Document:

LOAN AND SECURITY AGREEMENT

        by and among

        CONGRESS FINANCIAL CORPORATION
        as Lender

        and

THE PEP BOYS - MANNY, MOE & JACK
THE PEP  BOYS  MANNY MOE & JACK OF CALIFORNIA
PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC.
PEP BOYS - MANNY, MOE & JACK OF PUERTO RICO, INC.
        as Borrowers

        PBY CORPORATION
        CARRUS SUPPLY CORPORATION
        as Guarantors

        Dated: September 22, 2000
        TABLE OF CONTENTS

        Page

SECTION 1.      DEFINITIONS                                1

SECTION 2.      CREDIT FACILITIES                         28
2.1     Loans                                             28
2.2     Letter of Credit Accommodations                   29
 2.3    Joint and Several Liability                       33

SECTION 3.      INTEREST AND FEES                         34
3.1     Interest.                                         34
3.2     Syndication Fee                                   36
3.3     Servicing Fee                                     36
3.4     Unused Line Fee                                   36
3.5     Closing Fee                                       36
3.6     Changes in Laws and Increased Costs of Loans.     36

SECTION 4.      CONDITIONS PRECEDENT                      38
4.1     Conditions Precedent to Initial Loans and
Letter of Credit Accommodations                           38
4.2     Conditions Precedent to All Loans and
Letter of Credit Accommodations                           41

SECTION 5.      GRANT OF SECURITY INTEREST                42

SECTION 6.      COLLECTION AND ADMINISTRATION             44
6.1     Borrowers' Loan Accounts                          44
6.2     Statements                                        44
6.3     Collection of Accounts                            44
6.4     Payments                                          47
6.5     Authorization to Make Loans                       48
6.6     Use of Proceeds                                   48
6.7     Appointment of Agent for Requesting
        Loans and Receipts of Loans and Statements.       49

SECTION 7.      COLLATERAL REPORTING AND COVENANTS        49
7.1     Collateral Reporting                              49
7.2     Accounts Covenants                                51
7.3     Inventory Covenants                               54
7.4     Power of Attorney                                 54
7.5     Right to Cure                                     55
7.6     Access to Premises                                56

SECTION 8.      REPRESENTATIONS AND WARRANTIES            56
8.1     Corporate Existence, Power and
        Authority; Subsidiaries                           56
8.2     Financial Statements; No Material
        Adverse Change.                                   57
8.3     Chief Executive Office; Collateral
        Locations.                                        57
8.4     Priority of Liens; Title to Properties            57
8.5     Tax Returns                                       57
8.6     Litigation                                        58
8.7     Compliance with Other Agreements and
        Applicable Laws                                   58
8.8     Environmental Compliance                          58
8.9     Employee Benefits.                                59
8.10    Bank Accounts                                     60
8.11    Intellectual Property                             60
8.12    Interrelated Business                             60
8.13    Capitalization                                    61
8.14    Labor Disputes                                    61
8.15    Corporate Name; Prior Transactions                61
8.16    Restrictions on Subsidiaries                      62
8.17    Material Contracts                                62
8.18    Payable Practices                                 62
8.19    Intentionally Deleted                             62
8.20    Credit Card Agreements                            62
8.21    Accuracy and Completeness of Information.         63

8.22    Survival of Warranties; Cumulative                63

SECTION 9.      AFFIRMATIVE AND NEGATIVE COVENANTS        63
9.1     Maintenance of Existence                          63
9.2     New Collateral Locations                          64
9.3     Compliance with Laws, Regulations, Etc.           64
9.4     Payment of Taxes and Claims                       65
9.5     Insurance                                         66
9.6     Financial Statements and Other Information        66
9.7     Sale of Assets, Consolidation, Merger,
        Dissolution, Etc.                                 69
9.8     Encumbrances                                      71
9.9     Indebtedness                                      73
9.10    Loans, Investments, Guarantees, Etc               81
9.11    Dividends and Redemptions                         86
9.12    Transactions with Affiliates                      87
9.13    Additional Bank Accounts                          87
9.14    Compliance with ERISA.                            88
9.15    End of Fiscal Years: Fiscal Quarters              88
9.16    Change in Business.                               88
9.17    Limitation of Restrictions Affecting
        Subsidiaries                                      88

9.18    Adjusted Tangible Net Worth                       89

9.19    Credit Card Agreements                            89

9.20    Costs and Expenses                                89
9.21    Sale and Leasebacks                               90
9.22    Exempted Debt Limit                               91
9.23    Further Assurances                                91
9.24    Equipment and Real Property Covenants             91

SECTION 10.     EVENTS OF DEFAULT AND REMEDIES            91
10.1    Events of Default                                 91
10.2    Remedies                                          93

SECTION 11.     JURY TRIAL WAIVER; OTHER WAIVERS
                AND CONSENTS; GOVERNING LAW               95
11.1    Governing Law; Choice of Forum; Service
        of Process; Jury Trial Waiver                     95
11.2    Waiver of Notices                                 97
11.3    Amendments and Waivers                            97
11.4    Waiver of Counterclaims                           97
11.5    Indemnification                                   97

SECTION 12.     TERM OF AGREEMENT; MISCELLANEOUS          98
12.1    Term                                              98
12.2    Interpretative Provisions                         99
12.3    Notices                                          101
12.4    Partial Invalidity                               101
12.5    Successors                                       101
12.6    Confidentiality                                  102
12.7    Participant's Security Interest.                 102
12.8    Entire Agreement                                 103

        INDEX TO
        EXHIBITS AND SCHEDULES

Exhibit A               Information Certificate for Pep Boys
Information Certificate for PBY - California
Information Certificate for PBY - Delaware
Information Certificate for PBY - Puerto Rico
Information Certificate for Carrus
Information Certificate for PBY

Exhibit B               Compliance Certificate

Exhibit C               Borrowing Base Certificate

Exhibit D               Weekly Collateral Report

Schedule 1.51           Existing Letters of Credit

Schedule 6.3            Bank Accounts

Schedule 8.4            Existing Liens

Schedule 8.6            Litigation

Schedule 8.7            Compliance with Other Agreements\Applicable Laws

Schedule 8.8            Environmental Matters

Schedule 8.10           Bank Accounts

Schedule 8.11           Intellectual Property

Schedule 8.14           Labor Matters

Schedule 8.17           Material Contracts

Schedule 8.20           Credit Card Agreements

Schedule 9.9            Existing Indebtedness

Schedule 9.10           Existing Loans, Advances and Guarantees
        LOAN AND SECURITY AGREEMENT

This Loan and Security Agreement dated September __, 2000 is entered into by
and among Congress Financial Corporation, a Delaware corporation ("Lender"),
The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation ("Pep Boys"),
The Pep Boys - Manny, Moe & Jack of California, a California corporation
("PBY-California"), Pep Boys Manny Moe & Jack of Delaware, Inc., a Delaware
corporation ("PBY-Delaware"), and  Pep Boys - Manny, Moe & Jack of Puerto
Rico, Inc., a Delaware corporation ("PBY-Puerto Rico"; and together with PBY,
PBY-California  and PBY-Delaware, each individually, a "Borrower" and
collectively, "Borrowers" as hereinafter further defined), PBY Corporation, a
Delaware corporation ("PBY") and Carrus Supply Corporation, a Delaware
corporation ("Carrus" and, together with PBY, each individually, a "Guarantor"
and collectively, "Guarantors" as hereinafter further defined).

        W I T N E S S E T H:

WHEREAS, Borrowers and Guarantors have requested that Lender enter into certain
financing arrangements with Borrowers pursuant to which Lender may make loans
and provide other financial accommodations to Borrowers; and

WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

SECTION 1.      DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective
meanings given to them below:

1.1     "Accounts" shall mean, as to each Borrower, all present and future
rights of such Borrower to payment for Inventory or other Collateral sold or
leased or for services rendered, whether or not evidenced by instruments or
chattel paper, and whether or not earned by performance and including, without
limitation, Credit Card Receivables.

 1.2    "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage.  For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or applicable foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans.  The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.

1.3     "Adjusted Tangible Net Worth"  shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if any),
the amount equal to:  the difference between:  (a) the aggregate net book value
of all assets (excluding the value of patents, trademarks, trade names,
copyrights, licenses, goodwill, deferred tax assets, prepaid assets (including,
without limitation, prepaid insurance receivables of Colchester unless such
receivables are offset by an associated liability), investments (whether
characterized as loans or otherwise) to the Business Enterprises referred to
in Section 9.10(o), the cash surrender value of life insurance policies and
other intangible assets) of such Person and its Subsidiaries, calculating the
book value of inventory for this purpose on a last-in-first-out basis, after
deducting from such book values all appropriate reserves in accordance with
GAAP (including all reserves
for doubtful receivables, obsolescence, depreciation and amortization) and (b)
the sum of: (i) the aggregate amount of the Indebtedness and other liabilities
of such Person and its Subsidiaries (including tax and other proper accruals)
and (ii) cash and investments of Colchester.

1.4     "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person.  For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Stock, by agreement or otherwise.

1.5     "Applicable Margin" shall mean, at any time, as to the Interest Rate
for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
applicable percentage (on a per annum basis) set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is in the amount indicated for such percentage or the Fixed Charge
Coverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at the level indicated for such
percentage:

 Quarterly Average
 Excess Availability
  Fixed Charge         Coverage Ratio
Applicable Prime      Rate Margin
Applicable Euro- dollar Rate Margin

(a)     $50,000,000 or more
        1.75 or more to 1
        0%
        1 3/4%

(b)     Greater than $25,000,000 and less than
        $50,000,000
        1.50 to 1.74 to 1
        1/4%
        2%

(c)     Greater than $10,000,000 and equal to or less than $25,000,000
        1.25 to 1.49 to 1
        1/2%
        2 1/4%

(d)     $10,000,000 or less
        Less than 1.25 to 1
        3/4%
        2 1/2%

provided, that, (i) the Applicable Margin shall be the lower percentage set
forth above based on the Quarterly Average Excess Availability or the Fixed
Charge Coverage Ratio and (ii) for purposes of calculating Quarterly Excess
Average Availability for the fiscal quarter ending October 28, 2000,
"Quarterly Average Excess Availability" shall be determined for the period
commencing the date hereof and ending October 28, 2000.

1.6     "Applicable Unused Line Fee Percentage" shall mean, at any time, as
to the calculation of the Unused Line Fee set forth in Section 3.4 hereof,
(a) one-quarter (1/4%) percent (on a per annum basis), for the period
commencing the date hereof through and including the end of October, 2000, and
(b) commencing with the Unused Line Fee due in respect of the third month of
each fiscal quarter (commencing with the fiscal quarter ending January, 2001),
the Applicable Unused Line Fee Percentage shall be as set forth below if either
the Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is in the amount indicated for such percentage or the Fixed Charge
Coverage Ratio as of the last day of the immediately preceding fiscal quarter
(which ratio for this purpose shall be calculated based on the four (4)
immediately preceding fiscal quarters) is at the level indicated for such
percentage:

 Quarterly Average
 Excess Availability

        Fixed Charge
        Coverage Ratio
        Applicable
        Unused Line
        Fee Percentage

(i)     $50,000,000 or  more
        1.75 or more to 1
        1/4%

(ii)    Greater than $25,000,000 and less than $50,000,000
        1.50 to 1.74 to 1
        1/4%

(iii)   Greater than $10,000,000 and equal to or less than $25,000,000
        1.25 to 1.49 to 1
        3/8%

(iv)    $10,000,000 or less
        Less than 1.25 to 1
        1/2%

provided, that, (i) the Applicable Unused Line Fee Percentage shall be
calculated and established once each fiscal quarter (commencing with the fiscal
quarter ending October 28, 2000) and shall be effective as of each January,
April, July, and October of each calendar year, (ii) for purposes of
calculating "Quarterly Average Excess Availability" for the fiscal quarter
ending October 28, 2000, Quarterly Average Excess Availability shall be
determined for the period commencing the date hereof and ending October 28,
2000 and (iii) the Applicable Unused Line Fee Percentage shall be the lower
percentage set forth above based on the Quarterly Average Excess Availability
or the Fixed Charge Coverage Ratio.

1.7     "Asset Purchase Advances" shall have the meaning set forth in Section
4.2 (c) hereof.

1.8     "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.

1.9     "Borrowers" shall mean, collectively, the following (together with
their respective successors and assigns): (a) The Pep Boys - Manny, Moe &
Jack, a Pennsylvania corporation, (b) The Pep  Boys - Manny, Moe & Jack of
California, a California corporation, (c) Pep Boys - Manny, Moe & Jack of
Delaware, Inc., a Delaware corporation, and (d)  Pep Boys - Manny, Moe & Jack
of Puerto Rico, Inc., a Delaware corporation; each sometimes being referred
to herein individually as a "Borrower".

1.10    "Borrowing Base" shall mean, as to any Borrower, at any time, the
amount equal to the lesser of:

(a)             (i)  eighty (80%) percent multiplied by the Net Amount of
Eligible Accounts of  Borrowers; plus

 (ii)   the lesser of: (A) sixty-five (65%) percent multiplied by the Value of
Eligible Inventory of  Borrowers or (B) ninety (90%) percent of the Net
Recovery Percentage multiplied by the Value of the Eligible Inventory of
Borrowers, provided, that, in the event that Excess Availability is less than
$50,000,000 (with Excess Availability calculated for this purpose without
regard to the Special Reserve) for more than five (5) consecutive Business
Days, Lender may at its option, reduce such percentage to eighty-five (85%) of
the Net Recovery Percentage; less

(iii)   any Reserves; and

(b) the Maximum Credit minus the Facility Reserve.

1.11    "Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit C hereto, as the same may from time to time be modified by
Lender, which is duly completed as provided in Section 7.1 hereof and executed
by the chief financial officer or Vice President-Finance of Pep Boys on behalf
of each Borrower and delivered to Lender.

1.12    "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which the Reference Bank and Lender are open for the transaction of business,
except that if a determination of a Business Day shall relate to any Eurodollar
Rate Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market.

1.13    "Business Enterprise" shall have the meaning set forth in Section
9.10(o) hereof.

1.14    "Capital Expenditures" shall mean, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year
or years.

1.15    "Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.

1.16    "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock, partnership interests or limited liability company
interests at any time outstanding, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock or other interests
(but excluding any debt security that is exchangeable for or convertible into
such capital stock).

1.17    "Carrus" shall mean Carrus Supply Corporation, a Delaware corporation,
and its successors and assigns.

1.18    "Cash Dominion Event" shall have the meaning set forth in Section
6.3(a)(i) hereof.

1.19    "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America of any agency or instrumentality thereof; provided, that, the full
faith and credit of the United States of America is pledged in support thereof;
(b) certificates of deposit or bankers' acceptances with a maturity of one
hundred eighty (180) days or less of any financial institution that is a
member of the Federal Reserve System having combined capital and surplus and
undivided profits of not less than $250,000,000; (c) commercial paper
(including variable rate demand notes) with a maturity of one hundred eighty
(180) days or less issued by a corporation (except an Affiliate of a Borrower
or Guarantor) organized under the laws of any State of the United States of
America or the District of Columbia and rated at least A-1 by Standard & Poor's
Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least
P-1 by Moody's Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution
having combined capital and surplus and undivided profits of not less than
$250,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or issued by any governmental agency thereof and
backed by the full faith and credit to the United States of America, in each
case maturing within one hundred eighty (180) days or less from the date of
acquisition; provided, that, the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of Depository
Institutions with Securities Dealers and Others, as adopted by the Comptroller
of the Currency on October 31, 1985; and (f) investments in money market
funds and mutual funds which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above.

 1.20   "Change of Control" shall mean shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower or Guarantor to any Person or group (as such term is
used in Section 13(d)(3) of the Exchange Act) other than as permitted in
Section 9.7 hereof; (b) the liquidation or dissolution of any Borrower or
Guarantor or the adoption of a plan by the stockholders of any Borrower or
Guarantor relating to the dissolution or liquidation of such Borrower or
Guarantor other than as permitted in Section 9.7 hereof; (c) the acquisition by
any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) of beneficial ownership, directly or indirectly, of fifty (50%) percent or
more of the voting power of the total outstanding Voting Stock of Pep Boys;
(d) during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Pep Boys
(together with any new directors whose nomination for election by the
stockholders of Pep Boys, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Pep Boys then still in
office; or (e) the failure of Pep Boys to own one hundred (100%) percent of
the voting power of the total outstanding Voting Stock of any of the Borrowers
(other than Pep Boys), Guarantors and Colchester.

1.21    "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

1.22    "Colchester" shall mean Colchester Insurance Company, a Vermont
insurance corporation, and its successors and assigns.

1.23    "Collateral" shall have the meaning set forth in Section 5 hereof.

1.24    "Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Lender in good faith, from any lessor of
premises to any Borrower or Guarantor, or any other person to whom any
Collateral (including Inventory, bills of lading or other documents of title)
is consigned or who has custody, control or possession of any such Collateral
or is otherwise the owner or operator of any premises on which any of such
Collateral is located, pursuant to which such lessor, consignee or other
person, inter alia, acknowledges the first priority security interest of Lender
in such Collateral, agrees to waive or subordinate any and all claims such
lessor, consignee or other person may, at any time, have against such
Collateral, whether for processing, storage or otherwise, and agrees to permit
Lender access to, and the right to remain on, the premises of such lessor,
consignee or other person so as to exercise Lender's rights and remedies and
otherwise deal with such Collateral and in the case of any person who at any
time has custody, control or possession of any bills of lading or other
documents of title, agrees to hold such bills of lading or other documents as
bailee for Lender and to follow all instructions of Lender with respect
thereto.

 1.25   "Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary and/or one time or unusual and non-recurring
gains and non-cash extraordinary losses) after deducting all charges which
should be deducted before arriving at the net income (loss) for such period
and, without duplication, after deducting the Provision for Taxes for such
period, all as determined in accordance with GAAP; provided, that, (a) the net
income of any Person that is not a wholly-owned Subsidiary or that is accounted
for by the equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid or payable to such Person or a
wholly-owned Subsidiary of such Person; (b) except to the extent included
pursuant to the foregoing clause, the net income of any Person accrued prior to
the date it becomes a wholly-owned Subsidiary of such Person or is merged
into or consolidated with such Person or any of its wholly-owned Subsidiaries
or that Person's assets are acquired by such Person or by its wholly-owned
Subsidiaries shall be excluded; and (c) the net income (if positive) of any
wholly-owned Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such wholly-owned Subsidiary to such
Person or to any other wholly-owned Subsidiary of such Person is not at the
time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such wholly-owned Subsidiary shall be excluded.  For the purposes
of this definition, (i) net income excludes any gain or non-cash loss together
with any related Provision for Taxes for any such gain or loss realized upon the
sale or other disposition of any assets that are not sold in the ordinary course
of business (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or of any Capital Stock of such Person or a Subsidiary
of such Person and any net income realized or loss incurred as a result of
changes in accounting principles or the application thereof to such Person, and
(ii) the term "Provision for Taxes" shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial,
county or local, and whether foreign or domestic, that are paid or payable by
any Person in respect of any period in accordance with GAAP.

1.26  "Consolidated Net Tangible Assets" shall have the meaning set forth in
the 1998 Senior Note Indenture, as in effect on the date hereof, or if such
1998 Senior Note Indenture is not in full force and effect, such other
equivalent term in any of the other Pep Boys Indentures, then in effect.

1.27  "Credit Card Acknowledgments" shall mean, with respect to each Borrower,
individually and collectively, the agreements in favor of Lender by Credit
Card Issuers or Credit Card Processors who are parties to Credit Card
Agreements in favor of Lender acknowledging Lender's first priority security
interest in the monies due and to become due to such Borrower (including,
without limitation, credits and reserves) under the Credit Card Agreements of
such Borrower, and agreeing to transfer all such amounts to the Blocked
Accounts of such Borrower, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

1.28  "Credit Card Agreements" shall mean, with respect to each Borrower, all
agreements (other than Credit Card Acknowledgments) now or hereafter entered
into by such Borrower with any Credit Card Issuer or any Credit Card Processor,
as the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, including, but not limited to, the
agreements set forth on Schedule 8.20 hereto.

1.29  "Credit Card Issuer" shall mean any person (other than any Borrower) who
issues or whose members issue credit cards, including, without limitation,
MasterCard or VISA bank credit or debit cards or other bank credit or debit
cards issued through MasterCard International, Inc., VISA, U.S.A., Inc. or Visa
International and American Express, Discover, Diners Club, Carte Blanche and
other non-bank credit or debit cards, including, without limitation, credit or
debit cards issued by or through American Express Travel Related Services
Company, Inc. and Novus Services, Inc.

 1.30  "Credit Card Processor" shall mean, with respect to each Borrower, any
servicing or processing agent or any factor or financial intermediary who
facilitates, services, processes or manages the credit authorization, billing
transfer and/or payment procedures with respect to any of such Borrower's sales
transactions involving credit card or debit card purchases by customers using
credit cards or debit cards issued by any Credit Card Issuer.

1.31  "Credit Card Receivables" shall mean, with respect to each Borrower,
collectively, (a) all present and future rights of such Borrower to payment
from any Credit Card Issuer, Credit Card Processor or other third party arising
from sales of goods or rendition of services to customers who have purchased
such goods or services using a credit or debit card and (b) all present and
future rights of such Borrower to payment from any Credit Card Issuer, Credit
Card Processor or other third party in connection with the sale or transfer of
Accounts arising pursuant to the sale of goods or rendition of services to
customers who have purchased such goods or services using a credit card or a
debit card, including, but not limited to, all amounts at any time due or to
become due from any Credit Card Issuer or Credit Card Processor under the
Credit Card Agreements or otherwise.

1.32    "Direct Competitor" shall mean any Person engaged principally in the
wholesale and/or retail sale of automotive parts, tires and/or accessories,
automotive maintenance and/or service and installation of parts.

1.33    "EBITDA" shall mean, as to any Person, with respect to any period,
an amount equal to: (a) the Consolidated Net Income of such Person and its
Subsidiaries for such period determined in accordance with GAAP, plus (b)
depreciation, amortization and other non-cash charges (including, but not
limited to, imputed interest and deferred compensation) for such period (to
the extent deducted in the computation of Consolidated Net Income of such
Person), all in accordance with GAAP, plus (c) Interest Expense for such
period (to the extent deducted in the computation of Consolidated Net Income
of such Person), plus (d) charges for Federal, State, local and foreign
income taxes for such period (to the extent deducted in the computation of
Consolidated Net Income of such Person).

1.34    "Eligible Accounts" shall mean, as to each Borrower, Accounts created
by such Borrower which are and continue to be acceptable to Lender based on
the criteria set forth below.  In general, Accounts shall be Eligible Accounts
if:

(a)     such Accounts arise from the actual and bona fide sale and delivery
of goods by such Borrower or rendition of services by such Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;

(b)     such Accounts are not unpaid more than the earlier of (i) sixty (60)
days after the original due date thereof or (ii) ninety (90) days after the
date of the original invoice for them;

 (c)    such Accounts comply with the terms and conditions contained in Section
7.2(c) of this Agreement;

(d)     such Accounts do not arise from sales on consign-ment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;

(e)     the chief executive office of the account debtor with respect to such
Accounts is located in the United States of America, Puerto Rico or Canada
(provided, that, at any time promptly upon Lender's request, such Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Lender, in good
faith, to perfect the security interests of Lender in those Accounts of an
account debtor with its chief executive office or principal place of business
in Canada in accordance with the applicable laws of the Province of Canada in
which such chief executive office or principal place of business is located and
take or cause to be taken such other and further actions as Lender may request,
in good faith,  to enable Lender as secured party with respect thereto to
collect such Accounts under the applicable Federal or Provincial laws of
Canada) or, at Lender's option, if the chief executive office and principal
place of business of the account debtor with respect to such Accounts is
located other than in the United States of America or Canada, then if either:
(i) the account debtor has delivered to such Borrower an irrevocable letter of
credit issued or confirmed by a bank satisfactory to Lender and payable only
in the United States of America and in U.S. dollars, sufficient to cover such
Account, in form and substance satisfactory to Lender and if required by
Lender, the original of such letter of credit has been delivered to Lender or
Lender's agent and the issuer thereof notified of the assignment of the
proceeds of such letter of credit to Lender, or (ii) such Account is subject
to credit insurance payable to Lender issued by an insurer and on terms and in
an amount acceptable to Lender, or (iii) such Account is otherwise acceptable
in all respects to Lender, determined in good faith (subject to such lending
formula with respect thereto as Lender may determine in good faith);

(f)     such Accounts do not consist of progress billings (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon such Borrower's satisfactory completion of any further performance under
the agreement giving rise thereto), bill and hold invoices or retainage
invoices, except as to bill and hold invoices, if Lender shall have received
an agreement in writing from the account debtor, in form and substance
satisfactory to Lender, confirming the unconditional obligation of the account
debtor to take the goods related thereto and pay such invoice;

(g)     the account debtor with respect to such Accounts has not asserted a
counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to any right of setoff or recoupment against
such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts);

(h)    there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;

(i)     such Accounts are subject to the first priority, valid and perfected
security interest of Lender and any goods giving rise thereto are not, and
were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;

(j)     neither the account debtor nor any officer or employee of the account
debtor with respect to such Accounts is an officer, employee, agent or other
Affiliate of such Borrower;

(k)     the account debtors with respect to such Accounts are not any foreign
government, the United States of America, any State, political subdivision,
department, agency or instrumentality thereof, unless, if the account debtor
is the United States of America, any State, political subdivision, department,
agency or instrumentality thereof, upon Lender's request, the Federal
Assignment of Claims Act of 1940, as amended or any similar State or local law,
if applicable, has been complied with in a manner satisfactory to Lender;

(l)     there are no proceedings or actions which are threatened or pending
against the account debtors with respect to such Accounts which might result
in any material adverse change in any such account debtor's financial
condition;

(m)     such Accounts of a single account debtor or its Affiliates do not
constitute more than five (5%) percent of all otherwise Eligible Accounts (but
the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts), provided, that, with respect to Bridgestone/Firestone Inc.
such percentage shall be ten (10%) percent;

(n)     such Accounts are not owed by an account debtor who has Accounts unpaid
more than the earlier of (i) sixty (60) days after the due date thereof and
(ii) ninety (90) days after the date of the original invoice for them, which
constitute more than fifty (50%) percent of the total Accounts of such account
debtor;

(o)     such Accounts are not evidenced by instruments or chattel paper;

(p)     the account debtor is not located in a state requiring the filing of
a Notice of Business Activities Report or similar report in order to permit
such Borrower to seek judicial enforcement in such State of payment of such
Account, unless such Borrower has qualified to do business in such state or
has filed a Notice of Business Activities Report or equivalent report for the
then current year or such failure to file and inability to seek judicial
enforcement is capable of being remedied without any material delay or
material cost;

(q)     such Accounts are not Credit Card Receivables;

 (r)    such Accounts are owed by account debtors whose total indebtedness
to such Borrower does not exceed the credit limit with respect to such account
debtors as determined by such Borrower substantially consistent with its
current practices (taken as a whole) as of the date hereof and as is reasonably
acceptable to Lender (but the portion of the Accounts not in excess of such
credit limit may be deemed Eligible Accounts); and

(s)     such Accounts are owed by account debtors deemed creditworthy at all
times by such Borrower consistent with its current practice and who are
reasonably acceptable to Lender.

General criteria for Eligible Accounts may be estab-lished and revised from
time to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof
to the extent Lender has no written notice thereof from such Borrower, which
adversely affects or would reasonably be expected to adversely affect the
Accounts in the good faith determination of Lender.  Any Accounts which are
not Eligible Accounts shall nevertheless be part of the Collateral.

1.35    "Eligible Inventory" shall mean, as to each Borrower, the Inventory of
such Borrower consisting of finished goods held for resale in the ordinary
course of the business of such Borrower, which are acceptable to Lender based
on the criteria set forth below.  In general, Eligible Inventory shall not
include:

(a)     packaging and shipping materials;

(b)     supplies used or consumed in such Borrower's business;

 (c)    Inventory at premises other than those owned and controlled by such
Borrower, except any Inventory which would otherwise be deemed Eligible
Inventory at locations in the United States of America and Puerto Rico which
are not owned and operated by such Borrower may nevertheless be considered
Eligible Inventory:  (i) as to locations which are leased by such Borrower if
Lender shall have received a Collateral Access Agreement from the owner and
lessor of such location, duly authorized, executed and delivered by such owner
and lessor, except that notwithstanding that Lender shall not have received
such an agreement for a particular leased location, Lender will consider
Inventory at such leased location which would otherwise be Eligible Inventory
to be Eligible Inventory, provided, that, (A) the other conditions set forth
in this Section 1.35 are satisfied,  in the good faith determination of Lender,
and (B) Excess Availability is at least $37,500,000, and in any event, Lender
may at any time establish such Reserves as Lender may determine in respect of
amounts at any time payable by such Borrower to the owner or lessor of such
location, without limiting any other rights and remedies of Lender under this
Agreement or under the other Financing Agreements with respect to the
establishment of Reserves or otherwise and (ii) as to premises of third parties
(including sales agents, consignees, warehouses and processors), Lender shall
have received a Collateral Access Agreement duly authorized, executed and
delivered by the owner and operator of such premises (except that
notwithstanding that Lender shall not have received such an agreement as to a
particular third party location, Lender will consider Inventory at such
location which would otherwise be Eligible Inventory to be Eligible Inventory
to the extent that (A) the other conditions set forth with this Section 1.35
are satisfied in the good faith determination of Lender, and (B) Excess
Availability is at least $37,500,000 and in such event, Lender may at any
time establish such Reserves as Lender may determine in respect of amounts at
any time payable by such Borrower to such third party, without limiting any
other rights or remedies of Lender under this Agreement or under the other
Financing Agreements with respect to the establishment of Reserves or
otherwise, and in addition, if required by Lender, as to premises of third
parties where assets of a Borrower are located:  (A) the owner and operator
executes appropriate UCC-1 financing statements in favor of such Borrower,
which are duly assigned to Lender and (B) any secured lender to the owner
and operator is properly notified of the first priority lien on such
Inventory of Lender;

(d)     Inventory located outside the continental United States of America
or Puerto Rico;

(e)     Inventory subject to a security interest or lien in favor of any person
other than Lender except those permitted in this Agreement (including those
liens which are the subject of a Collateral Access Agreement);

(f)     bill and hold goods;

(g)     unserviceable or obsolete Inventory;

(h)     Inventory which is not subject to the first priority, valid and
perfected security interest of Lender;

(i)     damaged and/or defective Inventory;

(j)     returned Inventory that is not held for resale;

(k)    Inventory to be returned to vendors;

 (l)   Inventory subject to deposits made by customers for sales of Inventory
that has not been delivered; and

(m)     Inventory purchased or sold on consignment.

