Erie Indemnity Company (Form: 8-K)

This POST-EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into on the 27th day of December 2007, by and between ERIE INDEMNITY COMPANY, a Pennsylvania corporation with its principal place of business in Erie, Pennsylvania (the “Company”), and JEFFREY A. LUDROF, residing in Fairview, Pennsylvania (the “Executive”).

WHEREAS, the Company and the Executive are parties to an Amended and Restated Employment Agreement made effective as of December 12, 2005 (the “Employment Agreement”); and

WHEREAS, on August 1, 2007, the Executive tendered his resignation, which was effective as of August 8, 2007, as an officer and director of the Company and each of its subsidiaries and related companies, and as a trustee of any employee benefit trusts or other trusts maintained or sponsored by the Company and each of its subsidiaries and related companies, and the Company and each of its subsidiaries and related companies accepted such resignations effective as of August 8, 2007; and

WHEREAS, the Company and the Executive entered into a Letter of Understanding effective as of August 1, 2007 (the “Letter of Understanding”), which set forth the parties’ understanding as to the fundamental terms to be memorialized in this Agreement; and

WHEREAS, the Company and the Executive desire to memorialize the terms of the Executive’s termination of employment in this Agreement and completely resolve all matters arising out of the Executive’s employment with the Company or the termination of that employment, as well as all matters arising out of or related to the Employment Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

1. Effective Date. This Agreement shall not become effective or enforceable until the seven (7) day revocation period described in Section 5(f) of this Agreement has expired (the “Effective Date”) and none of the payments or benefits described in this Agreement shall be provided to the Executive until after the revocation period has expired without the Executive having revoked this Agreement.

2. Termination of the Employment Agreement. The Executive and the Company hereby mutually terminate, revoke and rescind the Employment Agreement and all rights and obligations either party has or may be entitled to under the Employment Agreement, in accordance with Section 5(h) of the Employment Agreement. The Executive and the Company agree further that the Executive’s employment with the Company was terminated effective as of August 8, 2007.

a. In consideration of the execution and performance of this Agreement by the Executive, and subject to the remaining provisions of this Section 3, the Executive will receive from the Company the following severance payments and benefits, which include sums of money and benefits to which the Executive would not otherwise be entitled if the Company and the Executive did not mutually agree to the termination of his Employment Agreement:

i. The Company shall pay to the Executive, in a lump sum cash payment on December 31, 2007, the sum of Four Million Five Hundred Forty-Three Thousand Nine Hundred Dollars ($4,543,900).

ii. The Company shall pay to the Executive, in a lump sum cash payment on April 1, 2008, the sum of Three Million Forty Thousand Nine Hundred Dollars ($3,040,900) in substitution for and in settlement of the Executive’s Accrued SERP Benefit (as such term is defined in the Employment Agreement) and any other benefit under or related to the Supplemental Executive Retirement Plan for Certain Members of the Erie Insurance Group Retirement Plan for Employees (“SERP”) in which Executive may have had an expectancy.

iii. On April 1, 2008, or within seven (7) days after that date, the Company shall pay to the appropriate taxing authorities on the Executive’s behalf a Tax Gross-up with respect to the payment described in paragraph (ii). As used throughout this Agreement, the “Tax Gross-up” with respect to a particular payment or benefit means the taxes identified below that are payable by the Executive by reason of such payment or benefit, computed by applying the highest applicable marginal rate with respect to each such tax:

Federal income tax applicable to the Executive for the year of payment under section 1 of the Code;

As used in this Agreement, the “appropriate taxing authorities” means the United States Treasury, the Commonwealth of Pennsylvania Department of Revenue and the City of Erie and/or Fairview Township, Pennsylvania, as applicable. Any Tax Gross-up payable under this Agreement shall be paid during the year in which the related payment or benefit is paid.

iv. The Company shall pay to the Executive, in a lump sum cash payment on or about January 15, 2008, an amount equal to the Executive’s account balance under the Deferred Compensation Plan of Erie Indemnity Company (the “Deferred Compensation Plan”) as of December 31, 2004, plus earnings on that portion of the Executive’s account through the date of payment, computed in accordance with the terms of the Deferred Compensation Plan.

The Company shall pay to the Executive, in a lump sum cash payment on April 1, 2008, an amount equal to the Executive’s account under the Deferred Compensation Plan attributable to accruals on and after January 1, 2005, and earnings on that portion of the Executive’s account through the date of payment, computed in accordance with the terms of the Deferred Compensation Plan.

v. The Company shall issue 7,556 shares of the Company’s Class A Common Stock (less applicable deductions) to the Executive in January 2008, and 3,593 shares of the Company’s Class A Common Stock (less applicable deductions) to the Executive in January 2009, which shares represent restricted shares awarded to Executive under the Company’s 1997 Long Term Incentive Plan.

vi. With respect to the Company’s 2004 Long Term Incentive Plan (“2004 LTIP”), (A) the performance period with respect to awards made to the Executive for the 2005-2007, 2006-2008, and 2007-2009 performance periods shall all be treated as ending on December 31, 2007; (B) the Company shall measure Company performance for each such performance period against the applicable performance standards and goals and shall determine the number of the restricted performance shares earned by the Executive for the performance period, based on such Company performance (the “earned award”); and (C) the Company shall issue to the Executive shares of the Company’s Class A Common Stock representing: (1) for the 2005-2007 performance period, 100 percent of the earned award, (2) for the 2006-2008 performance period, 2/3 of the earned award and (3) for the 2007-2009 performance period, 7/36 of the earned award (less, in each case, applicable deductions). The Company shall issue such shares in 2008 at the time awards for the 2005-2007 performance period are paid to other 2004 LTIP participants. The Company’s determination of the number of shares to be issued shall be final and binding on all interested parties.

