THE PEP BOYS - MANNY, MOE & JACK

ANNUAL INCENTIVE BONUS PLAN

(as amended and restated as of June 24, 2009)

The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation (the "Company"),
previously established, effective January 29, 1989, an Annual Incentive Bonus
Plan (the "Plan") for the benefit of officers of the Company who were eligible
to participate as provided therein. The Plan has been amended and restated in
its entirely as follows and approved by the Company's shareholders to be
effective as of June 24, 2009.

1. Purpose. The Plan is intended to increase the profitability of the Company by
giving employees of the Company holding positions at the levels of officer or
director (such employees being hereinafter collectively referred to as the
"Eligible Employees") a financial stake in the growth and profitability of the
Company. The Plan has the further objective of enhancing the Company's
compensation packages for Eligible Employees, thus enabling the Company to
attract and retain officers and other key employees of the highest ability. The
Plan is intended to provide Eligible Employees with incentive opportunities
that: (a) provide compensation opportunities which are competitive with other
companies of similar size and industry focus; (b) focus Eligible Employees'
attention on the accomplishment of specific Company goals; and (c) recognize
different levels and types of individual contributions by providing a portion of
the incentive payout for the achievement of individual objectives. The Plan is
intended to supplement, not replace, any other bonus paid by the Company to any
of its Eligible Employees and is not intended to preclude the continuation of
such arrangements or the adoption of additional bonus or incentive plans,
programs or contracts.

 

2. Definitions.

 a. "Applicable Performance Measures" shall mean the Company Performance
    Measures and/or the Individual Performance Measures upon which a
    Participant's right to receive a Bonus is based.
 b. "Award Period" shall mean a measuring period of one Fiscal Year.
 c. "Bonus" shall mean a cash payment made by the Company to a Participant after
    an Award Period, based on performance against specific predetermined
    performance objectives for both the Company and the Participant, as
    calculated in accordance with the provisions of this Plan document.
 d. "Bonus Level" shall mean the level at which a Participant shall participate
    in the Plan as set forth in Paragraph 4(b) hereof.
 e. "CEO" shall mean the person elected to the office of Chief Executive Officer
    of the Company by the Board of Directors.
 f. "Code" shall mean the Internal Revenue Code of 1986, as amended.
 g. "Compensation Committee" shall mean the Compensation Committee of the Board.
    The Compensation Committee shall consist of two or more persons appointed by
    the Board, each of whom shall be an "outside director" as defined under Code
    section 162(m) and related Treasury regulations.
 h. "Fiscal Year" shall mean the Fiscal Year of the Company which ends on the
    Saturday nearest January 31 in each year.
 i. "Participant" shall have the meaning set forth in Paragraph 4 hereof.
 j. "Salary" shall mean the base salary of a Participant for a Fiscal Year. For
    purposes of the foregoing, base salary shall include (i) amounts which the
    Participant elects to forego to provide benefits under a plan which
    satisfies the provisions of section 401(k) or section 125 of the Code and
    (ii) amounts which the Participant elects to defer under a deferred
    compensation plan or program, other than an equity-based deferred
    compensation plan, adopted by the Company. Base salary shall not include any
    amount attributable to any bonus paid or accrued (including any bonus
    deferred under a deferred compensation plan or program adopted by the
    Company), whether or not pursuant to a plan or program.

3. Administration, Amendment and Termination.

 a. The Plan shall be administered by the Compensation Committee acting by a
    majority vote of its members. The Compensation Committee shall have the
    power and authority to take all actions and make all determinations which it
    deems necessary or desirable to effectuate, administer or interpret the
    Plan. The Company's adoption and continuation of the Plan is voluntary. The
    Compensation Committee shall have the power and authority to extend, amend,
    modify or terminate the Plan at any time; provided, however, that the
    Compensation Committee shall not have the power to amend or modify any
    provision of the Plan without stockholder approval in a manner that would
    affect the terms of the Plan applicable to a Bonus intended to constitute
    qualified performance-based compensation under Code section 162(m), if
    stockholder approval would be required under Code section 162(m). The
    Compensation Committee's authority to extend, amend or modify the Plan shall
    include, without limitation, the right to change Award Periods, to determine
    the time or times of paying Bonuses, to establish and approve Company and
    individual performance goals and the relative weightings of the goals, and
    to establish such other measures as may be necessary to meet the objectives
    of the Plan. In particular, but without limitation of the foregoing, the
    Compensation Committee shall have the power and authority to make any
    amendments or modifications to the Plan which may be necessary for the Plan
    to maintain compliance with Code section 162(m).
 b. All actions taken and all determinations made by the Compensation Committee
    in accordance with the power and authority conferred upon the Compensation
    Committee under Paragraph 3(a) above shall be final, binding and conclusive
    on all parties, including the Company and all Participants.