 General criteria for Eligible Inventory may be established and revised from
time to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof
to the extent Lender has no written notice thereof from such Borrower, which
adversely affects or would reasonably be expected to adversely affect the
Inventory in the good faith determination of Lender.  Any Inventory which is
not Eligible Inventory shall nevertheless be part of the Collateral.

1.36  "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), rules, codes, licenses, permits (including any
conditions imposed therein), authorizations, judicial or administrative
decisions, injunctions or agreements between Borrower and any Governmental
Authority, relating to emissions, discharges, releases threatened releases, of
any Hazardous Materials into ambient air, surface water, groundwater, publicly
owned treatment works, septic system, or land, or otherwise relating to the
handling, storage, treatment, generation, use, or disposal of Hazardous
Materials, pollution or to the protection of health or the environment,
including, without limitation, CERCLA, the Resource Conservation and Recovery
Act, 42 U.S.C. 6901, et seq., and state statutes analogous thereto.

1.37  "Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires remediation under
any Environmental Law and must be remediated during any grace period allowed
under such Environmental Law) to violate or results in or threatens (if the
threat requires remediation under any Environmental Law and must be remediated
during any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.

1.38    "Equipment" shall mean, as to each Borrower, all of such Borrower's now
owned and hereafter acquired equipment, machinery, computers and computer
hardware and software (whether owned or licensed), vehicles, tools, furniture,
fixtures, all attachments, accessions and property now or hereafter affixed
thereto or used in connection therewith, and substitutions and replacements
thereof, wherever located.

1.39    "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.

1.40    "ERISA Affiliate" shall mean any person required to be aggregated with
a Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or
414(o) of the Code.

 1.41   "ERISA Event" shall mean, any of the following, the occurrence of which
would have a reasonable likelihood of having a Material Adverse Effect: (a) any
"reportable event", as defined in Section 4043 of ERISA or the regulations
issued thereunder, with respect to a Plan; (b) the adoption of any amendment to
a Plan that would require the provision of security pursuant to Section 401(a)
(29) of the Code or Section 307 of ERISA; (c) the existence with respect to any
Plan of an "accumulated funding deficiency" (as defined in Section 412 of the
Code or Section 302 of ERISA), whether or not waived; (d) the filing pursuant
to Section 412 of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (e) the
occurrence of a "prohibited transaction" with respect to which a Borrower or
any of its Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which a Borrower or any of its
Subsidiaries could otherwise be liable; (f) a complete or partial
withdrawal by a Borrower or any ERISA Affiliate from a Multiemployer Plan or
a cessation of operations which is treated as such a withdrawal or notification
that a Multiemployer Plan is in reorganization; (g) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
Pension Benefit Guaranty Corporation to terminate a Plan or Multiemployer
Plan; (h) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or Multiemployer Plan; (i)
the imposition of any liability under Title IV of ERISA, other than the Pension
Benefit Guaranty Corporation premiums due but not delinquent under Section 4007
of ERISA, upon any Borrower or any ERISA Affiliate; and (j) any other event or
condition with respect to a Plan or Multiemployer Plan or any Plan subject to
Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that
could reasonably be expected to result in liability of a Borrower.

1.42    "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower and approved by Lender) on
or about 9:00 a.m. (New York time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to
such Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by such Borrower.

1.43    "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.

1.44    "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.

1.45    "Excess Availability" shall mean, as to Borrowers, the amount, as
determined by Lender, calculated at any time, equal to: (a) the lesser of:
(i) the Borrowing Base and (ii) the Maximum Credit, minus (b) the sum of:
(i) the amount of all then outstanding and unpaid Obligations of  Borrowers,
plus (ii) the aggregate amount of all then outstanding and unpaid trade
payables and other obligations of Borrowers which are more than forty-five (45)
days past due as of such time (unless the trade payables or the obligation is
being contested in good faith).
For purposes of calculating Excess Availability in connection with Sections
1.5, 1.6 and 1.10(a)(ii)(B) hereof, the Borrowing Base shall not be reduced by
the Special Reserve.

1.46    "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may hereafter from time to time be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.

 1.47   "Exempted Debt" shall have the meaning set forth in the 1998 Senior
Note Indenture, as in effect on the date hereof, or if such 1998 Senior Note
Indenture is not in full force and effect, such other equivalent term in any of
the other Pep Boys Indentures, then in effect.

1.48    "Exempted Debt Limit" shall mean, on any date of determination, a
dollar amount equal to (a) the amount equal to 15% of Consolidated Net Tangible
Assets of Pep Boys and its Subsidiaries, less (b) $50,000,000.

1.49    "Exempted Debt Availability" shall mean, on any date of determination,
the amount of Exempted Debt which may be incurred by Pep Boys and its
Subsidiaries, which amount shall be equal to  (a) the Exempted Debt Limit, less
(b) the outstanding amount of Exempted Debt then being secured by "Mortgages"
(as such term is defined in the 1998 Senior Note Indenture, as in effect on the
date hereof), in accordance with Section 1004(b) of the 1998 Senior Note
Indenture, as in effect on the date hereof, or if such 1998 Senior Note
Indenture is not in effect, such other equivalent or more restrictive provision
in any of the other Pep Boys Indentures, then in effect.

1.50    "Existing Citibank Synthetic Lease Facility" shall mean, collectively,
the $143,000,000 synthetic lease facility evidenced by (a) the Transaction
Agreement, dated as of February 28, 1997, by and among Pep Boys, State Street
Bank and Trust Company, as trustee and Citicorp Leasing, Inc., as
Administrative Agent, Purchaser, and Holder and Bank of Montreal, (b) the
Transaction Agreement, dated as of November 13, 1995, by and among Pep Boys, as
lessee, State Street Bank and Trust Company, as Trustee and Citicorp Leasing,
Inc., as initial purchaser, holder as Administrative Agent and (c) all
agreements, documents, mortgages and instruments executed and/or delivered in
connection with any of the foregoing.

1.51    "Existing Letters of Credit" shall mean, collectively, the letters of
credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.51 hereto, as
the same now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

1.52    "Facility Reserve" shall mean an amount equal to $100,000,000, as
such amount may be increased or decreased, in the good faith determination by
Lender.

1.53    "Financing Agreements" shall mean, colle-ctively, this Agreement, and
all notes, guarantees, security agreements and other agreements, documents and
instr-uments now or at any time hereafter executed and/or delivered by any
Borrower or any Obligor in connection with this Agreement.  The parties hereto
agree that the Synthetic Lease Facility Agreements are not Financing
Agreements.

 1.54   "Fixed Charges" for any period shall mean the sum of, without
duplication, (a) all Interest Expense, plus (b) all regularly scheduled (as
determined at the beginning of the respective period) principal payments of
Indebtedness for borrowed money and Indebtedness with respect to Capital Leases
(and without duplicating amounts in item (a) of this definition, the interest
component with respect to Indebtedness under Capital Leases) plus (c) the fees
paid to Lender in respect of the financing arrangements provided for herein
(other than the syndication fee) plus (d) fees payable to Persons in respect of
other Indebtedness permitted in accordance with Section 9.9 hereof.  The
foregoing shall not be construed to include principal payments of Indebtedness
arising pursuant to revolving loans and advances.

1.55    "Fixed Charge Coverage Ratio" shall mean, with respect to Pep Boys and
its Subsidiaries, on a consolidated basis inclusive of Colchester, the ratio of
(a) EBITDA during the four (4) full fiscal quarters immediately preceding the
determination date with respect to the calculation of the Fixed Charge Coverage
Ratio less Capital Expenditures for such period to (b) Fixed Charges of Pep Boys
and its Subsidiaries for such four (4) fiscal quarter period.

1.56    "Flexi-Trust" shall mean the Trust established pursuant to the
Flexi-Trust Agreement.

1.57    "Flexi-Trust Agreement" shall mean the Trust Agreement, effective as of
April 29, 1994, between Pep Boys and First Union National Bank, as Trustee, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

1.58    "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except
that, if any change in generally accepted accounting principles after the date
hereof affects the calculation of compliance with the financial covenant in
Section 9.18 hereof or the calculation of the Fixed Charge Coverage Ratio or
any component thereof, Pep Boys may by notice to Lender, or Lender may, by
notice to Pep Boys, require that such covenants thereafter be calculated in
accordance with generally accepted accounting principles as in effect and
applied by Pep Boys immediately before such change in generally accepted
accounting principles occurred.  If such notice is given by Pep Boys (or if
such notice is given by Lender then only upon Lender's request), the
compliance certificate delivered pursuant to Section 9.6 hereof after such
change occurs shall be accompanied by a calculation of such covenant and ratio
made in accordance with generally accepted accounting principles as in effect
from time to time after such change occurs.

1.59    "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

 1.60   "Hazardous Materials" shall mean any of the following: (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or hazardous
to the environment or human health or safety as determined in accordance with
any Environmental Law; or (c) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.

1.61    "Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, (a) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar
instruments; (b) representing the balance deferred and unpaid of the purchase
price of any property or services (except any such balance that constitutes an
account payable to a trade creditor (whether or not an Affiliate) created,
incurred, assumed or guaranteed by such Person in the ordinary course of
business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of
such Person to pay or be liable for the payment of any indebtedness
described in this definition of another Person, including, without limitation,
any such indebtedness, directly or indirectly guaranteed, or any agreement to
purchase, repurchase, or otherwise acquire such indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or
discharge thereof, or to maintain solvency, assets, level of income, or other
financial condition; (e) all obligations with respect to redeemable stock and
redemption or repurchase obligations under any Capital Stock or other equity
securities issued by such Person; (fi all reimbursement obligations and other
liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker's acceptances or similar
documents or instruments issued for such Person's account; and (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in
this definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of
such Person, all as of such time.  Any funds borrowed by Pep Boys against the
cash surrender value of any "key-man" insurance policies (and which do not
exceed such cash surrender value), which is not treated as indebtedness under
GAAP shall not be deemed to be Indebtedness for purposes of this Agreement and
the other Financing Agreements.

 1.62   "Information Certificate" shall mean the Information Certificates
with respect to each Borrower and Guarantor constituting Exhibit A hereto
containing material information with respect to such Borrower and Guarantor,
its business and assets provided by or on behalf of Borrowers or Guarantors
to Lender in connection with the preparation of this Agreement and the other
Financing Agreements and the financing arrangements provided for herein.

1.63    "Intellectual Property" shall mean each Borrower's now owned and
hereafter arising or acquired:  patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service
mark registrations and applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations,
and continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints,
surveys, reports, manuals, and operating standards; goodwill; customer and
other lists in whatever form maintained; and trade secret rights, copyright
rights, rights in works of authorship, and contract rights relating to computer
software programs, in whatever form created or maintained.

1.64    "Interest Expense" shall mean, for any period, as to any Person, all of
the following as determined in accordance with GAAP:  (a) total interest
expense, whether paid or accrued during such period (including the interest
component of Capital Leases for such period), including, without limitation,
all bank fees, commissions, discounts and other fees and charges owed with
respect to letters of credit, banker's acceptances or similar instruments but
excluding (bi amortization of discount and amortization of deferred financing
fees paid in cash in connection with the transactions contemplated hereby and
(c) any other interest expense not payable in cash.

1.65    "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as a Borrower
may elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar Rate market; provided, that, no Borrower
may elect an Interest Period which will end after the last day of the
then-current term of this Agreement.

1.66    "Interest Rate" shall mean,

(ai     Subject to clauses (b) and (c) of this definition below:

(iA     as to Prime Rate Loans, a rate equal to zero (0%) percent per annum in
excess of the Prime Rate, and

(iiA    as to Eurodollar Rate Loans, a rate equal to one and three-quarters
 (1 3/4%) percent per annum in excess of the Adjusted Eurodollar Rate (in each
case, based on the Eurodollar Rate applicable for the Interest Period selected
by a Borrower as in effect three (3) Business Days after the date of receipt by
Lender of the request of such Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any
rate previously quoted to such Borrower).

(bi     Subject to clause (c) of this definition below, effective as of the
first (1st) day of the third month of each fiscal quarter (commencing with the
fiscal quarter ending October 28, 2000), the Interest Rate payable by Borrowers
shall be increased or decreased, as the case may be, (i) as to Prime Rate
Loans, to the rate equal to the Applicable Margin on a per annum basis in
excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the rate
equal to the Applicable Margin on a per annum basis in excess of the Adjusted
Eurodollar Rate.

(ci     Notwithstanding anything to the contrary contained in clauses (a) and
(b) of this definition, the Applicable Margin otherwise used to calculate the
Interest Rate for Prime Rate Loans and Eurodollar Rate Loans shall be the then
applicable percentage set forth in the definition of the term Applicable Margin
for each category of Loans (without regard to the amount of Excess Availability
or the Fixed Charge Coverage Ratio) plus two (2%) percent per annum, at
Lender's option, after five (5) Business Days' notice to any Borrower,  (i) for
the period (A) from and after the effective date of termination or non-renewal
hereof (including any termination of the initial term or any renewal term)
until Lender has received full and final payment of all outstanding and unpaid
Obliga-tions or as to contingent Obligations, cash collateral in the amount and
on the terms required under Section 12.1 hereof (notwithstanding entry of a
judgment against a Borrower) and (B) from and after the date of the occurrence
of an Event of Default for so long as such Event of Default is continuing,
and (ii) on Loans to any Borrower at any time outstanding in excess of the
Borrowing Base of such Borrower (whether or not such excess(es), arise or are
made with or without Lender's knowledge or consent and whether made before or
after an Event of Default).

1.67    "Inventory" shall mean all of each Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.

1.68    "Letter of Credit Accommodations" shall mean the letters of credit,
merchandise purchase or other guaranties which are from time to time either
(a) issued or opened by Lender for the account of any Borrower or Obligor or
(b) with respect to which Lender has agreed to indemnify the issuer or
guaranteed to the issuer the performance by Borrower of its obligations to
such issuer (including the Existing Letters of Credit); each sometimes being
referred to herein individually as a "Letter of Credit Accommodation".

1.69    "Loans" shall mean the loans made to or for the benefit of any Borrower
by or on behalf of Lender on a revolving basis (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.

 1.70   "LYONS Indenture" shall mean the Indenture, dated as of September 20,
1996, by and between Pep Boys and First Union National Bank, as Trustee, with
respect to the holders of Pep Boys Liquid Yield Option Notes due 2011 in the
principal amount (at maturity) of $271,704,000, with an initial price to the
public of $153,000,000, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

1.71    "Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business, performance or operations of Borrowers and
Guarantors (taken as a whole) or (b) the legality, validity or enforceability
of this Agreement or any of the other Financing Agreements; (c) the legality,
validity, enforceability, perfection or priority of the security interests and
liens of Lender upon the Collateral; (d) the Collateral of Borrowers (taken as
a whole) or the aggregate value of the Collateral (taken as a whole); (e) the
ability of Borrowers (taken as a whole) to repay the Obligations or of
Borrowers to perform their obligations under this Agreement or any of the other
Financing Agreements; or (f) the ability of Lender to enforce the Obligations
or realize upon the Collateral or otherwise with respect to the rights and
remedies of Lender under this Agreement or any of the other Financing
Agreements.

1.72    "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower (i)
relating to the purchase of merchandise involving monetary liability of or to
any Person in an amount in excess of $5,000,000 in any fiscal year, or (ii)
relating to any other matter involving monetary liability of or to any Person
in an amount in excess of $5,000,000 in any fiscal year, and (b) any other
contract or other agreement (other than the Financing Agreements), whether
written or oral, to which Borrower is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would
have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of any Borrower or Guarantor or the
validity or enforceability of this Agreement, any of the other Financing
Agreements, or any of the rights and remedies of Lender hereunder or
thereunder.

1.73    "Maximum Credit" shall mean the amount of $325,000,000.

1.74    "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by a Borrower
or any ERISA Affiliate.

1.75    "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.

 1.76   "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (ai the numerator of which is the amount equal to the amount of
the recovery in respect of the Inventory at such time on a "going out of
business sale" as set forth in the most recent acceptable appraisal of
Inventory received by Lender in accordance with Section 7.3, net of operating
expenses, liquidation expenses and commissions, and (b) the denominator of
which is the original cost of the aggregate amount of the Inventory subject
to such appraisal.

1.77    "1998 Senior Note Indenture" shall mean the Indenture, dated as of
February 18, 1998, by and between Pep Boys, and PNC Bank, National Association,
as Trustee, with respect to Pep Boys Medium Term Notes in the aggregate
principal amount of $100,000,000, and Term Enhanced Remarketable Securities in
the aggregate principal amount of $100,000,000, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

1.78    "1998 Subordinated Note Indenture" shall mean the Indenture, dated as
of February 18, 1998, by and between Pep Boys, and PNC Bank, National
Association, as Trustee, with respect to Pep Boys Subordinated Notes in the
aggregate principal amount of $-0-, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

1.79    "1995 Senior Note Indenture" shall mean the Indenture, dated as of June
12, 1995, by and between Pep Boys and First Union National Bank, as Trustee,
with respect to Pep Boys 7% Notes due 2005 in the aggregate principal amount of
$100,000,000, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

1.80    "1999 Note Purchase Agreement" shall mean the Note Purchase Agreement,
dated as of January 26, 1999, by and between Pep Boys and the purchasers listed
in Schedule A annexed thereto in respect of Pep Boys 7.80% Series A Senior Notes
due 2009 in the aggregate principal amount of $25,000,000, and 7.95% Series B
Senior Notes due 2011 in the aggregate principal amount of $45,000,000, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

1.81    "1991 Senior Note Indenture" shall mean the Indenture, dated as of
March 22, 1991, by and between Pep Boys and BankAmerica Trust Company of New
York, as Trustee, with respect to Pep Boys 6-5/8% Notes due May, 2003 in the
aggregate principal amount of $75,000,000.

1.82    "1997 Senior Note Indenture" shall mean the Indenture, dated as of
July 15, 1997 by and between Pep Boys and PNC Bank, National Association, as
Trustee, in respect of the Holders of Pep Boys Medium Term Notes issued between
July and October 1997 in the aggregate principal amount of $150,000,000, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 1.83   "1997 Subordinated Note Indenture" shall mean the Indenture, dated as
of June 15, 1997, by and between Pep Boys, and PNC Bank, National Association,
as Trustee, with respect to Pep Boys Subordinated Notes in the aggregate
principal amount of $-0-, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

1.84    "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by a Borrower or Guarantor to Lender and/or
its Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, lessee,
guarantor or otherwise, whether arising under this Agreement or any of the
other Financing Agreements, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case with respect to a Borrower or
Guarantor under the United States Bankruptcy Code or any similar statute
(including the payment of interest and other amounts which would accrue and
become due but for the commencement of such case, whether or not such amounts
are allowed or allowable in whole or in part in such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, secured or unsecured, and however
acquired by Lender.

1.85    "Obligor" shall mean any guarantor, endorser, acceptor, surety or other
person liable on or with respect to the Obligations or who is the owner of any
property which is security for the Obligations (including, without limitation,
Guarantors), other than a Borrower.

1.86    "Operating Assets" shall mean all merchandise inventories, furniture,
fixtures and equipment (including all transportation and warehousing equipment
and excluding office equipment and data processing equipment) owned or leased
pursuant to Capital Leases by Borrowers, Guarantors or any of their respective
Subsidiaries.

1.87    "Operating Property" shall mean all real property and improvements
thereon owned or leased pursuant to Capital Leases by a Borrower, Guarantor or
any of its Subsidiaries constituting, without limitation, any store, warehouse,
service center or distribution center wherever located, provided that such term
shall not include any store, warehouse, service center or distribution center
which any Borrower's, Guarantor's or any Subsidiary's Board of Directors (or
any Committee thereof) declares by resolution not to be of material importance
to the business of such Borrower, Guarantor or Subsidiary.  Operating Property
is treated as having been "acquired" on the date the Operating Property is
placed in operation by a Borrower, Guarantor or any of its Subsidiaries after
the later of (a) its acquisition from a third party, (b) completion of its
original construction or (c) completion of its substantial reconstruction,
renovation, remodeling or expansion (whether or not constituting an Operating
Property prior to such reconstruction, renovation, remodeling or expansion).

1.88    "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
12.5 of this Agreement governing participations.

1.89  "Payment Account" shall have the meaning set forth in Section 6.3 hereof.

1.90    "PBY" shall mean PBY Corporation, a Delaware corporation, and its
successors and assigns.

1.91    "PBY-California" shall mean The Pep Boys Manny Moe & Jack of
California, a California corporation, and its successors and assigns.

1.92    "PBY-Delaware" shall mean Pep Boys - Manny, Moe & Jack of Delaware,
Inc., a Delaware corporation, and its successors and assigns.

1.93    "PBY-Puerto Rico" shall mean Pep Boys - Manny, Moe & Jack of Puerto
Rico, Inc., a Delaware corporation, and its successors and assigns.

1.94    "Pep Boys" shall mean The Pep Boys - Manny, Moe & Jack, a
Pennsylvania corporation, and its successors and assigns.

1.95    "Pep Boys Indentures" shall mean, collectively, (a) Pep Boys Senior
Indentures, and (bi Pep Boys Subordinated Indentures.

1.96    "Pep Boys Senior Indentures" shall mean, collectively, the following
(as the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced): (a) the 1991 Senior Note Indenture,
(b) the 1995 Senior Note Indenture, (c) the 1997 Senior Note Indenture, (d)
the 1998 Senior Note Indenture and (e) all agreements, documents and
instruments executed and/or delivered in connection with any of the foregoing.

1.97    "Pep Boys Subordinated  Indentures" shall mean, collectively, the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) the 1998
Subordinated Note Indenture, (b) the 1997 Subordinated Note Indenture, (c)
the LYONS Indenture, and (d) all agreements, documents and instruments
executed and/or delivered in connection with any of the foregoing.

1.98    "Permits" shall have the meaning set forth in Section 8.7 hereof.

1.99    "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter
S status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

 1.100  "Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which Borrower sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a Multiemployer Plan
has made contributions at any time during the immediately preceding six (6)
plan years.

1.101   "Prime Rate" shall mean the rate from time to time publicly announced
by First Union National Bank, or its successors, as its prime rate, whether
or not such announced rate is the best rate available at such bank.

1.102   "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.

1.103   "Quarterly Average Excess Availability" shall mean, at any time, the
daily average of the Excess Availability for the immediately preceding fiscal
quarter as calculated by Lender in good faith.

1.104  "Real Property" shall mean all now owned and hereafter acquired real
property of each Borrower and Guarantor, including leasehold interests,
together with all buildings, structures, and other improvements located thereon
and all licenses, easements and appurtenances relating thereto, wherever
located.

1.105   "Receivables" shall mean: (a) all Accounts; (b) all amounts at any
time payable to any Borrower in respect of the sale or other disposition by
any Borrower of (i) any Account or (ii) any other obligation for the payment of
money arising from or in connection with the sale or other disposition of
Inventory or any other Collateral; (c) all interest, fees, late charges,
penalties, collection fees and other amounts due or to become due or otherwise
payable in connection with (i) any Account or (ii) any other obligation for the
payment of money arising from or in connection with the sale or other
disposition of Inventory or any other Collateral; (d) all letters of credit,
indemnities, guarantees, security or other deposits and proceeds thereof issued
payable to any Borrower or otherwise in favor of or delivered to any Borrower
in connection with (i) any Account or (ii) any other obligation for the payment
of money arising from or in connection with the sale or other disposition of
Inventory or any other Collateral; or (e) all other contract rights, chattel
paper, instruments, notes, general intangibles and other forms of obligations
owing to any Borrower, arising from or in connection with the sale of Inventory
or any other Collateral, or the leasing, licensing or other disposition of any
Inventory or other Collateral (including Intellectual Property or other general
intangibles) or rendition of services or from loans or advances by any Borrower
or to or for the benefit of any third person (including loans or advances to
any Affiliates or Subsidiaries) or otherwise associated with any Accounts,
Inventory or other Collateral of any Borrower (including, without limitation,
choses in action, causes of action, tax refunds, tax refund claims, rights and
claims against carriers and shippers, rights to indemnification, casualty or
any similar types of insurance and any proceeds thereof).

 1.106  "Records" shall mean, as to each Borrower, all of such Borrower's
present and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and other data
relating to the Collateral or any Account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of such Borrower with respect to the foregoing maintained with or by
any other person).

1.107   "Reference Bank" shall mean First Union National Bank, or such other
bank as Lender may from time to time designate.

1.108   "Refinancing Indebtedness" shall have the meaning set forth in Section
9.9 hereof.

1.109   "Renewal Date" shall the meaning set forth in Section 12.1 hereof.

1.110   "Reserves" shall mean, as to each Borrower, as of any date of
determination, such amounts as Lender may from time to time establish and
revise in good faith reducing the amount of Loans and Letter of Credit
Accommodations which would otherwise be available to such Borrower under the
lending formula(s) provided for herein:  (a) to reflect events, conditions,
contingencies or risks which, as determined by Lender in good faith,
adversely affect, or would have a reasonable likelihood of adversely affecting,
either (i) the Collateral or any other property which is security for the
Obligations or its value, (ii) the assets or business of such Borrower or any
Obligor, or (iii) the security interests and other rights of Lender in the
Collateral (including the enforceability, perfection and priority thereof),
or (b) to reflect Lender's good faith belief that any collateral report or
financial information furnished by or on behalf of such Borrower or any Obligor
to Lender is or may have been incomplete,inaccurate or misleading in any
material respect, or (c) to reflect outstanding Letter of Credit Accommodations
as provided in Section 2.2 hereof, or (d) in respect of any state of facts
which Lender determines in good faith constitutes an Event of Default or may,
with notice or passage of time or both, constitute an Event of Default, or (e)
to reflect inventory shrinkage, or (f) to reflect the aggregate amount of
deposits, if any, received by any Borrower from its customers, or (g) to
reflect amounts due or to become due in respect of sales, use and/or
withholding taxes, or (h) to reflect amounts owing by such Borrower to Credit
Card Issuers or Credit Card Processors in connection with the Credit Card
Agreements, or (i) any rental payments, service charges or other amounts due
to lessors of real or personal property to the extent Inventory or Records
are located in or on property or such Records are needed to monitor or
otherwise deal with Collateral.  Without limiting the generality of the
foregoing, the term Reserves as used herein shall include, in addition to and
not in limitation, the  Facility Reserve, and the Special Reserve.
To the extent Lender may revise the lending formulas used to determine the.
Borrowing Base or establish new criteria or revise existing criteria for
Eligible Accounts or Eligible Inventory so as to address any circumstances,
condition, event or contingency in an manner satisfactory to Lender, Lender
shall not establish a Reserve for the same purpose.  The amount of any Reserve
established by Lender shall have a reasonable relationship to the event,
condition or other matter which is the basis for such reserve as determined by
Lender in good faith.

1.111  "Solvent" shall mean, at any time with respect to any Person, that at
such time (a) such Person is able to pay its debts as they mature and has (and
has reason to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation and at their present fair salable value are greater
than the Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, to the best of such Person's
knowledge, represents an amount which can reasonably be expected to become an
actual or matured liability.

1.112  "Special Reserve" shall mean the amount equal to $25,000,000.

1.113   "Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the
board of directors of such corporation (irrespective of whether, at the time,
Capital Stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency),
managers, trustees or other controlling persons, or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly,
owned by such Person and/or one or more subsidiaries of such Person.

1.114   "Synthetic Lease Facility Agreements" shall mean, collectively, the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) Amended and
Restated Trust Agreements, dated as of the date hereof, by and between, the
several holders from time to time parties thereto, and State Street Bank and
Trust Company of Connecticut, National Association, as Owner Trustee, (b)
the Credit Agreements, each dated as of the date hereof, by and among,
State Street Bank and Trust Company of Connecticut, National Association, as
Owner Trustee under the 1995 Pep Boys Leased Property Trust and the 1997 Pep
Boys II Leased Property Trust (as applicable), as borrower, the several
lenders, parties thereto, and First Union National Bank, as Agent with respect
to each of Tranche A and Tranche B, (c) the Synthetic Master Lease, (d)
Participation Agreement, dated as of the date hereof, among Pep Boys,
PBY-California, PBY- Delaware, as lessee, various parties thereto, as
guarantors, State Street Bank and Trust Company of Connecticut, National
Association, as Owner Trustee,  the various banks and other lending
institutions parties thereto, as holders, the various banks and other lending
institutions parties thereto, as lenders, First Union National Bank, as Agent
and First Union Securities, Inc., as Arranger, and (e) all agreements,
documents, mortgages and instruments executed and/or delivered in connection
with any of the foregoing.

1.115  "Synthetic Master Lease" shall mean the Lease Agreement, dated as of
the date hereof, by and among State Street Bank and Trust Company of
Connecticut, National Association, as Owner Trustee under the 1995 Pep Boys
Leased Property Trust and the 1997 Pep Boys Leased Property Trust
(as applicable), jointly and severally, as lessor, and Pep Boys,
PBY- California, and PBY-Delaware, as lessees.

1.116   "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of  (a) cost computed on a last-in first-out
basis in accordance with GAAP  or (b) market value as determined in
accordance with GAAP, provided, that, for purposes of the calculation of
the Borrowing Base, the Value of the Inventory shall not include:
(i) the portion of the value of Inventory equal to the profit earned by any
Affiliate on the sale thereof to a Borrower or Guarantor or (ii) write-ups
in value with respect to currency exchange rates.

1.117   "Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees
of such Person, irrespective of whether at the time Capital Stock of any
other class or classes have or might have voting power by reason of the
happening of any contingency, and (b) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (a) of this
definition.

1.118   "Weekly Collateral Report" shall mean a report, substantially in the
form of Exhibit D hereto, as the same may from time to time be modified by
Lender, which is duly completed as provided in Section 7.1 hereof and
executed by the chief financial officer or Vice President-Finance of Pep
Boys on behalf of each Borrower and delivered to Lender.

1.119  "Weighted Average to Maturity" shall mean when applied to any
1ndebtedness at any date, the number of years obtained by dividing (a) the
then outstanding principal amount of such Indebtedness into (b) the product
obtained by multiplying (i) the amount of each then outstanding installment,
sinking fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by (ii) the number
of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.

1.120   "Working Capital Advances" shall have the meaning set forth in
Section 4.2 (c) hereof.

SECTION 2.      CREDIT FACILITIES

2.1     Loans.

(ai     Subject to and upon the terms and conditions contained herein, Lender
agrees to make Loans to each Borrower from time to time in amounts requested
by such Borrower (or Pep Boys on behalf of such Borrower) up to the Borrowing
Base.