vii. For each of the calendar years 2008, 2009 and 2010, the Company shall reimburse the Executive for the annual premiums due and paid during such years (i.e., in 2008 for the 2008-2009 policy year, in 2009 for the 2009-2010 policy year, and in 2010 for the 2010 -2011 policy year) on two Northwestern Mutual Life Insurance Company policies on the Executive’s life (Nos. 15-145-189 and 16-176-764), to the extent not in excess of Twenty-Four Thousand Two Hundred Thirty-Eight Dollars ($24,238) in the aggregate for each such year, within thirty (30) days after receipt of reasonable substantiating documentation from the Executive, but in any event not later than the end of the calendar year following the year in which such expense was incurred. In addition, in each such year the Company shall pay to the appropriate taxing authorities on the Executive’s behalf an amount equal to the Tax Gross-up (as defined in clause (iii)) with respect to such premium payments. If the Executive should die or cancel or surrender such policies during the three (3) year period, no further payments by the Company shall be required, and if the Executive cancels or surrenders one such policy during the three (3) year period, no further payments by the Company shall be required with respect to such policy. The Company agrees to use its best efforts to have any restrictive endorsements on these policies removed not later than December 31, 2008.

viii. The Company shall continue or cause to be continued the coverage of the Executive (and the Executive’s previously covered dependents, if any) under the following employee benefit plans of the Company, upon substantially the same terms and conditions (including the required employee contribution, if any) as apply to comparably situated executives, for a period of three (3) years beginning on August 8, 2007:

With respect to all health plan coverages that are not provided under an insured plan, the Executive shall duly elect and pay for COBRA continuation coverage. The Company’s obligation with respect to all health plan coverages that are not provided under an insured plan is conditioned on the Executive’s duly electing, and then paying for, COBRA coverage throughout the available COBRA continuation coverage period.

If the continuation of any coverage identified in clauses (I) through (V) above is not reasonably available pursuant to the applicable insurance policy or plan and, in the case of any health plan coverage not provided under an insured plan, after the end of the available COBRA continuation period:

(A)

The parties will cooperate and use their best efforts to obtain an individual policy or policies that provides the Executive (and his previously covered dependents, if any) substantially equivalent coverage, and the Company will pay, for a period of three (3) years beginning on August 8, 2007, the premiums on any such individual policy, to the extent in excess of the required employee contribution paid by the Executive prior to August 8, 2007.

(B)

If the continuation of any such coverage is not available pursuant to the applicable insurance policy or plan, and an individual policy cannot be obtained despite the parties’ cooperative best efforts:

(I)

With respect to group health plan coverage, the Company will reimburse the Executive for any medical expense he (and his previously covered dependents, if any) incur during the period after COBRA coverage has terminated and before August 8, 2010, provided that such expense would have been reimbursed by the applicable Company plan. The Company shall pay such reimbursement promptly upon receipt of reasonable documentation thereof from the Executive, but in any event not later than the end of the calendar year following the year in which the expense was incurred.

(II)

With respect to any other such coverage, the Company shall, during the three (3) year period beginning on August 8, 2007, pay or reimburse the Executive (and his previously covered dependents, if any) the same amount that would have been paid by the applicable plan or policy. The Company shall make such payment upon receipt of reasonable substantiating documentation from the Executive, but in any event not later than the end of the calendar year following the year in which any reimbursable expense was incurred.

b. In the event of the Executive’s death before payment of the benefit described in Section 3(a)(i), the Company shall pay the benefit at the scheduled time to the Executive’s surviving spouse, as the primary beneficiary, with the contingent beneficiary being the Jeffrey A. Ludrof Revocable Trust dated January 21, 2000.

In the event of the Executive’s death before payment of a benefit described in any of the paragraphs (ii) through (vi) of Section 3(a), the Company shall pay the benefit at the scheduled time to the beneficiary or beneficiary designated by the Executive in accordance with the terms of the plan or arrangement to which the benefit relates; provided, however, that if the Executive has not designated a beneficiary in accordance with the terms of the applicable plan or arrangement, or if no designated beneficiary with respect to the plan or arrangement survives the Executive, the Company shall pay the benefit to the executor or administrator of the Executive’s estate.

c. All payments under this Section 3, whether or not in cash, shall be subject to applicable deductions. For the purposes of this Agreement, “applicable deductions” shall include, but shall not be limited to, any federal, state, or local taxes determined by the Company to be required to be withheld from amounts paid to the Executive pursuant to this Agreement or otherwise due from the Company, and any other amounts that the Company may be legally required to deduct from his earnings.

d. Any date specified as a payment date under this Section 3 shall be construed as meaning any date on or about the specified date; provided, however, that the Company shall make payment as soon as practicable after the specified date without, to the extent possible, incurring any tax penalties on either the Executive or the Company.

e. Except as provided in this Agreement, the Executive agrees that he is not entitled to any other compensation (including, but not limited to, salary or bonuses), perquisites, or benefits of any kind or description from the Company, or from or under any employee benefit plan or fringe benefit plan sponsored by the Company or under the Employment Agreement, other than as described above and other than the Erie Insurance Group Retirement Plan for Employees and the Erie Insurance Group Employee Savings Plan. The consideration paid by the Company to the Executive pursuant to this Agreement shall be in compromise, settlement and full satisfaction of any and all Claims, as defined in Section 4 of this Agreement, that the Executive has, or may have, against the Company or other Releasees, as defined in Section 4 of this Agreement, arising out of the Executive’s employment with the Company or its affiliates, the termination of such employment and any and all matters related to the Executive’s employment and termination, or to his Employment Agreement.

