EXHIBIT 10.26 - THE PEP BOYS DEFERRED COMPENSATION PLAN

THE PEP BOYS
DEFERRED COMPENSATION PLAN

Effective March 19, 2004

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ARTICLE 1
PURPOSE

          In recognition of the services provided by certain key employees, the
Board of Directors of THE PEP BOYS – MANNY, MOE & JACK wishes to adopt a
deferred compensation plan (the “Plan”) to make additional retirement benefits
and increased financial security, on a tax-favored basis, available to those
individuals effective March 19, 2004.  The Plan reads as follows:

ARTICLE 2
DEFINITIONS

          2.1          Definitions.  The following words and phrases, when used
in this Plan, shall have the following meanings:

                         Affiliate means any firm, partnership, or corporation
that directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the Company.  “Affiliate” also
includes any other organization related to the Company that is designated as
such by the Board.

                         Associate means any individual employed by the Company
on a regular, full-time basis at the manager level or above (determined in
accordance with the personnel policies and practices of the Company) as
designated by the Company, including citizens of the United States employed
outside of their home country and resident aliens employed in the United States;
provided, however, that to qualify as an “Associate” for purposes of the Plan,
the individual must be a member of a group of “key management or other highly
compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA
whose Compensation is within the top 5% of all Associates of the Company ranked
by Compensation.

                         Base Salary means the amount of base salary paid to
each Associate before any reduction for amounts deferred by the Participant
pursuant to any Code section 401(k) plan or Code section 125 plan, or pursuant
to this Plan or any other non-qualified plan that permits deferrals of
compensation.

                         Base Salary Deferral means that portion of Base Salary
as to which a Participant has made an annual irrevocable election to defer
receipt until the date specified under the In-Service Distribution Option or the
Retirement Distribution Option.

                         Beneficiary means the person or persons (natural or
otherwise) designated by the Participant in accordance with Section 11.3.

                         Board means the Board of Directors of the Company.

                         Bonus means the amount earned by an Associate under any
annual incentive plan maintained by the Company.

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                         Cause means (i) the continued failure of the Associate
to perform substantially his duties with the Company (other than such failure
resulting from an Associate’s Disability), (ii) any act by the Associate of
illegality, dishonesty or fraud in connection with the Associate’s employment,
(iii) the willful engaging by the Associate in gross misconduct which is
demonstrably and materially injurious to the Company or its affiliates, (iv) the
Associate’s conviction of or pleading guilty or no contest to a felony, or (v) a
violation of the Associate’s employment agreement or non-competition agreement
with the Company.

                         Change of Control means:

                         (a)          individuals who, on the Effective Date,
constitute the Board of Directors (the “Incumbent Directors”) cease for any
reason to constitute at least a majority of the Board of Directors, provided
that any person becoming a director subsequent to the date hereof, whose
election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board of Directors (either by
a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to
such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board of Directors shall
be deemed to be an Incumbent Director;

                         (b)          any “Person” (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company’s then outstanding securities eligible to
vote for the election of the Board of Directors (the “Voting Securities”);
provided, however, that the event described in this paragraph (b) shall not be
deemed to be a Change of Control by virtue of any of the following
acquisitions:  (i) by the Company or any subsidiary of the Company in which the
Company owns more than 50% of the combined voting power of such entity (a
“Subsidiary”), (ii) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (iii) by any underwriter
temporarily holding the Company’s Voting Securities pursuant to an offering of
such Voting Securities, or (iv) pursuant to a Non-Qualifying Transaction (as
defined in paragraph (c));

                         (c)          a merger, consolidation, statutory share
exchange or similar form of corporate transaction is consummated involving the
Company or any of its Subsidiaries that requires the approval of the Company’s
stockholders, whether for such transaction or the issuance of securities in the
transaction (a “Business Combination”), unless immediately following such
Business Combination:  (i) more than 50% of the total voting power of (A) the
corporation resulting from such Business Combination (the “Surviving
Corporation”), or (B) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the “Parent
Corporation”), is represented by the Company’s Voting Securities that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which the Company’s Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the

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voting power of the Company’s Voting Securities among the holders thereof
immediately prior to the Business Combination, (ii) no person (other than any
employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the beneficial
owner, directly or indirectly, of 20% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (iii) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board of Directors’ approval of the
execution of the initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in (i), (ii)
and (iii) above shall be deemed to be a “Non-Qualifying Transaction”);

                         (d)          a sale of all or substantially all of the
Company’s assets is consummated;

                         (e)          the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company; or

                         (f)          there occur such other events as the Board
of Directors may designate.

               Notwithstanding the foregoing, a Change of Control of the Company
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 20% of the Company’s Voting Securities as a result of the
acquisition of the Company’s Voting Securities by the Company which reduces the
number of the Company’s Voting Securities outstanding; provided, that if after
such acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change of Control of the Company shall then occur.

                         Code means the Internal Revenue Code of 1986, as
amended from time to time and includes any regulations issued thereunder.

                         Company means The Pep Boys – Manny, Moe & Jack.

                         Company Stock Fund means the Deemed Investment Option
under the Plan for which the rate of return credited to a Participant’s
Distribution Accounts shall be based on the actual performance of the common
stock of the Company.