4. Participants.

 a. Each Eligible Employee shall be entitled to participate in the Plan for each
    Fiscal Year or portion thereof in which such employee holds a position at
    the level of officer or director of the Company (the "Participants", or
    individually, "Participant"), unless excluded from participation by the
    Compensation Committee or as provided by Paragraph 11 hereof. With respect
    to an individual who becomes an Eligible Employee during an Award Period,
    such individual shall become a Participant, unless excluded from
    participation by the Compensation Committee or as provided in Paragraph 11
    hereof, and shall be eligible to receive an amount equal to the amount which
    would have been paid if the Participant had been an Eligible Employee for
    the entire Award Period, multiplied by a fraction, the numerator of which is
    the number of days during the Award Period that the Participant was an
    Eligible Employee of the Company and the denominator of which is the number
    of days in the Award Period.
 b. Each Participant shall participate in the Plan and earn Bonuses at one of
    five Bonus Levels, as set forth below:

Bonus Level

Participant Group

Tier I CEO

Tier II Executive Vice Presidents

Tier III Senior Vice Presidents

Tier IV Vice Presidents

With respect to any Participant who was employed at more than one of the Bonus
Levels during an Award Period, the total Bonus amount for such Award Period for
which such Participant shall be eligible shall be the sum of prorated Bonus
payments corresponding to the applicable Bonus Levels. Each such prorated Bonus
payment shall equal the amount which would have been paid if the Participant had
been an Eligible Employee at the applicable Bonus Level for the entire Award
Period, multiplied by a fraction, the numerator of which is the number of days
during the Award Period that the Participant was employed at such Bonus Level
and the denominator of which is the number of days in the Award Period.

5. Company Performance Measures.

 a. Under the Plan, for each Award Period the Compensation Committee will
    establish minimum, target and maximum performance goals for the Company
    using one or more of the following business criteria (the "Company
    Performance Measures"): (1) return on total stockholder equity; (2) earnings
    per share of Common Stock; (3) net income (before or after taxes); (4)
    earnings before interest, taxes, depreciation and amortization; (5) sales or
    revenue targets; (6) return on assets, capital or investment; (7) cash flow:
    (8) market share; (9) cost reduction goals; (10) budget comparisons; (11)
    implementation or completion of projects or processes strategic or critical
    to the Corporation's business operations; (12) measures of customer
    satisfaction; and (13) any combination of, or a specified increase in, any
    of the foregoing. Such performance goals may be based upon the attainment of
    specified levels of the Company's performance under one or more of the
    measures described above relative to the performance of other entities and
    may also be based on the performance of any of the Company's business units
    or divisions or any parent or subsidiary. In addition, the Compensation
    Committee will establish relative weightings for the respective Company
    Performance Measures being used.
 b. To the extent applicable, the Compensation Committee, in determining whether
    and to what extent a Company Performance Measure has been achieved, shall
    use the information set forth in the Company's audited financial statements.

6. Individual Performance Measures. Under the Plan, for each Award Period the
Company will establish individual or "small team" performance goals for each
Participant (the "Individual Performance Measures"); provided, however, that
Individual Performance Measures shall not apply to a Bonus designated as
"qualified performance-based compensation" under Code section 162(m).