4. Executive’s Waiver and Release. The Executive, for himself, his heirs, successors and assigns and in consideration of the payments to be made by or on behalf of the Company pursuant to Section 3 of this Agreement, does hereby forever discharge and release the Company, and its corporate parents, subsidiaries, affiliated companies, companies with common management, ownership or control, successors, assigns, insurers and reinsurers, attorneys, and franchisees, and all of their officers, directors, shareholders, employees, agents and representatives, in their official and individual capacities (collectively referred to as “Releasees”), from any and all claims, demands, causes of action, damages, charges, complaints, grievances, expenses, compensation and remedies which the Executive now has or may in the future have on account of or arising out of any matter or thing which has happened, developed or occurred before the date of this Agreement (collectively “Claims”), including, but not limited to, all Claims arising from the Executive’s employment with the Company or any of its affiliated companies, the termination of such employment, any and all relationships or dealings between the Executive and the Company or any of the other Releasees, the termination of any such relationships and dealings, and any and all other Claims the Executive may have against the Company or any of the other Releasees, and the Executive hereby waives any and all such Claims including, all charges or complaints that were or could have been filed with any other court, tribunal or governmental agency, and any and all Claims not previously alleged, including, but not limited to, any Claims under the following: (a) Title VII of the Civil Rights Act of 1964, as amended; (b) the Age Discrimination in Employment Act (ADEA), as amended; (c) the Federal Employee Retirement Income Security Act of 1974 (ERISA), as amended; (d) the Americans With Disabilities Act (ADA), as amended; (e) the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), as amended; (f) Section 806 of the Sarbanes-Oxley Act of 2002, as amended; (g) any and all statutes of similar nature or purpose under Pennsylvania law, or the law of any other state, including, but not limited to, the Pennsylvania Human Relations Act, as amended; and (h) any federal, state or local law, rule, regulation, constitution, executive order or guideline of any description, including, but not limited to, those laws described above, or any rule or principle of equity or common law, or any Claim of defamation, conversion, interference with a contract or business relationship, or any other intentional or unintentional tort, or any Claim of loss of consortium, or any Claim of harassment or retaliation, or breach of contract or implied contract, or breach of covenant of good faith and fair dealing, or any whistle-blower Claim. This release, discharge and waiver shall be hereinafter referred to as the “Release.”

The Executive specifically understands and agrees that the termination of his employment does not violate or disregard any oral or written promise or agreement, of any nature whatsoever, express or implied. If any contract or agreement of employment exists concerning the employment of the Executive by the Company or the terms and conditions of such employment or the termination of such employment, whether oral or written, express or implied, that contract or agreement (including the Employment Agreement) is hereby terminated and is null and void.

The Executive agrees that this Release may be enforced in federal, state or local court, and before any federal, state or local administrative agency or body.

This Release does not prohibit the Executive from filing an administrative charge of alleged employment discrimination, harassment or retaliation under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans With Disabilities Act or the Equal Pay Act of 1963; however, the Executive represents that he has not to date filed or cause to be filed any such administrative charge, and further agrees that he hereby waives any right to monetary or other recovery should any federal, state or local administrative agency pursue any Claim on his behalf and will immediately request in writing that the Claim or matter on his behalf be withdrawn. Thus by signing this Agreement, the Executive waives any right he had to obtain a recovery if an administrative agency pursues a Claim against the Company or any of the other Releasees based on any action taken by the Company or any of the other Releasees up to the date of this Agreement, and that he will have released the Company and the other Releasees of any and all Claims, and the continuing effect of any and all Claims of any nature up to the date of this Agreement. This Release does not affect any of the Executive’s vested rights under the Erie Insurance Group Retirement Plan for Employees and the Erie Insurance Group Employee Savings Plan, nor, with respect to any of the capacities in which the Executive served the Company or each of its subsidiaries and related companies, or as a trustee of any employee benefit trusts or other trusts maintained or sponsored by the Company or each of its subsidiaries and related companies, does it bar any claim the Executive may have for indemnity in relation to any acts or omissions of the Executive or a claim for coverage under any applicable insurances, or any claim relating to enforcement of this Agreement

a. Except as otherwise provided in Section 4 or this Section 5, the Executive agrees not to commence or continue any action or proceeding in any federal, state or local court, concerning any Claim waived or released in this Agreement.

b. The Executive represents that he has not filed or caused to be filed, and agrees that he will not file or cause to be filed, any lawsuit of any kind arising out of or relating to his employment with the Company, the terms and conditions of that employment, or the termination of his employment.

c. Nothing contained in this Agreement prohibits the Executive from seeking a determination by a court of competent jurisdiction that the Release is, in whole or in part, invalid under applicable law. To the extent of such determination, the Executive may assert Claims or other matters included in the Release, subject to final determination on appeal.

d. The Executive agrees that he has not sustained any disabling personal injury and/or occupational disease which has resulted in a loss of wage earning capacity during his employment with the Company, and that he has no personal injury and/or occupational disease which has been contributed to, or aggravated or accelerated in a significant manner by his employment with the Company.

e. The Executive represents and warrants that the Company has encouraged and advised the Executive in writing, prior to signing this Agreement, to consult with an attorney of the Executive’s choosing concerning all of the terms of this Agreement.