                         Compensation means the sum of Base Salary and Bonus
paid to an Associate.

                         Deemed Investment Options means the deemed investment
options selected by the Participant from time to time pursuant to which deemed
earnings are credited to the Participant’s Distribution Accounts.

                         Disability or “Disabled” means a medically determinable
physical or mental impairment of a permanent nature which prevents a Participant
from performing his customary employment duties without endangering his health
and which would qualify the Participant for

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Social Security disability benefits or a benefit under the Pep Boys – Manny, Moe
& Jack Long Term Disability Salary Continuation Plan.

                         Distribution Option means the two distribution options
which are available under the Plan, consisting of the Retirement Distribution
Option and the In-Service Distribution Option.

                         Distribution Account or “Accounts” means, with respect
to a Participant, the Retirement Distribution Account and/or the In-Service
Distribution Account established on the books of the Employer, pursuant to
Section 5.1, which is used solely to calculate the amount payable to each
Participant as well as the “Accounts” to which are credited the Mandatory Bonus
Deferrals and the Matching Contributions under Sections 4.2 and 4.4(a),
respectively.

                         Distribution Option Period.  “Distribution Option
Period”  means a period of Plan Years for which an Eligible Associate elects, in
the Enrollment Agreement, the time and manner of payment of amounts credited to
the Eligible Associate’s In-Service Distribution Option Account for such Plan
Years.  As required by Section 6.3, the Distribution Option Period must end at
least two Plan Years prior to the Plan Year selected for the initial
distribution for that Distribution Option Period.

                         Effective Date means the effective date of the Plan,
which is March 19, 2004.

                         Eligible Associate means any Associate who is
designated by the Board as eligible to participate in the Plan.

                         Employer means the Company and any Affiliate which is
authorized by the Company to adopt the Plan and cover its Eligible Associates
and whose designation as such has become effective upon acceptance of such
status by the Affiliate.  An Affiliate may revoke its acceptance of such
designation at any time, but until such acceptance has been revoked, all the
provisions of the Plan and amendments thereto shall apply to the Eligible
Associates of the Affiliate.  In the event the designation is revoked by an
Affiliate, the Plan shall be deemed terminated only with respect to such
Affiliate.

                         Enrollment Agreement means the authorization form which
an Eligible Associate files with the Plan Administrator to participate in the
Plan.

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

                         In-Service Distribution Account means the Account
maintained for a Participant for each Distribution Option Period to which Base
Salary Deferrals and Voluntary Bonus Deferrals are credited pursuant to the
In-Service Distribution Option.

                         In-Service Distribution Option means the Distribution
Option pursuant to which benefits are payable in accordance with Section 6.3.

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                         Mandatory Bonus Deferral means the portion of the Tier
I Participant’s Bonus which is in excess of 150% of the Tier I Participant’s
target bonus. 

                         Matching Contributions are those credits made to the
Participant’s Retirement Distribution Account by the Employer pursuant to
Section 4.4.

                         Normal Retirement Age means age 62.

                         Participant means an Eligible Associate who has filed a
completed and executed Enrollment Agreement with the Plan Administrator or its
designee and is participating in the Plan in accordance with the provisions of
Article 4 or an Eligible Associate who is employed as an officer of the Company
and is eligible to receive a Bonus in any Plan Year in excess of 150% of the
Eligible Associate’s target bonus.  In the event of the death or incompetency of
a Participant, the term shall mean the Participant’s personal representative or
guardian.  An individual shall remain a Participant until that individual has
received full distribution of any amount credited to the Participant’s
Distribution Account(s).

                         Plan means this plan, called The Pep Boys Deferred
Compensation Plan, as amended from time to time.

                         Plan Administrator means the committee appointed by the
Board to act as the administrator of the Plan.

                         Plan Year means the 12 month period beginning on each
January 1 and ending on the following December 31.

                         Retirement means the termination of the Participant’s
Service with the Employer (for reasons other than death) at or after age 55.

                         Retirement Distribution Account means the Account
maintained for a Participant to which Base Salary Deferrals, Voluntary Bonus
Deferrals and Matching Contributions are credited pursuant to the Retirement
Distribution Option.

                         Retirement Distribution Option means the Distribution
Option pursuant to which benefits are payable in accordance with Section 6.1.

                         Service means the period of time during which an
employment relationship exists between an Associate and the Employer, including
any period during which the Associate is on an approved leave of absence,
whether paid or unpaid.  “Service” also includes employment with a
non-participating Affiliate if an Associate transfers directly between the
Employer and the Affiliate.

                         Tier I Participant means a Participant who is employed
as an officer of the Company.

                         Tier II Participant means a Participant other than a
Tier I Participant.

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                         Termination Date means the date of termination of a
Participant’s Service with the Employer and its Affiliates, including
termination resulting from a Participant’s Disability, and shall be determined
without reference to any compensation continuation arrangement or severance
benefit arrangement that may be applicable.

                         Voluntary Bonus Deferral means the portion of the
Participant’s Bonus earned in a Plan Year, which in the case of a Tier I
Participant, is equal to or less than 150% of the Tier I Participant’s target
bonus, as to which a Participant has made an annual irrevocable election to
defer receipt until the date specified under the In-Service Distribution Option
or the Retirement Distribution Option.

