsibilities of the Administrator. The person so
      designated will have full authority, or such limited authority as the
      Administrator may specify, to take such actions as are necessary or
      appropriate to carry out the duties delegated by the Administrator.

9.4   Conclusiveness of Various Documents

      The Administrator and the Company and its directors and officers will be
      entitled to rely upon all tables, valuations, certificates and reports
      furnished by any actuary, accountant, counsel or other expert appointed,
      employed or engaged by the Administrator or the Company.

9.5   Actions to be Uniform

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

9.6   Liability and Indemnification

      To the full extent allowed by law, the Administrator shall not incur any
      liability to any Participant or beneficiary, or to any other person, by
      reason of any act or failure to act on the part of the Administrator if
      such act or omission is not the result of the Administrator's gross
      negligence, willful misconduct or exercise of bad faith. To the full
      extent allowed by law, the Company agrees to indemnify the Administrator
      against all liability and expenses (including reasonable attorney's fees
      and other reasonable expenses) occasioned by any act or omission to act if
      such act or omission is not the result of the Administrator's gross
      negligence, willful misconduct or exercise of bad faith. Neither this
      Section 9.6 nor any other provision of this Plan shall be applied to
      invalidate, modify, or limit in any respect any contract, agreement, or
      arrangement for indemnifying or insuring the Administrator against, or
      otherwise limiting, such

                                     - 43 -
<PAGE>
      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.

                                     - 44 -
<PAGE>
                                   ARTICLE TEN

                                CLAIMS PROCEDURE

10.1  Claim for Benefit

      If a Participant or a beneficiary asserts a right to any benefit under the
      Plan which he has not received, he must file a claim for such benefit with
      the Administrator in such manner as provided hereunder. If the
      Administrator wholly or partially denies such claim, it shall provide
      written notice to the Participant or the beneficiary submitting the
      application within 90 days of the receipt by the Administrator of the
      application. The Administrator shall set forth in the notice:

      (a)   the specific reasons for denial of the claim;

      (b)   the specific reference to pertinent provisions of the Plan on which
            the denial is based;

      (c)   a description of any additional material or information necessary to
            perfect the claim and an explanation of why such material or
            information is necessary; and

      (d)   further steps which the Participant or beneficiary may take in order
            to have his claim reviewed (including a statement that the claimant
            or his duly authorized representative may review Plan documents and
            submit issues and comments regarding the claim to the
            Administrator).

10.2  Review of Denial of Claim

      A Participant or beneficiary whose application for benefits is denied may
      request a full and fair review of the decision denying the claim within 90
      days after receipt of the notice of the denial provided by the
      Administrator. The Participant or beneficiary may:

      (a)   request a hearing by the Administrator upon written application to
            the Administrator;

      (b)   review pertinent Plan documents in the possession of the
            Administrator; and

      (c)   submit issues and comments in writing to the Administrator for
            review.

      If a hearing is requested by a Participant or beneficiary, such hearing
      shall be held within 30 days after the Administrator's receipt of the
      request for review.

10.3  Decision by Administrator

      A decision on review by the Administrator shall be made promptly and not
      later than 60 days after the receipt by the Administrator of a request for
      review, unless special circumstances (such as the need to hold a hearing)
      require an extension of time for processing, in which case the Participant
      or beneficiary will be notified of the extension and a decision shall be
      rendered as soon as possible, but not later than 120 days after the
      receipt of the request for review. The

                                     - 45 -
<PAGE>
      decision shall be in writing and shall include specific reasons for the
      decision written in a manner calculated to be understood by the
      Participant or beneficiary, and specific references to the pertinent
      provisions of the Plan on which the decision is based.

                                     - 46 -
<PAGE>
                                 ARTICLE ELEVEN

                                  MISCELLANEOUS

11.1  Non-Alienation of Benefits

      (a)   Except as provided in Section 11.1(b) or 11.1(c), no benefit payable
            under the Plan shall be subject in any manner to anticipation, sale,
            transfer, assignment, pledge, encumbrance, security interest or
            charge, and any action by way of anticipating, alienating, selling,
            transferring, assigning, pledging, encumbering, charging or granting
            a security interest in the same shall be void and of no effect; nor
            shall any such benefit be in any manner liable for or subject to the
            debts, contracts, liabilities, engagements or torts of the person
            entitled to such benefit.