(bi    Lender may, in its discretion, from time to time, upon not less than
ten (10) days prior notice to a Borrower (or Pep Boys on behalf of such
Borrower), (i) reduce the lending formula with respect to Eligible Accounts to
the extent that Lender determines in its good faith, that, without duplication:
(A) the dilution with respect to the Accounts for any period (based on the
ratio of (1) the aggregate amount of reductions in Accounts other than as a
result of payments in cash to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Lender
determines in good faith, that, without duplication:  (A) the number of days of
the turnover of the Inventory for any period has changed in any material
respect, or (B) the nature and quality of the Inventory has deteriorated.
In determining whether to reduce the lending formula(s), Lender may consider
events, conditions, contingencies or risks which are also considered in
determining Eligible Accounts, Eligible Inventory or in establishing Reserves.
To the extent Lender shall have established a Reserve which is sufficient to
address an event, condition or matter described in this Section 2.1(b) in a
manner satisfactory to Lender in good faith, Lender shall not exercise its
rights under this Section 2.1(b) to reduce the lending formulas to address
such event, condition or matter.  The amount of any reduction in the lending
formula by Lender pursuant to this Section 2.1(b) shall have a reasonable
relationship to the matter which is the basis for such a reduction.

(c)     Except in Lender's discretion (i) the aggregate amount of the Loans and
the Letter of Credit Accommodations outstanding at any time shall not exceed
the Maximum Credit   and (ii) the aggregate amount of outstanding Working
Capital Advances at any time when taken together with the aggregate amount of
all other then outstanding Exempted Debt shall not exceed the Exempted Debt
Limit.  In the event that the outstanding amount of any component of the Loans,
or the aggregate amount of the outstanding Loans and Letter of Credit
Accommodations, exceed the amounts available under the Borrowing Base, the
sublimit for Letter of Credit Accommoda-tions set forth in Section 2.2(e), the
Maximum Credit, or the Exempted Debt Limit, as applicable, such event shall not
limit, waive or otherwise affect any rights of Lender in that circumstance or
on any future occasions and Borrowers shall, upon demand by Lender, which may
be made at any time or from time to time, immediately repay to Lender the
entire amount of any such excess(es) for which payment is demanded.

2.2     Letter of Credit Accommodations.

(a)     Subject to and upon the terms and conditions contained herein, at the
request of a Borrower, or Pep Boys on behalf of such Borrower, Lender agrees to
provide or arrange for Letter of Credit Accommodations for the account of such
Borrower with First Union National Bank or such other national bank with whom
Lender has an established business relationship, containing terms and
conditions acceptable to Lender and the issuer thereof.  Any payments made by
Lender to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations shall constitute additional Loans to such
Borrower pursuant to this Section 2.
(b)    In addition to any charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations, Borrowers shall
pay to Lender a letter of credit fee at a rate equal to one and one-quarter
(1 1/4%) percent per annum on the daily outstanding balance of the Letter of
Credit Accommodations for the immediately preceding month (or part thereof),
payable in arrears as of the first day of each succeeding month, except that
Borrowers shall pay to Lender such letter of credit fee, at Lender's option,
without notice, at a rate equal to three and one quarter (3 1/4%) percent per
annum on such daily outstanding balance for:  (i) the period from and after
the effective date of termination or non-renewal (including any termination
of the initial term or any renewal term) hereof until Lender has received full
and final payment of all Obligations (notwithstanding entry of a judgment
against any Borrower) and (ii) the period from and after the date of the
occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Lender.  Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual
days elapsed and the obligation of Borrowers to pay such fee shall survive
the termination or non-renewal of this Agreement.

(c)     The Borrower requesting a Letter of Credit Accommodation, or Pep Boys
on behalf of such Borrower, shall give Lender two (2) Business Days' prior
written notice of any Borrower's request for the issuance of a Letter of
Credit Accommodation.  Such notice shall be irrevocable and shall specify the
original face amount of the Letter of Credit Accommodation requested, the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit Accommodation, whether such Letter of Credit
Accommodations may be drawn in a single or in partial draws, the date on
which such requested Letter of Credit Accommodation is to expire (which
date shall be a Business Day), the purpose for which such Letter of Credit
Accommodation is to be issued, and the beneficiary of the requested Letter
of Credit Accommodation.  Such Borrower (or Pep Boys on behalf of such
Borrower) shall attach to such notice the proposed form of the Letter of
Credit Accommodation.

(d)    In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Lender:  (i) the Borrower requesting such
Letter of Credit Accommodation (or Pep Boys on behalf of such Borrower) shall
have delivered to the proposed issuer of such Letter of Credit Accommodation at
such times and in such manner as such proposed issuer may require, an
application in form and substance satisfactory to such proposed issuer and
Lender for the issuance of the Letter of Credit Accommodation and such other
documents as may be required pursuant to the terms thereof, and the form and
terms of the proposed Letter of Credit Accommodation shall be satisfactory to
Lender and such proposed issuer, (ii) as of the date of issuance, no order of
any court, arbitrator or other Governmental Authority shall purport by its
terms to enjoin or restrain money center banks generally from issuing letters
of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter
of Credit Accommodation refrain from, the issuance of letters of credit
generally or the issuance of such Letters of Credit Accommodation; and (iii)
the Excess Availability of Borrowers, prior to giving effect to any Reserves
with respect to such Letter of Credit Accommodation requested, on the date of
the proposed issuance of any Letter of Credit Accommodations, shall be equal
to or greater than: (A) if the proposed Letter of Credit Accommodation is for
the purpose of purchasing Eligible Inventory and the
documents of title with respect thereto are consigned to the issuer, the sum of
(1) the percentage equal to one hundred (100%) minus the then applicable
percentage with respect to Eligible Inventory set forth in Section 1.9(b)
multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes,
duty and other amounts which Lender estimates must be paid in connection with
such Inventory upon arrival and for delivery to one of a Borrower 's locations
for Eligible Inventory within the United States of America and (B) if the
proposed Letter of Credit Accommodation is for any other purpose (or the
documents of title are not consigned to the issuer in connection with a Letter
of Credit Accommodation which is for the purpose of purchasing Eligible
Inventory), an amount equal to one hundred (100%) percent of the face amount
thereof and all other commit-ments and obligations made or incurred by Lender
with respect thereto.  Effective on the issuance of each Letter of Credit
Accommodation, a Reserve shall be established in the applicable amount set
forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).

(e)     Except in Lender's discretion, the amount of all outstanding Letter of
Credit Accommodations and all other commitments and obligations made or
incurred by Lender in connection therewith shall not at any time exceed
$40,000,000.  At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrowers will either furnish cash
collateral to secure the reimbursement obligations to the issuer in connection
with any Letter of Credit Accommodations or furnish cash collateral to Lender
for the Letter of Credit Accommodations.

(f)    Each Borrower shall indemnify and hold Lender harmless from and against
any and all losses, claims, damages, liabilities, costs and expenses which
Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation.  Each Borrower assumes all risks with respect to the acts
or omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent.  Each Borrower assumes all risks for, and agrees to pay,
all foreign, Federal, State and local taxes, duties and levies relating to any
goods subject to any Letter of Credit Accommodations or any documents, drafts
or acceptances thereunder.  Each Borrower hereby releases and holds Lender
harmless from and against any acts, waivers, errors, delays or omissions,
whether caused by such Borrower, by any issuer or correspondent or otherwise
with respect to or relating to any Letter of Credit Accommodation, except for
the gross negligence or wilful misconduct of Lender as determined pursuant to
a final, non-appealable order of a court of competent jurisdiction.  The
provisions of this Section 2.2(f) shall survive the payment of Obligations and
the termination or non-renewal of this Agreement.

(g)     In connection with Inventory purchased pursuant to Letter of Credit
Accommodations, each Borrower will, at Lender's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in
which Lender holds a security interest to deliver them to Lender and/or subject
to Lender's order, and if they shall come into such Borrower's possession, to
deliver them, upon Lender's request, to Lender in their original form.  Each
Borrower shall also, at Lender's request, designate Lender as the consignee
on all bills of lading and other negotiable and non-negotiable documents.

(h)     Each Borrower hereby irrevocably authorizes and directs any issuer of a
Letter of Credit Accommodation to name such Borrower as the account party
therein and to deliver to Lender all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Lender's instructions and agreements with respect
to all matters arising in connection with the Letter of Credit Accommodations
or the applications therefor.  Nothing contained herein shall be deemed or
construed to grant any Borrower any right or authority to pledge the credit of
Lender in any manner.  Lender shall have no liability of any kind with respect
to any Letter of Credit Accommodation provided by an issuer other than Lender
unless Lender has duly executed and delivered to such issuer the application
or a guarantee or indemnification in writing with respect to such Letter of
Credit Accommodation.  Each Borrower shall be bound by any interpretation made
in good faith by Lender, or any other issuer or correspondent under or
in connection with any Letter of Credit Accommodation or any documents, drafts
or acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of such Borrower.  Lender shall have the
sole and exclusive right and authority to, and each Borrower shall not:
(i) at any time an Event of Default exists or has occurred and is continuing,
(A) approve or resolve any questions of non-compliance of documents, (B) give
any instructions as to acceptance or rejection of any documents or goods or
(C) execute any and all applications for steamship or airway guaranties,
indemnities or delivery orders, and (ii) at all times, (A) grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letter of Credit
Accommodations, or docu-ments, drafts or acceptances thereunder or any letters
of credit included in the Collateral.  Lender may take such actions either in
its own name or in any Borrower's name.

(i)    Any rights, remedies, duties or obligations granted or undertaken by a
Borrower to any issuer or corre-spondent in any application for any Letter of
Credit Accommo-da-tion, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed.
to have been granted or undertaken by such Borrower to Lender.  Any duties or
obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by such Borrower to
Lender and to apply in all re-spects to such Borrower.

2.3   Joint and Several Liability.  Borrowers shall be liable for all amounts
due to Lender under this Agreement, regardless of which Borrower actually
receives the Loans or other extensions of credit hereunder or the amount of
such Loans received or the manner in which Lender accounts for such Loans,
Letter of Credit Accommodations or other extensions of credit on its books and
records.  The Obligations with respect to Loans made to a Borrower, and the
Obligations arising as a result of the joint and several liability of a
Borrower hereunder, with respect to Loans made to the other Borrower hereunder,
shall be separate and distinct obligations, but all such other Obligations
shall be primary obligations of all Borrowers.  The Obligations arising as a
result of the joint and several liability of a Borrower hereunder with respect
to Loans, Letter of Credit Accommodations or other extensions of credit made
to the other Borrower hereunder shall, to the fullest extent permitted by law,
be unconditional irrespective of (a) the validity or enforceability,
avoidance or subordination of the Obligations of the other Borrower or of any
promissory note or other document evidencing all or any part of the
Obligations of the other Borrowers, (b) the absence of any attempt to collect
the Obligations from the other Borrower, any Obligor or any other security
therefor, or the absence of any other action to enforce the same, (c) the
waiver, consent, extension, forbearance or granting of any indulgence by
Lender with respect to any provisions of any instrument evidencing the
Obligations of the other Borrower, or any part thereof, or any other agreement
now or hereafter executed by the other Borrower and delivered to Lender, (d)
the failure by Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights and maintain its security or collateral
for the Obligations of the other Borrower, (e) the election of Lender in any
proceeding instituted under the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, (f) the disallowance of all or any
portion of the claim(s) of Lender for the repayment of the Obligations of the
other Borrower under Section 502 of the Bankruptcy Code, or (g) any other
circumstances which might constitute a legal or equitable discharge or defense
of any Obligor or of the other Borrower, other than the wilful misconduct,
gross negligence or bad faith of Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction.  With respect to
the Obligations arising as a result of the joint and several liability of a
Borrower hereunder with respect to Loans, Letter of Credit Accommodations or
other extensions of credit made to the other Borrower hereunder, each Borrower
waives, until the Obligations shall have been paid in full and this Agreement
shall have been terminated, any right to enforce any right of subrogation or
any remedy which Lender now has or may hereafter have against Borrowers, any
endorser or any guarantor of all or any part of the Obligations, and any
benefit of, and any right to participate in, any security or collateral given
to Lender.  Upon any Event of Default and for so long as the same is
continuing, Lender may proceed directly and at once, without notice, against
any Borrower to collect and recover the full amount, or any portion of the
Obligations, without first proceeding against the other Borrower or any other
Person, or against any security or collateral for the Obligations.  Each
Borrower consents and agrees that Lender shall be under no obligation to
marshall any assets in favor of Borrower(s) or against or in payment of any
or all of the Obligations.

SECTION 3.      INTEREST AND FEES

3.1     Interest.

(a)     Borrowers shall pay to Lender interest on the outstanding principal
amount of the Loans at the Interest Rate.  All interest accruing hereunder on
and after the date of any Event of Default or termination or non-renewal hereof
shall be payable on demand.

(b)     Each Borrower (or Pep Boys on behalf of such Borrower) may from time to
time request that Prime Rate Loans be converted to Eurodollar Rate Loans or
that any existing Eurodollar Rate Loans continue for an additional Interest
Period.  Such request from a Borrower (or Pep Boys on behalf of such Borrower)
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans.  Subject to the terms
and conditions contained herein, three (3) Business Days after receipt by
Lender of such a request from a Borrower, such Prime Rate Loans shall be
converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall
continue, as the case may be, provided, that, (i) no Event of Default, or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred and be continuing,
(ii) no party hereto shall have sent any notice of termination or non-renewal
of this Agreement, (iii) Borrowers shall have complied with such customary
procedures as are established by Lender and specified by Lender to Borrowers
from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv)
no more than four (4) Interest Periods may be in effect at any one time, (v)
the aggregate amount of the Eurodollar Rate Loans must be in an amount not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof,
(vi) in the event that Excess Availability, at any time, shall be less than
$37,500,000, then, the maximum amount of the Eurodollar Rate Loans at any time
requested by Borrowers shall not exceed the amount equal to eighty-five (85%)
percent of the lowest principal amount of the Loans which it is anticipated
will be outstanding during the applicable Interest Period, as determined by
Lender (but with no obligation of Lender to make such Loans), and (vii)
Lender shall have determined that the Interest Period or Adjusted Eurodollar
Rate is available to Lender through the Reference Bank and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by such
Borrower.  Any request by a Borrower to convert Prime Rate Loans to Eurodollar
Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable.  Notwithstanding anything to the contrary contained herein, Lender
and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Lender and Reference Bank had purchased such deposits to
fund the Eurodollar Rate Loans.

(c)    Any Eurodollar Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, unless Lender has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof.  Any Eurodollar Rate Loans shall, at Lender's option, upon notice by
Lender to Pep Boys, convert to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed.  Borrowers shall pay to Lender,
upon demand by Lender (or Lender may, at its option, charge any loan account of
a Borrower) any amounts required to compensate Lender, the Reference Bank or
any Participant with Lender for any loss (including loss of anticipated
profits), cost or expense incurred by such Person, as a result of the
conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the
foregoing (other than at the end of an Interest Period).

(d)     Interest shall be payable by Borrowers to Lender monthly in arrears not
later than the first day of each calendar month and shall be calculated on the
basis of a three hundred sixty (360) day year and actual days elapsed.  The
interest rate on non-contingent Obligations (other than Eurodollar Rate Loans)
shall increase or decrease by an amount equal to each increase or decrease in
the Prime Rate effective on the first day of the month after any change in
such Prime Rate is announced based on the Prime Rate in effect on the last day
of the month in which any such change occurs.

(e)    No agreements, conditions, provisions or stipulations contained in this
Agreement or any of the other Financing Agreements or any Event of Default, or
the exercise by Lender of the right to accelerate the payment or the maturity
of all or any portion of the Obligations, or the exercise by Lender of any
option whatsoever contained in this Agreement or any of the other Financing
Agreements, or the prepayment by or on behalf of a Borrower of any of the
Obligations, or the occurrence of any event or contingency whatsoever, shall
entitle Lender to contract for, charge or receive, in any event, interest
exceeding the maximum non-usurious rate of interest under applicable Federal
or State Law as in effect from time to time that may be contracted for, taken,
reserved, charged or received in respect of Indebtedness of any Borrower to
Lender (the "Maximum Interest Rate").  In no event shall a Borrower be
obligated to pay interest exceeding such Maximum Interest Rate.  All
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel such Borrower to
pay a rate of interest exceeding the Maximum Interest Rate shall be without
binding force or effect, at law or in equity, to the extent of the excess of
interest over such Maximum Interest Rate.  In the event any interest is
contracted for, charged or received in excess of the Maximum Interest Rate
("Excess"), each Borrower acknowledges and stipulates that any such contract,
charge or receipt shall be the result of an accident and bona fide error, and
that any Excess received by Lender shall be applied, first, to the payment of
the then outstanding and unpaid principal hereunder; second, to the payment of
the other Obligations then outstanding and unpaid; and third, returned to such
Borrower (or Pep Boys on behalf of such Borrower), it being the intent of the
parties hereto not to enter at any time into a usurious or otherwise illegal
relationship.  Each Borrower recognizes that, with fluctuations in the rate of
interest set forth in this Section 3.1 and the Maximum Interest Rate, such an
unintentional result could inadvertently occur.  By the execution of this
Agreement, each Borrower agrees that (i) the credit or return of any Excess
shall constitute the acceptance by such Borrower of such Excess, and (ii) each
Borrower shall not seek or pursue any other remedy, legal or equitable, against
Lender, based in whole or in part upon contracting for, charging or receiving
of any interest in excess of the Maximum Interest Rate.  For the purpose of
determining whether or not any Excess has been contracted for, charged or
received by Lender, all interest at any time contracted for, charged or
received by Lender in connection with this Agreement or any of the other
Financing Agreements shall be amortized, prorated, allocated and spread in
equal parts during the entire term of this Agreement.

3.2     Syndication Fee.  Borrowers shall pay to Lender as a syndication fee in
the amount of $812,500, which shall be fully earned and payable on the date
hereof.

3.3     Servicing Fee.  Borrowers shall pay to Lender quarterly a servicing fee
in an amount equal to $36,000 in respect of Lender's services for each quarter
(or part thereof) while this Agreement remains in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each calendar quarter hereafter.

3.4     Unused Line Fee.  While this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, Borrowers shall pay to
Lender monthly an unused line fee at a rate equal to the Applicable Unused Line
Fee Percentage per annum calculated upon the amount by which eighty (80%)
percent of the Maximum Credit exceeds the average daily principal balance of
the outstanding Loans and Letter of Credit Accommodations during the
immediately preceding month (or part thereof); such unused line fee shall be
payable on the first day of each month in arrears.

3.5     Closing Fee.  Borrower shall pay to Lender as a closing fee the amount
of $125,000, which shall be fully earned and payable as of the date hereof.

3.6     Changes in Laws and Increased Costs of Loans.

(a)     Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to a Borrower, convert to
Prime Rate Loans in the event that:

(i)     any change in applicable law or regulation (or the interpretation or
administration thereof) shall either:

(A)    make it unlawful for Lender, Reference Bank or any Participant to make
or maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, except that, in the event that it
becomes unlawful for any Participant or  Lender to make or maintain Eurodollar
Rate Loans, then (1) only the portion of the Eurodollar Rate Loans equal to
the pro rata share of the Participant in the Loans (or in the case of Lender,
the Loans made by Lender) shall be converted to Prime Rate Loans and thereafter
such portion of the Loans shall not be available as Eurodollar Rate Loans, and
(2) all other Eurodollar Rate Loans shall not be converted, or

(B)     result in an increase in the costs to Lender, Reference Bank or any
Participant of making or maintaining any Eurodollar Rate Loans by an amount
deemed by Lender, in good faith to be material (or so increase the costs to
Reference Bank or  any Participant of providing the funds used by Lender to
make or maintain Eurodollar Rate Loans), provided, that, (1) Borrowers may
elect, upon timely notice from Pep Boys to Lender, that such Eurodollar Rate
Loans shall not be converted as a result of the increase in costs with respect
to such Eurodollar Rate Loans, so long as Lender (whether in respect of the
interests of the applicable Participant or its own interests) shall receive
payments from Borrowers in the amount of such increased costs or (2) except as
otherwise provided in clause (i)(B)(1) above, in the event that there are
increased costs for a Participant or  Lender which are payable by Borrowers as
a result of any change in applicable law or regulation, then only the portion
of the Eurodollar Rate Loans equal to the pro rata share of the Participant in
the Loans (or in the case of  Lender, the Loans made by or on behalf of
Lender) shall be converted to Prime Rate Loans and thereafter such portion of
the Loans shall not be available as Eurodollar Rate Loans and all other
Eurodollar Rate Loans shall not be converted, or

(C)     reduce the amounts received or receivable by Lender or any Participant
with respect to Eurodollar Rate Loans, by an amount deemed by  Lender, in good
faith to be material, provided, that, in the event that there are reduced
amounts received or receivable by a Participant or  Lender, then (1) Borrowers
may elect, upon timely notice from Pep Boys to Lender, that such Eurodollar
Rate Loans shall not be converted so long as Lender (whether in respect of the
interests of the applicable Participant or its own interests) shall receive
payments from Borrowers in the amount required for  Lender (or such
Participant) to receive such amounts as it would have but for such change in
applicable law or regulation or (2) except as otherwise provided in clause
(i)(C)(1) above, in the event that there are reduced amounts received or
receivable by a Participant or  Lender, only the portion of the Eurodollar Rate
Loans equal to the pro rata share of the Participant in the Loans (or in the
case of Lender, the Loans made by or on behalf of Lender) shall be converted to
Prime Rate Loans and thereafter such portion of the Loans shall not be
available as Eurodollar Rate Loans and all other Eurodollar Rate Loans shall
not be converted, or

(ii)     the cost to Lender, Reference Bank or any Participant with  Lender of
making or maintaining any Eurodollar Rate Loans shall otherwise increase by an
amount deemed by Lender, in good faith to be material (or so increase the costs
to Reference Bank or any Participant of providing the funds used by Lender to
make or maintain Eurodollar Rate Loans), other than increases in cost resulting
from changes in applicable law or regulation set forth in Section 3.6(a)(i)(B)
hereof; provided, that, in the event of such increase as to any Participant or
Lender, (A) Borrowers may elect, upon timely notice from Pep Boys to Lender,
that such Eurodollar Rate Loans shall not be converted as a result of the
increase in costs with respect to such Eurodollar Rate Loans, so long as Lender
(whether in respect of the interests of the applicable Participant or its own
interests) shall receive payments from Borrowers in the amount of such
increased costs and (B) except as otherwise provided in clause (ii)(A) above,
only the portion of the Eurodollar Rate Loans equal to the pro rata share of
the Participant in the Loans (or in the case of Lender, the Loans made by or
on behalf of  Lender) shall be converted to Prime Rate Loans and thereafter
such portion of the Loans shall not be available as Eurodollar Rate Loans and
 all other Eurodollar Rate Loans shall not be converted.

Borrowers shall pay to Lender, upon demand by Lender (or Lender may, at its
option, charge any loan account with respect to a Borrower) any amounts
required to compensate Lender, the Reference Bank or any Participant with
Lender for any loss (including loss of anticipated profits), cost or expense
incurred by such person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by reason of the .
liquidation or reemployment of deposits or other funds acquired by such person
to make or maintain the Eurodollar Rate Loans or any portion thereof.  A
certificate of Lender setting forth the basis for the determination of such
amount necessary to compensate Lender as aforesaid shall be delivered to a
Borrower and shall be conclusive, absent manifest error.

(b)     If any payments or prepayments in respect of the Eurodollar Rate Loans
are received by Lender other than on the last day of the applicable Interest
Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrowers
shall pay to Lender upon demand by Lender (or Lender may, at its option, charge
any loan account with respect to a Borrower) any amounts required to compensate
Lender, the Reference Bank or any Participant with Lender for any additional
loss (including loss of anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such person to make or
maintain such Eurodollar Rate Loans or any portion thereof.

SECTION 4.      CONDITIONS PRECEDENT

4.1     Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:

(a)    Lender shall have received, in form and substance satisfactory to
Lender, all releases, terminations and such other documents as Lender may
request to evidence and effectuate the termination by The Chase Manhattan Bank
(National Association), as Agent, of the  financing arrangements with
Borrowers existing pursuant to the Amended and Restated Credit Agreement, dated
as of April 21, 1995, by and among the Pep Boys, as borrower, the other
Borrowers and Guarantors, as guarantors and the banks signatories thereto and
the termination and release by such lenders of any interest in and to any
assets and properties of Borrowers and Guarantors, duly authorized, executed
and delivered by each of them, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by
each of them or their predecessors, as secured party and any Borrower or
Guarantor, as debtor and (ii) satisfactions and discharges of any mortgages,
deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor
of such lenders, in form acceptable for recording with the appropriate
Governmental Authority;

(b)     Lender shall have received, in form and substance satisfactory to
Lender, all releases, terminations and such other documents as Lender may
request to evidence and effectuate the termination by Citibank Leasing, Inc.
of the Existing Citibank Synthetic Lease Facility with Borrowers and the
termination and release by each of them of any interest in and to any assets
and properties of Borrowers and Guarantors, duly authorized, executed and
delivered by it, including, but not limited to, (i) UCC termination statements
for all UCC financing statements previously filed by it or its predecessors,
as secured party and any Borrower or Guarantor, as debtor and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to
secure debt by any Borrower or Guarantor in favor of such lender, in form
acceptable for recording with the appropriate Governmental Authority;

(c)     Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
and only security interests in and liens upon the Collateral, subject only
to the security interests and liens permitted herein or in the other Financing
Agreements;

(d)     all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information
and copies of all documents, including records of requisite corporate action
and proceedings which Lender may have requested in connection therewith, such
documents where requested by Lender or its counsel to be certified by
appropriate corporate officers or Governmental Authority;

(e)     no material adverse change shall have occurred in the assets,
business or prospects of any Borrower or Guarantor since the date of Lender's
latest field examination and no change or event shall have occurred which
would impair the ability of any Borrower or Guarantor to perform its
obligations hereunder or under any of the other Financing Agreements to which
it is a party or of Lender to enforce the Obligations or realize upon the
Collateral;

(f)    Lender shall have completed a field review of the Records and such
other information with respect to the Collateral as Lender may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of
Accounts and Inventory through the date of closing and test counts of the
Inventory in a manner satisfactory to Lender, together with such supporting
documentation as may be necessary or appropriate, and other documents and
information that will enable Lender to accurately identify and verify the
Collateral), the results of which each case shall be satisfactory to Lender,
not more than three (3) Business Days prior to the date hereof;

(g)     Lender shall have received, in form and sub-stance satisfactory to
Lender, all consents, waivers, acknowl-edgments and other agreements from
third persons which Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the Collateral or
to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrowers and by
warehouses at which Collateral is located;

(h)     Lender shall have received, in form and substance satisfactory to
Lender, all agreements with the depository banks and Borrowers with respect to
the Blocked Accounts as Lender may require pursuant to Section 6.3 hereof,
duly authorized, executed and delivered by such depository banks and Borrowers;

(i)     Lender shall have received and reviewed UCC search results for all
jurisdictions in which assets of Borrowers and Guarantors are located, which
search results shall be in form and substance satisfactory to Lender;

(j)     Lender shall have received Credit Card Acknowledgments in each case,
duly authorized, executed and delivered by the Credit Card Issuers and Credit
Card Processors;

(k)  Lender shall have received, in form and substance satisfactory to Lender,
all releases, terminations and such other documents as Lender may request to
evidence and effectuate the termination of the 1999 Note Purchase Agreement;

(l)     Lender shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorse-ments naming Lender as loss payee;

(m)     Lender shall have received from Pep Boys, in form satisfactory to
Lender: (i) financial projections, on a quarterly basis for fiscal year 2001,
(ii) financial projections, on a quarterly basis, for the fiscal year 2002,
and financial projections, on an annual basis, for each of  the fiscal years,
2003 and 2004.

(n)     A certificate of the chief financial officer or Vice President-Finance
of Pep Boys setting forth, in form and substance, satisfactory to Lender,
among other things, a calculation of the Exempted Debt Limit which certificate
shall also include a calculation of Exempted Debt Availability after giving
effect to the initial Loans and Letter of Credit Accommodations contemplated
hereunder;

(o)    Lender shall have received true and correct copies of all of the Pep
Boys Indentures;

(p)     the Synthetic Lease Facility Agreements and all instruments and
documents thereunder, shall have been duly executed and delivered by all of
the parties thereto, each in form and substance satisfactory to Lender;

(q)     the aggregate amount of the Excess Availability of Borrowers as
determined by Lender, as of the date hereof, shall be not less than
$50,000,000, after giving effect to the initial Loans made or to be made and
Letter of Credit Accommodations issued or to be issued in connection with the
initial transactions hereunder;

(r)     Lender shall have received, in form and substance satisfactory to
Lender,such opinion letters of counsel to Borrowers and Guarantors with respect
to the Financing Agreements and such other matters as Lender may request; and

(s)     the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
 in form and substance satisfactory to Lender.

4.2     Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is (i) an additional condition precedent to Lender making
the initial Loans and Letter of Credit Accommodations to each Borrower, and
(ii) a condition precedent to Lender making any future Loans and Letter of
Credit Accommodations to each Borrower:

(a)     all representations and warranties contained herein and in the other
Financing Agreements shall be true and correct in all material respects with
the same effect as though such representations and warranties had been made on
and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);

(b)     no law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any
arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit,
restrain or otherwise adversely affect (A) the making of the Loans or
providing the Letter of Credit Accommodations, or (B) the consummation of the
transactions contemplated pursuant to the terms hereof or the other Financing
Agreements or (ii) has or could reasonably be expected to have a Material
Adverse Effect;

(c)    At any time during which the limitations with respect to secured
indebtedness and limitation on liens set forth in any of the Pep Boys
Indentures remain in effect, Pep Boys shall, together with any request for
a Loan or Letter of Credit Accommodation, deliver a certificate of its chief
financial officer or Vice President-Finance to Lender stating (i) whether the
Loan or Letter of Credit Accommodation requested shall be used (A) to pay all
or any part of the purchase price or construction costs in respect of property
(including, without limitation, Inventory) or properties acquired by Pep Boys
or any other Borrower (each an "Asset Purchase Advance"), or (B) used for
purposes other than to pay all or any part of the purchase price or
construction costs in respect of property or properties acquired by Pep Boys
or any other Borrower (each a "Working Capital Advance"), and (ii) if the Loan
and/or Letter of Credit Accommodation is a Working Capital Advance, that (A)
the Exempted Debt Availability is at
least equal to the amount of the requested Working Capital Advance, and (B)
prior to and after giving effect to the making of such Working Capital Advance,
the aggregate amount of outstanding Exempted Debt shall not exceed the
Exempted Debt Limit and setting forth the calculations with respect thereto.

(d)     no Event of Default and no act, condition or event which, with notice
or passage of time or both, would constitute an Event of Default, shall exist
or have occurred and be continuing on and as of the date of the making of such
Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.