7. Establishment of Plan Components.

 a. During the first ninety (90) days of each Award Period (or such other period
    provided in Paragraph 9 with respect to Bonuses designated as "qualified
    performance-based compensation" under Code section 162(m) , the Compensation
    Committee will establish and approve the following components of the Plan
    for the Award Period: (i) the Participants; (ii) the minimum, target and
    maximum Company performance levels for each Company Performance Measure
    being used; (iii) the relative weightings of the respective Company
    Performance Measures being used; (iv) the target, minimum and maximum Bonus
    amounts (each expressed as a percentage of salary) at each Bonus Level; and
    (v) the percentages of the Bonus amounts at each of the Bonus Levels which
    are attributable to the Company's performance and the individual
    Participant's performance, respectively, during the Award Period. The
    Compensation Committee shall set forth the decisions reached on each of the
    items in this Paragraph 7(a) in its minutes.
 b. During the first ninety (90) days of each Award Period, the Compensation
    Committee will review, approve and set forth in its minutes, the following
    information for the Award Period, as determined by the Compensation
    Committee: (i) the Bonus Levels; (ii) the Participants in each Bonus Level
    (classified by title of position held); (iii) the target Bonus amount for
    each Bonus Level (expressed as a percentage of salary); (iv) the percentages
    of the Bonus amounts at each of the Bonus Levels which are attributable to
    the Company's performance and the individual Participant's performance,
    respectively, during the Award Period; (v) the Company Performance Measures
    for the current Award Period; (vi) the relative weightings of each such
    Company Performance Measure; and (vii) the minimum, target and maximum
    performance levels for each such Company Performance Measure.

8. Determination of Bonus. Within sixty (60) days after the end of the Award
Period, actual performance will be compared to the predetermined performance
levels for both Company Performance Measures and Individual Performance
Measures, and the resulting actual Bonus amounts for Participants will be
approved by the Compensation Committee. Subject to Paragraph 9(c) hereof with
respect to any Bonus designated as "qualified performance-based compensation"
under Code section 162(m), the Committee shall have the authority to increase or
decrease Bonus amounts, in its sole discretion, notwithstanding any achievement
of the applicable Company Performance Measure and Individual Performance
Measure, as applicable. Nothing in this Paragraph 8 shall be used to create any
presumption that Bonuses under the Plan are the exclusive means of providing
incentive compensation for Eligible Employees, it being expressly understood and
agreed that the Compensation Committee has the authority to recommend to the
Board of Directors payments to any of the Eligible Employees, in cash or
otherwise, based on performance measures or otherwise, other than Bonuses under
this Plan to Participants.

9. Special Rules for Qualified Performance -Based Compensation

 a. The maximum amount for a Bonus designated as "qualified performance-based
    compensation" under Code section 162(m) payable to a Participant for any
    Fiscal Year shall not exceed three million dollars ($3,000,000).
 b. Notwithstanding anything to the contrary set forth in this Plan, the
    Compensation Committee shall establish the Applicable Performance Measures
    for Bonuses designated as "qualified performance-based compensation" under
    Code section 162(m) no later than the earliest to occur of (i) the ninetieth
    (90th) day following the beginning of the Award Period or (ii) the date on
    which 25% of the Award Period has been completed, or (iii) such other date
    as may be required under applicable regulations under Code section 162(m).
    Such Applicable Performance Measures shall be set forth in the minutes of
    the Compensation Committee.
 c. Any Bonus payable to a Participant that is designated as "qualified
    performance-based compensation" under Code section 162(m) shall be based on
    Applicable Performance Measures that satisfy the requirements for "qualified
    performance-based compensation" under Code section 162(m), including the
    requirement that the achievement of the Applicable Performance Measures be
    substantially uncertain at the time they are established and that the
    Applicable Performance Measures be established in such a way that a third
    party with knowledge of the relevant facts could determine whether and to
    what extent the Applicable Performance Measures have been met. To the extent
    that any Bonus is designated as "qualified performance-based compensation"
    under Code section 162(m), no such Bonus may be made as an alternative to
    any other award that is not designated as "qualified performance based
    compensation" but instead must be separate and apart from all other awards
    made. To the extent a Bonus is designated as "qualified performance-based
    compensation," the Compensation Committee is authorized to reduce such Bonus
    for any Award Period based upon its assessment of personal performance or
    other factors, but may not increase the Bonus that would otherwise be
    payable to the Participant. In no event shall a reduction to one
    Participant's Bonus result in an increase to a Bonus designated as
    "qualified performance based compensation" under Code section 162(m).
 d. If a Bonus to which a Participant may become entitled is designated as
    "qualified performance-based compensation" under Code section 162(m), the
    Compensation Committee shall certify in writing prior to payment of such
    Bonus that the Applicable Performance Measures were in fact achieved. Any
    such certification by the Compensation Committee shall be set forth in its
    minutes.