      (b)   Section 11.1(a) shall not apply to the creation, assignment, or
            recognition of a right to any benefit payable pursuant to a
            Qualified Domestic Relations Order. The 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 11.1(a), the Plan may
            offset any portion of the Total Account maintained on behalf of a
            Participant or beneficiary against a claim of the Plan arising:

            (i)   as a result of the Participant's or beneficiary's conviction
                  of a crime involving the Plan; or

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

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

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

            The provisions of this Section 11.1(c) shall apply only to orders,
            judgments, decrees and settlements issued or entered into after
            August 5, 1997, and which expressly provide for such offset.

                                     - 47 -
<PAGE>
11.2  Risk to Participants and Source of Payments

      Each Participant assumes all risk in connection with any decrease in the
      value of any investment fund in the Trust Fund, and the Trust Fund shall
      be the sole source of any payments to be made to Participants or their
      beneficiaries under the Plan.

11.3  Expenses

      Subject to any restriction applicable under Section 5.4(a), brokerage
      fees, transfer taxes and other expenses incurred by the Trustee in
      connection with the purchase or sale of securities may be added to the
      cost of such securities or deducted from the proceeds thereof, as the case
      may be. Earnings credited to accounts invested in mutual funds shall be
      net of direct fund management expenses. Fees and other expenses associated
      with a self-directed "open option" arrangement shall be assessed directly
      against the Total Account maintained on behalf of the Participant or
      beneficiary participating in such arrangement.

      All other costs and expenses incurred in administering the Plan shall be
      paid by the Company or an Employer, unless the Company authorizes the
      payment of such expenses from the Trust Fund.

11.4  Rights of Participants

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

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

11.5  Statement of Accounts

      As soon as practicable after the last day of March, June, September and
      December, or such other time or times as the Administrator shall
      designate, the Company shall cause to be sent to each current or former
      Participant a written statement of his account.

                                     - 48 -
<PAGE>
11.6  Designation of Beneficiary

      (a)   Each Participant shall file with the Administrator, on such form as
            may be provided by the Administrator, a written designation of a
            beneficiary or beneficiaries who shall receive payment of the
            Participant's interest under the Plan in the event of his death. If
            the Participant is married, the Participant's beneficiary must be
            his spouse (in accordance with Code Section 401(a)(11)(B)(iii))
            unless Spousal Consent requirements are satisfied. In the event the
            Participant shall die and there is no properly designated
            beneficiary then living, the interest of the Participant under the
            Plan shall be paid in a lump sum to his surviving spouse, or, if
            there is no surviving spouse, to his estate or other successor, all
            as the Administrator may determine.

      (b)   A beneficiary entitled to a payment of all or a portion of a
            Participant's Total Account due to the death of the Participant may
            disclaim his interest therein subject to the following requirements.
            To be eligible to disclaim, a beneficiary must be a natural person,
            must not have received a distribution of all or any portion of said
            Total Account at the time such disclaimer is executed and delivered,
            and must have attained at least age twenty-one (21) years as of the
            date of the Participant's death. Any disclaimer must be in writing
            and must be executed personally by the beneficiary before a notary
            public. A disclaimer shall state that the beneficiary's entire
            interest is disclaimed or shall specify what portion thereof is
            disclaimed. To be effective, an original executed copy of the
            disclaimer must be both executed and actually delivered to the
            Administrator after the date of the Participant's death but not
            later than one hundred eighty (180) days after the date of the
            Participant's death. A disclaimer shall be irrevocable when
            delivered to the Administrator. A disclaimer shall be considered to
            be delivered to the Administrator only when actually received by the
            Administrator. The Administrator shall be the sole judge of the
            content, interpretation and validity of a purported disclaimer. Upon
            the filing of a valid disclaimer, the beneficiary shall be
            considered not to have survived the Participant as to the interest
            disclaimed. A disclaimer by a beneficiary shall not be considered to
            be a transfer of an interest or an assignment or alienation of
            benefits in violation of Section 11.1 hereof. No other form of
            attempted disclaimer shall be recognized by the Administrator.