SECTION 5.      GRANT OF SECURITY INTEREST

5.1     To secure payment and performance of all Obligations, each Borrower
hereby grants to Lender a continuing security interest in, a lien upon, and
a right of set off against, and hereby assigns to Lender as security, the
following property and interests in property of such Borrower, whether now
owned or hereafter acquired or existing, and wherever located (together with
all other collateral security for the Obligations at any time granted to or
held or acquired by Lender, collectively, the "Collateral"):

(a)     Receivables;

(b)     all other present and future (i) general intangibles (including
Intellectual Property), chattel paper, documents, instruments, credit card
sales drafts, credit card sales slips or charge slips or receipts and other
forms of store receipts, investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts), and (ii) letters of credit,
bankers' acceptances and guaranties in each case, as to clauses (b)(i) and
(b)(ii), relating to Receivables, Inventory or other Collateral;

 (c)    all present and future (i) monies, securities and other investment
property, credit balances, deposits, deposit accounts and other property of
such Borrower now or hereafter held or received by or in transit to Lender or
its Affiliates or at any other depository or other institution from or for the
account of such Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and (ii) liens, security interests,
rights, remedies, title and interest in, to and in respect of Receivables
and other Collateral, including (A) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (B) rights of stoppage in transit,
replevin, repossession, reclamation and other rights and remedies of an unpaid
vendor, lienor  or secured party, (C)  goods described in invoices, documents,
credit card sales drafts, credit card sale slips or charge slips or receipts
and other forms of store receipts,
contracts or instruments with respect to, or otherwise representing or
evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (D) deposits by and property of account debtors or
other persons securing the obligations of account debtors;

(d)     Inventory;

(e)     Intellectual Property;

(f)     Records; and

(g)     all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to
or destruction of any or all of the foregoing.

5.2     Notwithstanding anything to the contrary set forth in Section 5.1
above, the types or items of Collateral described in such Section shall not
include any rights or interests in any contract, lease, permit, license,
charter or license agreement covering real or personal property, as such, if
under the terms of such contract, lease, permit, license, charter or license
agreement, or applicable law with respect thereto, the valid grant of a
security interest or lien therein to Lender is prohibited and such prohibition
has not been or is not waived or the consent of the other party to such
contract, lease, permit, license, charter or license agreement has not been or
is not otherwise obtained or under applicable law such prohibition cannot be
waived; provided, that, the foregoing exclusion shall in no way be construed
(a) to apply if any such prohibition is unenforceable under Section 9-318 of
the UCC or other applicable law or (b) so as to limit, impair or otherwise
affect Lender's unconditional
continuing security interests in and liens upon any rights or interests of
any Borrower in or to monies due or to become due under any such contract,
lease, permit, license, charter or license agreement (including any
Receivables).

 5.3   Notwithstanding anything to the contrary set forth in Section 5.1 above,
 the types or items of Collateral described in such Section shall not include
any of the real and personal property (including, without limitation, the
"Improvements" and "Equipment") and  fixtures of State Street Bank and Trust
Company of Connecticut, National Association, not individually, but solely as
Owner Trustee under the Synthetic Lease Facility Agreements, whether now owned
or hereafter acquired upon which a lien is purported to be created by one or
more of the "Mortgage Instruments" and/or the "Security Agreement."   The
quoted terms used in this Section shall have the meanings set forth in the
Synthetic Lease Facility Agreements.

SECTION 6.      COLLECTION AND ADMINISTRATION

6.1     Borrowers' Loan Accounts.  Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all
payments made by or on behalf of Borrowers and (c) all other appropriate
debits and credits as provided in this Agreement, including fees, charges,
costs, expenses and interest.  All entries in the loan account(s) shall be
made in accordance with Lender's customary practices as in effect from time
to time.

6.2     Statements.  Lender shall render to Pep Boys each month a statement
setting forth the balance in each Borrower's loan account(s) maintained by
Lender for each such Borrower pursuant to the provisions of this Agreement,
including principal, interest, fees, costs and expenses.  Each such statement
shall be subject to subsequent adjustment by Lender but shall, absent manifest
errors or omissions, be considered correct and deemed accepted by Borrowers
[and Guarantors and conclusively binding upon Borrowers and Guarantors as an
account stated except to the extent that Lender receives a written notice from
Borrowers and Guarantors of any specific exceptions of Borrowers thereto within
thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Pep Boys a written statement
as provided above, the balance in Borrowers' loan account(s) shall be
presumptive evidence of the amounts due and owing to Lender by Borrowers and
Guarantors.

6.3     Collection of Accounts.

(a)     Each Borrower shall establish and maintain, at its expense, deposit
account arrangements and merchant payment arrangements with the banks set
forth on Schedule 6.3 hereto and after prior written notice to Lender, subject
 to Section 9.13, such other banks as Borrower may hereafter select as are
acceptable to Lender.  The banks set forth on Schedule 6.3 constitute all of
the banks with whom each Borrower has deposit account arrangements and
merchant payment arrangements as of the date hereof and identifies each of
the deposit accounts at such banks to a location of such Borrower or otherwise
describes the nature of the use of such deposit account by such Borrower.

 (i)    Each Borrower shall deposit all proceeds from sales of Inventory in
every form, including, without limitation, cash, checks, and other forms of
daily store receipts, from each location of such Borrower no less than twice
weekly into the deposit accounts of Borrower used solely for such purpose and
identified to each  location as set forth on Schedule 6.3 (together with any
other deposit accounts at any time established or used by such Borrower for
receiving such proceeds from any location, collectively, the "Local Bank
Accounts") or as otherwise provided in Section 6.3(a)(ii) below.  Each Borrower
shall, on each Business Day, authorize and direct, and shall use its best
efforts to cause, all available funds deposited into the Local Bank Accounts
to be sent by wire transfer or by transfer using the automated clearinghouse
network ("ACH transfer") on each Business Day, and all other proceeds of
Collateral to be sent by wire transfer or by ACH transfer, to the Blocked
Account as provided in Section
6.3(a)(ii) below (except nominal amounts which are required to be maintained
in such Local Bank Accounts under the terms of such Borrower's arrangements
with the bank at which such Local Bank Accounts are maintained as in effect
on the date hereof and amounts which Borrowers may require to operate such
retail locations, not to exceed $10,000,000, in the aggregate in all such
Local Bank Accounts at any time).  In the even that either (A) an act,
condition or event which, with notice or passage of time or both, would
constitute an Event of Default, or an Event of Default shall exist or have
occurred and be continuing ( an "Event of Default Cash Dominion Event"), or
(B) the Excess Availability of Borrowers shall be less than $37,500,000 (an
"Excess Availability Cash Dominion Event"; each being a "Cash Dominion Event");
each Borrower shall, at the request of Lender, irrevocably authorize and
direct in writing, in form and substance satisfactory to Lender (and to the
extent Borrowers have already delivered
executed direction letters to Lender, each Borrower irrevocably authorizes
Lender to send such direction letters upon the occurrence of a Cash Dominion
Event), each of the banks into which proceeds from sales of Inventory from each
location of such Borrower are at any time deposited as provided above to (a)
honor all wire or ACH transfer requests, provided that any and all amounts
released and/or transferred by such bank pursuant to such requests are sent
to the Blocked Account and (b) follow any contrary instructions sent to such
banks by Lender; provided, that, in the event that (1) the Cash Dominion Event
which occurred was an Event of Default Cash Dominion Event, and such Event of
Default Cash Dominion Event has been cured to the satisfaction of Lender, or
(2) the Cash Dominion Event which occurred was an Excess Availability Cash
Dominion Event and after the occurrence of such Cash Dominion Event, Excess
Availability shall be equal to or greater than $37,500,000, for forty-five
(45) consecutive days, then Lender shall instruct the depository banks at
which the Local Bank Accounts are maintained to commence following the
instructions of Borrowers.  In the event any of such banks fails to send such
funds to the Blocked Account as provided herein either prior to or after the
occurrence of a Cash Dominion Event, such Borrower shall pursue all of its
rights and remedies, as reasonably requested by Lender, as a result of such
failure.  Notwithstanding the foregoing, for those Local Bank Accounts that
transfer funds by ACH transfer initiated by each Borrower's store management
notifying a third party processor, each Borrower shall irrevocably authorize
and direct in writing, in form and substance satisfactory to Lender, the third
party processor that establishes the routing and executes the ACH transfer to
send funds only to the Blocked Accounts and to agree to do so at any time upon
Lender's request and Lender shall receive an agreement from such third party
processor confirming its agreement to do so.  Such authorization and direction
shall not be rescinded, revoked or modified without the prior written consent
of Lender.

 (ii)   Pep Boys shall establish and maintain, at its expense, deposit
accounts with First Union National Bank or such other banks as are reasonably
acceptable to Lender (the "Blocked Accounts") into which each Borrower shall
promptly either cause all amounts on deposit in their respective Local Bank
Accounts to be sent as provided in Section 6.3(a)(i) above or shall itself
deposit or cause to be deposited all payments on Receivables, all amounts
payable to Borrowers from Credit Card Issuers and Credit Card Processors, and
 all payments constituting proceeds of Inventory or other Collateral in the
identical form in which such payments are made, whether by cash, check or
other manner.  The banks at which the Blocked Accounts are established shall
enter into an agreement, in form and substance satisfactory to Lender,
providing that all items received or deposited in the Blocked Accounts are
the property of Lender, that the depository bank has no lien upon, or right
to setoff against, the Blocked Accounts, the items received for deposit
therein, or the funds from time to time on deposit therein and that the
depository bank will wire, or otherwise transfer, in immediately available
funds, on a daily basis, all funds received or deposited into the Blocked
Accounts to such bank account of Lender as Lender may from time to time
designate for such purpose ("Payment Account").  Subject to the terms and
conditions contained herein, Lender shall instruct the depository banks at
which the Blocked Accounts are maintained to transfer the funds on deposit
in the Blocked Accounts to such operating bank account of each Borrower as
such Borrower (or Pep Boys on behalf of such Borrower) may specify in writing
to Lender until such time as Lender shall notify the depository bank otherwise.
Lender will only instruct the depository banks at which the Blocked Accounts
are maintained to transfer all funds received or deposited into the Blocked
Accounts to the Payment Account at any time that either: (A) an Event of
Default Cash Dominion Event shall exist or have occurred and be continuing,
or (B) a Excess Availability Cash Dominion Event has occurred; provided,
that, in the event that (1) the Cash Dominion Event is an Event of Default
Cash Dominion Event and such Event of Default Cash Dominion Event has been
cured to the satisfaction of Lender, or (2) the Cash Dominion Event is an
Excess Availability Cash Dominion Event, and after the occurrence of such Cash
Dominion Event, Excess Availability shall be equal to or greater than
$37,500,000, for forty-five (45) consecutive days, then Lender shall instruct
the depository banks at which the Blocked Accounts are maintained to transfer
the funds on deposit in the Blocked Accounts to such operating bank account of
each Borrower as such Borrower (or Pep Boys on behalf of such Borrower) may
specify in writing to Lender until such time as Lender shall notify the
depository bank otherwise.  Each Borrower agrees that all payments made to
such Blocked Accounts or other funds received and collected by Lender, whether
in respect of the Receivables, as proceeds of Inventory or other Collateral or
otherwise shall be treated as payments to Lender in respect of the Obligations
and therefore shall constitute the property of Lender to the extent of the then
outstanding Obligations.

(b)     For purposes of calculating the amount of the Loans avail-able to each
Borrower, such payments to the Payment Account will be applied (conditional
upon final collection) to the Obligations on the Business Day of receipt by
Lender of immediately available funds in the Payment Account provided such
payments and notice thereof are received in accordance with Lender's usual and
customary practices as in effect from time to time and within sufficient time
to credit such Borrower's loan account on such day, and if not, then on the
next Business Day.

(c)    Each Borrower and all of its shareholders, directors, employees, agents,
Subsidiaries or other Affiliates shall, acting as trustee for Lender, receive,
as the property of Lender, any monies, checks, notes, drafts or any other
payment relating to and/or proceeds of Receivables or other Collateral which
come into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Lender.  In no event shall the same be commingled with a Borrower's own funds.
Each Borrower agrees to reimburse Lender on demand for any amounts owed or paid
to any bank at which a Blocked Account is established or any other bank or
person involved in the transfer of funds to or from the Blocked Accounts
arising out of Lender's payments to or indemnification of such bank or person.
The obligation of Borrowers to reimburse Lender for such amounts pursuant to
this Section 6.3 shall survive the termination or non-renewal of this
Agreement.

 6.4    Payments.  All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time
to time.  Lender shall apply payments received or collected from Borrowers or
for the account of Borrowers (including the monetary proceeds of collections or
of realization upon any Collateral) as follows: first, to pay any fees,
indemnities or expense reimbursements then due to Lender from Borrowers;
second, to pay interest due in respect of any Loans; third, to pay principal
due in respect of the Loans; fourth, to pay or prepay any other Obligations
whether or not then due, in such order and manner as Lender determines
provided, that, (i) all such payments shall be applied to Prime Rate Loans
before being applied to Eurodollar Rate Loans, (ii) all such payments shall be
applied to Working Capital Advances before being applied to Asset Purchase
Advances, and (iii) unless so directed by Pep Boys, or unless a Default or
Event of Default shall exist or have occurred and be continuing, Lender shall
not apply any payments which it receives to any Eurodollar Rate Loans, other
than on the expiration date of the Interest Period applicable to any such
Eurodollar Rate Loans. Any payments received by Lender which are not applied to
the Obligations shall, at Lender's option, be held as cash collateral for the
Obligations.  Such cash collateral shall constitute part of the Collateral.
Such cash collateral shall be held by Lender in an account designated by Lender
for such purposes in its books and records and may be commingled with Lender's
own funds.  Borrowers shall receive a credit on a monthly basis to its loan
account maintained by Lender on the funds so held by Lender at a rate equal to
three and one-half (3 1/2%) percent per annum less than the Prime Rate
(adjusted effective on the first day of the month after any change in such
Prime Rate is announced based on the Prime Rate in effect on the last day of
the month in which any such change occurs) as calculated by Lender.  So long as
no act, condition or event, which with notice, lapse of time or both, would
constitute an Event of Default or Event of Default shall exist or have occurred
and be continuing and Excess Availability is at least $37,500,000, amounts
received by Lender from Borrowers pursuant to the foregoing which are not
applied to the Obligations or at the option of Lender, held as cash collateral
pursuant to the provisions of this Section 6.4 shall, upon the request of Pep
Boys received by Lender on or before 11:00 a.m. New York City time on any
Business Day, be remitted to Pep Boys.   At Lender's option, all
principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Financing Agreements, at any time owing by
Borrowers and Guarantors, may, in each case, be charged directly to the loan
account(s) of a Borrower.  Borrowers shall make all payments to Lender on the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind.  If
after receipt of any payment of, or proceeds of Collateral applied to the
payment of, any of the Obligations, Lender is required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Lender.  Borrowers shall be liable
to pay to Lender, and does hereby indemnify and hold Lender harmless for the
amount of any payments or proceeds surrendered or returned.  This Section 6.4
shall remain effective notwithstanding any contrary action which may be taken
by Lender in reliance upon such payment or proceeds.  This Section 6.4 shall
survive the payment of the Obligations and the termination or non-renewal of
this Agreement.

6.5     Authorization to Make Loans.  Lender is authorized to make the Loans
and provide the Letter of Credit Accommodations based upon telephonic or other
 instructions received from anyone purporting to be an officer of a Borrower
or other authorized person or, at the discretion of Lender, if such Loans are
necessary to satisfy any Obligations.  All requests for Loans or Letter of
Credit Accommodations hereunder shall specify the date on which the requested
advance is to be made or Letter of Credit Accommodations established (which
day shall be a Business Day) and the amount of the requested Loan.  Requests
received after 11:00 a.m. New York City time on any day shall be deemed to
have been made as of the opening of business on the immediately following
Business Day.  All Loans and Letter of Credit Accommodations under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, a Borrower when deposited to the credit
of such Borrower or otherwise
disbursed or established in accordance with the instructions of such Borrower
 or in accordance with the terms and conditions of this Agreement.

6.6     Use of Proceeds.

(a)  Borrowers shall use the initial proceeds of the Loans provided by Lender
 to Borrowers hereunder only for: (i) payments to each of the persons listed
in the disbursement direction letter furnished by Borrowers to Lender on or
about the date hereof and (ii) costs, expenses and fees in connection with
the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements.

 (b)   All other Loans made or Letter of Credit Accommodations provided by
Lender to Borrowers pursuant to the provisions hereof shall be used by
Borrowers only (i) to pay all or any part of the purchase price or construction
costs in respect of property or properties acquired by Pep Boys or any other
Borrower, and (ii) for other working capital purposes.  At any time during
which the limitation regarding secured Indebtedness set forth in Section 1004
of the 1998 Senior Note Indenture remains in effect (or such other equivalent
provision in any of the other Pep Boys Indentures, then in effect), both
before and after giving effect to the making of any Working Capital Advances,
the outstanding amount of Exempted Debt will not exceed the Exempted Debt
Limit without the prior written consent of Lender.  None of the proceeds will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred
to purchase or carry any margin security or for any other purpose which might
cause any of the Loans to be considered a "purpose credit" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System, as
amended.

6.7     Appointment of Agent for Requesting Loans and Receipts of Loans and
Statements.

(a)     Each Borrower hereby irrevocably appoints and constitutes Pep Boys
as its agent to request and receive Loans and Letter of Credit Accommodations
pursuant to this Agreement and the other Financing Agreements from Lender in
the name or on behalf of such Borrower.  Subject to the terms and conditions
contained herein, Lender may disburse the Loans to such bank account of such
Borrower or Pep Boys or otherwise make such Loans to a Borrower and provide
such Letter of Credit Accommodations to a Borrower as Pep Boys may designate
or direct, without notice to any other Borrower or Obligor.

(b)     Each Borrower hereby irrevocably appoints and constitutes Pep Boys as
its agent to receive statements on account and all other notices from Lender
with respect to the Obligations or otherwise under or in connection with this
Agreement and the other Financing Agreements.

(c)     Pep Boys hereby accepts the appointment by each Borrower to act as the
agent of such Borrower pursuant to this Section 6.7.

(d)     No purported termination of the appointment of Pep Boys as agent as
aforesaid shall be effective, except after ten (10) Business Days' prior
written notice to Lender.

SECTION 7.      COLLATERAL REPORTING AND COVENANTS

7.1     Collateral Reporting.

(a)     Borrowers shall provide Lender with the following documents in a form
satisfactory to Lender:

 (i)    after the end of each calendar week, as soon as available, but in any
event no later than five (5) days after the end of such week, a Weekly
Collateral Report, as of the last business day of the immediately preceding
week as to the Accounts and Inventory balances, duly completed and executed
by the chief financial officer, Vice President-Finance of Pep Boys, or such
other financial officer of Pep Boys reasonably acceptable to the Lender on
behalf of Borrowers; provided, that, without limiting any other rights of
Lender, upon Lender's request, Borrower shall provide Lender on a daily
basis with a schedule of Accounts, collections received and credits issued
and on a weekly basis with an inventory report in the event that at any time
either:  (1) an Event of Default or event which with notice or passage of time
or both would constitute an Event of Default, shall exist or have occurred, or
(2) Borrowers shall have failed to deliver any Borrowing Base Certificate in
accordance with the terms hereof, or
(3) upon Lender's good faith belief, any information contained in any
Borrowing Base Certificate is incomplete, inaccurate or misleading, or
(4) Excess Availability shall be less than $37,500,000;

(ii)    as soon as possible after the end of each month (but in any event
within ten (10) Business Days after the end of each month) so long as Excess
Availability is greater than $37,500,000, or more frequently as Lender may
in good faith request if at any time Excess Availability is equal to or less
than $37,500,000,

(A)  a Borrowing Base Certificate setting forth Borrowers' calculation of
the Revolving Loans and Letter of Credit Accommodations available to
Borrowers, duly completed and executed by the chief financial officer or
Vice President-Finance of Pep Boys, on behalf of Borrowers;

(B)  a schedule of sales made, credits issued and cash received, together
with such supporting documentation and detail with respect thereto as Lender
may request;

(C)     perpetual inventory reports, including inventory reports by location,
category and a gross margin report by category,

(D) reports with respect to Inventory sold or purchased on consignments,

(E) a schedule detailing use of Loan (whether Working Capital Advances or
Asset Purchase Advances) proceeds and Letter of Credit Accommodations;
provided, that, Borrowers shall make available to Lender such supporting
documentation with respect to the use of Loan proceeds and Letter of Credit
Accommodations  (including without limitation, vendor invoices, copies of
cancelled checks, disbursement receiving journals, purchase journals) and
detail with respect thereto as Lender may request, from time to time,

(F) agings of accounts payable (and including information indicating the
status of payments to owners and lessors of the leased premises of Borrowers),
and

(G) agings of accounts receivable (together with a reconciliation to the then
current month's general ledger);

(iii)   upon Lender's request, (A) copies of customer statements and credit
memos, remittance advices and reports, and copies of deposit slips and bank
statements, (B) copies of shipping and delivery documents, and (C) copies of
purchase orders, invoices and delivery documents for property acquired by a
Borrower;
 (iv) as soon as available, but in any event not later than five (5) Business
Days after receipt by any Borrower, the monthly statements received by any
Borrower from any Credit Card Issuers or Credit Card Processors, together
with such additional information with respect thereto as shall be sufficient
to enable Lender to monitor the transactions pursuant to the Credit Card
Agreements; and

(v)     such other reports as to the Collateral as Lender shall reasonably
request from time to time.

(b)     Nothing contained in any Borrowing Base Certificate shall be deemed
to limit, impair or otherwise affect the rights of Lender contained herein
and in the event of any conflict or inconsistency between the calculation of
the Loans and Letter of Credit Accommodations available to Borrowers as set
forth in any Borrowing Base Certificate and as determined by Lender, the
determination of Lender shall govern and be conclusive and binding upon
Borrowers.  Without limiting the foregoing, Borrowers shall furnish to Lender
any information which Lender may reasonably request regarding the determination
and calculation of any of the amounts set forth in the Borrowing Base
Certificate.  If any Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, such Borrower hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports, and related documents to
Lender and to follow Lender's instructions
with respect to further services at any time that an Event of Default exists
or has occurred and is continuing.

7.2     Accounts Covenants.

 (a)    Borrowers shall notify Lender promptly of: (i) (A) any material delay
in a Borrower's performance of any of its obligations to any account debtor in
respect to an Account or Accounts representing at least five (5%) percent of
the then Eligible Accounts in the aggregate (including any Credit Card Issuer
or Credit Card Processor) or (B) the assertion of any claims, offsets, defenses
or counterclaims by any account debtor (including any Credit Card Issuer or
Credit Card Processor) or (C) any disputes with account debtors (including any
Credit Card Issuer or Credit Card Processor) with respect to such Eligible
Accounts, or (D) any settlement, adjustment or compromise thereof, provided,
that, in the case of clauses (B), (C) and (D), the amount of such claim,
dispute, settlement, adjustment or compromise is in excess of $50,000 , (ii)
all material adverse information relating to the financial condition of any
account debtor in respect to an Account or Accounts representing at least five
(5%) percent of the then Eligible Accounts in the aggregate (including any
Credit Card Issuer or Credit Card Processor) and (iii) any event or
circumstance which, to a Borrower's knowledge would cause Lender to consider
any then existing Accounts as no longer constituting Eligible Accounts.
No credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor without Lender's consent,
except in the ordinary course of such Borrower's business in accordance with
practices and policies substantially consistent with current practices of
such Borrower (taken as a whole) as of the date hereof.  So long as no Event
of Default exists or has occurred and is continuing, Borrowers shall settle,
adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor (including any Credit Card Issuer or Credit Card Processor).
At any time that an Event of Default exists or has occurred and is continuing,
 Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors (including any Credit Card Issuer or Credit Card Processor) or grant
any credits, discounts or allowances.  For purposes of this Section, a
Borrower shall be deemed to have "knowledge" of any information or  events
or circumstances set forth in clauses (ii) and (iii) of this Section 7.2 ,
if such information, events or circumstances, as the case may be, is known by
any of the Vice President -Finance, Assistant Vice President- Controller,
Director of Treasury, Director of Credit or Credit Manager of such Borrower
or Pep Boys.

(b)     Each Borrower shall notify Lender promptly of:  (i) any notice of a
material default by such Borrower under any of the Credit Card Agreements or
of any default which has a reasonable likelihood of resulting in the Credit
Card Issuer or Credit Card Processor ceasing to make payments or suspending
payments to such Borrower, (ii) any notice from any Credit Card Issuer or
Credit Card Processor that such person is ceasing or suspending, or will cease
or suspend, any present or future payments due or to become due to such
Borrower from such person, or that such person is terminating or will terminate
any of the Credit Card Agreements, and (iii) the failure of such Borrower to
comply with any material terms of the Credit Card Agreements or any terms
thereof which has a reasonable likelihood of resulting in the Credit Card
Issuer or Credit Card Processor ceasing or suspending payments to such
Borrower.

(c)     Without limiting the obligation of Borrowers to deliver any other
information to Lender, Borrowers shall promptly report to Lender any return
of Inventory by any one account debtor if the Inventory so returned in such
case has a value in excess of $1,000,000.  At any time that Inventory is
returned, reclaimed or repossessed, the Account (or portion thereof) which
arose from the sale of such returned, reclaimed or repossessed Inventory shall
not be deemed an Eligible Account.  In the event any account debtor returns
Inventory when an Event of Default exists or has occurred and is continuing,
Borrowers shall, upon Lender's request, (i) hold the returned Inventory in
trust for Lender, (ii) segregate all returned Inventory from all of its other
property, (iii) dispose of the returned Inventory solely according to Lender's
instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Lender's prior written consent.

 (d)    With respect to each Account: (i) the amounts shown on any invoice
delivered to Lender or schedule thereof delivered to Lender shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Lender pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall
be granted to any account debtor except as reported to Lender in accordance
with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of a Borrower's business in
accordance with current practices and policies of Borrowers in effect on the
date hereof, (iv) there shall be no setoffs, deductions, or contras existing
or asserted with respect thereto except as reported to Lender in accordance
with Section 7.1 of this Agreement, (v) none of the transa-ctions giving rise
thereto will violate any applicable State or Federal laws or regulations, all
documentation relating thereto
will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.

(e)     Lender shall have the right at any time or times (i) prior to the
occurrence of an Event of Default, in the name of a nominee of Lender, and
without disclosing that such verification is being made by Lender, and (ii)
upon the occurrence and during the continuation of an Event of Default, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Account or other Collateral, by
mail, telephone, facsimile transmission or otherwise.  Prior to the occurrence
of an Event of Default, Lender shall use its best efforts to notify Pep Boys
promptly after any such verification is made.

(f)     Borrowers shall deliver or cause to be delivered to Lender, with
appropriate endorsement and assignment, with full recourse to Borrowers, any
chattel paper or instrument which a Borrower now owns or may at any time
acquire within five (5) Business Days after such Borrower's receipt thereof,
prior to an Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, if the amount of
any such chattel paper or instrument equals or exceeds $100,000, or all chattel
paper and instruments if the aggregate amount of all such chattel paper and
instruments equals or exceeds $1,000,000, and after an Event of Default, or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default, all such chattel paper and other instruments
regardless of the amount thereof, in each case except as Lender may otherwise
agree.

(g)     Lender may, at any time or times that an Event of Default exists or
has occurred and is continuing, (i) notify any or all account debtors
(including any Credit Card Issuer or Credit Card Processor) or other obligors
that the Receivables have been assigned to Lender and that Lender has a
security interest therein and Lender may direct any or all accounts debtors
and other obligors to make payment of Receivables directly to Lender, (ii)
extend the time of payment of, compromise, settle or adjust for cash, credit,
return of merchandise or otherwise, and upon any terms or conditions, any and
all Receivables or other obligations included in the Collateral and thereby
discharge or release the account debtor or any other party or parties in any
way liable for payment thereof without affecting any of the Obligations, (iii)
demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Lender shall not be liable for
its failure to collect or enforce the payment thereof nor for the negligence
of its agents or attorneys with respect thereto and (iv) take whatever other
action Lender may deem necessary or desirable for the protection of its
interests.  At any time that an Event of Default exists or has occurred and is
continuing, at Lender's request, all invoices and statements sent to any
account debtor shall state that the Receivables and such other obligations
have been assigned to Lender and are payable directly and only to Lender and
Borrowers shall deliver to Lender such originals of documents evidencing the
sale and delivery of goods or the performance of services giving rise to any
Receivables as Lender may require.
 7.3    Inventory Covenants.  With respect to the Inventory: (a) each Borrower
shall at all times maintain inventory records reasonably satisfactory to
Lender, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, the cost therefor and daily
withdrawals therefrom and additions thereto; (b) each Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the
form and with such specificity as may be reasonably satisfactory to Lender
concerning such physical count; (c) each Borrower shall not remove any
Inventory from the locations set forth or permitted herein, without the prior
written consent of Lender, except for sales of Inventory in the ordinary
course of such Borrower's business and except to move Inventory directly from
one location set forth or permitted herein to another such location and except
for Inventory shipped from the manufacturer thereof to each Borrower which is
in transit to the locations set forth or permitted herein; (d) upon Lender's
request, Borrowers shall, at their expense, no more than four (4) times in any
twelve (12) month period, but at any time or times as Lender may request on or
after an Event of Default, deliver or cause to be delivered to Lender written
appraisals as to the Inventory in form, scope and methodology reasonably
acceptable to Lender and by an appraiser reasonably acceptable to Lender,
addressed to Lender and upon which Lender is expressly permitted to rely; (e)
 each Borrower shall produce, use, store and maintain the Inventory with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws (including the requirements
of the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) each Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) each Borrower shall not sell
Inventory to any customer on approval, or any other basis which entitles the
customer to return or may obligate Borrower to repurchase such Inventory,
except (i) for the right of return given by Borrowers to its customers in the
ordinary course of business consistent with the current practices of Borrowers
as of the date hereof; and (ii) sales to customers on consignment in the
ordinary course of business of such Borrower consistent with the current
practices of Borrowers in effect on the date hereof, provided, that, (A) a
report of such Inventory is provided by Borrowers to Lender pursuant to
Section 7.1 hereof and (B) in no event shall the aggregate dollar amount of
all such Inventory so sold exceed $2,500,000 at any time; (h) each Borrower
shall keep the Inventory in good and marketable condition; and (i) each
Borrower shall not acquire or accept any Inventory on consignment or approval
without including such Inventory in a report of such Inventory provided by
Borrowers to Lender pursuant to Section 7.1 hereof.