10. Payment of Bonuses. Bonuses shall be paid in cash or otherwise deferred by
the Participant (as permitted by the Company and consistent with Code section
409A) within ninety (90) days after the end of the Award Period to which such
Bonus relates.

11. Termination of Employment.

 a. If a Participant's employment with the Company has terminated during an
    Award Period, for any reason whatsoever, with or without cause, then the
    Participant may not receive a Bonus for such Award Period, except as
    otherwise provided in Paragraph 11(b) below or in a separate written
    agreement between the Company and the Participant.
 b. If during an Award Period, a Participant dies; becomes disabled; or retires
    on or after his Early Retirement Date (as defined in the Company's defined
    benefit pension plan), such Participant (or the Participant's designated
    beneficiary) shall be paid, within ninety (90) days after the end of the
    Award Period, an amount equal to the amount which would have been paid if
    the Participant had been employed by the Company throughout the entire Award
    Period, multiplied by a fraction, the numerator of which is the number of
    days during the Award Period that the Participant was employed by the
    Company and the denominator of which is the number of days in the Award
    Period.

12. Assignment and Alienation of Benefits.

 a. To the maximum extent permitted by law, a Participant's right or benefits
    under this Plan shall not be subject to anticipation, alienation, sale,
    assignment, pledge, encumbrance or charge, and any attempt to anticipate,
    alienate, sell, assign, pledge, encumber or charge the same shall be void.
    No right or benefit hereunder shall in any manner be liable for or subject
    to the debts, contracts, liabilities or torts of the person entitled to such
    benefit.
 b. If any Participant becomes bankrupt or attempts to anticipate, alienate,
    sell, assign, pledge, encumber, or charge any rights to a benefit hereunder,
    then such right or benefit, in the discretion of the Compensation Committee,
    may be terminated. In such event, the Company may hold or apply the same or
    any part thereof for the benefit of the Participant, his or her spouse,
    children or dependents, or any of them, in such manner and portion as the
    Compensation Committee may deem proper.

13. Miscellaneous.

 a. The establishment of this Plan shall not be construed as granting any
    Participant the right to remain in the employ of the Company, nor shall this
    Plan be construed as limiting the right of the Company to discharge a
    Participant from employment at any time for any reason whatsoever, with or
    without cause.
 b. The Company may withhold from any amounts payable under the Plan such
    Federal, state or local taxes as may be required to be withheld pursuant to
    any applicable law or regulation.
 c. It is the intent of the Company that the Plan and any Bonuses that are
    designated as "qualified performance-based compensation" under Code section
    162(m) made under the Plan to a Participant comply with the applicable
    provisions of Code section 162(m). To the extent that any legal requirement
    of Code section 162(m) as set forth in the Plan ceases to be required under
    Code section 162(m), that Plan provision shall cease to apply.
 d. This Plan, and Bonuses payable hereunder, are intended to comply with the
    short-term deferral rule set forth in the regulations under Code section
    409A, in order to avoid application of Code section 409A to the Plan.
    Notwithstanding the foregoing, if, and to the extent that any payment of a
    Bonus under this Plan constitutes deferred compensation subject to the
    requirements of Code section 409A, all payments shall be made, and this Plan
    shall be administered so that such payments are made, in accordance with the
    requirements of Code section 409A.
 e. The paragraph headings in this Plan are for convenience only; they form no
    part of the Plan and shall not affect its interpretation.
 f. This Plan shall be governed by and construed in accordance with the laws of
    the Commonwealth of Pennsylvania.

/s/THE PEP BOYS - MANNY, MOE & JACK

Dated: June 24, 2009