Exhibit 10.20


THE PEP BOYS

GRANTOR TRUST AGREEMENT


This Grantor Trust
Agreement (the “Trust Agreement”) is dated as of January 31, 2004, by and
between THE PEP BOYS—MANNY, MOE & JACK  (“the
Company”) and WACHOVIA BANK, NATIONAL ASSOCIATION, (“the
Trustee”).


Recitals


(a)           WHEREAS,
the Company has adopted, and may in the future adopt, the nonqualified deferred
compensation Plans and Agreements (the “Arrangements”) listed in Attachment A,
and as Attachment A may be supplemented from time to time by the Company’s
Chief Executive Officer (the “CEO”);


(b)          WHEREAS, the
Company maintained The Pep Boys—Manny, Moe & Jack Trust Agreement for
the Executive Supplemental Pension Plan and certain Contingent Compensation
Plans, dated as of February 13, 1992 (“the Former Trust”), but terminated
the Former Trust as of January 31, 2004 and wishes to add the funding
under the Former Trust to the funding that will be used for the Arrangements
under this Trust Agreement (hereinafter, part of the “Arrangements” as
otherwise described above;


(c)           WHEREAS,
the Company has incurred or expects to incur liability under the terms of such
Arrangements with respect to the individuals participating in such Arrangements
(the “Participants and Beneficiaries”);


(d)          WHEREAS,
the Arrangements, copies of which are attached hereto as Attachment B, as in
effect from time to time, and incorporated herein by this reference, are
intended to provide benefits for certain Participants and Beneficiaries; and


(e)           WHEREAS,
the Company hereby establishes a Trust (the “Trust”) and shall contribute to
the Trust assets that shall be held therein, subject to the claims of the
Company’s creditors in the event of the Company’s Insolvency, as herein
defined, until paid to Participants and their Beneficiaries in such manner and
at such times as specified in the Arrangements and in this Trust Agreement;


(f)             WHEREAS,
it is the intention of the parties that this Trust shall constitute an unfunded
arrangement and shall not affect the status of the Arrangements as unfunded
plans, each maintained for the purpose of providing deferred compensation for a
select group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”);
and


(g)           WHEREAS,
it is the intention of the Company to make contributions to the Trust to
provide itself with a source of funds (the “Fund”) to assist it in satisfying
its liabilities under the Arrangements.


NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:


Section 1.   Establishment of The Trust


(a)           The Trust is intended
to be a Grantor Trust, of which the Company is the Grantor, within the meaning
of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal
Revenue Code of 1986, as amended, and shall be construed accordingly.


(b)          The Company shall be
considered the Grantor for the purposes of the Trust.



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(c)           The Trust hereby
established is irrevocable.


(d)          The Company hereby deposits
with the Trustee in the Trust one hundred dollars and zero cents ($100.00)
which shall become the principal of the Trust to be held, administered and
disposed of by the Trustee as provided in this Trust Agreement.


(e)           The principal of the
Trust, and any additions thereto and earnings thereon, shall be held separate
and apart from other funds of the Company and shall be used exclusively for the
uses and purposes of Participants, Beneficiaries and general creditors as
herein set forth. Participants and their Beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Arrangements and this Trust Agreement shall be
unsecured contractual rights of Participants and their Beneficiaries against
the Company. Any assets held by the Trust will be subject to the claims of the
general creditors of the Company under federal and state law in the event the
Company is Insolvent, as defined in Section 3(a) herein.


(f)             The Company, in its
sole discretion, may at any time, or from time to time, make additional
deposits of cash or other property acceptable to the Trustee in the Trust to
augment the principal to be held, administered and disposed of by the Trustee
as provided in this Trust Agreement. Prior to a Change in Control, neither the
Trustee nor any Participant or Beneficiary shall have any right to compel
additional deposits.


(g)           Upon a Potential Change
in Control, as defined herein, the Company shall, as soon as possible, but in
no event longer than thirty (30) days following the occurrence of a Potential
Change of Control, make a contribution to the Trust in an amount that is
sufficient (taking into account the Trust assets, if any, resulting from prior
contributions) to fund the Trust in an amount equal to no less than 100% but no
more than 120% of the amount necessary to pay each Participant or Beneficiary
the benefits to which Participants or their Beneficiaries would be entitled
pursuant to the terms of the Arrangements as of the date on which the Potential
Change in Control occurred.


(h)          In the event a Change in
Control, as defined herein, does not occur within one year of a Potential
Change in Control, the Company shall have the right to recover any amounts
contributed to and remaining on hand in the Trust pursuant to Section 1(g).


(i)             Upon
a Change in Control, the Company shall, as soon as possible, but in no event
longer than thirty (30) days following the occurrence of a Change in Control,
make an irrevocable contribution to the Trust in an amount that is sufficient
(taking into account the Trust assets, if any, resulting from prior
contributions) to fund the Trust in an amount equal to no less than 100 percent
but no more than 120 percent of the amount necessary to pay each Participant
or Beneficiary the benefits to which Participants or their Beneficiaries would
be entitled pursuant to the terms of the Arrangements as of the date on which
the Change in Control occurred. The Company shall also fund an Expense Reserve
for the Trustee, and other service providers, which shall be equal to the
amount estimated to be sufficient to pay all fees and expenses that may
thereafter become due.