          2.2          Construction. The masculine gender, where appearing in
the Plan, shall be deemed to include the feminine gender, unless the context
clearly indicates to the contrary.

ARTICLE 3
ADMINISTRATION OF THE PLAN AND DISCRETION

          3.1          The Plan Administrator shall have full power and
authority to interpret the Plan, to prescribe, amend and rescind any rules,
forms and procedures as it deems necessary or appropriate for the proper
administration of the Plan and to make any other determinations and to take any
other such actions as it deems necessary or advisable in carrying out its duties
under the Plan.  All action taken by the Plan Administrator arising out of, or
in connection with, the administration of the Plan or any rules adopted
thereunder, shall, in each case, lie within its sole discretion, and shall be
final, conclusive and binding upon the Employer, the Board, all Employees, all
Beneficiaries of Employees and all persons and entities having an interest
therein and the Enrollment Agreement of each Participant shall constitute that
Participant’s acknowledgement and acceptance of the Plan Administrator’s
authority and discretion.

          3.2          The Plan Administrator shall serve without compensation
for their services unless otherwise determined by the Board.  All expenses of
administering the Plan shall be paid by the Company.

          3.3          The Company shall indemnify, defend and hold the Plan
Administrator harmless from any and all claims, losses, damages, expenses
(including counsel fees) and liability (including any amounts paid in settlement
of any claim or any other matter with the consent of the Board) arising from any
act or omission of such member, except when the same is due to gross negligence
or willful misconduct.

          3.4          Any decisions, actions or interpretations to be made
under the Plan by the Company, the Employer, the Board or Plan Administrator
shall be made in its respective sole discretion, not as a fiduciary and need not
be uniformly applied to similarly situated individuals and shall be final,
binding and conclusive on all persons interested in the Plan.

ARTICLE 4
PARTICIPATION

          4.1          Election to Participate.  Annually, all Eligible
Associates will be offered the opportunity to make a Base Salary Deferral and a
Voluntary Bonus Deferral with respect to Base

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Salary and Bonus to be earned in the following Plan Year.  Any Eligible
Associate may enroll in the Plan effective as of the first day of a Plan Year by
filing a completed and fully executed Enrollment Agreement with the Plan
Administrator by a date set by the Plan Administrator but in any event prior to
the last day of the preceding Plan Year.  Pursuant to said Enrollment Agreement,
the Eligible Associate shall irrevocably elect, except as provided below, (a)
the percentages, in whole percentages, by which (as a result of payroll
reduction) an amount equal to any whole percentage of the Participant’s Base
Salary or Bonus to be earned during that Plan Year, in each case after required
nondeferrable payroll tax and other authorized or required deductions, will be
deferred, (b) the Distribution Accounts to which such amounts will be credited
and (c) the time and manner of distribution from the Retirement Distribution
Account and shall provide such other information as the Plan Administrator shall
require.  The first Enrollment Agreement filed by an Eligible Associate during
any Distribution Option Period must also set forth the Participant’s election as
to the time and manner of distribution of amounts credited to the Participant’s
In-Service Distribution Account, and earnings credited to such amounts, during
such Distribution Option Period.   The Company may establish minimum or maximum
amounts of Base Salary Deferrals and Voluntary Bonus Deferrals that may be
elected under this Section and may change such standards from time to time.  Any
such limits shall be communicated by the Company to the Plan Administrator and
by the Plan Administrator to the Participants prior to the commencement of a
Plan Year.  Notwithstanding anything herein to the contrary, a Participant may
elect to cease the Base Salary Deferrals or Voluntary Bonus Deferrals, being
made in the current Plan Year on the Participant’s behalf by giving the Plan
Administrator at least 30 days’ advance written notice of such election and
agreeing not to make any further Base Salary Deferrals and Voluntary Bonus
Deferrals under the Plan for the balance of the current Plan Year and all of the
next Plan Year.

          4.2          Mandatory Participation.  Each Tier I Participant who is
eligible to receive a Bonus in any Plan Year in excess of 150% of the Tier I
Participant’s target bonus will automatically be enrolled in the Plan with such
sum credited to an Account for the Tier I Participant. The Deemed Investment
Option for a Mandatory Bonus Deferral shall be a money market fund selected by
the Company.  The Mandatory Bonus Deferral shall vest according to the following
schedule provided that the Participant does not have a Termination Date prior
thereto:

 

Plan Years following Year Earned

 

Vested Percentage

 

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One year, but less than two

 

33.33%

 

 

Two years, but less then three

 

66.66%

 

 

Three or more years

 

100%

 

Notwithstanding the foregoing, if the Tier I Participant dies or becomes
Disabled while employed by the Employer, or terminates employment on or after
attaining Normal Retirement Age, the Mandatory Bonus Deferral shall vest
immediately on the Termination Date.

          4.3          New Eligible Associates.  The Plan Administrator, acting
on behalf of the Employer, may, in its discretion, permit employees who first
become Eligible Associates after the beginning of a Plan Year to enroll in the
Plan for that Plan Year by filing a completed and fully executed Enrollment
Agreement, in accordance with Section 4.1, as soon as practicable following the
date the Associate becomes an Eligible Associate but, in any event, within 30
days

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after such date.  Notwithstanding the foregoing, however, any election by an
Eligible Associate, pursuant to this section, to make a Base Salary Deferral or
Voluntary Bonus Deferral shall apply only to such amounts as are earned by the
Eligible Associate after the date on which such Enrollment Agreement is filed.