11.7  Payment to Incompetents

      If any person entitled to receive any benefits hereunder is a minor, or is
      in the judgment of the Administrator, legally, physically, or mentally
      incapable of personally receiving and receipting for any distribution, the
      Administrator may instruct the Trustee to make distribution to such other
      person, persons or institutions who, in the judgment of the Administrator,
      are then maintaining or have custody of such distributee. As a condition
      to the issuance of such instruction for the distribution to such other
      person or institution, the Administrator may require such person or
      institution to exhibit or to secure an order, decree or judgment of a
      court of competent jurisdiction with respect to the incapacity of the
      person who would otherwise be entitled to receive the benefits.

11.8  Authority to Determine Payee

                                     - 49 -
<PAGE>
      The determination of the Administrator as to the identity of the proper
      payee of any benefit under the Plan and the amount of such benefit
      properly payable shall be conclusive, and payment in accordance with such
      determination shall constitute a complete discharge of all obligations on
      account of such benefit.

11.9  Severability

      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, periods of
      service and Compensation unless shown beyond a reasonable doubt to be
      incorrect.

11.11 Limitation on Contributions

      (a)   In no event shall the total annual additions on behalf of a
            Participant under this Plan and under any other defined contribution
            plan or plans maintained by the Employer with respect to any
            Limitation Year exceed the lesser of $30,000 (or such dollar figure,
            as increased in accordance with Section 415(d) of the Code for years
            up to and including the given Limitation Year) or 25% of the Test
            Compensation, paid to the Participant by an Employer within such
            Limitation Year. All amounts contributed to any defined contribution
            plan maintained by an Employer or an Affiliate (taking into account
            Section 415(h) of the Code) other than any rollover contribution and
            any salary reduction contribution to a simplified employee pension
            shall be aggregated with contributions made by an Employer under
            this Plan in computing any Employee's total annual additions
            limitation. For purposes hereof, the Limitation Year shall be the
            calendar year.

            For purposes of this section, "total annual additions" for any
            Limitation Year shall mean the sum of the following:

            (i)   Employer contributions under this Plan and under any other
                  defined contribution plan maintained by an Employer or
                  Affiliate;

            (ii)  Reallocated forfeitures under any defined contribution plan
                  maintained by an Employer or Affiliate;

            (iii) After-tax contributions under any other defined contribution
                  plan maintained by an Employer or Affiliate; and

            (iv)  Amounts allocated to an individual medical account, as defined
                  in Section 415(1)(2) of the Code, as part of a pension or
                  annuity plan and amounts

                                     - 50 -
<PAGE>
            derived from contributions paid or accrued which are attributable to
            post-retirement medical benefits described in Section 419A(d) of the
            Code, under a welfare benefit fund (as defined in Section 419(e) of
            the Code) maintained by an Employer or Affiliate.

            Loan repayments under Section 14.2 shall not be recognized as annual
            additions for purposes of this section.

      (b)   In the event that a Participant's total annual additions for any
            Limitation Year exceed the limitations of Section 11.11(a) because
            of a reasonable error in estimating the Participant's Compensation,
            a reasonable error in determining the amount of Tax Deferred
            Contributions that a Participant may make within the limitations of
            paragraph (a) above or due to such other facts and circumstances as
            the Commissioner of Internal Revenue finds justifiable, his total
            annual additions shall be reduced in the following order until such
            limitations are met:

            (i)   any after-tax employee contributions made in the Limitation
                  Year by the Participant under any other plan maintained by an
                  Employer or Affiliate shall be returned to the Participant in
                  accordance with the provisions of such plan to the extent
                  necessary to meet the above limitations;

            (ii)  If further corrective adjustment is necessary, Tax Deferred
                  Contributions made on the Participant's behalf in the
                  Limitation Year that are in excess of five percent (5%) of the
                  Participant's Compensation (six percent (6%) for Limitation
                  Years beginning before January 1, 2001) shall be distributed
                  to the Participant;

            (iii) If further corrective adjustment is necessary with respect to
                  a Limitation Year beginning on or after January 1, 2001, the
                  Tax Deferred Contributions made on the Participant's behalf in
                  the Limitation Year that are not in excess of five percent
                  (5%) of the Participant's Compensation and the Safe Harbor
                  Matching Contributions made on the Participant's behalf in the
                  Limitation Year shall be reduced proportionately to the extent
                  necessary to meet the above limitations.