Section 2.   Payments to Participants and Their Beneficiaries


(a)           Prior to a Change in
Control, distributions from the Trust shall be made by the Trustee to
Participants and Beneficiaries at the direction of the Company except as may
otherwise be provided herein. Prior to a Change in Control, the entitlement of
a Participant or his or her Beneficiaries to benefits under the Arrangements
shall be determined by the Committee or Committees appointed by the Company
under the Arrangements, and any claim for such benefits shall be considered and
reviewed under the procedures set out in the Arrangements unless the Trustee
determines, in its sole and absolute discretion, that there has been a Failure
to Pay.



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(b)          The Company may make
payment of benefits directly to Participants or their Beneficiaries as they
become due under the terms of the Arrangements. The Company shall notify the
Trustee of its decision to make payment of benefits directly prior to the time
amounts are payable to Participants or their Beneficiaries. In addition, if the
principal of the Trust, and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the Arrangements, the
Company shall make the balance of each such payment as it falls due in
accordance with the Arrangements. The Trustee shall notify the Company when
principal and earnings are not sufficient. Nothing in this Agreement shall
relieve the Company of its liabilities to pay benefits due under the
Arrangements except to the extent such liabilities are actually satisfied by
application of assets of the Trust.


(c)           The Company shall
deliver to the Trustee a schedule of benefits due under the Arrangements on an
annual basis. After a Potential Change in Control and before a Change in
Control, the Company shall deliver an updated schedule of benefits due under
the Arrangements that is signed by the CEO and authorized by the Company’s
Board of Directors (the “Board”). After a Change in Control, the Trustee shall
pay benefits due in accordance with such schedule. After a Change in Control,
the Committee or Committees appointed by the Company shall continue to make the
determination of benefits due to Participants or their Beneficiaries and shall
provide the Trustee with an updated schedule of benefits due; provided however,
that a Participant or the Beneficiaries of a deceased Participant may make
application to the Trustee for an independent decision as to the amount or form
of their benefits due under the Arrangements. In making any determination
required or permitted to be made by the Trustee under this Section, the Trustee
shall, in each such case, reach its own independent determination, in its
absolute and sole discretion, as to the Participant’s or Beneficiary’s
entitlement to a payment hereunder.


(d)          Notwithstanding anything
herein to the contrary, upon the occurrence of a Failure to Pay, each
Participant covered by the situation described in clause (i) of the
definition of Failure to Pay, or each of the Participants in the event of a
situation described in clause (ii) of that definition, as the case may be,
shall be entitled to receive from the Trust the payments described by the
underlying Arrangement, as determined by the Trustee, in its sole and absolute
discretion.


(e)           In making its
determination under part (c) or part (d) of this Section 2, the
Trustee may consult with and make such inquiries of such persons, including the
Participant or Beneficiary, the Company, legal counsel, actuaries or other
persons, as the Trustee may reasonably deem necessary. Any reasonable costs
incurred by the Trustee in arriving at its determination shall be reimbursed by
the Company and, to the extent not paid by the Company  within
a reasonable time, shall be charged to the Trust, first to be satisfied from
the Expense Reserve. The Company waives any right to contest any amount paid
over by the Trustee hereunder pursuant to a good faith determination made by
the Trustee made in accordance with the claims procedure set forth in the
applicable arrangement or, if none, in accordance with the claims procedures
set forth in the Company’s Deferred Compensation Plan, notwithstanding any
claim by or on behalf of the Company (absent a manifest abuse of discretion by
the Trustee) that such payments should not be made.


(f)             The Trustee agrees that
it will not itself institute any action at law or at equity, whether in the
nature of an accounting, interpleading action, request for a declaratory
judgment or otherwise, requesting a court or administrative or quasi-judicial
body to make the determination required to be made by the Trustee under this Section 2
in the place and stead of the Trustee. The Trustee may (and, if necessary or
appropriate, shall) institute an action to collect a contribution due the Trust
following a Change in Control or in the event that the Trust should ever
experience a shortfall in the amount of assets necessary to make payments
pursuant to the terms of the Arrangements.