          4.4          Matching Contributions. 

          (a)           If a Tier I Participant elects to direct a portion of
his Voluntary Bonus Deferral to the Company Stock Fund, the Employer shall
credit to such Tier I Participant’s Account a Matching Contribution equal to
100% of the Voluntary Bonus Deferral which the Tier I Participant elected to
direct to the Company Stock Fund, up to 20% of the Tier I Participant’s Bonus. 
The Deemed Investment Option for the Matching Contribution shall be the Company
Stock Fund until such time as the Matching Contribution is vested and
distributed.  After such Matching Contribution is fully vested it shall be paid
as soon as practicable in shares of Company common stock unless the Participant
has elected, at the time and in the form specified by the Plan Administrator, to
credit the then value of such Matching Contribution to the Participant’s
In-Service or Retirement Account.  The Matching Contribution under this Section
4.4(a) shall vest according to the following schedule provided that the
Participant does not have a Termination Date prior thereto:

 

Plan Years following Credit

 

Vested Percentage

 

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One year, but less than two

 

33.33%

 

 

Two years, but less then three

 

66.66%

 

 

Three or more years

 

100%

 

If the Tier I Participant dies or becomes Disabled while employed by the
Employer, or terminates employment on or after attaining Normal Retirement Age,
the Matching Contribution shall vest immediately on the Termination Date.

          (b)           The Company may credit an additional Matching
Contribution to a Tier I Participant’s and/or a Tier II Participant’s
Distribution Account for any Plan Year, as determined by the Company.  Any such
Matching Contribution shall be communicated by the Company to the Plan
Administrator and by the Plan Administrator to the Participants.  The Company
shall also specify at the time of the credit whether such additional Matching
Contribution shall be distributed at the same time as the underlying Participant
contributions or earlier.

          (c)           Notwithstanding the foregoing, if a Participant is
terminated for Cause, the Plan Administrator, acting on behalf of the Company,
shall have the discretion to forfeit the vested portion of the Matching
Contribution credited to such Participant’s Retirement Distribution Account. 

          (d)           Matching Contributions will be credited as frequently as
determined by the Plan Administrator, acting on behalf of the Employer, but in
any event at least annually.

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ARTICLE 5
DISTRIBUTION ACCOUNTS

          5.1          Distribution Accounts.  The Plan Administrator shall
establish and maintain separate Distribution Accounts with respect to each
Participant for each Distribution Option Period and for the Retirement Account. 
A Participant’s Distribution Accounts shall consist of the Retirement
Distribution Account and/or one or more In-Service Distribution Accounts.  The
amount of Base Salary Deferrals, Voluntary Bonus Deferrals and Mandatory Bonus
Deferrals pursuant to Section 4.1 and Section 4.2 shall be credited by the
Employer to the Participant’s Distribution Option Accounts no later than the
first day of the month following the month in which such Base Salary or Bonus
would otherwise have been paid, in accordance with the Distribution Option
irrevocably elected by the Participant in the Enrollment Agreement, or in the
case of Mandatory Bonus Deferrals, to the Tier I Participant’s Account and
distributed in accordance with Section 7.2(c).  Any amount once taken into
account as Base Salary or Bonus for purposes of this Plan shall not be taken
into account thereafter. The Participant’s Distribution Accounts shall be
reduced by the amount of payments made by the Employer to the Participant or the
Participant’s Beneficiary pursuant to this Plan.

          5.2          Returns on Distribution Option Accounts.  A Participant’s
Distribution Accounts shall be credited with returns in accordance with the
Deemed Investment Options elected by the Participant from time to time.  Unless
otherwise provided under this Plan, Participants may allocate their Retirement
Distribution Account and/or each of their In-Service Distribution Accounts among
the Deemed Investment Options available under the Plan only in whole percentages
of not less than five percent.  The rate of return, positive or negative,
credited under each Deemed Investment Option is based upon the actual investment
performance of the investment fund(s) designated by the Plan Administrator from
time to time, and shall equal the total return of such investment fund net of
asset based charges, including, without limitation, money management fees, fund
expenses and mortality and expense risk insurance contract charges.  The Plan
Administrator reserves the right, on a prospective basis, to add or delete
Deemed Investment Options.

          5.3          Deemed Investment Options.  Except as otherwise provided
pursuant to Section 5.2, the Deemed Investment Options available under the Plan
shall consist of the Company Stock Fund and such other investments funds as the
Plan Administrator designates.  Notwithstanding that the rates of return
credited to Participants’ Distribution Accounts under the Deemed Investment
Options are based upon the actual performance of the investment funds designated
by the Plan Administrator, the Company shall not be obligated to invest any Base
Salary Deferral by Participants under this Plan, or any other amounts, in such
portfolios or in any other investment funds.  Investments in the Company Stock
Fund are limited to elections under Section 4.4 only.