 7.4    Power of Attorney.  Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in such Borrower's or Lender's
name, to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all
of such Borrower's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such
amount and at such time or times as the Lender deems advisable, (v) settle,
adjust, compromise, extend or renew a Receivable, (vi) discharge and release
any Receivable, (vii) prepare, file and sign such Borrower's name on any proof
of claim in bankruptcy or other similar document against an account debtor or
other obligor in respect of any Receivables or other Collateral, (viii) notify
the post office authorities to change the address for delivery of remittances
from account debtors or other obligors in respect of Receivables or other
proceeds of Collateral to an address designated by Lender, and open and
dispose of all mail addressed to such Borrower and handle and store all mail
relating to the Collateral; and (ix) do all acts and things which are
necessary, in Lender's good faith determination, to fulfill such Borrower's
obligations under this Agreement and the other Financing Agreements and (b) at
any time to (i) take control in any manner of any item of payment in respect
of Receivables or constituting Collateral or otherwise received in or for
deposit in the Local Bank Accounts, Blocked Accounts or otherwise received by
Lender, (ii) have access to any lockbox or postal box into which remittances
from account debtors or other obligors in respect of Receivables or other
proceeds of Collateral are sent or received, (iii) endorse such Borrower's
name upon any items of payment in respect of Receivables or constituting
Collateral or otherwise received by Lender  and deposit the same in Lender's
account for application to the Obligations, (iv) endorse such Borrower's name
upon any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Receivable or any goods pertaining thereto or any
other Collateral, including any warehouse or other receipts, or bills of
lading and other negotiable or non-negotiable documents, (v) clear Inventory
the purchase of which was financed with Letter of Credit Accommodations
through U.S. Customs in such Borrower's name, Lender's name or the name of
Lender's designee, and to sign and deliver to customs officials powers of
attorney in such Borrower's name for such purpose, and to complete in such
Borrower's or Lender's name, any order, sale or transaction, obtain the
necessary documents in connection therewith and collect the proceeds thereof,
(vi) sign such Borrower's name on any verification of Receivables and notices
thereof to account debtors or other obligors in respect thereof and (vii)
execute in such Borrower's name and file any UCC financing statements or
amendments thereto.  Each Borrower hereby releases Lender and its officers,
employees and designees from any liabilities arising from any act or acts
under this power of attorney and in furtherance thereof, whether of omission
or commission, except as a result of Lender's own gross negligence or wilful
misconduct as determined pursuant to a final non-appealable order of a court
of competent jurisdiction.

 7.5    Right to Cure.  Lender may, at its option, (a) cure any default by any
Borrower or Guarantors under any material agreement with a third party which
affects the Collateral, its value or the ability of Lender to collect, sell
or otherwise dispose of the Collateral or the rights and remedies of Lender
therein or the ability of such Borrower to perform its obligations under the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower, (c) discharge taxes (subject to each Borrower's or
Guarantor's right to contest such taxes pursuant to Section 9.4 hereof) ,
liens, security interests or other encumbrances (other than as permitted under
Section 9.8 hereof) at any time levied on or existing with respect to the
Collateral and (d) pay any amount, incur any expense or perform any act which,
in Lender's good faith judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Lender with
respect thereto.  Lender may add any amounts so expended to the Obligations
and charge a Borrower's account therefor, such amounts to be repayable by
such Borrower on demand.  Lender shall be under no obligation to effect such
cure, payment or bonding and shall not, by doing so, be deemed to have
assumed any obligation or liability of Borrowers.  Any payment made or other
action taken by Lender under this Section shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.

7.6     Access to Premises.   From time to time as reasonably requested by
Lender, at the cost and expense of Borrowers, (a)  Lender or its designee
shall have complete access to all premises of Borrowers and Guarantors during
normal business hours and after reasonable notice to Pep Boys, or at any time
and without notice to Pep Boys if an Event of Default exists or has occurred
and is continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of such Borrower's and Guarantor's books and records,
including the Records, and (b) each Borrower and Guarantor shall promptly
furnish to Lender such copies of such books and records or extracts ther-efrom
as Lender may request, and (c) Lender or its designee may, after reasonable
notice to Pep Boys, use during normal business hours such of each Borrower's
and Guarantor's personnel, equipment, supplies and premises as may be
necessary for the foregoing and at any time if an Event of Default exists or
has occurred and is continuing for the collection of Receivables and
realization of other Collateral.

SECTION 8.      REPRESENTATIONS AND WARRANTIES

Each Borrower and Guarantor hereby, jointly and severally, represents and
warrants to Lender the following (which shall survive the execution and
delivery of this Agreement), the truth and accuracy of which are a continuing
condition of the making of Loans and providing Letter of Credit Accommodations
by Lender to Borrowers:

 8.1    Corporate Existence, Power and Authority; Subsidiaries.  Each Borrower
and Guarantor is a corporation duly organized and in good standing under the
laws of its state of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where
the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a Material Adverse Effect.
The execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are all
within each Borrower's or Guarantor's corporate powers, have been duly
authorized and are not in contravention of law or the terms of any Borrower's
or Guarantor's certificate of incorporation, by-laws, or other organizational
documentation, or any indenture (including without limitation, any of the Pep
Boys Indentures), or other material mortgage, agreement, instrument or
undertaking to which a Borrower or Guarantor is a party or by which a Borrower
or Guarantor or any of their property are bound or result in, require, or give
rise to the creation or imposition of any lien, charge or encumbrance upon any
property of Borrowers or Guarantors under the Pep Boys Indentures or otherwise
(other than in favor of Lender pursuant to the terms of the Financing
Agreements).  This Agreement and the other Financing Agreements to which each
is a party constitute legal, valid and binding obligations of Borrowers and
Guarantors enforceable in accordance with their respective terms.  Borrowers
and Guarantors do not have any Subsidiaries except as set forth on the
Information Certificates.

8.2     Financial Statements; No Material Adverse Change.  All financial
statements relating to Borrowers and Guarantors which have been or may
hereafter be delivered by Borrowers or Guarantors to Lender have been prepared
in accordance with GAAP (subject, as to all interim statements, to normal
year-end adjustments) and fairly present the financial condition and the
results of operation of Borrowers and Guarantors as at the dates and for the
periods set forth therein.  Except as disclosed in any interim financial
statements furnished by Borrowers or Guarantors to Lender prior to the date of
this Agreement, there has been no material adverse change in the assets,
liabi-lities, properties and condition, financial or otherwise, of Borrowers
or Guarantors, since the date of the most recent audited financial statements
furnished by Borrower to Lender prior to the date of this Agreement.

8.3     Chief Executive Office; Collateral Locations.  The chief executive
office of each Borrower and Guarantor and each Borrower's and Guarantor's
Records concerning Accounts are located only at the addresses set forth on the
signature page hereto and the only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of each Borrower and Guarantor
to establish new locations in accordance with Section 9.2 below.  The
Information Certificate correctly identifies any of such locations which are
not owned by Borrowers or Guarantors and sets forth the owners and/or
operators thereof.

8.4     Priority of Liens; Title to Properties.  The security interests and
liens granted to Lender under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 hereto and the other liens permitted under Section 9.8 hereof.
 Each Borrower and Guarantor has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Lender
and such others as are specifically listed on Schedule 8.4 hereto or permitted
under Section 9.8 hereof.

8.5     Tax Returns.  Each Borrower and Guarantor has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it.  All information in such tax returns, reports and
declarations is complete and accurate in all material respects.  Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or
claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower and Guarantor and with
respect to which adequate reserves have been set aside on its books.  Adequate
provision has been made for the payment of all accrued and unpaid Federal,
State, county, local, foreign and other taxes whether or not yet due and
payable and whether or not disputed.
8.6    Litigation.  Except for the actions listed on Schedule 8.6 annexed
hereto, there is no present investigation by any Governmental Authority
pending, or to the best of each Borrower's and Guarantor's knowledge
threatened, against or affecting any Borrower or Guarantor, its assets or
business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of each Borrower's and Guarantor's knowledge
threatened, against any Borrower or Guarantor or its assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, which,
in each or any case, if adversely determined against such Borrower and
Guarantor would have a reasonable likelihood of having a Material Adverse
Effect.

8.7     Compliance with Other Agreements and Applicable Laws.

(a)     Except as set forth in Schedule 8.7 hereto, each Borrower, Guarantor
and their Subsidiaries is not in default in any respect under, or in violation
in any respect of any of the terms of, any agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its
assets are bound where such default or violation would have a reasonable
likelihood of having a Material Adverse Effect.  Each Borrower, Guarantor and
their Subsidiaries is in compliance with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority relating to
its business, including, without limitation, those set forth in or promulgated
pursuant to the Occupational Safety and Health Act of 1970, as amended, the
Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as amended, and
the rules and regulations thereunder, and all Environmental Laws, where the
failure to so comply would have a Material Adverse Effect.

(b)     Each Borrower, Guarantor and their Subsidiaries has obtained all
material permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority (the "Permits") required for the
lawful conduct of its business.  The Permits constitute all permits, licenses,
approvals, consents, certificates, orders or authorizations necessary for each
Borrower, Guarantor and their Subsidiaries to own and operate its business as
presently conducted or proposed to be conducted.  All of the Permits are valid
and subsisting and in full force and effect.  There are no actions, claims or
proceedings pending or to the best of each Borrower's and Guarantor's
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits which would have a Material Adverse Effect.

8.8     Environmental Compliance.

 (a)    Except as set forth on Schedule 8.8 hereto, no investigation (of which
any Borrower or Guarantor is aware), proceeding, complaint, order, directive,
claim, citation or notice by any Governmental Authority or any other person is
pending or to the best of each Borrower's and Guarantor's knowledge
threatened, with respect to any non-compliance with or violation of the
requirements of any applicable Environmental Law by any Borrower, Guarantor or
Subsidiary (of which any Borrower or Guarantor is aware) or the release, spill
or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials by any Borrower, Guarantor
or Subsidiary which if adversely determined would have a reasonable likelihood
of having a Material Adverse Effect.

(b)     Borrowers, Guarantors and Subsidiaries have no liability (contingent
or otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials which liability would have a reasonable likelihood of having a
Material Adverse Effect.

8.9     Employee Benefits.

(a)     Each Plan is in compliance with the applicable provisions of ERISA,
the Code and other federal or state law except where such failure to comply
would not have a reasonable likelihood of having a Material Adverse Effect.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service
and to the best of each Borrower's and Guarantor's knowledge, nothing has
occurred which would cause the loss of such qualification.  Each Borrower and
Guarantor and their ERISA Affiliates have made all required contributions to
any Plan subject to Section 412 of the Code except where such failure to
contribute would not have a reasonable likelihood of having a Material Adverse
Effect, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

(b)     There are no pending or to the best of each Borrower's and Guarantor's
knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan.  There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan which would have a reasonable likelihood of having a
Material Adverse Effect.

(c)     (i)  No ERISA Event has occurred or is reasonably expected to occur;
(ii) the current value of each Plan's assets (determined in accordance with
the assumptions used for funding such Plan pursuant to Section 412 of the
Code) do not exceed such Plan's liabilities under Section 4001(a)(16) of ERISA;
(iii) each Borrower, Guarantor and its ERISA Affiliates have not incurred and
do not reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section
4007 of ERISA which would have a reasonable likelihood of having a Material
Adverse Effect); (iv) each Borrower, Guarantor and its ERISA Affiliates have
not incurred and do not reasonably expect to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multiemployer Plan which would have a reasonable likelihood
of having a Material Adverse
Effect; and (v) each Borrower, Guarantor and its ERISA Affiliates have not
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA which would have a reasonable likelihood of having a Material Adverse
Effect.

8.10   Bank Accounts.  All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrowers maintained at any bank or
other financial institution are set forth on Schedule 8.10 hereto, subject to
the rights of Borrowers to establish new accounts in accordance with Section
9.13 below.

8.11    Intellectual Property.  Each Borrower owns or licenses or otherwise
has the right to use all Intellectual Property necessary for the operation of
its business as presently conducted or proposed to be conducted.  As of the
date hereof, Borrowers do not own any Intellectual Property registered, or
subject to pending applications, in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State
thereof, any political subdivision thereof or in any other country, other than
the Intellectual Property, described in Schedule 8.11 hereto and none of the
Borrowers have granted any licenses with respect thereto which would have a
reasonable likelihood of having a Material Adverse Effect.  No event has
occurred which permits or would permit after notice or passage of time or
both, the revocation, suspension or termination of such rights.  To the best
of each Borrower's knowledge, no slogan or other advertising device, product,
process, method, substance or other Intellectual Property or goods bearing or
using any Intellectual Property presently contemplated to be sold by or
employed by a Borrower infringes any patent, trademark, servicemark, tradename,
copyright, license or other Intellectual Property owned by any other Person
presently and no claim or litigation is pending or threatened against or
affecting a Borrower contesting its right to sell or use any such Intellectual
Property.  Schedule 8.11 sets forth all of the agreements or other
arrangements of Borrowers pursuant to which a Borrower has a license or other
right to use any trademarks, logos, designs, representations or other
Intellectual Property owned by another person as in effect on the date hereof
and the dates of the expiration of such agreements or other arrangements of a
Borrower as in effect on the date hereof.

8.12    Interrelated Business.  Pep Boys is the direct and beneficial owner
and holder of all of the issued and outstanding shares of Capital Stock of the
other Borrowers (except PBY-California), Guarantors and Colchester.  PBY, a
wholly-owned subsidiary of Pep Boys is the direct and beneficial owner of
PBY-California.  Borrowers and Guarantors share an identity of interests such
that any benefit received by any one of them benefits the others. Borrowers,
Guarantors and the other Subsidiaries render services to or for the benefit of
the other Borrowers and/or Guarantors and other Subsidiaries, as the case may
be, purchase or sell and supply goods to or from or for the benefit of the
others, make loans, advances and provide other financial accommodations to or
for the benefit of the other Borrowers, Guarantors and the other Subsidiaries
(including inter alia, the payment by Borrowers and Guarantors of creditors of
the other Borrowers or Guarantors and guarantees by Borrowers and Guarantors
of indebtedness of the other Borrowers and Guarantors and provide
administrative, marketing, payroll and management services to or for the
benefit of the other Borrowers and Guarantors).  Borrowers  have centralized
accounting and legal services, are identified to creditors as a single
economic and business enterprise, and the officers and directors of Borrowers
(other than Pep Boys) and Guarantors are the employees and officers of Pep
Boys.

 8.13   Capitalization.

(a)     All of the issued and outstanding shares of Capital Stock of each
Borrower (other than Pep Boys), Guarantors and Colchester are directly or
indirectly and beneficially owned and held by Pep Boys, and in each case as to
all of such shares have been duly authorized and are fully paid and
non-assessable, free and clear of all claims, liens, pledges and encumbrances
of any kind, except as disclosed in writing to Lender.

(b)     Each Borrower and Guarantor is Solvent and will continue to be Solvent
after the creation of the Obligations, the security interests of Lender and
the other transaction contemplated hereunder.

8.14    Labor Disputes

(a)     Set forth on Schedule 8.14 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to each Borrower and any union, labor organization or other
bargaining agent in respect of the employees of such Borrower on the date
hereof.

(b)     There is (i) no significant unfair labor practice complaint pending
against a Borrower or Guarantor, to the best of each Borrower's and
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending on the date hereof against a Borrower or, to best of each Borrower's
and Guarantor's knowledge, threatened against it, and (ii) no significant
strike, labor dispute, slowdown or stoppage is pending against a Borrower or,
to the best of each  Borrower's and Guarantor's knowledge, threatened against
a Borrower.

8.15    Corporate Name; Prior Transactions.  Each Borrower and Guarantor has
not, during the past five years, been known by or used by any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate.

8.16    Restrictions on Subsidiaries.  Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof,
there are no contractual or consensual restrictions on any Borrower or
Guarantor or any of its respective Subsidiaries which prohibit or otherwise
restrict (a) the transfer of cash or other assets (i) between any Borrower or
Guarantor and any of its respective Subsidiaries or (ii) between any
Subsidiaries of any Borrower or Guarantor or (b) the ability of any Borrower
or Guarantor or any of its respective Subsidiaries to incur Indebtedness or
grant security interests to Lender in the Collateral.

 8.17   Material Contracts.  Schedule 8.17 hereto sets forth all Material
Contracts to which each Borrower and Guarantor is a party or is bound as of
the end of fiscal year 1999; Borrowers and Guarantors shall update the annexed
Schedule 8.17 on an annual basis, no later than ninety (90) days after the end
of each fiscal year of Borrowers, and deliver true and correct copies of each
new Material Contract with such updated Schedule.  Each Borrower and Guarantor
has delivered true, correct and complete copies of such Material Contracts to
Lender on or before the date hereof.  Each Borrower and Guarantor is not in
breach of or in default under any Material Contract where such default would
have a reasonable likelihood of having a Material Adverse Effect and has not
received any notice of the intention of any other party thereto to terminate
any Material Contract.

8.18    Payable Practices.  Each Borrower has not made any material change in
the historical accounts payable practices from those in effect immediately
prior to the date hereof.

8.19    Intentionally Deleted.

8.20    Credit Card Agreements.  Set forth in Schedule 8.20 hereto is a correct
and complete list of (a) all of the Credit Card Agreements and all other
agreements, documents and instruments existing as of the date hereof between
or among any Borrower, any of its affiliates, the Credit Card Issuers, the
Credit Card Processors and any of their affiliates, (b) the percentage of each
sale payable to the Credit Card Issuer or Credit Card Processor under the
terms of the Credit Card Agreements, (c) all other fees and charges payable by
each Borrower under or in connection with the Credit Card Agreements and (d)
the term of such Credit Card Agreements.  The Credit Card Agreements constitute
all of such agreements necessary for each Borrower to operate its business as
presently conducted with respect to credit cards and debit cards and no
Accounts of Borrower arise from purchases by customers of Inventory with credit
cards or debit cards, other than those which are issued by Credit Card Issuers
with whom any
borrower has entered into one of the Credit Card Agreements set forth on
Schedule 8.20 hereto or with whom each Borrower has entered into a Credit Card
Agreement in accordance with Section 9.19 hereof.  Each of the Credit Card
Agreements constitutes the legal, valid and binding obligations of such
Borrower and to the best of Borrower's knowledge, the other parties thereto,
enforceable in accordance with their respective terms and are in full force
and effect.  No default or event of default, or act, condition or event which
after notice or passage of time or both, would constitute a default or an event
of default under any of the Credit Card Agreements exists or has occurred and
is continuing which would have the reasonable likelihood of having a Material
Adverse Effect.  Each Borrower and, to the best of such Borrower's knowledge,
the other parties thereto have complied with all of the terms and conditions
of the Credit Card Agreements to the extent necessary for such Borrower to be
entitled to receive all payments thereunder.  Each Borrower has delivered, or
caused to be delivered to Lender, true, correct and complete copies of all of
the Credit Card Agreements.

8.21   Accuracy and Completeness of Information.  All information furnished by
or on behalf of each Borrower and Guarantor and its respective Subsidiaries in
writing to Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including all information on the Information Certificate is true and correct
in all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading.  No event or circumstance has occurred which has
had or would reasonably be expected to have a Material Adverse Effect, which
has not been fully and accurately disclosed to Lender in writing.

8.22    Survival of Warranties; Cumulative.  All representa-tions and
warranties contained in this Agreement or any of the other Financing
Agreements shall survive the execution and delivery of this Agreement and
shall be deemed to have been made again to Lender on the date of each
additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender.  The representations
and warranties set forth herein shall be cumulative and in addition to any
other representations or warranties which Borrowers and Guarantors shall now
or hereafter give, or cause to be given, to Lender.

SECTION 9.      AFFIRMATIVE AND NEGATIVE COVENANTS

9.1     Maintenance of Existence.  Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, at all times preserve, renew and keep in full,
force and effect its corporate existence and rights and franchises with
respect thereto (other than pursuant to a merger or liquidation permitted
hereunder) and maintain in full force and effect all Permits, licenses,
trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted
where the failure to so maintain the same would have a Material Adverse Effect.
Each Borrower and Guarantor shall, and shall cause any Subsidiary to, give
Lender twenty (20) days prior written notice of any proposed change in its
corporate name, which notice shall set forth the new name and each Borrower
and Guarantor shall deliver to Lender a copy of the amendment to the
certificate of incorporation of such Borrower, Guarantor or Subsidiary
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation of such Borrower, Guarantor or Subsidiary as
soon as it is available.

9.2     New Collateral Locations.  Each Borrower and Guarantor may open any
new location within the continental United States and Puerto Rico provided
such Borrower or Guarantor (a) gives Lender twenty (20) days prior written
notice of the intended opening of any such new location and (b) executes and
delivers, or causes to be executed and delivered, to Lender such agreements,
docu-ments, and instruments as Lender may deem reasonably necessary or
desirable to protect its interests in the Collateral at such location,
including Collateral Access Agreements and UCC or PPSA financing statements.
For purposes hereof, a "new location" shall mean any location of Collateral
other than those set forth in the Information Certificate.

9.3     Compliance with Laws, Regulations, Etc.
(a)    Each Borrower and Guarantor shall, and shall cause its Subsidiaries to,
at all times, comply in all material respects with all laws, rules,
regulations, licenses, Permits, approvals and orders of any Governmental
Authority applicable to it, including ERISA, the Code, the Occupational Safety
and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and the rules and regulations thereunder, all Federal, State and local
statutes, regulations, rules and orders relating to consumer credit (including,
without limitation, as each has been amended, the Truth-in-Lending Act, the
Fair Credit Billing Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act, and regulations, rules and orders promulgated thereunder), all
Federal, State and local statutes, regulations, rules and orders pertaining to
sales of consumer goods (including, without limitation, the Consumer Products
Safety Act of 1972, as amended, and the Federal Trade Commission Act of 1914,
as amended, and all regulations, rules and orders promulgated thereunder) and
all statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including, without
limitation, all Environmental Laws where the failure to so comply would have a
Material Adverse Effect.

(b)     Promptly upon any Borrower's or Guarantor's actual knowledge of the
presence of Hazardous Materials in any portion of any Real Property in
concentrations and conditions that constitute an Environmental Violation and
which, in the reasonable opinion of such Borrower or Guarantor, the cost to
undertake any legally required response, clean up, remedial or other action
will or might reasonably result in a cost to any Borrower or Guarantor of more
than $50,000, Borrowers shall notify Lender  in writing of such condition.  In
the event of any Environmental Violation (regardless of whether notice thereof
must be given), Borrowers shall, not later than thirty (30) days after
Borrowers or Guarantors have actual knowledge of such Environmental Violation,
at their sole cost and expense, promptly and diligently undertake and
diligently complete any response, clean up, remedial or other action (including
without limitation the pursuit by Lessee of appropriate action against any
off-site or third party source for contamination) necessary to remove, cleanup
or remediate the Environmental Violation in accordance with all Environmental
Laws.  Any such undertaking shall be timely completed in accordance with all
applicable Environmental Laws. Borrowers shall, upon completion of remedial
action by Borrowers or Guarantors, as the case may be, cause to be prepared by
a reputable environmental consultant reasonably acceptable to Lender a report
describing the Environmental Violation and the actions taken by such Borrower
or Guarantor, as the case may be (or their respective agents), in response to
such Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in full compliance with applicable
Environmental Law.  At Lender's request, copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial
investigations shall be promptly furnished, or caused to be furnished, by each
Borrower and Guarantor to Lender.

(c)  Promptly, but in any event within ten (10) Business Days from the date
any Borrower or Guarantor has actual knowledge thereof, such Borrower or
Guarantor shall provide to Lender written notice of any pending or threatened
claim, action or proceeding involving any Environmental Law or any Release on
or in connection with any Real Property to the extent the claim, action or
proceeding will or might reasonably result in a cost to any Borrower or
Guarantor of more than $50,000.  All such notices shall describe in reasonable
detail the nature of the claim, action or proceeding and such Borrower's or
Guarantor's proposed response thereto.  In addition, Borrowers and Guarantors
shall provide to Lender, within ten (10) Business Days of receipt, copies of
all material written communications with any Governmental Authority relating
to any Environmental Violation in connection with any Real Property.
Borrowers and Guarantors shall also promptly provide such detailed reports of
any such material environmental claims as may reasonably be requested by
Lender.

(d)     Each Borrower and Guarantor shall indemnify and hold harmless Lender,
its directors, officers, employees, agents, invitees, representa-tives,
successors and assigns, from and against any and all losses, claims, damages,
liabilities, costs, and expenses (including reasonable attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal by any Borrower or Guarantor or presence
of a Hazardous Material on any Real Property of any Borrower or Guarantor,
including the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of a Borrower or Guarantor and
the preparation and implementation of any closure, remedial or other required
plans, provided, however, that none of the Borrowers or Guarantors shall have
any obligation under this Section 9.3 with respect to any and all losses,
claims, damages, liabilities, costs or
expenses to the extent resulting from the gross negligence or willful
misconduct of Lender, as determined pursuant to a final non-appealable order
of a court of competent jurisdiction, or with respect to any Hazardous
Material either not present, or present in compliance with applicable
Environmental Laws, on the date of payment of the Obligations.  The
indemnification in this Section 9.3 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.

9.4     Payment of Taxes and Claims.  Each Borrower and Guarantor shall,
and shall cause any Subsidiary to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or
its properties or assets, except for taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Borrower or Guarantor or such Subsidiary, as the case may
be, and with respect to which adequate reserves have been set aside on its
books.  Each Borrower and Guarantor shall be liable for any tax or penalties
imposed on Lender as a result of the financing arrangements provided for herein
and each Borrower and Guarantor agrees to indemnify and hold Lender harmless
with respect to the foregoing, and to repay to Lender on demand the amount
thereof, and until paid by Borrowers such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall be construed
to require Borrowers or Guarantors to pay any income or franchise taxes
attributable to the income of Lender from any amounts charged or paid
hereunder to Lender.  The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.

9.5    Insurance.  Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and
all other insurance of the kinds and in the amounts customarily insured
against or carried by corporations of established reputation engaged in the
same or similar businesses and similarly situated.  Said policies of insurance
shall be satisfactory to Lender as to form, amount and insurer.  Each Borrower
and Guarantor shall furnish certificates, policies or endorsements to Lender
as Lender shall require as proof of such insurance, and, if any Borrower or
Guarantor fails to do so, Lender is authorized, but not required, to obtain
such insurance at the expense of Borrowers.  All policies with respect to the
Collateral shall provide for at least thirty (30) days prior written notice to
Lender of any cancellation or reduction of coverage and that Lender may act as
attorney for any Borrower or Guarantor in obtaining such insurance at the
expense of Borrowers, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance.  Each Borrower and Guarantor shall cause Lender to be named as a
loss payee and an additional insured (but without any liability for any
premiums) under all such insurance policies with respect to Collateral and
each Borrower and Guarantor shall obtain non-contributory lender's loss payable
endorsements to all such insurance policies in form and substance satisfactory
to Lender.  Such lender's loss payable endorsements shall specify that the
proceeds of such insurance shall be payable to Lender as its interests may
appear and further specify that Lender shall be paid regardless of any act or
omission by Borrowers or any of their Affiliates; provided, that, prior to the
occurrence of a Cash Dominion Event such proceeds may be paid to Borrowers.  At
its option, Lender may apply any insurance proceeds received by Lender at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in the order and manner set forth in
Section 6.4 of this Agreement.

9.6     Financial Statements and Other Information.

 (a)    Each Borrower and Guarantor shall, and shall cause any Subsidiary to,
keep proper books and records in which true and complete entries shall be made
of all dealings or transactions of or in relation to the Collateral and the
business of Borrowers, Guarantors and their Subsidiaries in accordance with
GAAP and Borrowers and Guarantors shall promptly furnish to Lender all such
financial and other information as Lender shall reasonably request relating to
the Collateral and the assets, business and operations of Borrower and
Guarantors, and notify the auditors and accountants of Borrowers and
Guarantors that Lender is authorized to obtain such information directly from
them.  Without limiting the foregoing, Borrowers and Guarantors shall each
furnish or cause to be furnished to Lender, the following: (i) within twenty
(20) days after the end of each fiscal month, a compliance certificate
substantially in the form of Exhibit B hereto, along with a schedule in form
reasonably satisfactory to Lender of the calculations used in determining, as
of the end of such month,
(A) whether Borrowers were in compliance with the covenant set forth in
Section 9.18 of this Agreement for such month and (B) a calculation of the
Exempted Debt Limit and Exempted Debt Availability; and (ii) within forty-five
(45) days after the end of each of the first three fiscal quarters, unaudited
consolidated financial statements, and unaudited consolidating financial
statements (including in each case balance sheets, statements of income and
loss, statements of cash flow, and statements of shareholders' equity) in form
consistent with those statements delivered to Lender prior to the date hereof,
all in reasonable detail, fairly presenting the financial position and the
results of the operations of Pep Boys and its Subsidiaries as of the end of
and through such fiscal quarter, certified to be correct by the chief
financial officer or Vice President-Finance of each of Borrowers, subject to
normal year-end adjustments, and accompanied by the
certificate described in Section 9.6 (e) hereof, and a compliance certificate
substantially in the form of Exhibit B hereto, along with a schedule in form
reasonably satisfactory to Lender of the calculations used in determining, as
of the end of such quarter, (A) whether Borrowers were in compliance with the
covenant set forth in Section 9.18 of this Agreement for such month and the
calculations used in determining the Fixed Charge Coverage Ratio for purposes
of determining the Interest Rate as of the last day of the immediately
preceding fiscal quarter and (B) a calculation of the Exempted Debt Limit and
Exempted Debt Availability,  and (iii) within ninety (90) days after the end
of each fiscal year, audited consolidated financial statements and unaudited
consolidating financial statements of Pep Boys and its Subsidiaries (including
in each case balance sheets, statements of income and loss, statements of cash
flow and statements of shareholders' equity), and the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position
and the results of the operations of Pep Boys and its Subsidiaries as of the
end of and for such fiscal year, together with the unqualified (in any
material respect) opinion of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Borrowers
and reasonably acceptable to Lender, that such financial statements have been
prepared in accordance with GAAP, and present fairly the results of operations
and financial condition of Pep Boys and its Subsidiaries as of the end of and
for the fiscal year then ended.

(b) Borrowers, shall furnish to Lender upon its request, internally prepared
monthly balance sheets, and profit and loss statements.

(c)     Borrowers and Guarantors shall promptly notify Lender in writing of
the details of (i) any loss or damage that involves Collateral having a value
in excess of $1,000,000 or which would result in any Material Adverse Effect,
(ii) any action, suit or proceeding relating to Collateral having a value in
excess of $1,000,000,  (iii) any Material Contract of a Borrower or Guarantor
being terminated or amended or any new Material Contract entered into (in
which event such Borrower or Guarantor shall provide Lender with a copy of
such Material Contract), (iv) any order, judgment or decree in excess of
$5,000,000 shall have been entered against a Borrower or Guarantor or any of
its properties or assets, (v) any notification of a material violation of
laws or regulations received by a Borrower or Guarantor, (vi) any ERISA Event,
and (vii) the occurrence of any Event of Default or act, condition or event
which, with notice or the passage of time or giving of notice or both, would
constitute an Event of Default.

(d)     Borrowers and Guarantors shall promptly after the sending or filing
thereof furnish or cause to be furnished to Lender copies of all reports
which any Borrower or Guarantor sends to its stockholders generally and copies
of all reports and registration statements which any Borrower or Guarantor
files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.