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(g)           In
the event any Participant or his or her Beneficiary is determined to be subject
to federal income tax on any amount to the credit of his or her account under
any Arrangement prior to the time of payment hereunder, whether or not due to
the establishment of or contributions to this Trust, a portion of such taxable
amount equal to the federal, state and local taxes (excluding any interest or
penalties)  owed on such taxable amount, shall be
distributed by the Trustee as soon thereafter as practicable to such
Participant or Beneficiary. The Company shall promptly reimburse the Trust for
any such distribution in an amount certified by the Trustee to be needed for
the Participant’s benefits. For these purposes, a Participant or Beneficiary
shall be deemed to pay state and local taxes at the highest marginal rate of
taxation in the state in which the Participant resides or is employed (or both)
where a tax is imposed and federal income taxes at the highest marginal rate of
taxation, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes. Such distributions shall
be at the direction of the Company or the Trustee, or upon proper application
of the Participant or Beneficiary; provided that the actual amount of the
distribution shall be determined by the Company prior to a Change in Control
and the Trustee following a Change in Control. An amount to the credit of a
Participant’s Account shall be determined to be subject to federal income tax
upon the earliest of: (a) a final determination by the United States
Internal Revenue Service addressed to the Participant or his Beneficiary which
is not appealed to the courts; (b) a final determination by the United
States Tax Court or any other federal court affirming any such determination by
the Internal Revenue Service; or (c) an opinion by the Company’s tax
counsel, addressed to the Company and the Trustee, to the effect that by reason
of Treasury Regulations, amendments to the Internal Revenue Code, published
Internal Revenue Service rulings, court decisions or other substantial
precedent, amounts to the credit of Participants hereunder are subject to
federal income tax prior to payment. The Company shall undertake at its sole
expense to defend any tax claims described herein which are asserted by the
Internal Revenue Service against any Participant or Beneficiary, including
attorney fees and cost of appeal, and shall have the sole authority to
determine whether or not to appeal any determination made by the Service or by
a lower court. The Company also agrees to reimburse any Participant or
Beneficiary for any interest or penalties in respect of tax claims hereunder
upon receipt of documentation of same. Any distributions from the Fund to a
Participant or Beneficiary under this Section 2(g) shall be applied
in accordance with the provisions of the Arrangement to reduce the Company
liabilities to such Participant and/or Beneficiary under the Arrangement with
such reductions to be made on a pro-rata basis over the term of benefit
payments under the Arrangement; provided, however, that in no event shall any Participant,
Beneficiary or estate of any Participant or Beneficiary have any obligation to
return all or any part of such distribution to the Company if such distribution
exceeds benefits payable under an Arrangement. Any reduction in accordance with
the foregoing sentence and the Arrangements shall be  determined
by the Company prior to a Change in Control. Following a Change in Control, the
Company shall continue to make such determination subject to the right of a
Participant to petition the Trustee under Section 2(c).


Section 3.   Trustee Responsibility Regarding Payments To The Trust Beneficiary When The Company Is Insolvent


(a)           The Trustee shall cease
payment of benefits to Participants and their Beneficiaries if the Company is
Insolvent. The Company shall be considered “Insolvent” for purposes of this
Trust Agreement if (i) the Company is unable to pay its debts as they
become due, or (ii) the Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.


(b)          At all times during the
continuance of this Trust, the principal and income of the Trust shall be
subject to claims of general creditors of the Company under federal and state
law as set forth below.


(1)         The Board and the Chief
Executive Officer of the Company shall have the duty to inform the Trustee in
writing that the Company is Insolvent. If a person claiming to be a creditor of
the 



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Company alleges in writing
to the Trustee that the Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending such determination, the
Trustee shall discontinue payment of benefits to Participants or their
Beneficiaries.


(2)         Unless the Trustee has
actual knowledge that the Company is Insolvent, or has received notice from the
Company or a person claiming to be a creditor alleging that the Company is
Insolvent, the Trustee shall have no duty to inquire whether the Company is
Insolvent. The Trustee may in all events rely on such evidence concerning the
Company’s solvency as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination concerning the
Company’s solvency.


(3)         If at any time the
Trustee has determined that the Company is Insolvent, the Trustee shall
discontinue payments to Participants or their Beneficiaries and shall hold the
assets of the Trust for the benefit of the Company’s general creditors. Nothing
in this Trust Agreement shall in any way diminish any rights of Participants or
their Beneficiaries to pursue their rights as general creditors of the Company with
respect to benefits due under the Arrangements or otherwise.


(4)         The Trustee shall resume
the payment of benefits to Participants or their Beneficiaries in accordance
with Section 2 of this Trust Agreement only after the Trustee has
determined that the Company is not Insolvent (or is no longer Insolvent).


(c)           Provided
that there are sufficient assets, if the Trustee discontinues the payment of
benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to
Participants or their Beneficiaries under the terms of the Arrangements for the
period of such discontinuance, less the aggregate amount of any payments made
to Participants or their Beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.


Section 4.   Payments When a Shortfall of The Trust Assets Occurs


(a)           If there are not
sufficient assets for the payment of current and expected future benefits
pursuant to Section 2 or Section 3(c) hereof and the Company
does not otherwise make such payments within a reasonable time after demand
from the Trustee, the Trustee shall allocate the Trust assets among the Participants
or their Beneficiaries in the following order of priority:


(1)         first, among all
Participants and their Beneficiaries in proportion to benefits under the
Company’s Deferred Compensation Plan determined as of the date of a Change in
Control;


(2)         second, among vested
Participants (including partially vested Participants, and regardless of
whether they are actively employed) and their Beneficiaries in proportion to
their vested benefits under the Company’s Executive Supplemental Retirement
Plan determined as of the date of a Change in Control;


(3)         third, among Participants
(regardless of whether they are actively employed) and their Beneficiaries in
proportion to their benefits under any severance agreement between the
Participant and the Company determined as of the date of a Change in Control


(4)         fourth, among non-vested
and partially vested Participants (regardless of whether they are actively
employed) and their Beneficiaries in proportion to their unvested benefits
under any other Arrangement.


(b)          Within each category,
assets shall be allocated pro-rata with respect to the total present value of
benefits expected for each Participant or Beneficiary within the category, and
payments to each Participant or Beneficiary shall be made to the extent of the assets
allocated to each Participant or Beneficiary.