          5.4          Changes in Deemed Investment Options.  A Participant may
change the Deemed Investment Options to which the Participant’s Distribution
Accounts are deemed to be allocated with whatever frequency is determined by the
Plan Administrator which shall not be less than four times per Plan Year;
provided, however, a Tier I Participant who has elected to invest a portion of
his Voluntary Bonus Deferral in the Company Stock Fund may not change such
investment option (for such Voluntary Bonus Deferrals or for the related
Matching Contributions).  Each such change may include (a) reallocation of the
Participant’s existing Accounts in whole percentages of not less than five
percent, and/or (b) change in investment

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allocation of amounts to be credited to the Participant’s Accounts in the
future, as the Participant may elect. 

          5.5          Valuation of Accounts.  The value of a Participant’s
Distribution Accounts as of any date shall equal the amounts theretofore
credited to such Accounts, including any earnings (positive or negative) deemed
to be earned on such Accounts in accordance with Section 5.2 through the day
preceding such date, less the amounts theretofore deducted from such Accounts.

          5.6          Statement of Accounts.  The Plan Administrator shall
provide to each Participant, not less frequently than quarterly, a statement in
such form as the Plan Administrator deems desirable setting forth the balance
standing to the credit of each Participant in each of his Distribution Accounts.

          5.7          Distributions from Accounts.  Any distribution made to or
on behalf of a Participant from one or more of his Distribution Accounts in an
amount which is less than the entire balance of any such Account shall be made
pro rata from each of the Deemed Investment Options to which such Account is
then allocated.

ARTICLE 6
DISTRIBUTION OPTIONS

          6.1          Election of Distribution Option.  In the Enrollment
Agreement filed with the Plan Administrator for each Distribution Option Period
and for the Retirement Account, the Participant shall allocate his or her
deferrals between the Distribution Options in increments of ten percent and
elect the time and manner of distributions from such Distribution Accounts.  A
Participant’s execution of the Enrollment Agreement shall also constitute
acknowledgment that all decisions, interpretations and determinations by the
Plan Administrator shall be final and binding on the Company, the Employer,
Participants, Beneficiaries and any other persons having or claiming an interest
hereunder.

          6.2          Retirement Distribution Option.  Subject to Section 7.1,
distribution of the Participant’s Retirement Distribution Account, if any, shall
be made or commence on the first day of the 13th month immediately following the
Participant’s Retirement.

          6.3          In-Service Distribution Option.  Subject to Section 7.2,
the Participant’s In-Service Distribution Account for any Distribution Option
Period shall be distributed commencing in, and no later than, January of the
Plan Year elected by the Participant in the Enrollment Agreement pursuant to
which such In-Service Distribution Account was established.  Notwithstanding the
foregoing, a Participant shall not be entitled to allocate any Compensation
deferrals to an In-Service Distribution Account for a Distribution Option Period
for the two Plan Years preceding the Plan Year which includes the date on which
such Account is to be distributed and any such deferrals shall instead be
allocated to the Retirement Distribution Account or to a subsequent In-Service
Distribution Account if selected. 

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ARTICLE 7
BENEFITS TO PARTICIPANTS

          7.1          Benefits Under the Retirement Distribution Option. 
Benefits under the Retirement Distribution Option shall be paid to a Participant
as follows:

                         (a)          Distribution of Benefits Upon Retirement. 
In the case of a Participant whose Service with the Employer terminates on
account of Retirement and whose Retirement Distribution Account balance exceeds
$25,000, the Participant’s Retirement Distribution Account shall be distributed
in one of the following methods, as elected by the Participant in writing either
in the Enrollment Agreement or in a separate election made prior to the date of
the Participant’s Retirement: (i) in a lump sum; (ii) in annual installments
over a 5, 10, 15 or 20 year period or (iii) by any other formula that is
mathematically derived and is acceptable to the Plan Administrator.  The first
annual installment payments are equal to (i) the value of such Retirement
Distribution Account as of the last business day of the Plan Year preceding the
date of payment, divided by (ii) the number of annual installment payments
elected by the Participant in the Enrollment Agreement pursuant to which such
Retirement Distribution Account was established.  The remaining annual
installments shall be paid not later than January 31 of each succeeding Plan
Year in an amount equal to (i) the value of such Retirement Distribution Account
as of the last business day of the immediately preceding Plan Year divided by
(ii) the number of installments remaining.  A Participant may change the
election regarding the manner of payment of the Participant’s Account, as
described in Section 6.1, at any time prior to the Participant’s Retirement.

                         (b)          Distribution of Benefits Upon Termination
of Employment.  In the case of a Participant whose Service with the Employer
terminates prior to the earliest date on which the Participant is eligible for
Retirement, or whose Retirement Distribution Account balance does not exceed
$25,000, the Participant’s Retirement Distribution Account shall be distributed
in a lump sum payment as soon as administratively practicable following the
Participant’s Termination Date notwithstanding any other election by the
Participant.