f. This Agreement may be revoked by the Executive within seven (7) days after the date this Agreement is signed by the Executive, by giving notice of revocation to James J. Tanous, the Executive Vice President, Secretary and General Counsel of the Company. This Agreement shall not become effective or enforceable until the revocation period has expired and the consideration provided in Section 3 of this Agreement shall not be made until after the revocation period has expired with no revocation.

g. The Executive represents and warrants that the Company has given the Executive a reasonable period of time, of at least twenty-one (21) days, for the Executive to consider all the terms of this Agreement and for the purpose of consulting with an attorney if the Executive so chooses. A copy of this Agreement was first given to the Executive on November 14, 2007. If this Agreement has been executed by the Executive prior to the end of the twenty-one (21) day period, the Executive represents that he has freely and willingly elected to do so.

h. This Agreement provides the Executive sums and benefits to which he is not otherwise entitled as an employee of the Company.

i. Nothing contained in this Agreement is intended to be an admission of any fault, wrongdoing, or liability on the part of any of the parties hereto, and nothing contained in this Agreement may be deemed, construed, or treated in any respect as such an admission. The Company specifically denies any fault, wrongdoing or liability toward the Executive. This Agreement was reached by the parties as a mutual compromise of their respective positions, in order to avoid the costs and inconvenience of litigation and for other reasons deemed good and sufficient by the respective parties.

6. Non-Disparagement. The Executive shall not disparage the Company or other Releasees, its products or services or its officers, directors or employees in any way orally or in writing, and the directors and executive officers of the Company shall likewise not disparage the Executive.

7. Covenants as to Confidential Information and Competitive Conduct. The Executive hereby acknowledges and agrees as follows: (a) this Section 7 is necessary for the protection of the legitimate business interests of the Company, (b) the restrictions contained in this Section 7 with regard to geographical scope, length of term and types of restricted activities are reasonable; (c) the Executive has received adequate and valuable consideration for entering into this Agreement, and (d) the Executive’s expertise and capabilities are such that his obligations hereunder and the enforcement hereof by injunction or otherwise will not adversely affect the Executive’s ability to earn a livelihood.

a. Confidentiality of Information and Nondisclosure. The Executive agrees that the Executive will not, directly or indirectly, without the express written approval of the Company, unless directed by applicable legal authority (including any court of competent jurisdiction, governmental agency having supervisory authority over the business of the Company or its subsidiaries, or any legislative or administrative body having supervisory authority over the business of the Company or its subsidiaries) having jurisdiction over the Executive, disclose to or use, or knowingly permit to be so disclosed or used, for the benefit of himself, any person, corporation or other entity other than the Company, (i) any non-public information concerning any financial matters, customer relationships, competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company, its subsidiaries or affiliated or related parties, (ii) any proprietary management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company, its subsidiaries or affiliated or related parties, or (iii) any other information related to the Company, its subsidiaries or affiliated or related parties, or which the Executive should reasonably believe will be damaging to the Company, its subsidiaries or affiliated or related parties, which has not been published and is not generally known outside of the Company. The Executive acknowledges that all of the foregoing constitutes confidential and proprietary information, which is the exclusive property of the Company.

b. Restrictive Covenant. For a period of eighteen (18) months (the “Restrictive Period”) beginning on August 9, 2007, the Executive shall not render, directly, or indirectly, services to any person, firm, corporation, association, or other entity which conducts the same or similar business as the Company or its subsidiaries at the date of the Executive’s termination of employment hereunder within the states in which the Company or its subsidiaries is or are then licensed and doing business at the date of the Executive’s termination of employment hereunder without the prior written consent of the Company’s Board of Directors, which may be withheld in its discretion. In the event the Executive violates any of the provisions contained in this Section 7 hereof, the Restrictive Period shall be increased by the period of time from the commencement by the Executive of any violation until such violation has been cured to the satisfaction of the Company. The Executive further agrees that at no time during the Restrictive Period will the Executive attempt to directly or indirectly solicit or hire employees of the Company or its subsidiaries or induce any of them to terminate their employment with the Company or its subsidiaries.

c. Company Remedies. The Executive acknowledges and agrees that any breach of this Section 7 will result in immediate and irreparable harm to the Company, and that the Company cannot be reasonably or adequately compensated by damages in an action at law. In the event of a breach by the Executive of the provisions of this Section 7, the Company shall be entitled, to the extent permitted by law, immediately to cease to pay or provide the Executive or the Executive’s dependents any compensation or benefit being, or to be, paid or provided to the Executive pursuant to this Agreement, and also to obtain immediate injunctive relief restraining the Executive from conduct in breach of the covenants contained in this Section 7. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach, including the recovery of damages from the Executive.

8. Breach of Agreement. The Executive agrees that if he violates any of the terms of this Agreement, in addition to any other remedy that the Company may have in law or in equity, the Executive, if the Company so elects, shall be liable to the Company for any and all sums of money paid to Executive and for the costs incurred by the Company in compliance with Section 3 of this Agreement and, from that date forward, if it so elects, the Company shall have no further obligation under Section 3 of this Agreement, except as may be required by law. The Company’s enforcement of its rights under this Section will not affect the validity and enforceability of the Release contained in this Agreement. If the Executive is required to bring any action to enforce rights or to collect moneys due under this Agreement, the Company shall pay to the Executive the fees and expenses incurred by the Executive in bringing and pursuing such action provided that the Executive is successful, in whole or in part, on the merits or otherwise (including by way of a settlement involving the payment of money by the Company to the Executive), in such action. The Company shall pay such fees and expenses in advance of the final disposition of such action. The Executive agrees to repay to the Company such advances if the Executive is not ultimately successful, in whole or in part, on the merits or otherwise, in such action. The Company shall make such payments within thirty (30) days after receipt of reasonable substantiating documentation from the Executive but in no event later than the end of the calendar year following the year in which such fees and expenses were incurred.