            (iv)  If further corrective adjustment is necessary with respect to
                  a Limitation Year beginning before January 1, 2001, the Tax
                  Deferred Contributions made on the Participant's behalf in the
                  Limitation Year that are not in excess of six percent (6%) of
                  the Participant's Compensation and the Employer Matching
                  Contributions made on the Participant's behalf in the
                  Limitation Year shall be reduced proportionately to the extent
                  necessary to meet the above limitations.

            Tax Deferred Contributions so reduced shall be distributed to the
            Participant. Employer Matching Contributions and Safe Harbor
            Matching Contributions so reduced shall be held unallocated in a
            suspense account and shall be applied to reduce the Employer
            Matching Contribution or Safe Harbor Matching Contribution with
            respect to all Participants for the subsequent Limitation Year. Any
            distribution under this paragraph

                                     - 51 -
<PAGE>
            which includes Tax Deferred Contributions shall also include gains
            on such Tax Deferred Contributions.

            The Administrator may change the order of the reductions listed
            above in any manner which, in the judgment of the Administrator, is
            in the Participant's best interest.

      (c)   If a Participant is also a participant in a defined benefit plan
            maintained by an Employer, the sum of the defined benefit plan
            fraction and the defined contribution plan fraction for any
            Limitation Year beginning after December 31, 1982 and before January
            1, 2000 shall not exceed 1.0. The defined benefit plan fraction for
            any Limitation Year is a fraction, the numerator of which is the
            projected annual benefit of the Participant under such Plan
            (determined as of the close of the year), and the denominator of
            which is the lesser of 1.25 times the dollar limit in Section
            415(b)(1)(A) of the Code or 1.4 times 100% of the Participant's
            average Test Compensation over that period of consecutive calendar
            years (not more than three) during which his Test Compensation was
            the highest. The defined contribution plan fraction for any
            Limitation Year is a fraction the numerator of which is the sum of
            the annual additions on behalf of the Participant under this Plan
            and any other defined contribution plan or plans maintained by an
            Employer as of the close of the year and the denominator of which is
            the sum of 1.25 times the maximum dollar limit or 1.4 times the
            maximum percentage limit, whichever is smaller on a year-by-year
            basis, which could have been made under Section 415(c) of the Code
            for such year and for each prior year of service with the Employer,
            subject to any transition adjustments allowed by law and adopted by
            the Administrator. Any adjustment necessary to comply with the
            limitations of this Section 11.11(c) shall be made in the
            Participant's benefit payable under the defined benefit plan. The
            provisions of this paragraph (c) shall not apply with respect to
            Limitation Years beginning on and after January 1, 2000.

      (d)   The sole purpose of this Section is to comply with Sections 415(c)
            and 415(e) of the Code and the terms of this Section shall be
            interpreted, applied, and if and to the extent necessary, shall be
            deemed modified so as to satisfy solely the minimum requirements of
            Sections 415(c) and 415(e) of the Code and the regulations
            promulgated with respect thereto.

11.12 IRC 414(u) Compliance Provision

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

                                     - 52 -
<PAGE>
                                 ARTICLE TWELVE

                  AMENDMENT, TERMINATION OR MERGER OF THE PLAN

12.1  Right to Amend

      The Company reserves the right at any time or times to modify or amend the
      Plan by resolution of the Board setting forth such modification or
      amendment; provided, however, that no such modification or amendment shall
      be made which would:

      (a)   increase the duties or liabilities of the Trustee without its
            written consent; or

      (b)   divest a Participant of any portion of his Total Account hereunder
            that has accrued to him prior to the effective date of such
            amendment; or

      (c)   cause or permit any portion of the Trust Fund to be converted to or
            become the property of the Company; or

      (d)   cause any portion of the Trust Fund to be used for purposes other
            than the exclusive benefit of the Participants or their
            beneficiaries;

      unless such modification or amendment is necessary or appropriate to
      enable the Plan or Trust Fund to qualify under Section 401 of the Code, as
      amended from time to time, or to retain for the Plan or Trust Fund such
      qualified status.