          7.2          Benefits Under the In-Service Distribution Option. 
Benefits under the In-Service Distribution Option shall be paid to a Participant
as follows:

                         (a)          In-Service Distributions.  Benefits under
the In-Service Distribution Account shall be distributed to the Participant for
any Distribution Option Period beginning on the date chosen by the Participant
in the first Enrollment Agreement that designated all or a portion of the Base
Salary or Bonus deferred to be allocated to the In-Service Distribution
Account.  In no event shall the date selected be earlier than the first day of
the third Plan Year following the Plan Year in which the initial filing of the
Enrollment Agreement was made with respect to that In-Service Distribution
Account.  The Participant may, subsequently amend the intended date of payment
to a date later than that date initially chosen, by filing such amendment with
the Plan Administrator no later than 12 months prior to the date of the first
payment originally chosen.  The Participant may file this amendment to defer the
receipt of benefits under this Section only twice, and each amendment must
provide for a payout under this Section at a date later than the election in
force immediately prior to a filing of such amendment.  The Participant’s
In-Service Distribution Account shall be paid to the Participant in either: (i)
a lump sum payment commencing no later than January 31 of the Plan Year elected
by the Participant in

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the Enrollment Agreement pursuant to which such In-Service Distribution Account
was established as it may have been amended in accordance with the preceding
paragraph; or (ii) annual installments payable over a 2, 3, 4 or 5 year period. 
Annual installment payments, if any, equal to (i) the value of such In-Service
Distribution Account as of the last business day of the Plan Year preceding the
date of payment, divided by (ii) the number of annual installment payments
elected by the Participant in the Enrollment Agreement pursuant to which such
In-Service Distribution Account was established.  The remaining annual
installments shall be paid not later than January 31 of each succeeding year in
an amount equal to (i) the value of such In-Service Distribution Account as of
the last business day of the immediately preceding Plan Year divided by (ii) the
number of installments remaining.

                         (b)          Benefits Upon Termination of Employment. 
In the case of a Participant whose Service with the Employer terminates prior to
the date on which the Participant’s In-Service Distribution Account would
otherwise be distributed, such In-Service Distribution Account shall be paid in
a lump sum as soon as administratively practicable following the Participant’s
Termination Date.

                         (c)          Distribution of Mandatory Bonus Deferral. 
Notwithstanding the foregoing, the vested portion of the Mandatory Bonus
Deferral credited to a Tier I Participant’s Account, and related earnings, shall
be distributed to the Tier I Participant in April of each of the three Plan
Years following the Plan Year in which the Mandatory Bonus Deferral was credited
to the Tier I Participant’s Account.  If the Tier I Participant terminates
employment on or after attaining Normal Retirement Age, dies or becomes Disabled
prior to the end of this three year period, the entire balance shall be
distributed to the Tier I Participant or his Beneficiary in a lump sum payment
as soon as administratively possible following the Termination Date.

          7.3          Distribution of Benefits Upon a Change of Control.  In
the event of a Change of Control, within 30 days thereafter, a Participant may
elect to receive the vested portion of the Participant’s Accounts.  If a
Participant elects to be paid a benefit under this Section 7.3, the lump sum
payment due to the Participant (or Beneficiary, in the event of the
Participant’s death) under this Section shall be made on the first day of the
13th month immediately following the end of the election period.

ARTICLE 8
SURVIVOR BENEFITS

          8.1          Death of Participant Prior to the Commencement of
Benefits.  In the event of a Participant’s death prior to the commencement of
benefits in accordance with Article 7, distribution of the Participant’s
Accounts shall be made to the Participant’s Beneficiary in a lump sum as soon as
practicable on the first day of the seventh month following the Participant’s
death.  The amount of any lump sum benefit payable in accordance with this
Section shall equal the value of the Participant’s Accounts as of the last
business day of the calendar month immediately preceding the date on which such
benefit is paid.  In lieu of the lump sum, a Beneficiary may elect, in the form
and manner, and at the time specified by, the Plan Administrator, any form of
payment allowed under Section 7.1 or 7.2, as applicable, that the Participant
would have been able to elect had the Participant retired on the day before
death.

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          8.2          Death of Participant After Benefits Have Commenced.  In
the event a Participant dies after annual installment benefits payable under
Section 7.1 or 7.2 have commenced, but before the entire balance of the
applicable Distribution Account has been paid, any remaining installments shall
continue to be paid to the Participant’s Beneficiary at such times and in such
amounts as they would have been paid to the Participant had the Participant
survived.

ARTICLE 9
EMERGENCY BENEFIT

          In the event that the Plan Administrator, upon written request of a
Participant, determines, in its sole discretion, that the Participant has
suffered an unforeseeable financial emergency, the Employer shall pay to the
Participant from the Participant’s Distribution Account(s), as soon as
practicable following such determination, an amount necessary to meet the
emergency, after deduction of any and all taxes as may be required pursuant to
Section 11.9 (the “Emergency Benefit”).  For purposes of this Plan, an
unforeseeable financial emergency is an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal, or other such unforeseeable
occurrence.  Cash needs arising from foreseeable events such as the purchase of
a house or education expenses for children shall not be considered to be the
result of an unforeseeable financial emergency.  Emergency Benefits shall be
paid first from the Participant’s In-Service Distribution Accounts, if any, to
the extent the balance of one or more of such In-Service Distribution Accounts
is sufficient to meet the emergency, in the order in which such Accounts would
otherwise be distributed to the Participant.  If the distribution exhausts the
In-Service Distribution Accounts, the Retirement Distribution Account may be
accessed.  With respect to that portion of any Distribution Option Account which
is distributed to a Participant as an Emergency Benefit, in accordance with this
Article, no further benefit shall be payable to the Participant under this
Plan.  Notwithstanding anything in this Plan to the contrary, a Participant who
receives an Emergency Benefit in any Plan Year shall not be entitled to make any
further deferrals for the remainder of such Plan Year.  It is intended that the
Plan Administrator’s determination as to whether a Participant has suffered an
“unforeseeable financial emergency” shall be made consistent with the
requirements under section 457(d) of the Code.