9. Company Property, Records, Files and Equipment. The Executive will return all Company property, records, files, or any other Company owned equipment in his possession within ten (10) days after the execution of this Agreement.

10. Confidentiality of Agreement. The Executive agrees that (except pursuant to judicial legal process or any legal action to enforce this Agreement), the Executive shall keep confidential the terms of this Agreement, and all performance hereunder, and shall not disclose this information henceforth to anyone other than the United States Internal Revenue Service; state or local tax authorities; or the Executive’s family, attorneys and tax advisors, who also shall be bound by this confidentiality obligation. The foregoing shall not prohibit or restrict such disclosure as is required by law or may be necessary for the prosecution of claims relating to the performance or enforcement of this Agreement or prohibit or restrict the Executive (or the Executive’s counsel) from responding to any inquiry about the agreements represented in this Agreement or the underlying facts and circumstances of those agreements by the Securities and Exchange Commission, the NASDAQ Stock Market or any other self-regulatory organization. Prior to responding to any such inquiry, the Executive agrees to provide the Company with as much notice as possible that he has been requested or compelled to make disclosures and use the Executive’s (or the Executive’s counsel) best efforts to ensure that if any disclosure occurs, it does so in a manner designed to maintain the confidentiality of this Agreement to the fullest extent possible.

11. Ongoing Cooperation. The Executive agrees to assist, advise and cooperate with the Company in the future if the Company so requests on issues that arose or were in any way developing during his employment with the Company. The Executive shall furnish such assistance, advice or cooperation to the Company as the Company shall reasonably request and as is within the Executive’s capability. Such assistance, advice and cooperation may include, but shall not be limited to the preparation for, or the conduct of, any litigation, investigation or proceeding involving matters or events which occurred during the Executive’s employment by the Company as to which the Executive’s knowledge or testimony may be important to the Company. In connection with the preparation for, or the conduct of such litigation, investigation or proceeding as described in the preceding sentence, the Executive shall promptly provide the Company with any records or other materials in his possession that the Company shall request in connection with the defense or prosecution of such litigation, investigation or proceeding. The Company shall pay or reimburse the Executive for his travel expenses reasonably incurred in the course of providing such cooperation. The Company shall make such payment or reimbursement within thirty (30) days of receipt of reasonable substantiating documentation from the Executive but in no event later than the end of the calendar year following the year in which such expenses were incurred.

12. Letter of Understanding. Upon the execution by the Executive of this Agreement, the Letter of Understanding shall be null and void.

13. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable to contracts executed in and to be performed in that commonwealth without regard to its conflicts of laws provisions. Each of the parties hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania located in the County of Erie, Pennsylvania, and of the United States for the Western District of Pennsylvania for any litigation arising out of or relating to this Agreement or the transactions contemplated hereby. Each of the parties hereby irrevocably and unconditionally acknowledges that service of any process, summons, notice or document by United States registered mail to the respective addresses set forth herein shall be effective service of process for any litigation brought against a party in any such court. Any legal action relating to this Agreement shall be brought in the courts of the Commonwealth of Pennsylvania located in the County of Erie, Pennsylvania, and of the United States for the Western District of Pennsylvania and the parties irrevocably and unconditionally waive and will not plead or claim in any such court that venue is improper or that such litigation has been brought in an inconvenient forum.

14. Waiver. The waiver by a party hereto of any breach by the other party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach by a party hereto.

15. Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company, and the Company shall be obligated to require any successor to expressly acknowledge and assume its obligations hereunder. This Agreement shall inure to the extent provided hereunder to the benefit of and be enforceable by the Executive or the Executive’s legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. The Executive may not delegate any of the Executive’s duties, responsibilities, obligations or positions hereunder to any person and any such purported delegation shall be void and of no force and effect.

16. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

17. Notices. Any notices required or permitted to be given under this Agreement shall be sufficient if in writing, and if personally delivered or when sent by first class certified or registered mail, postage prepaid, return receipt requested — in the case of the Executive, to his principal residence address, and in the case of the Company, to the address of its principal place of business as set forth above, to the attention of the Executive Vice President, Secretary and General Counsel of the Company.

18. Defined Terms. Any terms not specifically defined herein have the meanings set forth in the Employment Agreement.

19. Entire Agreement. This Agreement constitutes the entire agreement of the parties relating to the subject matter hereof, and supersedes any obligations of the Company and the other Releasees under any previous agreements or arrangements (including the Employment Agreement and the Letter of Understanding), except as otherwise provided in this Agreement. The provisions of this Agreement may not be amended, modified, repealed, waived, extended or discharged except by an agreement in writing signed by the party against whom enforcement of any amendment, modification, repeal, waiver, extension or discharge is sought. No person acting other than pursuant to a resolution of the Company’s Board of Directors shall have authority on behalf of the Company to agree to amend, modify, repeal, waive, extend or discharge any provision of this Agreement or anything in reference thereto. This Agreement may be executed in one or more counterparts (including by facsimile signature), all of which shall be considered one and the same instrument, and shall be fully executed when one or more counterparts have been signed by and delivered to each party.

20. Headings. The descriptive headings used herein are used for convenience of reference only and shall not constitute a part of this Agreement.