(e)  Without limiting the rights of Lender under any other provision of this
Agreement, as soon as available, but in any event not later than forty-five
(45) days after the end of each fiscal quarter or more frequently as Lender
may request, but no more frequently than monthly, Borrowers and Guarantors
shall deliver to Lender, in form and reasonably substance satisfactory to
Lender, in each case certified by the chief financial officer or
Vice-President-Finance of Pep Boys as true and correct:  (i) a statement
confirming the payment of rent and other amounts due to owners and lessors
of real property used by Borrowers and Guarantors in the immediately preceding
fiscal quarter, subject to year-end or periodic adjustments or setting forth
the amount of such rent or other amounts which have been deferred and remain
payable, (ii) the addresses of all third party or new retail store locations
of Borrowers and Guarantors opened or closed since the date of the most recent
certificate delivered to Lender containing the information required under this
subsection (ii), or if no such certificate has been delivered, then since the
date hereof (and as to store locations closed, such information with respect
to the sale of any assets at such store location as Lender may from time to
time reasonably request), and (iii) a report of any new deposit account,
investment accounts, securities accounts or other accounts established or
used by Borrowers and Guarantors with any bank or other financial institution,
including the Borrower or Guarantor in whose name the account is maintained,
the account number, the name and address of the financial institution at which
such account is maintained, the purpose of such account and, if any, the
amount held in such account on or about the date of such report.

(f)     Borrowers and Guarantors shall furnish or cause to be furnished to
Lender such budgets, forecasts, projections and other information respecting
the Collateral and the businesses of Borrowers and Guarantors, as Lender may,
from time to time, reasonably request.  Lender is hereby authorized to deliver
a copy of any financial statement or any other information relating to the
businesses of Borrowers and Guarantors to any court or other Governmental
Authority or to any Participant or assignee or prospective Participant or
assignee.  Each Borrower and Guarantor hereby irrevocably authorizes and
directs all accountants or auditors to deliver to Lender, at Borrowers'
expense, copies of the financial statements of Borrowers and Guarantors and
any reports or management letters prepared by such accountants or auditors on
behalf of Borrowers and Guarantors and to disclose to Lender such information
as they may have regarding the businesses of Borrowers and Guarantors.  Any
documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender one (1) year after the same are
delivered to Lender, except as otherwise designated by Borrowers to Lender in
writing.

9.7     Sale of Assets, Consolidation, Merger, Dissolution, Etc.  Each
Borrower and Guarantor shall not, and shall not permit any Subsidiary to,
directly or indirectly:

(a)    merge into or with or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it, except, that, any
Borrower or Guarantor may merge with and into or consolidate with any other
Borrower or Guarantor, provided, that, each of the following conditions is
satisfied as determined by Lender: (i) Lender shall have received not less
than five (5) days' prior written notice of the consummation of any merger
or consolidation of such Borrower or Guarantor to so merge or consolidate and
such information with respect thereto as Lender may reasonably request, (ii)
as of the effective date of the merger or consolidation and after giving
effect thereto, no Event of Default or act, condition or event which with
notice or passage of time or both would constitute an Event of Default, shall
exist or have occurred, (iii) Lender shall have received, true, correct and
complete copies of all agreements, documents and instruments relating to such
merger, including, but not limited to, the certificate or certificates of
merger as filed with each appropriate Secretary of State, (iv) the surviving
entity shall, immediately before and immediately after giving effect to such
transaction or series of transactions have a net worth (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions)
equal to or greater than the net worth of such Borrower or Guarantor involved
in such merger immediately prior to such transaction or series of transactions,
(v) the surviving entity shall expressly confirm, ratify and assume the
Obligations and the Financing Agreements to which it is a party in writing,
in form and substance reasonably satisfactory to Lender, and execute and
deliver such other agreements, documents and instruments as Lender may request
in connection therewith, (vi) the surviving entity of a merger between a
Borrower and Guarantor shall be a Borrower, and (vii) each Borrower and
Guarantor shall ratify and confirm that its guarantees of the Obligations (and
in the case of Borrowers, its joint and several liability, the guarantees of
the Obligations of the other Borrowers) shall apply to the Obligations as
assumed by such surviving entity; or

(b)     sell, assign, lease, transfer, abandon or otherwise dispose of any
Capital Stock or Indebtedness to any other Person or any of its assets to any
other Person except, for,

(i)     sales of Inventory and rendition of services in the ordinary course of
business,

(ii)    the sale or other disposition of Equipment and Real Property so long
as (A) as of the date of such sale and after giving effect thereto, no Event
of Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default shall exist or have occurred, and
(B)  in connection with any such sale permitted in accordance with Section
9.21 hereof, subject to the  satisfaction of all of the condition set forth
in clause (A) above, and the conditions set forth in such Section,

(iii)  the issuance and sale by Pep Boys of its Capital Stock after the date
hereof; provided, that, (A) Pep Boys shall not be required to pay any cash
dividends or repurchase or redeem its Capital Stock or make any other payments
in respect thereof, except to the extent such dividends, or repurchases or
redemptions are otherwise permitted under Section 9.11 hereof, (B) the terms
of such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right
of Borrowers to request or receive Loans or Letter of Credit Accommodations or
the right of Borrowers to amend or modify any of the terms and conditions of
this Agreement or any of the other Financing Agreements or otherwise in any
way relate to or affect the arrangements of Borrowers with Lender or are more
restrictive or burdensome to Borrowers than the terms of any Capital Stock of
Pep Boys in effect on the date hereof, (C) so long as any Cash Dominion Event
has occurred and is continuing, any proceeds payable to Pep Boys in connection
with the issuance and sale of its Capital Stock shall be paid to Lender for
application to the Obligations, and (D) as of the date of such issuance and
sale and after giving effect thereto, no Event of Default or act, condition or
event which with notice or passage of time or both would constitute an Event
of Default shall exist or have occurred and be continuing;

(iv)    in addition to the issuance of Capital Stock permitted in Section 9.7
(b)(iii) above, the issuance of Capital Stock of any Borrower or Guarantor
consisting of common stock pursuant to a stock option plan or 401(k) plan of
such Borrower or Guarantor for the benefit of its employees, directors and
consultants, provided, that, in no event shall such Borrower or Guarantor be
required to issue, or shall such Borrower or Guarantor issue, Capital Stock
pursuant to such stock option plan or 401(k) plan which would result in a
Change of Control or other Event of Default;

(c)    wind up, liquidate or dissolve except that any Subsidiary of a Borrower
or Guarantor (other than a Borrower) may wind up, liquidate and dissolve,
provided, that, each of the following conditions is satisfied, (i) the winding
up, liquidation and dissolution of such Subsidiary shall not violate any law
or any order or decree of any court or other Governmental Authority in any
material respect and shall not conflict with or result in the breach of, or
constitute a default under, any material indenture, mortgage, deed of trust,
or other agreement or instrument to which any Borrower, Guarantor or such
Subsidiary is a party or may be bound, (ii) such winding up, liquidation or
dissolution shall be done in accordance with the requirements of all
applicable laws and regulations, (iii) effective upon such winding up,
liquidation or dissolution, all of the assets and properties of such
Subsidiary shall be duly and validly transferred and assigned to a Borrower,
Guarantor (or in the case of a Subsidiary which is not a Borrower or
Guarantor, to another Subsidiary which is not a Borrower or Guarantor) free
and clear of any liens, restrictions or encumbrances other than the security
interests and liens of Lender or other security interests, liens, restrictions
or encumbrances expressly permitted hereunder (and Lender shall have received
such evidence thereof as Lender may require), (iv) Lender shall have received
copies of all documents and agreements of such Subsidiary to be filed with any
Governmental Authority or otherwise required to effectuate such winding up,
liquidation or dissolution, (v) no Borrower or Guarantor shall assume any
Indebtedness, obligations or liabilities as a result of such winding up,
liquidation or dissolution, or otherwise become liable in respect of any
obligations or liabilities of the Person which is winding up, liquidating or
dissolving, unless such Indebtedness is otherwise expressly permitted
hereunder or such obligations or liabilities are not prohibited under this
Agreement or any of the other Financing Agreements, (vi) Lender shall have
received not less than ten (10) Business Days' prior written notice of the
intention of such Subsidiary to wind up, liquidate or dissolve, (vii) Lender
shall have received copies of such deeds, assignments or other agreements as
Lender may reasonably request to evidence and confirm the transfer of such
assets from the Subsidiary which is liquidating to a Borrower, and (viii) as of
the date of such winding up, liquidation or dissolution and after giving effect
thereto, no act, condition or event which, with notice or passage of time or
both, would constitute an Event of Default, or Event of Default shall exist or
have occurred and be continuing; or

(d)     agree to do any of the foregoing (unless such agreement has been
consented to in writing by Lender or includes as a condition to the
effectiveness of such agreement that Lender's consent thereto be obtained).

9.8     Encumbrances.

(a)  Each Borrower and Guarantor shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever
on any of its assets or properties, including the Collateral, except:

(i)     liens and security interests of Lender;

(ii)    liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower or Guarantor and with
respect to which adequate reserves have been set aside on its books;

(iii)   non-consensual statutory liens (other than liens securing the payment
of taxes) arising in the ordinary course of such Borrower's or Guarantor's
business to the extent: (A) such liens secure indebtedness which is not
overdue or (B) such liens secure indebtedness relating to claims or
liabilities which are fully insured (other than the payment by such Borrower
of the deductible with respect to such claim, which deductible/self insurance
retention shall not exceed $250,000) and being defended at the sole cost and
expense and at the sole risk of the insurer or which are being contested in
good faith by appropriate proceedings diligently pursued and available to such
Borrower or Guarantor, in each case prior to the commencement of foreclosure
or other similar proceedings and with respect to which adequate reserves have
been set aside on its books;

(iv) zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the business
of such Borrower or Guarantor as presently conducted thereon or materially
impair the value of the real property which may be subject thereto;

(v)    purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property, in each case, acquired
after the date hereof so long as such security interests and mortgages do not
apply to any property of a Borrower or Guarantor other than the Equipment or
Real Property so acquired, and the Indebtedness secured thereby does not
exceed the cost of the Equipment or Real Property so acquired, as the case
may be;

(vi)  setoff or credit balances of any Borrower with Credit Card Issuers, but
not liens on or rights of setoff against any other property or assets of such
Borrower pursuant to the Credit Card Agreements (as in effect on the date
hereof) to secure the obligations of such Borrower to the Credit Card Issuers
as a result of fees and chargebacks;

(vii)  pledges and deposits of cash by any Borrower or Guarantor after the
date hereof in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security
benefits consistent with the practices of Borrowers and Guarantors as of the
date hereof;

(viii)  pledges and deposits of cash by Borrowers after the date hereof to
secure the performance of tenders, bids, leases, trade contracts (other than
for the repayment of Indebtedness), and other similar obligations in each case
in the ordinary course of business consistent with the practices of Borrowers
and Guarantors as of the date hereof; provided, that, in connection with any
performance bonds issued by a surety or other person, the issuer of such bond
shall not have any rights in or to, or other interest in, any of the Collateral;

(ix)  judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i)
such liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, and (iii) a stay of
enforcement of any such liens is in effect;

(x)     liens arising from (A) operating leases and the precautionary UCC
financing statement filings or registrations in respect thereof and (B)
equipment or other materials which are not owned by a Borrower located on the
premises of such Borrower (but not in connection with, or as part of, the
financing thereof) from time to time in the ordinary course of business and
consistent with current practices of Borrowers in and the precautionary UCC
financing statement filings in respect thereof;

(xi)  liens and security interests set forth on Schedule 8.4 hereto;

(xii)   liens and security interests on assets of Borrowers and Guarantors to
secure Indebtedness of Borrowers and Guarantors permitted under Section 9.9(k)
hereof, provided, that, such assets do not constitute Collateral;

(xiii) liens and security interests to secure Indebtedness permitted under
Section 9.9(p);

(xiv) pledges and deposits of cash by any Borrower or Guarantor to secure
payment of the Existing Letter of Credit referred to in Section 9.9(n) hereof;
and

(xv) liens and security interests on assets of Borrowers and Guarantors in c
onnection with Synthetic Lease Facility Agreements, provided, that, liens on
the Collateral shall only be permitted so long as Lender is the holder of the
Tranche A Note (as such term is defined in the Synthetic Lease Facility
Agreements).

(b)     Notwithstanding anything to the contrary set forth in Sections 9.8(a)
(i) through (xiv) above, such liens shall only be permitted  (i) to the extent
that such liens are permitted pursuant to Section 1004(a) of the 1998 Senior
Note Indenture (as in effect on the date hereof), or if such 1998 Senior Note
Indenture is not in effect, then the equivalent provision in any other Pep
Boys Indenture, then in effect or (ii) to the extent such liens are not
permitted under  Section 1004(a) of the 1998 Senior Note Indenture, then only
if the Indebtedness that such liens secure is (A) Exempted Debt, and (B) after
giving effect to the incurrence of such Indebtedness and the lien securing
such Indebtedness, the aggregate amount of outstanding Exempted Debt secured
by such liens does not exceed the Exempted Debt Limit.

9.9     Indebtedness.  Each Borrower and Guarantor shall not, and shall not
permit any Subsidiary to, incur, create, assume, become or be liable in any
manner with respect to, or permit to exist, any Indebtedness, except for:

(a)     the Obligations;

(b)   purchase money Indebtedness (including Capital Leases) to the extent
incurred or secured by liens (including Capital Leases) permitted under
Section 9.8(a)(v) hereof;

(c)     unsecured Indebtedness of a Borrower to any other Borrower arising
after the date hereof pursuant to loans by such Borrower to such other
Borrower to the extent permitted under Section 9.10(c) hereof,

(d)     unsecured Indebtedness of a Borrower to any Guarantor arising after
the date hereof pursuant to loans by such Guarantor to such Borrower to the
extent permitted under Section 9.10(f) hereof;

(e)     unsecured Indebtedness of a Guarantor or a Subsidiary of any Guarantor
(other than a Borrower) to any Borrower arising after the date hereof pursuant
to loans by such Borrower to such Guarantor to the extent permitted under
Section 9.10(e) hereof,

 (f)    Indebtedness of any Subsidiary of Pep Boys, other than Borrowers and
Guarantors, provided, that, (i) as to any such Indebtedness, Borrowers and
Guarantors shall not be directly or indirectly liable (by virtue of such
Borrower or Guarantor being the primary obligor on, guarantor of, or otherwise
liable in any respect of such Indebtedness), (ii) the occurrence of a default
with respect thereto shall not result in, or permit any holder of any
Indebtedness of any Borrower or Guarantor to declare a default on Indebtedness
of any Borrower or Guarantor or cause the payment thereof to be accelerated or
payable prior to its stated maturity, and (iii) the aggregate amount of all of
such Indebtedness shall not exceed $15,000,000 at any time outstanding;

(g)   Indebtedness of Borrowers, Guarantors or any of their respective
Subsidiaries under swap agreements, cap agreements, collar agreements, exchange
 agreements, futures or forward hedging contracts or similar contractual
arrangements intended to protect  a Person against fluctuations in interest
rates, currency exchange rates or the price of raw materials and other chemical
products used or produced in the business of any Borrower; provided, that,
such arrangements are with banks or other financial institutions that have
combined capital and surplus and undivided profits of not less than
$250,000,000 and are not for speculative purposes and such Indebtedness shall
be unsecured;

(h)   Indebtedness of Borrowers evidenced by or arising under the Pep Boys
Senior Indentures (as in effect on the date hereof), provided, that:

(i)   the aggregate principal amount of such Indebtedness shall not exceed
$525,000,000, less the aggregate amount of all repayments, repurchases or
redemptions thereof, whether optional or mandatory, plus interest thereon at
the applicable rates provided in the Pep Boys Senior Indentures in effect on
the date hereof,

(ii)    as of the date hereof, the principal amount of such outstanding
Indebtedness under the 1991 Senior Note Indenture is $75,000,000,

(iii)   as of the date hereof, the principal amount of such outstanding
Indebtedness under the 1995 Senior Note Indenture is $100,000,000,

(iv)    as of the date hereof, the principal amount of such outstanding
Indebtedness under the 1997 Senior Note Indenture is $150,000,000,

(v)     as of the date hereof, the principal amount of such outstanding
Indebtedness under the 1998 Senior Note Indenture is $200,000,000,

(vi)  as of the date hereof, and after giving effect to the Synthetic Lease
Facility Agreements, no default or event of default, or act, condition or event
which with notice or passage of time or both would constitute an event of
default exists or has occurred and is continuing under any of the Pep Boys
Senior Indentures;

(vii) such Indebtedness is and shall remain unsecured;

 (viii)  Borrowers shall not, directly or indirectly, make, or be required to
make, any payments in respect of such Indebtedness, except, that, Borrowers may
 make regularly scheduled payments of principal, interest and fees, on an
unaccelerated basis, in respect of such Indebtedness in accordance with the
terms of the Pep Boys Senior Indentures as in effect on the date hereof and
payments as otherwise permitted pursuant to Section 9.9(h)(ix)(B);

(ix)  Borrowers shall not, directly or indirectly, (A) amend, modify, alter or
change any of the material terms of such Indebtedness or any of the Pep Boys
Senior Indentures as in effect on the date hereof, except, that, Borrowers may,
after prior written notice to Lender, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness other than pursuant to payments thereof, or to reduce the interest
rate or any fees in connection therewith, or to make the provisions thereof
less restrictive or burdensome than the terms or conditions of the Pep Boys
Senior Indentures as in effect on the date hereof, or (B) make optional
prepayments of principal or redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, provided, that, each of the following conditions is
satisfied as determined by Lender:(1) as of the date of such payment and after
giving effect thereto, Excess Availability for each of the immediately
preceding thirty (30) consecutive days shall have been not less than
$25,000,000, and as of the date of such payment and after giving effect thereto
, the Excess Availability shall be not less than $25,000,000 and (2) as of the
date of such payment and after giving effect thereto, no Event of Default or
act, condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or be continuing, and, except that
Pep Boys may redeem or retire such Indebtedness with proceeds of Refinancing
Indebtedness with respect thereto as permitted in this Section 9.9(l) hereof,
and

(x)  Borrowers shall furnish to Lender all notices or demands in connection
with such Indebtedness either received by any Borrower or Guarantor or on its
behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor
or on its behalf concurrently with the sending thereof, as the case may be;

(i)     Indebtedness of Pep Boys evidenced by or arising under the Pep Boys
Subordinated Indentures (as in effect on the date hereof), provided, that:

(i)     the aggregate principal amount of such Indebtedness shall not exceed
$271,000,000, less the aggregate amount of all repayments, repurchases or
redemptions thereof, whether optional or mandatory, plus interest thereon at
the applicable rates provided in the Pep Boys Subordinated Indentures in effect
on the date hereof,

(ii)    as of the date hereof, the principal amount of such outstanding
Indebtedness under the 1998 Subordinated Indenture is $-0-,

 (iii)  as of the date hereof, the principal amount of such outstanding
Indebtedness under the 1997 Subordinated Indenture is $-0-,

(iv)    at maturity, the principal amount of such outstanding Indebtedness
under the LYONS Indenture will be $271,000,000,

(v)  as of the date hereof, no default or event of default, or act, condition
or  event which with notice or passage of time or both would constitute an
event of default exists or has occurred and is continuing under any of the Pep
Boys Subordinated Indentures;

(vi)  such Indebtedness is and shall remain unsecured;

(vii)  such Indebtedness  is, in all respects, subject to, and subordinate in
right of payment to, the right of Lender to receive the prior indefeasible
payment and satisfaction in full of all of the Obligations;

(viii) the Obligations shall at all times constitute "Senior Indebtedness" as
such term is defined in each Pep Boys Subordinated Indenture and shall be
entitled to all of the rights and benefits of Senior Indebtedness under the
terms of such Pep Boys Subordinated Indentures;

(ix) Pep Boys shall not, directly or indirectly, make, or be required to make,
any payments in respect of such Indebtedness, except, that, Pep Boys may make
regularly scheduled payments of interest, on an unaccelerated basis, in
respect of such Indebtedness in accordance with the terms of the Pep Boys
Subordinated Indentures as in effect on the date hereof and payments otherwise
permitted pursuant to Section 9.9(i)(x)(B);

 (x)  Borrowers shall not, directly or indirectly, (A) amend, modify, alter or
change any of the material terms of such Indebtedness or any of the Pep Boys
Subordinated Indentures as in effect on the date hereof, except, that,
Borrowers may, after prior written notice to Lender, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness other than pursuant to payments thereof, or to reduce the
interest rate or any fees in connection therewith, or to make the provisions
thereof less restrictive or burdensome than the terms or conditions of the Pep
Boys Subordinated Indentures as in effect on the date hereof, or (B) make
optional prepayments of principal or redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except, that, Borrowers may make optional
prepayments of principal or edeem, retire, defease, purchase or otherwise
acquire such Indebtedness, provided, that, as to any such payment each of the
following conditions is satisfied as determined by Lender: (1) as of the date
of such payment and after giving effect thereto, Excess Availability for each
of the immediately preceding thirty (30) consecutive days shall have been not
less than $25,000,000, and as of the date of such payment and after giving
effect thereto, the Excess Availability shall be not less than $25,000,000 and
(2) as of the date of such payment and after giving effect thereto, no Event of
Default or act, condition or event which with notice or passage of time or both
would constitute an Event of Default shall exist or be continuing, and, except
that Pep Boys may redeem or retire such Indebtedness with proceeds of
Refinancing Indebtedness with respect thereto as permitted in this Section
9.9(l) hereof, and

(xi)  Borrowers shall furnish to Lender all notices or demands in connection
with such Indebtedness either received by any Borrower or Guarantor or on its
behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor
or on its behalf concurrently with the sending thereof, as the case may be;

(j)     the Indebtedness of Borrowers, Guarantors and their Subsidiaries set
forth on Schedule 9.9 hereto; provided, that, (i) except as otherwise provided
in clauses (ii) and (iv) below, the Borrower, Guarantor or Subsidiary obligated
on such Indebtedness may only make regularly scheduled or other mandatory
payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, and (ii) such
Borrower, Guarantor or Subsidiary obligated on such Indebtedness may make
optional prepayments in respect of such Indebtedness, provided, that, each of
the following conditions is satisfied as determined by Lender:  (A) as of the
date of such payment and after giving effect thereto,  Excess Availability for
each of the immediately preceding thirty (30) consecutive days shall have been
not less than $25,000,000, and as of the date of such payment and after giving
effect thereto, Excess Availability shall be not less than $25,000,000, and (B)
as of the date of such payment and after giving effect thereto, no Event of
Default or act, condition or event which with notice or passage of time or both
would constitute an Event of Default shall exist or have occurred and be
continuing, shall not, directly or indirectly, (iii)  amend, modify, alter or
change the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the date hereof except, that, such Borrower,
Guarantor or Subsidiary, as the case may be, may, after prior written notice to
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or to make the provisions thereof less restrictive or burdensome
than the terms or conditions of such Indebtedness as in effect on the date
hereof, or (iv) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose (except as expressly required pursuant to the terms thereof, or with
proceeds of any Refinancing Indebtedness permitted hereunder), and (v)
Borrowers and Guarantors shall furnish to Lender all notices or demands in
connection with such Indebtedness either received by a Borrower, Guarantor, or
Subsidiary or on its behalf, promptly after the receipt thereof, or sent by a
Borrower, Guarantor, Subsidiary or on its behalf, concurrently with the sending
thereof, as the case may be; and

 (k) Indebtedness of any  Borrower or Guarantor for borrowed money (other than
Indebtedness permitted under Sections 9.9(a) through (j) and (l) through (p)
hereof), arising after the date hereof owing to any person (other than to a
Borrower, Guaranty or Subsidiary) in an aggregate amount not to exceed
$50,000,000 at any time outstanding for all Borrowers and Guarantors; provided,
that, as to each and all of such indebtedness: (i) Lender shall have received
not less than ten (10) Business Days prior written notice of the intention to
incur such indebtedness, which notice shall set forth in reasonable detail
satisfactory to Lender, the person to whom such indebtedness will be owed and
the anticipated interest rate, schedule of repayments and maturity date with
respect thereto and such other information with respect thereto as Lender may
request, (ii) Lender shall have received true, correct and complete copies of
all agreements, documents and instruments evidencing or otherwise related to
such indebtedness, as duly authorized, executed and delivered by the parties
thereto, (iii) such indebtedness shall be incurred by such Borrower at
commercially reasonable rates and terms in a bona fide arms' length transaction
, (iv) if any of such indebtedness is to be secured by any assets of such
Borrower, then (A) the security interests and liens on the assets of Borrower
in favor of such person to secure such indebtedness shall not be on any of the
Collateral, and (B) Lender shall have received, in form and substance
satisfactory to Lender, if required by Lender, in good faith, a Collateral
Access Agreement executed by such Person in favor of Lender, (v) such
indebtedness shall not at any time include terms and conditions which in any
manner adversely affect Lender or any rights of Lender as determined in good
faith by Lender and confirmed by Lender to Borrower in writing, (vi) as of the
date of incurring such indebtedness and after giving effect thereto, no Event
of Default shall exist or have occurred, (vii) Borrower may only make regularly
scheduled payments of principal and interest in respect ofsuch indebtedness,
(viii) Borrower shall not, directly or indirectly, (A) amend, modify, alter or
change the terms of the agreements with respect to such indebtedness, except,
that, Borrower may, after prior written notice to Lender, amend, modify, alter
or change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel a portion of
such indebtedness (other than pursuant to payments thereof), or to release any
liens or security interests in any assets of Borrower which secure such
indebtedness (if any), or to reduce the rate or any fees in connection
therewith, or to make any covenants contained therein less restrictive or
burdensome as to Borrower or otherwise more favorable to Borrower (as
determined in good faith by Lender), or (B) redeem, retire, defease, purchase
or otherwise acquire such indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and (ix) Borrower shall furnish to Lender all
notices or demands in connection with such indebtedness either received by
Borrower or on its behalf promptly after the receipt thereof, or sent by
Borrower on its behalf, concurrently with the sending thereof, as the case may
be;

 (l)    Indebtedness issued in exchange for, or the proceeds of which are used
to extend, refinance, replace or substitute for, Indebtedness permitted under
Section 9.9(b), Section 9.9(h), Section 9.9(i), Section 9.9(f), Section 9.9(j)
or Section 9.9(k) hereof (the "Refinancing Indebtedness"); provided, that, as
to any such Refinancing Indebtedness, each of the following conditions is
satisfied: (i) Lender shall have received not less than ten (10) Business Days'
prior written notice of the intention to incur such Indebtedness, which notice
shall set forth in reasonable detail satisfactory to Lender, the anticipated
amount of such Indebtedness, the schedule of repayments and maturity date with
respect thereto and such other information with respect thereto as Lender may
request, (ii) promptly upon Lender's request, Lender shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, as duly authorized,
executed and delivered by the parties thereto, (iii) such Indebtedness incurred
by any Borrower or Guarantor shall be at rates and with fees or other charges
no higher or greater than the prevailing market rates of interest, charges and
fees at the time of incurrence of such Refinancing Indebtedness, (iv) the
Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a
final maturity equal to or greater than the Weighted Average Life to Maturity
and the final maturity, respectively, of the Indebtedness being extended,
refinanced, replaced, or substituted for, (v) as of the date of incurring such
Indebtedness and after giving effect thereto, no Event of Default shall exist
or have occurred and be continuing, (vi) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount of and interest
on the Indebtedness so extended, refinanced, replaced or substituted for (plus
the amount of reasonable refinancing fees and expenses incurred in connection
therewith),  (vii) the Refinancing Indebtedness shall be subject to the same
restrictions set forth in this Agreement as the Indebtedness so refinanced,
(vii) the Refinancing Indebtedness may be secured by assets other than
Collateral, and Lender shall have received, if required by Lender in form and
substance satisfactory to Lender, a Collateral Access Agreement executed by
such Person in favor of Lender, (viii) the Refinancing Indebtedness shall not
at any time include any terms that include any limitation on the right of
Borrowers to request or receive Loans or Letter of Credit Accommodations or the
right of Borrowers or Guarantors to amend, modify, supplement, replace, renew
or extend any of the terms or conditions of this Agreement,  any of the other
Financing Agreements, the Synthetic Lease Facility Agreements or otherwise in
any way adversely affect the arrangements of Borrowers and Guarantors with
Lender and such Refinancing Indebtedness shall not at any time include terms
and conditions which in any manner adversely affect Lender or any rights of
Lender as determined by Lender in good faith, (ix) Borrowers and Guarantors
shall not, directly or indirectly, (A) amend, modify, alter or change in any
material respect the terms of the agreements with respect to such Indebtedness,
except, that, Borrowers and Guarantors may, after prior written notice to
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or
to forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or to make the provisions thereof less restrictive or burdensome as
to Borrowers or Guarantors, or (B) redeem, retire, defease, purchase or
otherwise acquired such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, except as expressly required pursuant to the
terms thereof or pursuant to regularly scheduled payments permitted herein or
with the proceeds of any other Refinancing Indebtedness permitted hereunder,
and (x) Borrowers and Guarantors shall furnish to Lender all notices or demands
in connection with such Indebtedness received by any Borrower or Guarantor or
on its behalf promptly after the receipt thereof, or sent by any Borrower or
Guarantor, concurrently with the sending thereof, as the case may be;

 (m)    Indebtedness  to the extent incurred or secured by pledges and deposits
of cash permitted under Section 9.8(a)(viii) hereof;

 (n)    The contingent obligation of Pep Boys in effect on the date hereof to
reimburse Union Bank of California in respect of the Existing Letter of Credit
issued by such bank which obligations are secured by pledges and deposits of
cash permitted under Section 9.8(a)(vii); and

 (o)     Indebtedness of Pep Boys owing to Colchester evidenced by a Demand
Promissory Note, dated March 2, 1995, provided, that:(i)     as of the date
hereof, the principal amount of such outstanding Indebtedness  is $78,235,487.
(ii) such Indebtedness is and shall remain unsecured; (iii)  Borrowers or
Guarantors shall not, directly or indirectly, make, or be required to make, any
payments in respect of such Indebtedness, except, that, Borrowers may make (A)
payments of principal in an amount equal to (1) the amounts of insurance claims
that Colchester is then required to pay on behalf of the insurance policies
issued by it for which it does not have funds, and (2) the amount of any
insurance premiums then due and payable by Pep Boys to Colchester, and (B)
regularly scheduled payments of interest, on an unaccelerated basis, in respect
of such Indebtedness; (iv)  Borrowers shall not, directly or indirectly, (A)
amend, modify, alter or change any of the material terms of such Indebtedness,
except, that, Borrowers may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness other than pursuant to payments thereof, or to
reduce the interest rate in connection therewith, and (v)  Borrowers shall
furnish to Lender all notices or demands in connection with such Indebtedness
either received by any Borrower or Guarantor or on its behalf promptly after
the receipt thereof, or sent by any Borrower or Guarantor or on its behalf
concurrently with the sending thereof, as the case may be;

 (p)    Indebtedness of any Borrower for borrowed money (other than
Indebtedness permitted under Sections 9.9(b) and (l) hereof) arising after the
date hereof owing to any person, arising in connection with the financing of
assets (other than Collateral) of such Borrower purchased by such Borrower for
cash no more than 360 days prior to the date of the incurrence of such
Indebtedness; provided, that, as to each and all of such indebtedness: (i)
Lender shall have received not less than ten (10) Business Days prior written
notice of the intention to incur such indebtedness, which notice shall set
forth in reasonable detail satisfactory to Lender, the person to whom such
indebtedness will be owed, the anticipated amount of such indebtedness,
interest rate, schedule of repayments and maturity date with respect thereto
and such other information with respect thereto as Lender may request, (ii)
Lender shall have received true, correct and complete copies of all agreements,
documents and instruments evidencing or otherwise related to such indebtedness,
as duly authorized, executed and delivered by the parties thereto, (iii) such
indebtedness shall be incurred by such Borrower at commercially reasonable
rates and terms in a bona fide arms' length transaction, (iv) such security
interests and mortgages do not apply to Collateral or to any other property of
such Borrower other than the property so acquired, and the Indebtedness secured
thereby does not exceed the cost of the asset, as the case may be, (A) the
security interests and liens on the assets of Borrower in favor of such person
to secure such indebtedness shall not extend not be on any of the Collateral,
and (B) Lender shall have received, in form and substance satisfactory to
Lender, if required by Lender, in good faith, a Collateral Access Agreement
executed by such Person in favor of Lender, (v) such indebtedness shall not at
any time include terms and conditions which in any manner adversely affect
Lender or any rights of Lender as determined in good faith by Lender and
confirmed by Lender to Borrower in writing, (vi) as of the date of incurring
such indebtedness and after giving effect thereto, no Event of Default shall
exist or have occurred, (vii) Borrower may only make regularly scheduled
payments of principal and interest in respect of such indebtedness, (viii)
Borrower shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of the agreements with respect to such indebtedness, except, that,
Borrower may, after prior written notice to Lender, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel a portion of
such indebtedness (other than pursuant to payments thereof), or to release any
liens or security interests in any assets of Borrower which secure such
indebtedness (if any), or to reduce the rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (ix) Borrower shall furnish to Lender all notices or demands in
connection with such indebtedness either received by Borrower or on its behalf
promptly after the receipt thereof, or sent by Borrower on its behalf,
concurrently with the sending thereof, as the case may be.