12.2  Right to Terminate

      (a)   Although it is the expectation of the Company that it will continue
            the Plan as a permanent retirement program for the benefit of the
            Employees eligible hereunder, the Company reserves the right at any
            time, by action of its Board, at its sole discretion, to terminate
            the Plan in whole or in part. There shall be no liability or
            obligation on the part of an Employer to make any further
            contributions to the Trust Fund in the event of the termination of
            the Plan.

      (b)   Notwithstanding anything to the contrary contained herein, Trustee's
            fees and other expenses incident to the operation and management of
            the Plan incurred after the termination of the Plan may, at the
            discretion of the Company, be paid from assets of the Trust Fund
            that are not part of any Participant's Total Account.

      (c)   In the event of the termination of the Plan in whole or in part or
            in the event of the complete discontinuance of Employer
            contributions under the Plan, each affected Participant's interest
            in the Trust Fund shall become 100% vested and shall be
            nonforfeitable.

                                     - 53 -
<PAGE>
12.3  Merger, Transfer of Assets or Liabilities

      The Company may merge or consolidate the Plan with, transfer assets and
      liabilities of the Plan to, or receive a transfer of assets and
      liabilities from, any other plan without the consent of any other Employer
      or other person, if such transfer is effected in accordance with
      applicable law and if such other plan meets the requirements of Code
      Sections 401(a) and 501(a), permits such transfer or the receipt of such
      transfer and, with respect to liabilities to be transferred from this Plan
      to such other plan, satisfies the requirements of Code Sections 411(d)(6).
      This Plan may not be merged or consolidated with any other plan, nor may
      any assets or liabilities of this Plan be transferred to any other plan,
      unless the terms of the merger, consolidation or transfer are such that
      each Participant in the Plan would, if the Plan were terminated
      immediately after such merger, consolidation or transfer, receive a
      benefit equal to or greater than the benefit he would have been entitled
      to receive if this Plan had terminated immediately prior to the merger,
      consolidation or transfer.

                                     - 54 -
<PAGE>
                                ARTICLE THIRTEEN

                              TOP HEAVY PROVISIONS

13.1  Top Heavy Provisions

      (a)   The Plan shall be deemed to be a top heavy plan for a Plan Year if,
            as of a Determination Date, the aggregate value of the Total
            Accounts of Key Employee Participants exceeds 60% of the aggregate
            value of the Total Accounts of all Participants (excluding, for such
            determination, "unrelated" rollovers), or if the Plan is part of a
            required Aggregation Group which is top heavy. Such value shall be
            determined by using the single accrual method which is used for all
            plans of the Employers (including entities required to be aggregated
            with the Employer pursuant to Sections 414(b), (c), (m) and (o) of
            the Code) and by taking into account any distributions made during
            the five Plan Years ending on the Determination Date. If a
            Participant was not a Key Employee during the five Plan Years ending
            on the Determination Date, but such individual was a Key Employee
            during any previous Plan Year, the value of his Total Account shall
            not be taken into account. Further, if any Employee has not
            performed services for an Employer at any time during the five-year
            period ending on the Determination Date, the value of such
            Employee's Total Account shall be disregarded. In no event shall the
            Plan be considered top heavy if it is part of a required or
            permissive Aggregation Group which is not top heavy.

      (b)   For purposes of this Section 13.1, the following terms shall have
            the meaning indicated:

            (i)   Key Employee means any Employee who at any time during the
                  Plan Year or any of the four preceding Plan Years is:

                  (A)   an officer of an Employer or an Affiliate. No more than
                        50 Employees (or, if lesser, the greater of three
                        Employees or 10 percent of the Employees) shall be
                        treated as officers. No Employee whose annual Test
                        Compensation is less than 50% of the amount specified in
                        Section 415(b)(1)(A) of the Code, adjusted for any
                        automatic increases permitted by law or regulation,
                        shall be treated as an officer;

                  (B)   one of the 10 Employees owning or considered as owning
                        (within the meaning of Section 318 of the Code) the
                        largest interest in an Employer, if such Employee's
                        annual Test Compensation is greater than the amount
                        specified in Section 415(c)(1)(A) of the Code, adjusted
                        for any automatic increases permitted by law or
                        regulation;

                  (C)   a more than five percent owner of an Employer; or

                  (D)   a more than one percent owner of an Employer having
                        annual Test Compensation from an Employer of more than
                        $150,000.