THE EXECUTIVE HEREBY EXPRESSLY WARRANTS AND REPRESENTS THAT, BEFORE ENTERING INTO THIS AGREEMENT, HE HAS RECEIVED A REASONABLE PERIOD OF TIME WITHIN WHICH TO CONSIDER ALL OF THE PROVISIONS CONTAINED IN THIS AGREEMENT, THAT HE HAS FULLY READ, INFORMED HIMSELF OF AND UNDERSTANDS ALL THE TERMS, CONTENTS, CONDITIONS AND EFFECTS OF ALL PROVISIONS OF THIS AGREEMENT, AND THAT HE CONSIDERS ALL SUCH PROVISIONS TO BE SATISFACTORY.

THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT NO PROMISE OR REPRESENTATION OF ANY KIND HAS BEEN MADE, EXCEPT THOSE EXPRESSLY STATED IN THIS AGREEMENT.

THE EXECUTIVE FURTHER EXPRESSLY WARRANTS AND REPRESENTS THAT HE ENTERS INTO THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

IN WITNESS WHEREOF, the Executive and the Company, by its duly authorized representative, have signed this Agreement as of the date set forth above.


WITNESS:		THE EXECUTIVE:
/s/ Carol G. Stauch		/s/ Jeffrey A. Ludrof JEFFREY A. LUDROF
		THE COMPANY:
ATTEST:		ERIE INDEMNITY COMPANY
/s/ James J. Tanous James J. Tanous, Secretary		By: /s/ John J. Brinling, Jr. John J. Brinling, Jr., President and CEO

This AMENDMENT AND PAYMENT DESIGNATION AGREEMENT (the “Agreement”), made effective as of the 31st day of December 2007, is by and between ERIE INDEMNITY COMPANY, a Pennsylvania corporation with its principal place of business in Erie, Pennsylvania (the “Company”) and PHILIP A. GARCIA (the “Executive”).

WHEREAS, the Executive and the Company are parties to an Amended and Restated Employment Agreement made effective as of the 12th day of December 2005 (the “Employment Agreement”); and

WHEREAS, the Employment Agreement will expire in accordance with its terms on December 11, 2008, unless earlier terminated pursuant to Section 5 thereof; and

WHEREAS, the Company has advised the Executive that the Employment Agreement should be amended in certain respects in order to comply with recent changes in applicable Federal tax law; and

WHEREAS, the Executive is willing to amend his Employment Agreement based on the mutual understanding of the Executive and the Company that, subject to the amendments to the Employment Agreement set forth in this Agreement, the Executive will continue to be entitled to, and will retain, all rights, payments, emoluments, perquisites, benefits, salary, eligibility for incentives and/or other compensation due to and/or provided for the Executive under and by virtue of the Employment Agreement to the fullest extent allowed by law, including but not limited to the benefit of the Tax Gross-up provided in the Employment Agreement; and

WHEREAS, based on the understanding set forth in the preceding WHEREAS clause, the Executive and the Company each desires to amend the Employment Agreement in certain respects, in order to comply with recent changes in applicable Federal tax law; and each further desires that the Executive designate the time and form of payment of certain compensation payable to the Executive under the Employment Agreement and certain Company benefit plans.

NOW, THEREFORE, in view of the premises and in consideration of the agreements and mutual covenants set forth herein, the adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:

(a) The term of the Employment Agreement will expire on December 11, 2008, in accordance with Section 1 of the Employment Agreement, unless it is terminated earlier pursuant to Section 5 thereof.

(b) The terms and conditions currently set forth in the Employment Agreement that apply after the expiration of the Employment Agreement, including but not limited to Section 12 thereof, shall continue beyond the expiration of the term of the Employment Agreement, except and to the extent as they may be specifically amended in this Agreement.

(a) With respect to benefits to which the Executive may be entitled under the Company’s Supplemental Retirement Plan (the “SERP”) pursuant to Section 8(a)(5) of the Employment Agreement, the Company and the Executive hereby agree that, notwithstanding any conflicting provisions of the Employment Agreement or the SERP, his Accrued SERP Benefit and Additional SERP Benefits shall be paid to him in a lump sum payment on December 12, 2008, or if the Executive terminates employment (other than for Cause) before December 11, 2008, on the first day of the seventh (7^th) month after the date of termination. Such lump sum shall be computed in the manner provided under the SERP and Section 8(a)(5) of the Employment Agreement, consistent with how the Company has computed any such payments in the past. The interest rate to be used in calculating the lump sum shall be the interest rate equal to the average of the Moody’s Aa corporate bond rates for the second calendar month immediately preceding the calendar month as of which the lump sum distribution is made (i.e. October 2008). The mortality table to be used in calculating the lump sum shall be the 1994 Group Annuity Reserving table, as defined in IRS Revenue Ruling 2001-62. Attached hereto as Exhibit A, by way of illustration only, is an example of how this payment will be computed.

(b) In addition, if the Executive becomes entitled to SERP Benefits pursuant to Section 8(a)(5) of the Employment Agreement, the Company shall pay to the appropriate taxing authorities on the Executive’s behalf a Tax Gross-up with respect to that portion of the lump sum payment described in subparagraph (a) above which fulfills the Company’s obligations under Section 8(a)(5) of the Employment Agreement. Such Tax Gross-up shall be equal to the sum of (i) all taxes (federal, state, local and payroll taxes) incurred and due and owing by the Executive, arising from the lump sum payment and (ii) any such taxes incurred and due and owing with respect to the amount paid under clause (i), computed by applying the highest applicable marginal rate with respect to each such tax. The Tax Gross-up shall be paid immediately or as soon thereafter as is consistent with applicable law.

(c) If the Executive is terminated for Cause before December 11, 2008, his SERP benefits, computed in the manner prescribed by the SERP without regard to Section 8(a)(5) of the Employment Agreement, shall be paid in the form and at the time designated in subparagraph (a) above.