ARTICLE 10
ACCELERATED DISTRIBUTION

          10.1        Availability of Withdrawal Prior to Retirement.  Upon the
Participant’s written election, the Participant may elect to withdraw all or a
portion (minimum of 25%) of the Participant’s Distribution Account(s) at any
time prior to the time such Distribution Account otherwise becomes payable under
the Plan, provided the conditions specified in Section 10.3, Section 10.4, and
Section 10.5 are satisfied.

          10.2        Acceleration of Periodic Distributions.  Upon the
Participant’s written election, the Participant or Participant’s Beneficiary who
is receiving installment payments under the Plan may elect to have all or a
percentage of the remaining installments distributed in the form of an
immediately payable lump sum, provided the condition specified in Section 10.3
is satisfied.

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          10.3        Forfeiture Penalty.  In the event of a withdrawal pursuant
to Section 10.1, or an accelerated distribution pursuant to Section 10.2, the
Participant shall forfeit from his Distribution Account from which the
withdrawal is made an amount equal to 10% of the amount of the withdrawal or
accelerated distribution, as the case may be.  The forfeited amount shall be
deducted from the applicable Distribution Account prior to giving effect to the
requested withdrawal or acceleration.  The Participant and the Participant’s
Beneficiary shall not have any right or claim to the forfeited amount, and the
Employer shall have no obligation whatsoever to the Participant, the
Participant’s Beneficiary or any other person with regard to the forfeited
amount.

          10.4        Minimum Withdrawal.  In no event shall the amount
withdrawn in accordance with Section 10.1 be less than 25% of the amount
credited to the Participant’s Distribution Account immediately prior to the
withdrawal.

          10.5        Suspension from Deferrals.  In the event of a withdrawal
pursuant to Section 10.1, a Participant who is otherwise eligible to make
deferrals under Article 4 shall be prohibited from making any deferrals with
respect to the Plan Year immediately following the Plan Year during which the
withdrawal was made, and any election previously made by the Participant with
respect to deferrals for the Plan Year of the withdrawal shall be void and of no
effect with respect to subsequent deferrals for such Plan Year.

ARTICLE 11
MISCELLANEOUS

          11.1        Amendment and Termination.  The Plan may be amended,
suspended, discontinued or terminated at any time by the Plan Administrator,
acting on behalf of the Company; provided, however, that no such amendment,
suspension, discontinuance or termination shall reduce or in any manner
adversely affect the rights of any Participant with respect to benefits that are
payable or may become payable under the Plan based upon the balance of the
Participant’s Accounts as of the effective date of such amendment, suspension,
discontinuance or termination.  Following a termination of the Plan, the Plan
Administrator, acting on behalf of the Company, shall determine when amounts
shall be distributed from each Participant’s Distribution Accounts
notwithstanding any terms of the Plan to the contrary.

          11.2        Claims Procedure. 

                         a.          Claim

                         A person who believes that he is being denied a benefit
to which he is entitled under the Plan (hereinafter referred to as a “Claimant”)
may file a written request for such benefit with the Plan Administrator, setting
forth the claim.

                         b.          Claim Decision

                         Upon receipt of a claim, the Plan Administrator shall
advise the Claimant that a reply will be forthcoming within ninety (90) days and
shall, in fact, deliver such reply within

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such period.  The Plan Administrator may, however, extend the reply period for
an additional ninety (90) days for reasonable cause.

                         If the claim is denied in whole or in part, the
Claimant shall be provided a written opinion, using language calculated to be
understood by the Claimant, setting forth:

                         (a)         The specific reason or reasons for such
denial;

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

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

                         (d)         Appropriate information as to the steps to
be taken if the Claimant wishes to submit the claim for review;

                         (e)         The time limits for requesting a review
under subsection (c) and for review under subsection (d) hereof; and

                         (f)         The Participant’s right to bring an action
for benefits under Section 502 of ERISA.

                         c.          Request for Review

                         Within sixty (60) days after the receipt by the
Claimant of the written opinion described above, the Claimant may request in
writing that the Plan Administrator review its determination.  The Claimant or
his duly authorized representative may, but need not, review the pertinent
documents and submit issues and comment in writing for consideration by the Plan
Administrator.  If the Claimant does not request a review of the initial
determination within such sixty (60) day period, the Claimant shall be barred
and estopped from challenging the determination.

                         d.          Review of Decision

                         Within sixty (60) days after the Plan Administrator’s
receipt of a request for review, it will review the initial determination. 
After considering all materials presented by the Claimant, the Plan
Administrator will render a written opinion, written in a manner calculated to
be understood by the Claimant, setting forth the specific reasons for the
decision and containing specific references to the relevant provisions of this
Agreement on which the decision is based and the Participant’s right to bring an
action for benefits under Section 502 of ERISA.  If special circumstances
require that the sixty (60) day time period be extended, the Plan Administrator
will so notify the Claimant and will render the decision as soon as possible,
but no later than one hundred twenty (120) days after receipt of the request for
review.