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(c)           Upon
receipt of a contribution from the Company necessary to make up for a shortfall
in the payments due, the Trustee shall resume payments to all the Participants
and Beneficiaries under the Arrangements. Following a Change in Control, the
Trustee shall have the right and duty to compel a contribution to the Trust
from the Company to make-up for any shortfall.


Section 5.   Payments to the Company


(a)           Except as provided in Section 3
and Sections 5(b) and (c) hereof, the Company shall have no right or
power to direct the Trustee to return to the Company or to divert to others any
of the Trust assets before all payment of benefits have been made to
Participants and their Beneficiaries pursuant to the terms of the Arrangements.


(b)          In the event that the
Committee, prior to a Change in Control, or the Trustee in its sole and
absolute discretion, after a Change in Control, determines that the Trust
assets exceed 110 percent (125 percent following a Change in Control) of
the anticipated benefit obligations and administrative expenses that are to be
paid under the Arrangements, the Trustee, at the written direction of the
Committee, prior to a Change in Control, or the Trustee in its sole and
absolute discretion, after a Change in Control, shall distribute to the Company
such excess portion of Trust assets.


(c)           In the event that the Company makes a payment of benefits directly to
Participants or their Beneficiaries after notifying the Trustee of its decision
to make payment of benefits directly pursuant to Section 2(b) hereof,
upon submission of proof of payment to the Trustee, the Company shall be
reimbursed from the Trust assets in the amount of such payment.


Section 6.   Investment Authority


(a)           The Trustee shall not
be liable in discharging its duties hereunder, including without limitation its
duty to invest and reinvest the Fund, if it acts for the exclusive benefit of
the Participants and their Beneficiaries, in good faith and as a prudent person
would act in accomplishing a similar task and in accordance with the terms of
this Trust Agreement and any applicable federal or state laws, rules or
regulations.


(b)          Subject to investment guidelines
agreed to in writing from time to time by the Company and the Trustee prior to
a Change in Control, the Trustee shall have the power in investing and
reinvesting the Fund in its sole discretion:


(1)         To invest and reinvest in
any readily marketable common and preferred stocks, bonds, notes, debentures
(including convertible stocks and securities but not including any stock or
security of the Trustee or the Company other than a de minimis amount held in a mutual fund), any United States
Treasury security, investment grade corporate and United States government
agency debt instrument, money market-fund eligible commercial paper debt
instrument or money market fund of the Trustee, or an affiliate of the Trustee,
and life insurance policies (including underlying mutual funds) without being
limited to the classes or property in which the trustees are authorized to
invest by any law or any rule of court of any state and without regard to
the proportion any such property may bear to the entire amount of the Fund;


(2)         To commingle for
investment purposes all or any portion of the Fund with assets of any other
similar trust or trusts established by the Company with the Trustee for the
purpose of safeguarding deferred compensation or retirement income benefits of
its employees and/or directors;


(3)         To retain any property at
any time received by the Trustee;



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(4)         To participate in any
plan of reorganization, consolidation, merger, combination, liquidation or
other similar plan relating to property held by it and to consent to or oppose
any such plan or any action thereunder or any contract, lease, mortgage,
purchase, sale or other action by any person;


(5)         To deposit any property
held by it with any protective, reorganization or similar committee, to
delegate discretionary power thereto, and to pay part of the expenses and
compensation thereof any assessments levied with respect to any such property
to deposited;


(6)         To extend the time of
payment of any obligation held by it;


(7)         To hold uninvested any
moneys received by it, without liability for interest thereon, but only in
anticipation of payments due for investments, reinvestments, expenses or
disbursements;


(8)         To exercise all voting or
other rights with respect to any property held by it and to grant proxies, discretionary
or otherwise;


(9)         To employ suitable
contractors and counsel, who may be counsel to the Company or to the Trustee,
and to pay their reasonable expenses and compensation from the Fund, first from
the Expense Reserve, to the extent not paid by the Company;


(10)  To register investments in its
own name or in the name of a nominee; to hold any investment in bearer form;
and to combine certificates representing securities with certificates of the
same issue held by it in other fiduciary capacities or to deposit or to arrange
for the deposit of such securities with any depository, even though, when so
deposited, such securities may be held in the name of the nominee of such
depository with other securities deposited therewith by other persons, or to deposit
or to arrange for the deposit of any securities issued or guaranteed by the
United States government, or any agency or instrumentality thereof, including
securities evidenced by book entries rather than by certificates, with the
United States Department of the Treasury or a Federal Reserve Bank, even
though, when so deposited, such securities may not be held separate from
securities deposited therein by other persons; provided, however, that no
securities held in the Fund shall be deposited with the United States
Department of the Treasury or a Federal Reserve Bank or other depository in the
same account as any individual property of the Trustee, and provided, further,
that the books and records of the Trustee shall at all times show that all such
securities are part of the Trust Fund;


(11)  To settle, compromise or submit
to arbitration any claims, debts or damages due or owing to or from the Trust,
respectively, to commence or defend suits or legal proceedings to protect any
interest of the Trust, and to represent the Trust in all suits or legal
proceedings in any court or before any other body or tribunal; provided,
however, that the Trustee shall not be required to take any such action unless
it shall have been indemnified by the Company to its reasonable satisfaction
against liability or expenses it might incur therefrom;


(12)  To hold and retain policies of
life insurance, annuity contracts, and other property of any kind which
policies are contributed to the Trust by the Company or any subsidiary of the
Company or are purchased by the Trustee;


(13)  To hold any other class of
assets which may be contributed by the Company and that is deemed reasonable by
the Trustee, unless expressly prohibited herein; and


(14)  Generally, to do all acts,
whether or not expressly authorized, that the Trustee may deem necessary or
desirable for the protection of the Fund.