(d) The parties acknowledge and agree that, conditioned only on the Company’s payment of the lump sum as described in subparagraph (a) above, and payment of the Tax Gross-up as described in subparagraph (b) above as and when due, and notwithstanding any provision of the Employment Agreement or the SERP to the contrary:

(i) The Executive shall not accrue any additional benefits under the SERP after December 11, 2008, and shall release the Company from any further obligation under the SERP and Section 8(a)(5) of the Employment Agreement; and

(ii) The Company shall not have any further or additional obligation to the Executive or his heirs, successors and assigns arising out of or relating to the SERP.

(e) No additional approval of the Company’s Board of Directors or any committee of the Board shall be required with respect to any payments by the Company required to be made under subparagraphs 2(a), 2(b) or 2(c) of this Agreement.

(a) If the Executive becomes entitled to severance pay pursuant to Section 6(a)(1) of the Employment Agreement, such severance shall be paid in a lump sum on the seventieth (70th) day after the Executive’s termination of employment, provided that the Executive has theretofore executed and delivered to the Company a release if so requested by the Company in accordance with Section 13 of the Employment Agreement.

(b) Any award under the Company’s Long-Term Incentive Plan to which the Executive is entitled pursuant to Section 6(a)(3) of the Employment Agreement shall be paid to him in the year following the year of his termination of employment, no later than September 30th of that year, but not earlier than six (6) months after the date of termination.

(a) The Company and the Executive hereby acknowledge that the severance pay provided for in Section 12 of the Employment Agreement shall be in an amount equal to two (2) times the Executive’s Covered Compensation (as that term is defined in Section 6(a)(1) of the Employment Agreement) as determined on the date of such termination. In the event that the Executive becomes entitled to severance pay pursuant to Section 12 of the Employment Agreement, such severance shall be paid in a lump sum on the seventieth (70th) day after the Executive’s termination of employment, provided that the Executive has theretofore executed and delivered to the Company a release if so requested by the Company in accordance with Section 13 of the Employment Agreement.

(b) In addition, if the Executive becomes entitled to severance pay pursuant to Section 12 of the Employment Agreement, the Executive and the Executive’s eligible dependents shall be entitled to continuing coverage under the Company’s then-existing group health plans (including medical, dental, prescription drug and vision plans, if any) for a period of two (2) years after the date of the termination of the Executive’s employment, to the extent not prohibited by law and subject to the terms of such plans including provisions as to deductibles and copayments and changes in levels of coverage that are generally applicable to employees.

(c) With respect to all such health plan coverages that are not provided under an insured plan, the Executive shall duly elect and pay for COBRA continuation coverage. The Company’s obligation with respect to all health plan coverages that are not provided under an insured plan is conditioned on the Executive’s duly electing, and then paying for, COBRA coverage throughout the available COBRA continuation coverage period. The Company shall reimburse the Executive for the actual costs paid by the Executive for any such COBRA continuation coverage elected and paid for by the Executive, but only to the extent that any such payments by the Executive are in excess of the required employee contributions paid by the Executive prior to termination. The Company shall pay such reimbursement promptly upon receipt of reasonable documentation thereof from the Executive, but in any event not later than the end of the calendar year following the year in which the expense was incurred.

(d) If the continuation of any coverage identified in subparagraph 4(b) above is not reasonably available pursuant to the applicable insurance policy or plan and, in the case of any health plan coverage not provided under an insured plan, after the end of the available COBRA continuation period:

(i) The parties will cooperate and use their best efforts to obtain an individual policy that provides the Executive (and his previously covered dependents, if any) substantially equivalent coverage, and the Company will pay, for the balance of the two (2) year period beginning on the date of termination, the premiums on any such individual policy, to the extent in excess of the required employee contribution paid by the Executive prior to termination.

(ii) If the continuation of any such coverage is not available pursuant to the applicable insurance policy or plan, and an individual policy cannot be obtained despite the parties’ cooperative best efforts, the Company will reimburse the Executive for any medical expense he (and his previously covered dependents, if any) incur during the balance of the two (2) year period beginning on the date of termination, provided that such expense would have been reimbursed by the applicable Company plan. The Company shall pay such reimbursement promptly upon receipt of reasonable documentation thereof from the Executive, but in any event not later than the end of the calendar year following the year in which the expense was incurred.

(a) With respect to the reimbursement of legal fees pursuant to Section 11 of the Employment Agreement, the parties agree that:

(i) the legal fees and expenses eligible for reimbursement during any calendar year shall not affect the expenses eligible for reimbursement in any other calendar year;

(ii) reimbursement of eligible legal fees and expense shall be paid promptly after reasonable documentation thereof is provided to the Company, and in any case no later than the last day of the calendar year following the year in which the expense was incurred; and

(iii) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.

(a) Except as specifically amended herein, the Employment Agreement shall continue in effect for the balance of its term, and thereafter in accordance with its terms as hereby amended. The terms contained in this Agreement constitute the only amendments, changes and/or modifications to the Employment Agreement that the Company and the Executive have agreed to as of the date hereof. Other than for the terms of the Employment Agreement that are amended or changed by this Agreement, no other terms set forth in the Employment Agreement have been or shall be amended, changed, modified, repealed, waived, extended or discharged unless agreed to in writing by both the Company and the Executive. This Agreement, together with the Employment Agreement as amended thereby, constitute the entire agreement of the parties hereto with respect to the subject matters set forth in this Agreement and the Employment Agreement. All terms, conditions and provisions in the Employment Agreement that are not amended by this Agreement shall remain in full force and effect.