                                     - 55 -
<PAGE>
                  For the purpose of determining top 10 owners, five percent
                  owners and one percent owners, neither the aggregation rules
                  nor the rules of Sections 414(b), (c) and (m) shall apply.

            (ii)  Non-Key Employee means an Employee who is not a Key Employee.

            (iii) Determination Date means the last day of the preceding Plan
                  Year.

            (iv)  Plan Year means any calendar year commencing on or after
                  December 31, 1988.

            (v)   A required Aggregation Group is each plan of an Employer which
                  provides benefits to a Key Employee and each other plan of an
                  Employer, if any, which is included with this Plan for
                  purposes of meeting the requirements of Sections 401(a)(4) or
                  410 of the Code. A permissive Aggregation Group is this Plan
                  and each other plan of an Employer which in total would
                  continue to meet the requirements of Section 401(a)(4) and 410
                  of the Code with such other plan being taken into account. For
                  purposes hereof, an Aggregation Group shall include a
                  terminated plan if such Plan 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 if terminated,
                  be part of a required Aggregation Group for such Plan Year. An
                  Aggregation Group will be deemed to be a "top-heavy group" if
                  the sum of (a) the present value of the cumulative accrued
                  benefits for Key Employees under all defined benefit plans
                  included in such group, and (b) the aggregate of the accounts
                  of Key employees under all defined contribution plans included
                  in such group, exceeds 60% of a similar sum determined for all
                  Employees.

            (vi)  "Employee" and "Key Employee" shall also include beneficiaries
                  of such an Employee. Inherited benefits shall retain the
                  character of the benefits of the Participant.

13.2  Minimum Contribution

      Notwithstanding the provisions of Article Three, for any Plan Year during
      which the Plan is deemed to be top heavy, the Employers shall make a
      minimum contribution on behalf of each Non-Key Employee Participant which
      shall be no less than three percent (3%) of the Test Compensation of the
      Non-Key Employee Participant; provided, however, that if the Employer
      contribution allocated on behalf of the Key Employee Participant for whom
      such allocation represents the highest percentage of Test Compensation for
      the given Plan Year of all Key Employee Participants is a lesser
      percentage, the minimum contribution shall be reduced to such lesser
      percentage. For purposes of this Section 13.2 all defined contribution
      plans that are included in an Aggregation Group shall be considered as one
      plan. In the case of Employees covered under both this Plan and any
      defined benefit plan maintained by an Employer or Affiliate, the defined
      benefit plan will provide the top heavy minimum benefit and will be offset
      by the benefit provided under this Plan. Non-Key Covered Employees who are
      eligible to participate in the Plan or who have become participants in the
      Plan but who subsequently fail to complete 1,000 Hours of Service by the
      end of the applicable Plan Year (and who have not

                                     - 56 -
<PAGE>
      separated from service by the end of such Plan Year) shall receive an
      allocation of a minimum contribution.

      Except to the extent used for the purpose of determining the largest
      percentage of Test Compensation contributed by an Employer for a given
      year on behalf of a Key Employee Participant, Tax Deferred Contributions
      described in Section 3.1 and Employer Matching Contributions described in
      Section 3.6 shall not be considered Employer contributions under this
      Section 13.2.

13.3  Plan Year in Which Plan is Top Heavy

      In any Plan Year in which the Plan is top heavy, but not super top heavy,
      the factor of 1.25 in Section 11.11(c) shall be changed to 1.00 wherever
      it appears therein; provided, however, that such change shall not have the
      effect of reducing any benefit accrued under a defined benefit plan prior
      to the first day of the Plan Year in which this provision becomes
      applicable and, provided further, that this Section 13.3 shall not apply
      with respect to Limitation Years beginning on and after January 1, 2000.