(c)           Notwithstanding any
other provision of this Section 6, prior to a Change in Control:


(1)         Grantor shall have the
right, subject to this Section, to direct the Trustee with respect to the
investment of all or any portion of the assets of the Trust. Grantor may also
at any time prior to a 



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Change in Control direct
the Trustee to segregate all or a portion of the Trust in a separate investment
account or accounts and appoint one or more investment managers to direct the
investment and reinvestment of each such investment account or accounts. In
such event, the Company shall notify the Trustee of the appointment of each
such investment manager and/or investment committee. No such investment manager
shall be related, directly or indirectly, to the Company, but members of the
investment committee may be employees of the Company.


(2)         It shall be the duty of
the Trustee to act strictly in accordance with each direction issued to Trustee
by Grantor or an investment manager appointed by Grantor. The Trustee shall be
under no duty to question any such direction, to review any securities or other
property acquired by it pursuant to such directions or to make any recommendations
with respect to such securities or other property.


(3)         Notwithstanding the
foregoing, the Trustee, without obtaining prior approval or direction, shall
invest cash balances held by it from time to time in short term cash
equivalents including, but not limited to, through the medium of any short term
common, collective or commingled trust established and maintained by the
Trustee subject to the instrument establishing such trust fund, or mutual fund,
U.S. Treasury Bills, commercial paper (including such forms of commercial paper
as may be available through the Trustee’s Trust Department), certificates of
deposit (including certificates issued by the Trustee in its separate corporate
capacity), and similar type securities, with a maturity not to exceed one year;
and, furthermore, sell such short term investments as may be necessary to carry
out the instructions of Grantor or an investment manager regarding more
permanent type investment and directed distributions.


(4)         The Trustee shall neither
be liable nor responsible for any loss resulting to the Trust by reason of any
sale or purchase of an investment directed by Grantor or Grantor’s investment
manager nor by reason of the failure to take any action with respect to any
investment which was acquired pursuant to any such direction in the absence of
further directions of Grantor or its investment manager so long as the Trustee
acts in good faith.


(5)         Notwithstanding anything
in this Agreement to the contrary, the Trustee shall be indemnified as permitted
by applicable law and saved harmless by Grantor, in accordance with the
provisions of Section 10(b), from and against any and all personal
liability to which the Trustee may be subjected by carrying out any directions
of Grantor or its investment manager issued pursuant hereto or for failure to
act in the absence of directions of Grantor or its investment manager including
all expenses reasonably incurred in its defense in the event Grantor fails to
provide such defense, so long as the Trustee acts in good faith; provided,
however, the Trustee shall not be so indemnified if it participates knowingly
in, or knowingly undertakes to conceal, an act or omission of Grantor or its
investment manager, having actual knowledge that such act or omission is a breach
of a fiduciary duty; provided further, however, that the Trustee shall not be
deemed to have knowingly participated in or knowingly undertaken to conceal an
act or omission of Grantor or its investment manager with knowledge that such
act or omission was a breach of fiduciary duty by merely complying in good
faith with directions of Grantor or its investment manager or for failure to
act in the absence of directions of Grantor or its investment manager. The
Trustee may rely in good faith upon any order, certificate, notice, direction
or other documentary confirmation purporting to have been issued by Grantor or
its investment manager which the Trustee believes to be genuine and to have
been issued by Grantor or its investment manager. The Trustee shall not be
charged with knowledge of the termination of the appointment of its investment
manager until it receives written notice thereof from Grantor.


(d)          Following a Change in
Control, and subject to the specific provisions of this subsection that provide
otherwise, the Trustee shall have the sole and absolute discretion in the
management of the Trust 



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assets and shall have all
the powers set forth under Section 6(b). In investing the Trust assets,
the Trustee shall consider:


(1)         the needs of the
Arrangements;


(2)         the need for matching of
the Trust assets with the liabilities of the Arrangements; and


(3)         the duty of the Trustee
to act solely in the best interests of the Participants and their
Beneficiaries.


The Trustee shall invest the assets of the Trust
related to the Company’s Supplemental Executive Retirement Plan (“SERP”) and
the Deferred Compensation Plan primarily in universal variable life insurance
policies. To the extent the Trust holds cash that may not be invested in
universal variable life insurance policies, the Trustee shall invest such cash
in its proprietary money market mutual funds. The Trustee shall invest the
sub-accounts of the universal variable life insurance policies as follows:


It is the intent of the Company that the cash value of
the universal variable life insurance policies be invested in sub-accounts
designated from time to time by the administrator of the universal variable
life insurance policies. The Trustee shall follow the directions of the
administrator of the universal variable life insurance policies with respect to
the investment of the cash surrender value.