9.10  Loans, Investments, Guarantees, Etc.  Each Borrower and Guarantor shall
not, and shall not permit any Subsidiary to, directly or indirectly, make any
loans or advance money or property to any Person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital
Stock or Indebtedness or all or a substantial part of the assets or property of
any person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly) the Indebtedness, performance, obligations or
dividends of any Person, or form or acquire any Subsidiaries or agree to do any
of the foregoing, except:

(a)     the endorsement of instruments for collection or deposit in the
ordinary course of business;

 (b)    investments in cash or Cash Equivalents, provided, that, as to any of
the foregoing, unless waived in writing by Lender, each Borrower, Guarantor or
Subsidiary, as the case may be, shall take such actions as are deemed necessary
by Lender to perfect the security interest of Lender in such investments,
except that, each Borrower, Guarantor or Subsidiary, as the case may be, may
make investments of the cash proceeds of any sale of its property (to the
extent such disposition is permitted herein) other than Collateral, without
taking actions to perfect the security interests of Lender in such investments;

(c)     loans by a Borrower to any other Borrower after the date hereof,
provided, that, as to any such loan, (i) each month Borrowers shall provide to
Lender a report in form and substance reasonably satisfactory to Lender of the
outstanding amount of such loans as of the last day of the immediately
preceding month and indicating any loans made and payments received during the
immediately preceding month,  (ii) the Indebtedness arising pursuant to any
such loan shall not be evidenced by a promissory note or other instrument,
unless the single original of such note or other instrument is delivered to
Lender to hold as part of the Collateral, with such endorsement and/or
assignment by the payee of such note or other instrument as Lender may require,
(iii) as of the date of any such loan and after giving effect thereto, the
Borrower making such loan shall be Solvent; and (iv) as of the date of any such
loan and after giving effect thereto, no Event of Default, or act, condition or
event which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred and be continuing;

(d)  any guaranties by any Borrower or Guarantor or other assumptions or
endorsements of Indebtedness constituting permitted Indebtedness under Section
9.9 hereof;

(e)     loans by a Guarantor (or a Subsidiary of a Guarantor or a Borrower
other than a Borrower) to a Borrower after the date hereof, provided, that, as
to any such loan (i) the Indebtedness arising pursuant to such loan shall be
subject to, and subordinate in right of payment to, the right of Lender to
receive the prior final payment and satisfaction in full of all of the
Obligations on terms and conditions acceptable to Lender, (ii) Lender shall
have received, in form and substance satisfactory to Lender, a subordination
agreement providing for the terms of the subordination in right of payment of
such Indebtedness of such Borrower to the prior final payment and satisfaction
in full of all of the Obligations, duly authorized, executed and delivered by
such Guarantor or Subsidiary (as the case may be) and such Borrower, (iii) such
Borrower shall not, directly or indirectly make, or be required to make, any
payments in respect of such Indebtedness,  (iv) each month Borrowers shall
provide to Lender a report in form and substance satisfactory to Lender of the
outstanding amount of such loans as of the last day of the immediately
preceding month and indicating any loans made and payments received during the
immediately preceding month, and (v) the Indebtedness arising pursuant to any
such loan shall not be evidenced by a promissory note or other instrument,
unless the single original of such note or other instrument is delivered to
Lender to hold as part of the Collateral, with such endorsement and/or
assignment by the payee of such note or other instrument as Lender may require;

 (f)    loans by a Borrower to a Guarantor; provided, that, as to any such loan
, (i) each month Borrowers shall provide to Lender a report in form and
substance satisfactory to Lender of the outstanding amount of such loans as of
the last day of the immediately preceding month and indicating any loans made
and payments received during the immediately preceding month, (ii) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is delivered to Lender to hold as part of the Collateral, with
such endorsement and/or assignment by the payee of such note or other
instrument as Lender may require, and (iii) as of the date of the making of
such loan and after giving effect thereto, the Borrower making such loan shall
be Solvent;

(g)   the formation or acquisition by a Borrower or Guarantor after the date
hereof of one or more Subsidiaries incorporated or organized under the laws of
any State of the United States of America; provided, that: (i) such Borrower or
Guarantor (as the case may be) shall cause any such Subsidiary to execute and
deliver to Lender, in form and substance satisfactory to Lender, (A) an
absolute and unconditional guarantee of payment of the Obligations, (B) a
security agreement granting to Lender a first security interest and lien
(except as otherwise consented to in writing by Lender) upon property of any
such Subsidiary constituting the same items or types of property set forth in
Section 5 hereof, (C) related UCC financing statements, and (D) such other
agreements, documents and instruments as Lender may require, including, but not
limited to, supplements and amendments hereto and other loan agreements or
instruments evidencing Indebtedness of such new Subsidiaries to Lender, (ii)
the Subsidiary formed or acquired shall be engaged in a business related,
ancillary or complimentary to the businesses of Borrowers as conducted on the
date hereof, (iii) in the case of  loans and  advances, the original of any
promissory note or other instrument evidencing the Indebtedness arising
pursuant to such loans and advances shall be delivered, or caused to be
delivered, to Lender, at Lender's option, together with an appropriate
endorsement and with full recourse to the payee thereof, and (iv) Lender shall
have received (A) not less than ten (10) Business Days' prior written notice of
the formation or acquisition of any such Subsidiary and such information with
respect thereto as Lender may request, and (B) true, correct and complete
copies of all agreements, documents and instruments relating thereto and (v) as
of the date of any such loan, advance, capital contribution or other investment
or payment, no Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default shall exist or
have occurred and be continuing;

(h)     the existing equity investments of Borrowers, Guarantors and their
Subsidiaries as of the date hereof in their respective Subsidiaries, provided,
that, Borrowers and Guarantors shall have no further obligations or liabilities
to make any capital contributions or other additional investments or other
payments to or in or for the benefit of  any of such Subsidiaries;

 (i)    stock or obligations issued to any Borrower, Guarantor or any of their
respective Subsidiaries by any Person (or the representative of such Person) in
respect of Indebtedness of such Person owing to any Borrower or Subsidiary in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person;
provided, that, prior to an Event of Default, if the amount or value thereof is
greater than $100,000, or the amount or value of all of such stock and
instruments in the aggregate is greater than $250,000, and after an Event of
Default, regardless of the amount or value thereof, the original of any such
stock or instrument evidencing such obligations to a Borrower, Guarantor or any
Subsidiary shall be promptly delivered to Lender, upon Lender's request,
together with such stock power, assignment or endorsement by such Borrower or
as Lender may request;

(j)     obligations of account debtors to any Borrower, Guarantor or
Subsidiaries arising from Accounts which are past due provided, that, such
Borrower, Guarantor or Subsidiary, as the case may be, uses its best efforts to
evidence such obligations, to the extent such obligations exceed $100,000, with
a promissory note made by such account debtor payable to such Borrower or
Subsidiary, as the case may be; provided, that, prior to an Event of Default,
if the amount of such note is greater than $100,000, or the amount of all of
such notes in the aggregate is greater than $250,000, and after an Event of
Default, regardless of the amount thereof, promptly upon the receipt of the
original of any such promissory note by a Borrower to a Borrower, Guarantor or
any Subsidiary such promissory note shall be endorsed to the order of Lender by
such Borrower to a Borrower, Guarantor or any Subsidiary and promptly delivered
to Lender as so endorsed;

(k)     loans or advances by any Borrower, Guarantor or any of their respective
Subsidiaries to any of its employees, after the date hereof, not to exceed the
principal amount of $1,000,000 in the aggregate at any time outstanding in the
ordinary course of such Borrower's, Guarantor's or Subsidiary's business for
reasonable and necessary work-related travel and other ordinary business
expenses to be incurred by such employees in connection with their employment
with such Borrower, Guarantor or Subsidiary, as the case may be;

(l)     any investments of any Borrower, Guarantor or any of their respective
Subsidiaries in swap agreements, cap agreements, collar agreements, exchange
agreements futures or forward hedging contracts or similar contractual
arrangements intended to protect a Person against fluctuations in interest
rates, currency exchange rates or the price of raw materials and other chemical
products used or produced in the business of any Borrower; provided, that, such
arrangements are with banks or other financial institutions that have combined
capital and surplus and undivided profits of not less than  $250,000,000 and
are not for speculative purposes and are unsecured;

(m) loans by any Subsidiary of Pep Boys (other than a Borrower or Guarantor) to
any other Subsidiary of Pep Boys (other than a Borrower or Guarantor);

(n)     the existing loans, advances and guarantees set forth on Schedule 9.10
hereto, provided, that, as to such loans, advances and guarantees, (i)
Borrowers, Guarantors, or their respective Subsidiaries, as the case may be,
shall not, directly or indirectly, (A)  amend, modify, alter or change in any
material respect the terms of such loans, advances or guarantees or any
agreement, document or instrument related thereto, except, that, such Borrower,
Guarantor or Subsidiary, as the case may be, after prior written notice to
Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel a portion of such indebtedness (other than pursuant to
payments thereof), or to release any liens or security interests in any assets
of Borrower which secure such indebtedness (if any), or to reduce the rate or
any fees in connection therewith, or to make any covenants contained therein
less restrictive or burdensome as to Borrower or otherwise more favorable to
Borrower, Guarantor or Subsidiary, as the case may be, (as determined in good
faith by Lender), or (B) as to such guarantees, redeem, retire, defease,
purchase or otherwise acquire such guarantee or set aside or otherwise deposit
or invest any sums for such purpose (except as expressly required pursuant to
the terms thereof or pursuant to regularly scheduled payments permitted herein)
and (ii) Borrowers and Guarantors shall furnish to Lender all notices or
demands in connection with such loans, advances or guarantees  either received
by a Borrower, Guarantor or Subsidiary on its behalf, promptly after the
receipt thereof, or sent by a Borrower, Guarantor or Subsidiary on its behalf,
concurrently with the sending thereof, as the case may be;

(o)   investments (including, without limitation, any loan, advance, capital
contribution or other investment or payment) in joint ventures or other Persons
(each a "Business Enterprise") by Pep Boys for the purpose of development,
creation and operation of an internet business; provided, that: (i) each such
Business Enterprise is entered into with a Person who is not an Affiliate, (ii)
the Business Enterprise shall be engaged in a business related, ancillary or
complimentary to the businesses of Borrowers as conducted on the date hereof,
(iii) Lender shall have received (A) (1) in the event the initial investment
(whether characterized by loans, capital contributions, letters of credit or
otherwise) in the Business Enterprise is not in excess of $5,000,000, not more
than two (2) Business Days' written notice after the date of such investment,
and such other information with respect thereto as Lender may reasonably
request, or (2) in the event such initial investment is to be equal to or
greater than $5,000,000, not less than ten (10) Business Days prior written
notice of such investment in such Business Enterprise, and such other
information with respect thereto as Lender may reasonably request and (B) true,
correct and complete copies of all agreements, documents and instruments
relating thereto,  (iv) in the case of  loans and  advances, the original of
any promissory note or other instrument evidencing the Indebtedness arising
pursuant to such loans and advances shall be delivered, or caused to be
delivered, to Lender, at Lender's option, together with an appropriate
endorsement and with full recourse to the payee thereof, (v) so long as a Cash
Dominion Event is continuing, in no event shall the total amount of investments
made by Pep Boys in all such Business Enterprises be in excess of $15,000,000
in each fiscal year, (vi) the total amount of all such investments in such
Business Enterprises shall not exceed $50,000,000 in the aggregate at any time,
and (vii) Lender shall receive a monthly report in form and substance
satisfactory to Lender of the amount of such investment and such other
information with respect thereto as Lender may reasonably request and (viii) as
of the date of any such loan, advance, capital contribution or other investment
or payment, no Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default shall exist or
have occurred and be continuing;

(p)  the existing loans by Pep Boys to the Flexi-Trust, pursuant to the terms
and conditions of the Flexi-Trust Agreement in effect on the date hereof; and

(q)  repurchases and redemptions of Capital Stock permitted pursuant to Section
9.11(c).

9.11  Dividends and Redemptions. Each Borrower and Guarantor shall not, and
shall not permit any Subsidiary to, directly or indirectly, declare or pay any
dividends on account of any shares of class of Capital Stock of such Borrower,
Guarantor or Subsidiary now or hereafter outstanding, or set aside or otherwise
deposit or invest any sums for such purpose, or redeem, retire, defease,
purchase or otherwise acquire any shares of any class of Capital Stock (or set
aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, except, that:

(a)     any Subsidiary of a Borrower may pay dividends to such Borrower or
another Subsidiary and any Subsidiary of a Borrower (other than a Borrower) may
redeem or repurchase any of its Capital Stock by making payments to a Borrower;

(b)     any Borrower or Guarantor may pay dividends or may redeem or repurchase
any of its Capital Stock for consideration consisting of common stock;

(c)     any Borrower or Guarantor may pay dividends or may redeem or repurchase
any of its Capital Stock, provided, that, as to any payment of such dividend or
for such redemption or repurchase each of the following conditions is
satisfied:

(i) such payment shall be made with funds legally available therefor,

(ii) such dividend or redemption or repurchase shall not violate any law or
regulation or the terms of any indenture, agreement or undertaking to which a
Borrower or Guarantor is a party or by which a Borrower or Guarantor or its
properties are bound,

(iii) as of the date of the payment of such dividend or redemption or
repurchase and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred; and

(iv)    in the case of redemptions and repurchases, as of the day of the
redemption or repurchase and after giving effect thereto, the Excess
Availability, as of the date of any such payment and after giving effect
thereto, shall be not less than $25,000,000.

9.12    Transactions with Affiliates.  Each Borrower and Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly:

 (a)    purchase, acquire or lease any property from, or sell, transfer or
lease any property to, any officer, employee, shareholder, director, agent or
any other Affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's, Guarantor's or Subsidiary's
business (as the case may be) and upon fair and reasonable terms no less
favorable to such Borrower, Guarantor or Subsidiary than it would obtain in a
comparable arm's length transaction with a person that is not an Affiliate,
except, that (i) in the case of such transactions between Borrowers, then upon
fair and reasonable terms consistent with the current practices of such
Borrowers, as of the date hereof, (ii) in the case of sales of property by
Borrowers or Guarantors to the Business Enterprises referred to in Section 9.10
(o) upon fair and reasonable terms no more favorable than such Business
Enterprises would obtain in a comparable arm's length transaction with a Person
that is not an Affiliate, (iii) Pep Boys may sell its Capital Stock to the
Flexi-Trust in accordance with the Flexi-Trust Agreement; or

(b)     make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any officer,
employee, shareholder, director or any other Affiliate of any Borrower or
Guarantor except (i) compensation to officers, employees and directors for
services rendered to such Borrower, Guarantor or Subsidiary, as the case may be
, in the ordinary course of business, (ii) payments by a Borrower to any other
Borrower in respect of Indebtedness arising pursuant to loans made by such
Borrower to the extent such Indebtedness is permitted under Section 9.9 hereof,
and (iii) payments by a Borrower (other than Pep Boys) or Guarantor to Pep Boys
for actual and necessary reasonable out-of-pocket legal and accounting,
insurance, marketing, payroll and similar types of services paid for by Pep
Boys on behalf of the other Borrowers or Guarantors and their Subsidiaries in
the ordinary course of their respective businesses or as the same may be
directly attributable to such Borrowers or other Guarantor.

9.13    Additional Bank Accounts.  Each Borrower and Guarantor shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the Blocked Accounts and the accounts set forth in
Schedule 8.10 hereto, except:  (a) as to any new or additional Blocked Accounts
and other such new or additional accounts which contain any Collateral or
proceeds thereof, with the prior written consent of Lender and subject to such
conditions thereto as Lender may establish and (b) as to any accounts used by
such Borrower or Guarantor to make payments of payroll, taxes or other
obligations to third parties, after prior written notice to Lender and (c)
accounts which do not contain any Collateral or proceeds thereof, provided,
that, such Borrower or Guarantor notifies Lender promptly upon the opening of
such account.

 9.14   Compliance with ERISA.  Each Borrower shall and shall cause each of its
ERISA Affiliates to:  (a) maintain each Plan in compliance with the applicable
provisions of ERISA, the Code and other Federal and State law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; (c) not terminate any of such Plans so as to incur any liability
to the Pension Benefit Guaranty Corporation;  (d) not allow or suffer to exist
any prohibited transac-tion involving any of such Plans or any trust created
thereunder which would subject Borrower or such ERISA Affiliate to a tax or
penalty or other liability on prohibited transactions imposed under Section
4975 of the Code or ERISA; (e) make all required contributions to any Plan
which it is obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such Plan; (f) not allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to any such
Plan; or (g) not allow or suffer to exist any occurrence of a reportable event
or any other event or condition which presents a material risk of termination
by the Pension Benefit Guaranty Corporation of any such Plan that is a single
employer plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation except as to (a) through (g) above, where the
failure to comply would not have a reasonable likelihood of having a Material
Adverse Effect.

9.15    End of Fiscal Years: Fiscal Quarters.  Pep Boys shall, for financial
reporting purposes, and shall cause each of its Subsidiaries' (a) fiscal years
to end on the Saturday closest to the 31st day of January of each year, and (b)
fiscal quarters to end on the last day of the thirteenth (13th) week following
the end of the immediately preceding fiscal quarter, provided, that, the end of
the fourth fiscal quarter shall be on the last day of the fourteenth (14th)
week following the end of the third fiscal quarter whenever necessary to have
the fourth fiscal quarter end on the Saturday closest to January 31 of each
year.

9.16    Change in Business.  Pep Boys and its Subsidiaries shall not engage in
any business other than the businesses of Pep Boys and its Subsidiaries on the
date hereof and any business reasonably related, ancillary or complimentary to
the business in which Pep Boys and its Subsidiaries are engaged on the date
hereof.

9.17    Limitation of Restrictions Affecting Subsidiaries.  Each Borrower and
Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower,
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower, Guarantor or any Subsidiary of such Borrower or
Guarantor, (c) transfer any of its properties or assets constituting Collateral
to such Borrower, Guarantor or any Subsidiary of such Borrower or Guarantor; or
(d) create, incur, assume or suffer to exist any lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than
encumbrances and restrictions arising under (i) applicable law, (ii) this
Agreement, (iii) liens permitted under this Agreement,  (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of such Borrower, Guarantor or any of its Subsidiaries, (v)
customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of such Borrower, Guarantor or its Subsidiary,
(vi) any agreement relating to permitted Indebtedness incurred by a Subsidiary
of such Borrower or Guarantor prior to the date on which such Subsidiary was
acquired by such Borrower or Guarantor and outstanding on such acquisition date
, and (vii) the extension or continuation of contractual obligations in
existence on the date hereof; provided, that, any such encumbrances or
restrictions contained in such extension or continuation are no less favorable
to Lender than those encumbrances and restrictions under or pursuant to the
contractual obligations so extended or continued.

 9.18   Adjusted Tangible Net Worth.  Pep Boys inclusive of Colchester, at all
times, maintain Adjusted Tangible Net Worth of not less than $505,000,000.

9.19    Credit Card Agreements.  Each Borrower shall (a) observe and perform
all material terms, covenants, conditions and provisions of the Credit Card
Agreements to be observed and performed by it at the times set forth therein;
(b) not do, permit, suffer or refrain from doing anything, as a result of which
there could be a material default under or breach of any of the terms of any of
the Credit Card Agreements and (c) at all times maintain in full force and
effect the Credit Card Agreements and not terminate, cancel, surrender, modify,
amend, waive or release any of the Credit Card Agreements except where such
amendment, modification, or waiver would not have a Material Adverse Effect, or
consent to or permit to occur any of the foregoing; except, that, (i) any such
Borrower may terminate or cancel any of the Credit Card Agreements in the
ordinary course of the business of such Borrower; provided, that, such Borrower
shall give Lender not less than fifteen (15) days prior written notice of its
intention to so terminate or cancel any of the Credit Card Agreements; (d) not
enter into any new Credit Card Agreements with any new Credit Card Issuer
unless (i) Lender shall have received not less than fifteen (15) days prior
written notice of the intention of such Borrower to enter into such agreement
(together with such other information with respect thereto as Lender may
request) and (ii) such Borrower delivers, or causes to be delivered to Lender,
a Credit Card Acknowledg-ment in favor of Lender; (e) give Lender immediate
written notice of any Credit Card Agreement entered into by such  Borrower
after the date hereof, together with a true, correct and complete copy thereof
and such other information with respect thereto as Lender may reasonably
request; and (f) furnish to Lender, promptly upon the request of Lender, such
information and evidence as Lender may reasonably require from time to time
concerning the observance, performance and compliance by such Borrower or the
other party or parties thereto with the terms, covenants or provisions of the
Credit Card Agreements.

 9.20   Costs and Expenses.  Borrowers and Guarantors shall pay to Lender on
demand all costs, expenses, filing fees and taxes paid or payable in connection
with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including:  (a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees,
if appl-icable); (b) costs and expenses and fees for insurance premiums,
environmental audits, surveys, assessments, engineering reports and inspections
, appraisal fees and search fees, costs and expenses of remitting loan proceeds
, collecting checks and other items of payment, and establishing and
maintaining the Blocked Accounts, together with Lender's customary charges and
fees with respect thereto; (c) charges, fees or expenses charged by any bank or
issuer in connection with the Letter of Credit Accommodations; (d) costs and
expenses of preserving and protecting the Collateral; (e) costs and expenses
paid or incurred in connection with obtaining payment of the Obligations,
enforcing the security interests and liens of Lender, selling or otherwise
realizing upon the Collateral, and otherwise enforcing the provisions of this
Agreement and the other Financing Agreements or defending any claims made or
threatened against Lender arising out of the transactions contemplated hereby
and thereby (including preparations for and consultations concerning any such
matters); (f) all out-of-pocket expenses and costs heret-ofore and from time to
time hereafter incurred by Lender during the course of periodic field
examinations of the Collateral and Borrowers' and Guarantors' operations, plus
a per diem charge at the rate of $750 per person per day for Lender's examiners
in the field and office; and (g) the fees and disbursements of counsel
(including legal assistants) to Lender in connection with any of the foregoing.

9.21    Sale and Leasebacks.  Each Borrower and Guarantor shall not, and shall
not permit any Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby such Borrower, Guarantor or Subsidiary, as
the case may be, shall sell or transfer any property, real or personal, used or
useful in its business, whether now owned or hereafter acquired, and thereafter
rent or lease such property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred (except to the
extent of Capital Leases permitted under Section 9.9(b) hereof), except, that,
Borrowers may enter into such arrangements provided, that, each of the
following conditions is satisfied, as determined by Lender: (a) Lender shall
have received not less than ten (10) Business Days' prior written notice of any
such proposed transaction, which notice shall describe the transaction in
detail, (b) as of the date of any Borrower entering into such arrangement and
after giving effect to such transaction,  the aggregate amount of outstanding
Exempted Debt secured by such liens shall not exceed the Exempted Debt Limit,
(c) such proposed transaction shall be in compliance with the terms and
conditions set forth in the Pep Boys Indentures, and (d) as of the date of any
such transaction and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would
constitute an Event of Default shall exist or have occurred .

9.22    Exempted Debt Limit.  Borrowers shall not permit the outstanding
aggregate amount of Exempted Debt at any time to exceed the Exempted Debt Limit
, without the prior written consent of Lender.

 9.23   Further Assurances.  At the request of Lender, made in good faith, at
any time and from time to time, each Borrower and Guarantor shall, at its
expense, duly execute and deliver, or cause to be duly executed and delivered,
such further agreements, documents and instruments, and do or cause to be done
such further acts as may be necessary or proper to evidence, perfect, maintain
and enforce the security interests and the priority thereof in the Collateral
and to otherwise effectuate the provisions or purposes of this Agreement or any
of the other Financing Agreements.  Lender may at any time and from time to
time request a certificate from an officer of Borrowers representing that all
conditions precedent to the making of Loans and providing Letter of Credit
Accommodations contained herein are satisfied.  In the event of such request by
Lender, Lender may, at its option, cease to make any further Loans or provide
any further Letter of Credit Accommodations until Lender has received such
certificate and, in addition, Lender has determined that such conditions are
satisfied. Where permitted by law, each Borrower and Guarantor hereby
authorizes Lender to execute and file one or more UCC financing statements
signed only by Lender.

9.24    Equipment and Real Property Covenants.  With respect to the Equipment
and Real Property: (a) each Borrower shall keep the Equipment in good order,
repair, running and marketable condition (ordinary wear and tear excepted); (b)
each Borrower shall use the Equipment and Real Property with all reasonable
care and caution and in accordance with applicable standards of any insurance
and in conformity with all applicable laws; and (c) each Borrower assumes all
responsibility and liability arising from the use of the Equipment and Real
Property.

SECTION 10.     EVENTS OF DEFAULT AND REMEDIES

10.1    Events of Default.  The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":

(a)  (i) (1) any Borrower fails to pay when due any principal amount of the
Loans or (2) any Borrower fails to pay when due any of the Obligations (other
than payments of principal in respect of the Loans) within three (3) days after
the due date thereof or (ii) any Borrower or Obligor fails to perform any of
the covenants contained in Sections 9.3, 9.4, 9.6, 9.14, 9.15, 9.16, 9.17, 9.19
or 9.24 of this Agreement and such failure shall continue for fifteen (15) days
; provided, that, such fifteen (15) day period shall not apply in the case of:
(A) any failure to observe any such covenant which is not capable of being
cured at all or within such fifteen (15) day period or which has been the
subject of a prior failure within a six (6) month period or (B) an intentional
breach by any Borrower or Obligor of any such covenant or (iii) any Borrower or
Obligor fails to perform, or otherwise breaches or violates, any of the terms,
covenants, conditions or provisions contained in this Agreement or any of the
other Financing Agreements (or any other default under any of the other
Financing Agreements shall occur), other than those described in Sections 10.1
(a)(i) and 10.1(a)(ii) above;

(b)     any representation, warranty or statement of fact made by any Borrower
Obligor or Guarantor to Lender in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any material
respect;

(c)     any Obligor revokes, terminates or fails to perform any of the terms,
covenants, conditions or provisions of any guarantee, endorsement or other
agreement of such party in favor of Lender;

 (d)    any judgment for the payment of money is rendered against any Borrower
or Obligor in excess of $5,000,000 in any one case or in excess of $10,000,000
in the aggregate, exclusive in each case of any portion of such judgment
covered by insurance, and shall remain undischarged or unvacated for a period
in excess of forty-five (45) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any
Borrower or Obligor or any of their assets;

(e)     any Borrower or Obligor, which is a partnership, limited liability
company, limited liability partnership or a corporation, dissolves or suspends
or discontinues doing business (except as otherwise expressly permitted
herein);

(f)     any Borrower or Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;

(g)     a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at law or in equity) is
filed against any Borrower or Obligor or all or any part of its properties and
such petition or application is not dismissed within forty-five (45) days after
the date of its filing or any Borrower or Obligor shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or
the relief requested is granted sooner;

(h)     a case or proceeding under the bankruptcy laws of the United States of
America now or hereafter in effect or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by any Borrower or Obligor or for all or any part of its property; or

 (i)    any default by any Borrower or Obligor under any agreement, document or
instrument relating to any Indebtedness owing to any person other than Lender
(including without limitation, any of the Pep Boys Indentures), or any
Capitalized Lease, or any of the Synthetic Lease Facility Agreements, which
results in the right of the holder of such obligation or indebtedness to
accelerate indebtedness owing to such holder in an amount equal to at least
$5,000,000 or any default by any Borrower or Obligor under any Material
Contract, which default continues for more than the applicable cure period, if
any, with respect thereto and would have a Material Adverse Effect or any
Credit Card Issuer or Credit Card Processor withholds payment of amounts
otherwise payable to any Borrower to fund a reserve account or otherwise hold
as collateral, or shall require any Borrower to pay funds into a reserve
account or for such Credit Card Issuer or Credit Card Processor to otherwise
hold as collateral, or any Borrower shall provide a letter of credit, guarantee
, indemnity or similar instrument to or in favor of such Credit Card Issuer or
Credit Card Processor such that in the aggregate all of such funds in the
reserve account, other amounts held as collateral and the amount of such
letters of credit, guarantees, indemnities or similar instruments shall exceed
$2,000,000 or any Credit Card Issuer or Credit Card Processor shall debit or
deduct any amounts from any deposit account of any Borrower;

(j)     an ERISA Event shall occur;

(k)     any Change of Control;

(l)     the indictment by any Governmental Authority, or as Lender may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of a Borrower or Guarantor of which any Borrower,
Guarantor or Lender receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Lender, under any criminal or civil statute, or commencement
or threatened commencement of criminal or civil proceedings by any Governmental
Authority  against such Borrower or Guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) (A) any of the Collateral having a value in excess of $40,000,000 if such
indictment or threatened indictment occurs prior to the occurrence of a Cash
Dominion Event, or (B) any Collateral having a value in excess of $20,000,000,
if such threatened indictment or indictment occurs upon the occurrence and
during the continuance of a Cash Dominion Event or (ii) any other property of
any Borrower or Guarantor which is necessary or material to the conduct of its
business; or

(m)     there shall be a material adverse change in the business, assets or
financial condition of Borrowers taken as a whole after the date hereof.