13.4  Plan Year in Which Plan Ceases to be Top Heavy

      In any Plan Year that the Plan ceases to be top heavy, the above
      provisions shall no longer apply.

13.5  Limited Application of this Article

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

                                     - 57 -
<PAGE>
                                ARTICLE FOURTEEN

                                      LOANS

14.1  Availability of Loans

      Subject to the provisions of this Article Fourteen, Participants actively
      employed with the Company or an Affiliate (herein referred to in this
      Article as "Eligible Applicants") may apply for a loan from the Plan. All
      such applications for a loan made by an Eligible Applicant shall be
      approved or denied by the Administrator in accordance with a uniform,
      non-discriminatory policy and such action by the Administrator shall be
      final. All loans approved shall be effective as of the "loan effective
      date" (as hereinafter defined) provided the loan application was submitted
      to the Administrator within a reasonable time (as determined by the
      Administrator) prior to the loan effective date. All loans shall be made
      only in consideration of adequate security. For purposes hereof the term
      "loan effective date" shall mean the date, mutually agreed upon by the
      Participant and the Administrator, on which the loan shall be considered
      effective.

      The Administrator may establish rules governing the granting of loans,
      provided (i) that such rules are not inconsistent with the provisions of
      this Article Fourteen, (ii) that any such rules adopted by the
      Administrator shall be described in the documents supporting the loan
      transaction and (iii) that loans are made available to all Eligible
      Applicants on a reasonably equivalent basis and are not made available to
      Eligible Applicants who are Highly Compensated in an amount greater than
      the amount made available to other Eligible Applicants.

14.2  Terms and Conditions of Participant Loans

      (a)   Amount of Loan. At the time the loan is made, the principal amount
            of the loan, when added to all other outstanding loans of the
            Participant from the Plan and any other qualified plan of an
            Employer and Affiliates, shall not exceed the lesser of:

            (i)   $50,000, as reduced by the excess, if any, of the Eligible
                  Applicant's highest outstanding loan balance from the Plan
                  during the one-year period ending on the day before the date
                  such new loan is secured over the outstanding balance of loans
                  from the Plan on the date such loan is made; or

            (ii)  one-half of the current value of the Total Account maintained
                  on behalf of the Eligible Applicant under the Plan.

            The current value of a Total Account shall be determined as of the
            Valuation Date on which the Eligible Applicant initiates the loan
            process by providing Notice to the Administrator or its designee. No
            loan shall be made in an amount less than $1,000. Any loan amount
            shall be made in accordance with Section 14.3.

      (b)   Application for Loan. The Eligible Applicant must give the
            Administrator adequate written notice, as determined by the
            Administrator, of the requested amount and desired

                                     - 58 -
<PAGE>
            time for receiving a loan. In addition, if an Eligible Applicant is
            married at the time of application, the Administrator shall require
            Spousal Consent prior to approving the loan application.

      (c)   Length of Loan. The Eligible Applicant and the Administrator shall
            arrange for the repayment of a Plan loan. The period of repayment
            shall not exceed five years from the date the loan is made. All
            repayment schedules (whether by payroll withholding or otherwise)
            shall commence as of the next administratively feasible pay period
            following the disbursement of the loan and shall provide for
            substantially level amortization of principal and interest. An
            Eligible Applicant on a leave of absence and an Eligible Applicant
            who terminates employment with the Company and Affiliates must make
            principal and interest payments in the amount and on such dates as
            otherwise due. In the event such payments are not made the maturity
            of the loan shall be accelerated and the outstanding principal
            amount of the loan, together with all accrued interest, shall be
            deemed immediately due and distributable at such date or dates as
            the Administrator deems reasonable and as may be specified by
            applicable law and regulation. Except as otherwise permitted in
            Income Tax Regulations, in no event shall the date of deemed
            distribution extend beyond the end of the calendar quarter next
            following the calendar quarter in which the payment was not made.

      (d)   Prepayment. The Eligible Applicant shall be permitted to repay the
            loan in total as of any date prior to maturity without penalty.