Following a Change in Control, the Trustee shall
continue to follow the investment policy set forth above with respect to the
SERP and the Deferred Compensation Plan. Should the Trustee need to raise cash
from the universal variable life insurance policies, the Trustee shall follow
the directions of the administrator. However, the Trustee shall invest any cash
it receives from the SERP or the Deferred Compensation Plan assets in money
market instruments.


Any assets contributed to the Trust following a Change
in Control for any additional Arrangements covered by the Trust shall be
invested in the Trustee’s proprietary money market funds unless, prior to the
Change in Control, the Company specified a different investment policy.


The Company may
designate the administrator of the universal variable life insurance policies
by separate letter. The Trustee shall be indemnified and held harmless, in
accordance with the provisions of Section 10(b), for acting in good faith
upon direction of the administrator.


(e)           The Trustee shall have
the right, in its sole discretion, to delegate its investment responsibility to
an investment manager who may be an affiliate of the Trustee. In the event the
Trustee shall exercise this right, the Trustee shall remain, at all times
responsible for the acts of an investment manager.


(f)             The
Company shall have the right at any time, and from time to time in its sole
discretion, to substitute assets (other than securities issued by the Trustee
or the Company) of equal fair market value for any asset held by the Trust
provided such assets are not illiquid. This right is exercisable by the Company
in a nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity; provided, however, that, following a Change in Control, no
such substitution shall be permitted unless the Trustee determines that the
fair market values of the substituted assets are equal.


Section 7.   Insurance Contracts


(a)           To the extent that the
Trustee is directed by the Company prior to a Change in Control to invest part
or all of the Trust Fund in insurance contracts, the Trustee shall follow such
direction, and the type and amount thereof shall be specified by the Company. The
Trustee shall be under no duty to make inquiry as to the propriety of the type
or amount so specified.


(b)          Each insurance contract
issued shall provide that the Trustee shall be the owner thereof with the power
to exercise all rights, privileges, options and elections granted by or
permitted under such 



 9
 









contract or under the rules of
the insurer. The exercise by the Trustee of any incidents of ownership under
any contract shall, prior to a Change in Control, be subject to the direction
of the Company. After a Change in Control, the Trustee shall have all such
rights.


(c)           The Trustee shall have
no power to name a beneficiary of the policy other than the Trust, to assign
the policy (as distinct from conversion of the policy to a different form) other
than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against an insurance policy held in the Trust Fund.


(d)          No
insurer shall be deemed to be a party to the Trust and an insurer’s obligations
shall be measured and determined solely by the terms of contracts and other
agreements executed by the insurer.


Section 8.   Disposition of Income


All income received by the
Trust shall be accumulated and reinvested within the Trust.


Section 9.   Accounting by The Trustee


The Trustee shall keep
accurate and detailed records of all investments, receipts, disbursements, and
all other transactions required to be made, including such specific records as
shall be agreed upon in writing between the Company and the Trustee. Within
sixty (60) days following the close of each calendar year and within sixty (60)
days after the removal or resignation of the Trustee, the Trustee shall deliver
to the Company a written account of its administration of the Trust during such
year or during the period from the close of the last preceding year to the date
of such removal or resignation setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal or resignation,
as the case may be. The Company may approve such account by an instrument in
writing delivered to the Trustee. In the absence of the Company’s filing with
the Trustee objections to any such account within one hundred eighty (180) days
after its receipt, the Company shall be deemed to have so approved such account.
In such case, or upon the written approval by the Company of any such account,
the Trustee shall, to the extent permitted by law, be discharged from all
liability to the Company for its acts or failures to act described by such
account. The foregoing, however, shall not preclude the Trustee from having its
accounting settled by a court of competent jurisdiction. The Trustee shall be
entitled to hold and to commingle the assets of the Trust in one Fund for
investment purposes but at the direction of the Company prior to a Change in
Control, the Trustee shall create one or more sub-accounts.


Section 10.   Responsibility of The Trustee


(a)           The Trustee shall act
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims, provided, however, that the Trustee shall incur no liability to any
person for any action taken in good faith pursuant to a direction, request or
approval given by the Company which is contemplated by, and in conformity with,
the terms of the Arrangements or this Trust and is given in writing by the
Company. In the event of a dispute between the Company and a party, the Trustee
may apply to a court of competent jurisdiction to resolve the dispute, subject,
however to Section 2(f) hereof.



 10















(b)          The Company hereby
indemnifies the Trustee against losses, liabilities, claims, costs and expenses
in connection with the administration of the Trust, unless resulting from the
negligence or misconduct of Trustee. To the extent the Company fails to make
any payment on account of an indemnity provided in this paragraph 10(b), in a
reasonably timely manner, the Trustee may obtain payment from the Trust, first
from the Expense Reserve. If the Trustee undertakes or defends any litigation
arising in connection with this Trust or to protect a Participant’s or
Beneficiary’s rights under the Arrangements, the Company agrees to indemnify
the Trustee against the Trustee’s costs, reasonable expenses and liabilities
(including, without limitation, attorneys’ fees and expenses) relating thereto
and to be primarily liable for such payments. If the Company does not pay such
costs, expenses and liabilities in a reasonably timely manner, the Trustee may
obtain payment from the Trust, first from the Expense Reserve. No such
indemnification shall be required unless the Trustee (i) provides the
Company with prompt written notice, unless the Company is not prejudiced by
late notice, of the possibility that indemnification might be required and (ii) offers
the Company the right of defense provided there is no conflict of interest
between the Company’s position and that of the Trustee.