          11.3        Designation of Beneficiary.  Each Participant may
designate a Beneficiary or Beneficiaries (which Beneficiary may be an entity
other than a natural person) to receive any

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payments which may be made following the Participant’s death.  Such designation
may be changed or canceled at any time without the consent of any such
Beneficiary.  Any such designation, change or cancellation must be made in a
form approved by the Plan Administrator and shall not be effective until
received by the Plan Administrator, or its designee.  If no Beneficiary has been
named, or the designated Beneficiary or Beneficiaries shall have predeceased the
Participant, the Beneficiary shall be the Participant’s estate.  If a
Participant designates more than one Beneficiary, the interests of such
Beneficiaries shall be paid in equal shares, unless the Participant has
specifically designated otherwise.

          11.4        Limitation of Participant’s Right.  Nothing in this Plan
shall be construed as conferring upon any Participant any right to continue in
the employment of the Company, nor shall it interfere with the rights of the
Company to terminate the employment of any Participant and/or to take any
personnel action affecting any Participant without regard to the effect which
such action may have upon such Participant as a recipient or prospective
recipient of benefits under the Plan.  Any amounts payable hereunder shall not
be deemed salary or other compensation to a Participant for the purposes of
computing benefits to which the Participant may be entitled under any other
arrangement established by the Company for the benefit of its employees.

          11.5        No Limitation on Company Actions.  Nothing contained in
the Plan shall be construed to prevent the Company from taking any action which
is deemed by it to be appropriate or in its best interest.  No Participant,
Beneficiary, or other person shall have any claim against the Company as a
result of such action.

          11.6        Obligations to Company.  If a Participant becomes entitled
to a distribution of benefits under the Plan, and if at such time the
Participant has outstanding any debt, obligation, or other liability
representing an amount owing to the Company, then the Company may offset such
amount owed to it against the amount of benefits otherwise distributable.  Such
determination shall be made by the Plan Administrator.

          11.7        Nonalienation of Benefits.  Except as expressly provided
herein, no Participant or Beneficiary shall have the power or right to transfer
(otherwise than by will or the laws of descent and distribution), alienate, or
otherwise encumber the Participant’s interest under the Plan.  The Company’s
obligations under this Plan are not assignable or transferable except to (a) any
corporation or partnership which acquires all or substantially all of the
Company’s assets or (b) any corporation or partnership into which the Company
may be merged or consolidated.  The provisions of the Plan shall inure to the
benefit of each Participant and the Participant’s Beneficiaries, heirs,
executors, administrators or successors in interest.

          11.8        Protective Provisions.  Each Participant shall cooperate
with the Company by furnishing any and all information requested by the Company
in order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company.  If a Participant refuses to
cooperate, the Company shall have no further obligation to the Participant under
the Plan, other than payment to such Participant of the then current balance of
the Participant’s Distribution Option Accounts in accordance with his prior
elections.

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          11.9        Withholding Taxes.  The Company may make such provisions
and take such action as it may deem necessary or appropriate for the withholding
of any taxes which the Company is required by any law or regulation of any
governmental authority, whether Federal, state or local, to withhold in
connection with any benefits under the Plan, including, but not limited to, the
withholding of appropriate sums from any amount otherwise payable to the
Participant (or his Beneficiary).  Each Participant, however, shall be
responsible for the payment of all individual tax liabilities relating to any
such benefits.

          11.10      Unfunded Status of Plan.  The Plan is intended to
constitute an “unfunded” plan of deferred compensation for Participants. 
Benefits payable hereunder shall be payable out of the general assets of the
Company, and no segregation of any assets whatsoever for such benefits shall be
made.  Notwithstanding any segregation of assets or transfer to a grantor trust,
with respect to any payments not yet made to a Participant, nothing contained
herein shall give any such Participant any rights to assets that are greater
than those of a general creditor of the Company.

          11.11      Severability.  If any provision of this Plan is held
unenforceable, the remainder of the Plan shall continue in full force and effect
without regard to such unenforceable provision and shall be applied as though
the unenforceable provision were not contained in the Plan.

          11.12      Governing Law.  The Plan shall be construed in accordance
with and governed by the laws of the Commonwealth of Pennsylvania, without
reference to the principles of conflict of laws.

          11.13      Headings.  Headings are inserted in this Plan for
convenience of reference only and are to be ignored in the construction of the
provisions of the Plan.

          11.14      Gender, Singular and Plural.  All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, or
neuter, as the identity of the person or persons may require.  As the context
may require, the singular may read as the plural and the plural as the singular.

          11.15      Notice.  Any notice or filing required or permitted to be
given to the Plan Administrator or the Plan Administrator under the Plan shall
be sufficient if in writing and hand delivered, or sent by registered or
certified mail, to the Human Resources Department, or to such other entity as
the Plan Administrator or the Plan Administrator may designate from time to
time.  Such notice shall be deemed given as to the date of delivery, or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.

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