      (e)   Note. The loan shall be evidenced by a promissory note executed by
            the Eligible Applicant and delivered to the Administrator. The
            Eligible Applicant will agree to execute any other documents (e.g.,
            payroll withholding forms) that may be necessary or appropriate to
            effect the loan.

      (f)   Interest. All loans shall be considered investments of the Trust and
            interest shall be charged on the loan at the rate set by the
            Administrator as of the loan effective date. Such rate shall be
            based on the prime lending rate charged by a financial institution
            selected by the Administrator, plus 100 basis points.

      (g)   Security. Subject to the extent required under regulations
            promulgated by the Secretary of Labor or his delegate, a Plan loan
            shall be secured by an assignment of the Eligible Applicant's right,
            title and interest in that portion of his Total Account under the
            Plan as shall adequately secure the loan, provided such security
            shall not exceed one-half of the current value of the Eligible
            Applicant's vested Total Account. The Administrator may also require
            such additional collateral as may be deemed necessary to adequately
            secure repayment of the loan.

      (h)   Default. The Administrator shall take reasonable steps to secure
            repayment of any loan granted hereunder in accordance with its
            terms; however, when the Administrator declares a loan to an
            Eligible Applicant to be in default, the outstanding balance of the
            loan, together with unpaid, accrued interest, shall be deemed a lien
            against the Total Account maintained on behalf of the Eligible
            Applicant and no contributions or distributions of any

                                     - 59 -
<PAGE>
            kind (other than distributions due to loan default) may thereafter
            be made by or on behalf of the Eligible Applicant to or from this
            Plan during the continuance of the default. The Administrator shall
            take such reasonable steps as it shall deem necessary or appropriate
            to eliminate the default before causing an offset distribution to be
            made with respect to the Eligible Applicant for the purpose of fully
            amortizing the loan outstanding; however, should the loan remain in
            default after these administrative procedures are taken, the
            Administrator will consider the entire amount of the loan
            outstanding (including all accrued interest to date) as a
            distribution as of the first date, on or following the
            administrative procedures, on which the Eligible Applicant has a
            distributable event and will process the Total Account of the
            Eligible Applicant accordingly.

      (j)   Other Terms and Conditions. The Administrator shall fix such other
            terms and conditions of the loan as it deems necessary to comply
            with legal requirements, to maintain the qualification of the Plan
            and Trust Fund under Code Section 401(a), to exempt the loan
            transaction from the prohibited transaction rules of under Code
            Section 4975, or to prevent the treatment of the loan for tax
            purposes as a distribution to the Eligible Participant. The
            Administrator may fix other terms and conditions of the loan, not
            inconsistent with the provisions of this Article Fourteen.

      (k)   No Prohibited Transactions. No loan shall be made unless such loan
            is exempt from the tax imposed on prohibited transactions by Code
            Section 4975 or would be exempt from such tax (if the Eligible
            Participant were a disqualified person as defined in Section
            4975(e)(2) of the Code) by reason of Code Section 4975(d)(1).

10.3  Loan Accounts

      A loan made by the Plan to a Eligible Applicant in accordance with
      Sections 14.1 and 14.2 shall be from the Total Account maintained on
      behalf of such Eligible Applicant and from the investment funds in which
      such Total Account is invested in such order of priority as the
      Administrator, pursuant to a uniform and nondiscriminatory policy, shall
      direct. Payments of principal and interest on loans shall be paid over to
      the Trustee as soon as possible after each payroll deduction or other
      repayment and shall be credited to the Total Account of the Eligible
      Applicant as of the date the repayments are received by the Trustee. Loan
      repayments will be credited in such manner as determined by the
      Administrator to those accounts and those investment options which were
      accessed in connection with the granting of the loan to the Eligible
      Applicant. The Administrator shall have the authority to establish other
      reasonable rules, not inconsistent with the provisions of the Plan,
      governing the establishment and maintenance of loan accounts.

                                     - 60 -
<PAGE>

Executed at Erie, Pennsylvania, this 10th day of December, 2000.

                                           ERIE INDEMNITY COMPANY

                                           By: /s/ Stephen A. Milne
                                              -------------------------------
                                               Title: President and CEO

                                     - 61 -

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