(c)           Prior to a Change in
Control, the Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or obligations
hereunder. Following a Change in Control the Trustee shall select independent
legal counsel and may consult with counsel or other persons with respect to its
duties and with respect to the rights of Participants or their Beneficiaries
under the Arrangements.


(d)          The Trustee may hire
agents, accountants, actuaries, investment advisors, financial consultants or
other professionals to assist it in performing any of its duties or obligations
hereunder and may rely on any determinations made by such agents and
information provided to it by the Company.


(e)           The Trustee shall have,
without exclusion, all powers conferred on the Trustee by applicable law,
unless expressly provided otherwise herein.


(f)             Notwithstanding
any powers granted to the Trustee pursuant to this Trust Agreement or to
applicable law, the Trustee shall not have any power that could give this Trust
the objective of carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.


Section 11.   Compensation and Expenses of The Trustee


The Trustee’s compensation
shall be as agreed in writing from time to time by the Company and the Trustee.
The Company shall pay all administrative expenses and the Trustee’s fees and
shall promptly reimburse the Trustee for any fees and expenses of its agents. If
not so paid, the fees and expenses shall be paid from the Trust, first from the
Expense Reserve, but to the extent the Expense Reserve has been exhausted, from
the remainder of the Trust.


Section 12.   Resignation and Removal of The Trustee


(a)           Prior to a Change in
Control, the Trustee may resign at any time by written notice to the Company,
which shall be effective sixty (60) days after receipt of such notice unless
the Company and the Trustee agree otherwise. Following a Change in Control, the
Trustee may resign only after the appointment of a successor Trustee.


(b)          The Trustee may be
removed by the Company on sixty days (60) days notice or upon shorter notice
accepted by the Trustee prior to a Change in Control. Subsequent to a Potential
Change in Control, the Trustee may only be removed by the Company with the
consent of a Majority of the Participants.


(c)           If the Trustee resigns
within two years after a Change in Control, as defined herein, the Company, or
if the Company fails to act within a reasonable period of time following such
resignation, the Trustee, 



 11
 









shall apply to a court of
competent jurisdiction for the appointment of a successor Trustee which
satisfies the requirements of Section 13 or for instructions.


(d)          Upon resignation or
removal of the Trustee and appointment of a successor Trustee, all assets shall
subsequently be transferred to the successor Trustee. The transfer shall be
completed within sixty (60) days after receipt of notice of resignation,
removal or transfer, unless the Company extends the time limit.


(e)           If
the Trustee resigns or is removed, a successor shall be appointed by the
Company with the consent of a Majority of Participants if a Change in Control
has occurred, in accordance with Section 13 hereof, by the effective date
of resignation or removal under paragraph(s) (a) or (b) of this
section. If no such appointment has been made, the Trustee may apply to a court
of competent jurisdiction for appointment of a successor or for instructions. All
expenses of the Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust, first from the Expense Reserve.


Section 13.   Appointment of Successor


(a)           If the Trustee resigns
or is removed in accordance with Section 12 hereof, the Company may
appoint, subject to Section 12, any third party legally permitted to act
as Trustee pursuant to the terms of this Agreement with assets exceeding
$1,000,000,000, and wholly independent of the Company, to replace the Trustee
upon resignation or removal. The successor Trustee shall have all of the rights
and powers of the former Trustee, including ownership rights in the Trust. The
former Trustee shall execute any instrument necessary or reasonably requested
by the Company or the successor Trustee to evidence the transfer.


(b)          The
successor Trustee need not examine the records and acts of any prior Trustee
and may retain or dispose of existing Trust assets, subject to Section 8
and 9 hereof. The successor Trustee shall not be responsible for and the
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from
any other past event, or any condition existing at the time it becomes
successor Trustee, all pursuant to the provisions of Section 10(b) hereof.


Section 14.   Amendment or Termination


(a)           This Trust Agreement
may be amended by a written instrument executed by the Trustee and the Company,
except as otherwise provided in this Section 14. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the Arrangements
or shall make the Trust revocable.


(b)          Following a Change in
Control, the Trust shall not terminate until the date on which Participants and
their Beneficiaries have received all of the benefits due to them under the
terms and conditions of the Arrangements.


(c)           Prior to a Change in
Control, upon written approval of two third of the Participants or
Beneficiaries entitled to payment of benefits pursuant to the terms of the
Arrangements, the Company may terminate this Trust prior to the time all
benefit payments under the Arrangements have been made. All assets in the Trust
at termination shall be returned to the Company.


(d)          This
Trust Agreement may not be amended by the Company following a Change in Control
without the written consent of a Majority of Participants except as may be
required, in the opinion of the Trustee, to maintain the tax status or ERISA
status of this Trust.