(b) Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Employment Agreement.

(c) When this Agreement uses the term “termination of employment” or otherwise uses the term “terminate” with reference to employment, the terms “termination” or “terminate” shall be construed to mean a separation from service or separate from service, as those terms are defined in the regulations under Internal Revenue Code Section 409A.

(d) If the Executive is, on the date of termination of employment, a “specified employee”, as that term is used in regulations under Section 409A, no amount that is deferred compensation for purposes of Section 409A may be paid until the first (1^st) day of the seventh (7^th) month beginning after termination of the Executive’s employment. The Company and the Executive each independently and separately believes all amounts payable under the terms of this Agreement before such seventh (7^th) month are not deferred compensation for purposes of Section 409A of the Code, and this paragraph 6(d) shall be construed accordingly unless the Company’s and the Executive’s belief is demonstrated to be incorrect.

(e) This Agreement may be executed in one or more counterparts, including by facsimile (fax) signature, all of which shall be considered one and the same instrument, and shall become a binding agreement when one or more counterparts have been signed by and delivered to each party.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its President and Chief Executive Officer thereunto duly authorized by the Company’s Board of Directors to execute this Agreement on behalf of the Company, and the Executive has hereunto set his hand as of the day and year first above written.


ATTEST:		ERIE INDEMNITY COMPANY
/s/ James J. Tanous		/s/ John J. Brinling, Jr.

James J. Tanous, Secretary		John J. Brinling, Jr. President and Chief Executive Officer
WITNESS:		EXECUTIVE
/s/ Eric Miller		/s/ Philip A. Garcia

		Philip A. Garcia

This Exhibit A illustrates how a SERP lump sum benefit is calculated. The SERP benefit equals 2% of SERP Final Average Earnings multiplied by years of credited service (up to a maximum of 30 years) minus the benefit payable from ERIE’s qualified pension plan. This two step process is illustrated below by first calculating the benefit payable from the qualified pension plan then calculating the lump sum benefit payable from the SERP.

Erie Insurance Group Retirement Plan for Employees
Qualified Benefit Computation at December 11, 2008


I.	Employee Data 1. 2. 3. 4. 5. 6. 7.	Name Date of Birth Date of Hire Normal Retirement Date Years of continuous service at December 11, 2008 Final 36-month average monthly base salary Covered Compensation level (monthly)	Sample Calculation May 31, 1950 October 31, 1988 June 1, 2015 21 $17,638.89 $5,972.00	Notes and Comments Maximum of 30 years; a fractional year is counted as a whole year. This item may be limited by the IRC 401(a)(17) / 404(l) annual compensation limit This amount is provided annually by the Internal Revenue Service based on participant’s year of birth
II.	Calculation of Qualified Normal Retirement Pension — (Single Life)
	1. 2. 3. 4.	1% of Item I.6 .5% of (Item I.6 — Item I.7, minimum zero) Item II.1 plus Item II.2 Qualified Normal Retirement Pension (Item II.3 x Item I.5, maximum of 30 years)	$176.39 $58.33 $234.72 $4,929.12	Monthly benefit


III.Calculation of Qualified Early Retirement Pension
1.	Number of complete calendar months representing the		77		For a participant
					who is not yet age
					55, this will be
						120
					months difference		and December 11,	months)
					between the normal		2008 (up to a
					retirement date		maximum of 120
2.	1/4 of 1% of Item III.1 (only up to 60 months)		15.0000	%
3.	3/8 of 1% x the excess of Item III.1 over 60 months		6.3750	%
4.	Sum of Item III.2 and III.3		21.3750	%
5.	Item II.4 x Item III.4	$	1,053.60
6.	Qualified Early Retirement Pension: single life	$	3,875.52		Monthly benefit
	(Item II.4 - Item III.5)


		1.	Name	Sample Calculation
		2.	Date of Birth	May 31, 1950
		3.	Date of Hire	October 31, 1988
		4.	Normal Retirement Date	June 1, 2015
		5.	Years of continuous service at December 11, 2008		21		Maximum of 30 years. A fractional year is counted as a
							whole year
		6.	Final 24-month average monthly base salary	$	28,000.00
		7.	Years of Executive Service at December 11, 2008		15		These are full years of service as a Senior Vice	President or higher
								ranking executive
II.	Calculation of SERPBenefit at December 11, 2008
		1.	December 11, 2008 SERPbase: 10-year certain & continuous	$	11,760.00
			(2.0% x Item I.6 x Item I.5, maximum of 30)
		2.	Qualified Early Retirement Pension: single life	$	3,875.52
		3.	Early Retirement single life to 10-year certain & continuous conversion factor		98.06	%	For a participant who is not yet age 55, this will be the
							conversion factor at age 55 (98.83%).
		4.	Qualified Early Retirement Pension: 10-year certain & continuous	$	3,800.33
			(Item II.2 x Item II.3)
		5.	SERPBenefit at December 11, 2008: 10-year certain & continuous	$	7,959.67		Monthly benefit
			(Item II.1 - Item II.4) x (Item I.7 x 20%, to a maximum of 100%)

December, 2008 10-year certain & continuous to lump sum conversion factor 152.5488 For a participant who is at least age 55, this will be the factor to convert a 10-year certain & continuous benefit that is payable immediately to a lump sum payable in December 2008


7.		December 12, 2008 lump sum (Item II.5 x Item II.6)		$	1,214,238.11			factor to convert a deferred to age 55 10—year certain & continuous benefit to a lump sum payable in December 2008 Calculated using Moody’s Aa Corporate Bond interest rate and Revenue Ruling 2001-62 Mortality.