Section 15.   Definitions


(a)           For purposes of this
Trust, the following terms shall be defined as set forth below:



 12
 









(1)         Failure to Pay shall mean
that the circumstances described in either (i) or (ii) have occurred:


i.                    Any
Participant or Beneficiary shall have notified the Trustee and the Company in
writing that the Company shall have failed to pay to the Participant, when due,
either directly or by direction to the Trustee in accordance with the terms of
this Trust, at least 75% of any and all amounts which the Participant was
entitled to receive at any time in accordance with the terms of any Plan, the
payment schedule or this Trust Agreement and that such amount remains unpaid. Such
notice must set forth the amount, if any, which was paid to the Participant (or
Beneficiary), and the amount which the Participant (or Beneficiary) believes he
or she was entitled to receive under the Plans, the payment and this Trust
Agreement. The failure to make such payment shall have continued for a period
of 30 days after receipt of such notice by the Trustee and by the Company, and
during such 30-day period the Company shall have failed to prove, by
clear and convincing evidence as determined by the Trustee in its sole and
absolute discretion, that such amount was in fact paid or was not due and
payable; or


ii.                More than two Plan
Participants (or the Beneficiaries thereof) shall have notified the Trustee and
the Company in writing, either individually or jointly, that they have not been
paid, when due, amounts to which they are entitled under the Plans payment, and
that such amount remains unpaid. Each such notice must set forth the amount, if
any, which was paid to the Participant (or Beneficiary), and the amount which
the Participant (or Beneficiary) believes he or she was entitled to receive
under the Plans, the payment and this Trust Agreement. Within 15 days after
receipt of each such notice, the Trustee shall determine, on a preliminary
basis, whether any failure to pay such Participants (or their Beneficiaries)
has resulted in a failure to pay when due, directly or by direction, at least
75% of the aggregate amount due to all Participants (or their Beneficiaries)
under all the Plans, the schedule and this Trust Agreement in any two-year
period, and that such amount remains unpaid. If the Trustee determines that
such a failure has occurred, then it shall so notify the Company and the
Participants (or their Beneficiaries) in writing within the same 15 day period.
Within a period of 20 days after receipt of such notice from the Trustee, the
Company shall have failed to prove by clear and convincing evidence, in the
sole and absolute discretion of the Trustee, that such amount was paid or was
not due and payable.


(2)         Change in Control. For
purposes of this Plan, a “Change in Control” shall be deemed to have occurred
as of the first day any one or more of the following conditions shall have been
satisfied:


(i)             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;


(ii)         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 



 13
 









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 in 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));


(iii)     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 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”);


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


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


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



 14
 









Notwithstanding the
foregoing, a Change in 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 in Control of the Company shall then occur. 


(3)         Majority of Participants
shall mean participants the present value of whose vested rights under the
Arrangements exceed 50% of the present value of the vested rights of all
Participants. The Trustee shall determine the present value of vested rights
following a Change in Control.


(4)         Potential Change in
Control shall mean:


(i)             the announcement by
any person of an intention to take actions which might reasonably result in a
business combination between the Company and an entity which has a market
capitalization equal to or greater than 50% of the Company;


(ii)         the issuance of a proxy
statement by the Company with respect to an election of directors for which
there is proposed one or more directors who are not recommended by the Board or
its nominating committee, where the election of such proposed director or
directors would result in a Change in Control as defined in Section 15(a)(2)(a);
or


(iii)     submission to the Incumbent
Board of nominations which, if approved, would change the Executive Officer
configuration of the Company (at the Executive Vice President level and above)
by 50% or more.


(5)         The
General Counsel of the Company shall have the specific authority to determine
whether a Potential Change in Control or Change in Control has transpired under
the guidance of this Section 15 and shall be required to give the Trustee
notice of a Change in Control or a Potential Change in Control. The Trustee
shall be entitled to rely upon such notice, but if the Trustee receives notice
of a Change in Control from another source, the Trustee shall make its own
independent determination.


Section 16.   Miscellaneous


(a)           Any provision of this
Trust Agreement prohibited by law shall be ineffective to the extent of any
such prohibition, without invalidating the remaining provisions hereof.


(b)          The Company hereby
represents and warrants that all of the Arrangements have been established,
maintained and administered in accordance with all applicable laws, including
without limitation, ERISA. The Company hereby indemnifies and agrees to hold
the Trustee harmless from all liabilities, including attorney’s fees, relating
to or arising out of the establishment, maintenance and administration of the
Arrangements. To the extent the Company does not pay any of such liabilities in
a reasonably timely manner, the Trustee may obtain payment from the Trust.


(c)           Benefits payable to
Participants and their Beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.


(d)          This Trust Agreement
shall be governed by and construed in accordance with the laws of Delaware.



 15
 









IN WITNESS WHEREOF, this Grantor Trust Agreement has been executed on
behalf of the parties hereto on the day and year first above written.




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

  	
   

  	
  /s/ WACHOVIA
  BANK, NATIONAL ASSOCIATION

  






 



 16
 









Attachment A


The following
Arrangements are covered by this Trust:




	
  Deferred Compensation Plan

  
	
  Executive
  Supplemental Retirement Plan

  
	
  Employment
  Agreements (Change of Control)

  






 



 17