10.2    Remedies.

(a)     At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and
other applicable law, all of which rights and remedies may be exercised without
notice to or consent by any Borrower or Obligor, except as such notice or
consent is expressly provided for hereunder or required by applicable law.  All
rights, remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discr-etion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Borrower or
Guarantor of this Agreement or any of the other Financing Agreements.  Lender
may, at any time or times, proceed directly against any Borrower or any Obligor
to collect the Obligations without prior recourse to the Collateral.

 (b)    Without limiting the foregoing, at any time an Event of Default exists
or has occurred and is continuing, Lender may, in its discretion and without
limitation, (i) accelerate the payment of all Obligations and demand immediate
payment thereof to Lender (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrowers and Guarantors, at
Borrowers' expense, to assemble and make available to Lender any part or all of
the Collateral at any place and time designated by Lender, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all Collateral
, (v) remove any or all of the Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (vi) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral (including
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from
any right or equity of redemption of any Borrower or Guarantor, which right or
equity of redemption is hereby expressly waived and released by each Borrower
and Guarantor and/or (vii) terminate this Agreement.  If any of the Collateral
is sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lender.  If notice of disposition of Collateral is
required by law, ten (10) days prior notice by Lender to Pep Boys designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to
be reasonable notice thereof and each Borrower and Guarantor waives any other
notice.  In the event Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, each Borrower
and Guarantor waives the posting of any bond which might otherwise be required.

(c)     Upon the occurrence of an Event of Default and so long as such Event of
Default is continuing, for the purpose of enabling Lender to exercise the
rights and remedies hereunder, each Borrower and Guarantor hereby grants to
Lender, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to any Borrower
or Guarantor) to use, assign, license or sublicense any of the trademarks,
service-marks, trade names, business names, trade styles, designs, logos and
other source of business identifiers and other Intellectual Property and
general intangibles now owned or hereafter acquired by Borrowers and Guarantors
, wherever the same maybe located, including in such license reasonable access
to all media in which any of the licensed items may be recorded or stored and
to all computer programs used for the compilation or printout thereof.

 (d)    Lender may apply the cash proceeds of Collateral actually received by
Lender from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in such order as Lender
may elect, whether or not then due.  Borrowers and Guarantors shall remain
jointly and severally liable to Lender for the payment of any deficiency with
interest at the highest rate provided for herein and all costs and expenses of
collection or enforcement, including attorneys' fees and legal expenses.

(e)     Without limiting the foregoing, upon the occurrence of an Event of
Default or an act, condition or event which with notice or passage of time or
both would constitute an Event of Default, Lender may, at its option, without
notice, (i) cease making Loans or arranging for Letter of Credit Accommodations
or reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrowers and/or (ii) terminate any provision of
this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made by Lender to Borrowers.

SECTION 11.     JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW

11.1    Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a)     The validity, interpretation and enforcement of this Agreement and the
other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of New York (without giving
effect to principles of conflicts of law).

(b)     Borrowers, Guarantors and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York for
New York County and the United States District Court for the Southern District
of New York and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of
the other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement
or any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to
any such matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against any
Borrower, Guarantor or its property in the courts of any other jurisdiction
which Lender deems necessary or appropriate in order to realize on the
Collateral or to otherwise enforce its rights against any Borrower, Guarantor
or its property).

 (c)    Each Borrower and Guarantor hereby waives personal service of any and
all process upon it and consents that all such service of process may be made
by certified mail (return receipt requested) directed to its address set forth
on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender's option, by service upon any Borrower or Guarantor in any
other manner provided under the rules of any such courts.  Within thirty (30)
days after such service, such Borrower or Guarantor shall appear in answer to
such process, failing which such Borrower or Guarantor shall be deemed in
default and judgment may be entered by Lender against such Borrower or
Guarantor for the amount of the claim and other relief requested.

(d)     BORROWERS, GUARANTORS AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  BORROWERS,
GUARANTORS AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY AND THAT BORROWERS, GUARANTORS OR LENDER MAY FILE AN ORIGINAL COUNTERPART
OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e)     Lender shall not have any liability to Borrowers or Guarantors (whether
in tort, contract, equity or otherwise) for losses suffered by Borrowers or
Guarantors in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by
a final and non-appealable judgment or court order binding on Lender, that the
losses were the result of acts or omissions constituting gross negligence or
willful misconduct.  In any such litigation, Lender shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of this
Agreement.

11.2    Waiver of Notices.  Each Borrower and Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor with
respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein.  No notice to or demand on any Borrower or Guarantor which
Lender may elect to give shall entitle any Borrower or Guarantor to any other
or further notice or demand in the same, similar or other circumstances.

 11.3   Amendments and Waivers.  Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of
Borrowers and Guarantors.  Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender.  Any such waiver shall be enforceable only to the
extent specifically set forth therein.  A waiver by Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver
of any such right, power and/or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.

11.4    Waiver of Counterclaims.  Each Borrower and Guarantor waives all rights
to interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.

11.5    Indemnification.  Each Borrower and Guarantor shall indemnify and hold
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated
hereby or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except for such losses, claims, damages, liabilities, costs or expenses
resulting from the gross negligence or wilful misconduct of  Lender, its
directors, agents, employees or counsel as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction.   To the extent that
the undertaking to indemnify, pay and hold harmless set forth in this Section
may be unenforceable because it violates any law or public policy, Borrowers
and Guarantors shall pay the maximum portion which it is permitted to pay under
applicable law to Lender in satisfaction of indemnified matters under this
Section.  The foregoing indemnity shall survive the payment of the Obligations
and the termination or non-renewal of this Agreement.

SECTION 12.     TERM OF AGREEMENT; MISCELLANEOUS

12.1    Term.

 (a)    This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on September 30, 2004 (the
"Renewal Date");  and from year to year thereafter, unless sooner terminated
pursuant to the terms hereof.  Lender or Borrowers may terminate this Agreement
and the other Financing Agreements effective on the Renewal Date or on the
anniversary of the Renewal Date in any year by giving to the other party at
least sixty (60) days prior written notice; provided, that, this Agreement, all
other Financing Agreements and the Synthetic Lease Facility Agreements must be
terminated simultaneously.  Upon the effective date of termination or
non-renewal of the Financing Agreements, Borrowers shall pay to Lender, in full
, all outstanding and unpaid Obligations that are not contingent and shall
furnish cash collateral, if any, to Lender in such amounts as Lender determines
in good faith are reasonably necessary to secure Lender from loss, cost, damage
or expense, including reasonable attorneys' fees and legal expenses, in
connection with any contingent Obligations, including issued and outstanding
Letter of Credit Accommodations and checks or other payments provisionally
credited to the Obligations and/or as to which Lender has not yet received
final and indefeasible payment.  Such payments in respect of the Obligations
and cash collateral, if any, shall be remitted by wire transfer, as directed by
Lender, to such bank account of Lender, as Lender may, in its discretion,
designate to Pep Boys for such purpose.  Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrowers to the
bank account designated by Lender are received in such bank account later than
12:00 noon, New York City time except that if Borrowers notify Lender that a
payment shall be received after 12:00 noon and such payment is received by
Lender prior to 2:00 pm of the same day, interest shall not accrue through the
next Business Day.

(b)     No termination of this Agreement or the other Financing Agreements
shall relieve or discharge any Borrower or Guarantor of its respective duties,
obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid (or for which Agent has received cash collateral as provided in Section
12.1(a) above, as to contingent Obligations), and Lender's continuing security
interest in the Collateral and the rights and remedies of Lender hereunder,
under the other Financing Agreements and applicable law, shall remain in effect
until all such Obligations have been fully and finally discharged and paid.

(c)     If for any reason this Agreement is terminated prior to the end of the
then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, Borrowers agree to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:

Amount
Period

(i)     One and one-half (1 1/2%) percent of the Maximum Credit
From the date hereof to and including September 30, 2001

(ii)    Three-quarters (3/4%) percent of the Maximum Credit
From October 1, 2001 to and including September 30, 2002

(iii)   One- third (1/3%) percent of the Maximum Credit
From October 1, 2002 to and including September 30, 2003

(iv)    One-quarter (1/4%) of the Maximum Credit
From October 1, 2003 to and including September 15, 2004 or if the term of this
Agreement is extended, at any time prior to fifteen (15) days prior to the end
of the then current term.

Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing.  In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to Borrowers or permit the use of cash
collateral under the United States Bankruptcy Code.  The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.

(d)  Notwithstanding anything to the contrary contained in Section 12.1(c), in
the event of termination of this Agreement by Borrowers prior to the end of the
then current term or renewal term of this Agreement and the full and final
repayment of all of the Obligations and the receipt by Lender of cash
collateral all as provided in Section 12.1(a) above, Borrowers shall not be
required to pay to Lender an early termination fee if such payments are made to
Lender with the initial proceeds of a financing transaction provided or
underwritten by First Union National Bank to Borrowers.

12.2    Interpretative Provisions.

(a)     All terms used herein which are defined in Article 1 or Article 9 of
the Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement.

(b)     All references to the plural herein shall also mean the singular and to
the singular shall also mean the plural unless the context otherwise requires.

 (c)    All references to any Person herein, shall include their respective
successors and assigns.

(d)     The words "hereof", "herein", "hereunder", "this Agreement" and words
of similar import when used in this Agreement shall refer to this Agreement as
a whole and not any particular provision of this Agreement and as this
Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

(e)     The word "including" when used in this Agreement shall mean "including,
without limitation".

(f)     An Event of Default shall exist or continue or be continuing until such
Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Lender, if such Event of Default is capable of being
cured as determined by Lender.

(g)     Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP, and all financial computations hereunder shall be computed unless
otherwise specifically provided herein, in accordance with GAAP as consistently
applied and using the same method for inventory valuation as used in the
preparation of the financial statements of Borrower most recently received by
Lender prior to the date hereof.

(h)     In the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including", the words "to" and
"until" each mean "to but excluding" and the word "through" means "to and
including".

(i)     Unless otherwise expressly provided herein, (i) references herein to
any agreement, document or instrument shall be deemed to include all subsequent
amendments, modifications, supplements, extensions, renewals, restatements or
replacements with respect thereto, but only to the extent the same are not
prohibited by the terms hereof or of any other Financing Agreement, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
recodifying, supplementing or interpreting the statute or regulation.

(j)     The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.

(k)     This Agreement and other Financing Agreements may use several different
limitations, tests or measurements to regulate the same or similar matters.
All such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

 (l)    This Agreement and the other Financing Agreements are the result of
negotiations among and have been reviewed by counsel to Lender and the other
parties, and are the products of all parties.  Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.

12.3    Notices.  All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Pep Boys,
as agent for Borrowers and Guarantors at its chief executive office set forth
below, or to such other address as either party may designate by written notice
to the other in accordance with this provision, and (b) deemed to have been
given or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.

12.4    Partial Invalidity.  If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

 12.5   Successors.   This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrowers, Guarantors and their
respective successors and assigns, except that Borrowers and Guarantors may not
assign their rights under this Agreement, the other Financing Agreements and
any other document referred to herein or therein without the prior written
consent of Lender.  Lender may, after notice to Pep Boys on behalf of Borrowers
, assign its rights and delegate its obligations under this Agreement and the
other Financing Agreements (a) to any of its present and future Subsidiaries or
Affiliates, (b) to any commercial banks or other financial institutions or (c)
to the extent of the interests of Participants as provided below, or (d) upon
the merger, consolidation, sale, transfer or other disposition of all or any
substantial portion of its business, loan portfolio or other assets or  (e)
with the consent of Borrowers which shall not be unreasonably withheld, delayed
or conditioned or (f) at any time after an Event of Default shall exist or have
occurred and be continuing without the consent of Borrowers, provided, however,
that no assignment shall be made or participation sold to any Direct Competitor
of any Borrower except after the occurrence of an Event of Default. In the
event that Lender may elect to assign any interest in the Loans and/or Letter
of Credit Accommodations, to one or more financial institutions, Lender may, at
its option, be appointed to act as agent on behalf of purchasers of such
interests and promptly upon Lender's request, Borrowers shall acknowledge and
confirm the right of Lender to act in such capacity and execute and deliver
such other agreements as a result thereof as Lender may in good faith request.
In addition,  Lender may, sell participations in, all or any part of the Loans
and/or Letter of Credit Accommodations, or any other interest herein to another
financial institution or other person, provided, that, Borrowers shall continue
to deal solely and directly with Lender in connection with all rights and
obligations under this Agreement and the other Financing Agreements.  Upon such
assignment or participation, the assignee or Participant shall have, to the
extent of such assignment or participation, the same rights and benefits as it
would have if it were Lender hereunder, except as otherwise provided by the
terms of such assignment or participation.

12.6    Confidentiality.

(a)     Lender shall use all reasonable efforts to keep confidential, in
accordance with its customary procedures for handling confidential information
and safe and sound lending practices, any non-public information supplied to it
by Borrowers or Guarantors  pursuant to this Agreement, provided, that, nothing
contained herein shall limit the disclosure of any such information:  (i) to
the extent required by statute, rule, regulation, subpoena or court order, (ii)
to bank examiners and other regulators, auditors and/or accountants, (iii) in
connection with any litigation to which Lender is a party, (iv) to any assignee
or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) shall have
first agreed in writing to treat such information as confidential in accordance
with this Section 12.6, or (v) to counsel for Lender or any participant or
assignee (or prospective participant or assignee).

(b)     In no event shall this Section 12.6 or any other provision of this
Agreement or applicable law be deemed:  (i) to apply to or restrict disclosure
of information that has been or is made public by a Borrower or any third party
without breach of this Section 12.6 or otherwise become generally available to
the public other than as a result of a disclosure in violation hereof, (ii) to
apply to or restrict disclosure of information that was or becomes available to
Lender on a non-confidential basis from a person other than a Borrower or a
Guarantor, (iii) require Lender to return any materials furnished by Borrowers
to Lender or (iv) prevent Lender from responding to routine informational
requests  in accordance with the Code of Ethics for the Exchange of Credit
Information promulgated by The Robert Morris Associates or other applicable
industry standards relating to the exchange of credit information.  The
obligations of Lender under this Section 12.6 shall supersede and replace the
obligations of Lender under any confidentiality letter signed prior to the date
hereof.

12.7    Participant's Security Interest. If any Participant shall at any time
participate with Lender in the Loans, Letter of Credit Accommodations or other
Obligations, each Borrower hereby grants to such Participant and such
Participant shall have and is hereby given, a continuing lien on and security
interest in any money, securities and other property of such Borrower in the
custody or possession of such Participant, including the right of setoff, to
the extent of the Participant's participation in the Obligations, and such
Participant shall be deemed to have the same right of setoff to the extent of
its participation in the Obligations, as it would have if it were a direct
lender.

 12.8   Entire Agreement.  This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instru-ments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.  In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.

        [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 IN WITNESS WHEREOF, Lender, Borrowers and Guarantors have caused these
presents to be duly executed as of the day and year first above written.

LENDER                                                          BORROWERS

CONGRESS FINANCIAL CORPORATION  THE PEP BOYS - MANNY, MOE & JACK

By:_________________________                    By:_________________________

Title:________________________                  Title:________________________

Address:                                                Chief Executive Office:

1133 Avenue of the Americas                    3111 West Allegheny Avenue
New York, New York 10036                       Philadelphia, Pennsylvania 19132

THE PEP  BOYS MANNY MOE &
  JACK OF CALIFORNIA

By:___________________________

Title:__________________________

Chief Executive Office:

3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132

PEP BOYS - MANNY, MOE & JACK OF
 DELAWARE, INC.

By:___________________________

Title:__________________________

Chief Executive Office:

3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132

[SIGNATURES CONTINUED ON NEXT PAGE]
 [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

PEP BOYS - MANNY, MOE & JACK OF
PUERTO RICO, INC.

By:___________________________

Title:__________________________

Chief Executive Office:

3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132

GUARANTORS

PBY CORPORATION

By:___________________________

Title:__________________________

Chief Executive Office:

1105 North Market Street
Wilmington, Delaware 19899

                CARRUS SUPPLY CORPORATION

By:___________________________

Title:__________________________

Chief Executive Office:

1013 Centre Road
Wilmington, Delaware 19805
        EXHIBIT B
        TO
        LOAN AND SECURITY AGREEMENT

FORM OF COMPLIANCE CERTIFICATE

To:     Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036

Ladies and Gentlemen:

I hereby certify to you as follows:

1.      I am the duly elected Chief financial officer or Vice President-Finance
of The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation ("Pep Boys"),
The Pep  Boys - Manny, Moe & Jack of California, a California corporation
("PBY-California"), Pep Boys - Manny, Moe & Jack of Delaware, Inc.,
a _________ corporation ("PBY-Delaware"), and  Pep Boys - Manny, Moe & Jack of
Puerto Rico, Inc., a ________ corporation ("PBY-Puerto Rico"; and together with
PBY, PBP-California  and PBP-Delaware, each individually, a "Borrower" and
collectively, "Borrowers" as hereinafter further defined). Capitalized terms
used herein without definition shall have the meanings given to such terms in
the Loan and Security Agreement, dated _______, 2000, by and between Congress
Financial Corporation ("Lender"), Borrowers and certain of their affiliates (as
amended, modified or supplemented, from time to time, the "Loan Agreement").

2.      I have reviewed the terms of the Loan Agreement, and have made, or have
caused to be made under my supervision, a review in reasonable detail of the
transactions and the financial condition of Borrowers and their Subsidiaries,
during the immediately preceding fiscal month.

3.      The review described in Section 2 above did not disclose the existence
during or at the end of such fiscal month, and I have no actual knowledge of
the existence and continuance on the date hereof, of any condition or event
which constitutes an Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default, except
as set forth on Schedule I attached hereto.  Described on Schedule I attached
hereto are the exceptions, if any, to this Section 3 listing, in detail, the
nature of the condition or event, the period during which it has existed and
the action which any Borrower or Obligor has taken, is taking, or proposed to
take with respect to such condition or event.

 4.     I further certify that, based on the review described in Section 2
above, Borrowers and Guarantors have not at any time during or at the end of
such fiscal month, except as specifically described on Schedule II attached
hereto or as permitted by the Loan Agreement, done any of the following:

(a)     Changed its respective corporate name, or transacted business under any
trade name, style, or fictitious name, other than those previously described to
you and set forth in the Financing Agreements.

(b)     Changed the location of its chief executive office, or changed the
location of or disposed of any of its properties or assets (other than pursuant
to the sale of Inventory in the ordinary course of its business or as otherwise
permitted by Section 9.7 of the Loan Agreement), or established any new asset
locations.

(c)     Materially changed the terms upon which it sells goods (including sales
on consignment) or provides services, nor has any vendor or trade supplier to a
Borrower or Guarantor during or at the end of such period materially adversely
changed the terms upon which it supplies goods to Borrower or Guarantor.

(d)     Permitted or suffered to exist any security interest in or liens on any
of its properties, whether real or personal, other than as specifically
permitted in the Financing Agreements.

(e)     Received any notice of, or obtained knowledge of any of the following
not previously disclosed to Lender:  (i) the occurrence of any event involving
the release, spill or discharge, threatened or actual, of any Hazardous
Material in violation of applicable Environmental Law where the occurrence of
such event would have a reasonable likelihood of having a Material Adverse
Effect or (ii) any investigation, proceeding, complaint, order, directive,
claims, citation or notice with respect to: (A) any non-compliance with or
violation of any applicable Environmental Law by Borrowers where the occurrence
of such event would have a reasonable likelihood of having a Material Adverse
Effect or (B) the release, spill or discharge, threatened or actual, of any
Hazardous Material in violation of applicable Environmental Law  where the
occurrence of such event would have a reasonable likelihood of having a
Material Adverse Effect or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials where the occurrence of such event would have a reasonable likelihood
of having a Material Adverse Effect.

 (f)    Become aware of, obtained knowledge of, or received notification of,
any breach or violation of any material covenant contained in any instrument or
agreement in respect of Indebtedness for money borrowed by a Borrower or
Guarantor.

5.      Attached hereto as Schedule III are the calculations used in
determining, as of the end of such fiscal month, whether Borrowers were in
compliance with the covenant set forth in Section 9.18 of the Loan Agreement
for such fiscal month and the calculations used in determining the Fixed Charge
Coverage Ratio for purposes of determining the Interest Rate as of the last day
of the immediately preceding fiscal quarter as provided for in the Loan
Agreement.

6.      Attached hereto as Schedule IV are the calculations used in determining
, as of the end of such fiscal month\quarter, the Exempted Debt Limit.

7.      As of the end of such fiscal month\quarter, the Exempted Debt
Availability is at least $________.

The foregoing certifications are made and delivered this day of
 ___________, _____.

Very truly yours,

THE PEP BOYS - MANNY, MOE & JACK

By:_________________________

Title:________________________

THE PEP  BOYS - MANNY, MOE &
 JACK OF CALIFORNIA
By:___________________________

Title:__________________________

PEP BOYS - MANNY, MOE & JACK OF
  DELAWARE, INC.

By:___________________________

Title:__________________________

[SIGNATURES CONTINUED ON NEXT PAGE]

 [SIGNATURES CONTINUED FROM PREVIOUS PAGE]

PEP BOYS - MANNY, MOE & JACK OF
  PUERTO RICO, INC.

By:___________________________

Title:__________________________PARTICIPATION AGREEMENT

Dated as of September 22, 2000

among

THE PEP BOYS - MANNY, MOE & JACK
THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA
PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC.

as the Lessee,

THE VARIOUS PARTIES HERETO FROM TIME TO TIME,
as the Guarantors

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as the Owner Trustee,
jointly and severally, under the 1995 Pep Boys Leased Property Trust and/or
1997 Pep Boys II Leased Property Trust (as applicable),

THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Holders,

THE VARIOUS BANKS AND OTHER LENDING INSTITUTIONS WHICH ARE PARTIES HERETO FROM
TIME TO TIME, as the Lenders,

and

FIRST UNION NATIONAL BANK,
as the Agent for the Lenders
and respecting the Security Documents,
as the Agent for the Secured Parties

and

FIRST UNION SECURITIES, INC.,
as the Arranger

 TABLE OF CONTENTS

Page

SECTION 1.  THE LOANS AND HOLDER ADVANCES.                               1
SECTION 2.  INTENTIONALLY RESERVED                                       2
SECTION 3.  SUMMARY OF TRANSACTIONS.                                     2
3.1.    Operative Agreements.                                            2
3.2.    Property Refinance.                                              2
3.3.    Intentionally Reserved.                                          2
3.4.    Intentionally Reserved.                                          2
SECTION 4.  THE CLOSINGS.                                                2
SECTION 5.  CLOSING CONDITIONS.                                          3
5.1.    General.                                                         3
5.2.    Procedures for Funding.                                          3
5.3.    Conditions Precedent for the Lessor, the Agent, the
        Lenders and the Holders Relating to the Advances on
        the Closing Date.                                                4
5.4.    [Intentionally Reserved].                                        7
5.5.    [Intentionally Reserved].                                        7
5.6.    [Intentionally Reserved].                                        7
5.7.    [Intentionally Reserved].                                        7
5.8.    Payments.                                                        8
SECTION 6.  REPRESENTATIONS AND WARRANTIES.                              8
6.1.    Representations and Warranties of the Borrower.                  8
6.2.    Representations and Warranties of Each Credit Party.            10
SECTION 6B.  GUARANTY                                                   13
6B.1.   Guaranty of Payment and Performance.                            13
6B.2.   Obligations Unconditional.                                      14
6B.3.   Modifications.                                                  15
6B.4.   Waiver of Rights.                                               15
6B.5.   Reinstatement.                                                  15
6B.6.   Remedies.                                                       16
6B.7.   Limitation of Guaranty.                                         16
SECTION 7. PAYMENT OF CERTAIN EXPENSES.                                 17
7.1.    Transaction Expenses.                                           17
7.2.    Brokers' Fees.                                                  17
7.3.    Certain Fees and Expenses.                                      17
7.4.    [Intentionally Reserved].                                       18
7.5.    Administrative and Up Front Fees.                               18
SECTION 8.  OTHER COVENANTS AND AGREEMENTS.                             18
8.1.    Cooperation with Lessee.                                        18
8.2.    Covenants of the Owner Trustee and the Holders.                 18
8.3.    Credit Party Covenants, Consent and Acknowledgment.             20
8.4.    Sharing of Certain Payments.                                    23
8.5.    Grant of Easements, etc.                                        23
8.6.    Appointment by the Agent, the Lenders, the Holders
        and the Owner Trustee.                                          23
8.7.    Collection and Allocation of Payments and Other Amounts.        24
8.8.    Release of Properties, etc.                                     27
8.9.    Lessor; Borrower; Owner Trustee; Lessee.                        28
8.10    Distribution of Proceeds from the Properties.                   29
SECTION 9.  CREDIT AGREEMENT AND TRUST AGREEMENT.                       29
9.1.    The Lessee's Credit Agreement Rights.                           29
9.2.    Lessee's Trust Agreement Rights.                                30
SECTION 10.  TRANSFER OF INTEREST.                                      30
10.1.   Restrictions on Transfer.                                       30
10.2.   Effect of Transfer.                                             31
SECTION 11.  INDEMNIFICATION.                                           31
11.1.   General Indemnity.                                              31
11.2.   General Tax Indemnity.                                          34
11.3.   Increased Costs, Illegality, etc.                               38
11.4.   Funding/Contribution Indemnity.                                 40
11.5.   EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE,
        STRICT LIABILITY, ETC.                                          41
SECTION 12.  MISCELLANEOUS.                                             41
12.1.   Survival of Agreements.                                         41
12.2.   Notices.                                                        42
12.3.   Counterparts.                                                   43
12.4.   Terminations, Amendments, Waivers, Etc.;
        Unanimous Vote Matters.                                         44
12.5.   Headings, etc.                                                  44
12.6.   Parties in Interest.                                            44
12.7.   GOVERNING LAW; SUBMISSION TO JURISDICTION;
        WAIVER OF JURY TRIAL; VENUE.                                    44
12.8.   Severability.                                                   45
12.9.   Liability Limited.                                              45
12.10.  Rights of the Credit Parties.                                   46
12.11.  Further Assurances.                                             47
12.12.  Calculations under Operative Agreements.                        47
12.13.  Confidentiality.                                                47
12.14.  Financial Reporting/Tax Characterization.                       48
12.15.  Set-off.                                                        49
12.16.  Approval of Exhibits.                                           49
12.17.  Filing of Security Documents.                                   49

EXHIBITS

A - Form of Requisition - Sections 4.2, 5.2, 5.3 and 5.4

B - Form of Outside Counsel Opinion for the Lessee - Section 5.3(j)

C - Form of Secretary's Certificate - Section 5.3(z)

D- Form of Officer's Certificate - Section 5.3(aa)

E - Form of Secretary's Certificate - Section 5.3(cc)

F - Form of Officer's Certificate - Section 5.3(dd)

G - Form of Outside Counsel Opinion for the Owner Trustee - Section 5.3(ee)

H - Form of Outside Counsel Opinion for the Lessee - Section 5.3(ff)

I - [Intentionally Reserved]

J - [Intentionally Reserved]

K -Description of Material Litigation - Section 6.2(d)

L - State of Incorporation/Formation and Principal Place of Business of Each
Guarantor - Section 6.3(i)

M - Property Cost Certificate

N - Intercreditor Agreement

Appendix A - Rules of Usage and Definitions

 PARTICIPATION AGREEMENT

        THIS PARTICIPATION AGREEMENT dated as of September 22, 2000 (as
amended, modified, extended, supplemented, restated and/or replaced from time
to time, this "Agreement") is by and among THE PEP BOYS - MANNY, MOE & JACK a
Pennsylvania corporation, THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA, a
California corporation and PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a
Delaware corporation (jointly and severally, the "Lessee"); THE PEP BOYS -
MANNY, MOE & JACK and the various parties hereto from time to time as
guarantors (subject to the definition of Guarantors in Appendix A hereto,
individually, a "Guarantor" and collectively, the "Guarantors"); STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not individually
(in its individual capacity, the "Trust Company"), except as expressly stated
herein, but solely as the Owner Trustee, jointly and severally, under the 1995
Pep Boys Leased Property Trust and the 1997 Pep Boys II Leased Property Trust
(as applicable) (the "Owner Trustee", the "Borrower" or the "Lessor"); the
various banks and other lending institutions which are parties hereto from
time to time as holders of certificates issued with respect to the 1995 Pep
Boys Leased Property Trust and the 1997 Pep Boys II Leased Property Trust (as
applicable) (subject to the definition of Holders in Appendix A hereto,
individually, a "Holder" and collectively, the "Holders"); the various banks
and other lending institutions which are parties hereto from time to time as
lenders (subject to the definition of Lenders in Appendix A hereto,
individually, a "Lender" and collectively, the "Lenders"); and  FIRST UNION
NATIONAL BANK, a national banking association, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Secured Parties (in
such capacity, the "Agent").  Capitalized terms used but not otherwise defined
in this Agreement shall have the meanings set forth in Appendix A hereto.

        In consideration of the mutual agreements herein contained and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:

SECTION 1.  THE LOANS AND HOLDER ADVANCES.

        Subject to the terms and conditions of this Agreement and the other
Operative Agreements and in reliance on the representations and warranties of
each of the parties hereto contained herein or made pursuant hereto, the
Lenders have agreed to make Loans to the Lessor and the Holders have agreed to
make Holder Advances to the Lessor on the Closing Date pursuant to the terms of
this Agreement, the Credit Agreement, the Trust Agreement and the other
Operative Agreements in an aggregate principal amount of up to $143,000,000.00
in order for the Lessor to refinance the Existing Debt and pay certain
Transaction Expenses in connection therewith and in consideration of the
receipt of proceeds of the Loans and Holder Advances, the Lessor will issue the
Notes and the Holder Certificates.

SECTION 2.  INTENTIONALLY RESERVED

SECTION 3.  SUMMARY OF TRANSACTIONS.

        3.1.    Operative Agreements.

        On the date hereof, each of the respective parties hereto and thereto
shall execute and deliver this Agreement, the Lease, the Credit Agreement, the
Notes, the Trust Agreement, the Certificates, the Security Agreement, each
applicable Mortgage Instrument and such other documents, instruments,
certificates and opinions of counsel as agreed to by the parties hereto.  The
Operative Agreements are being executed to amend, restate and replace in their
entirety all of the documentation regarding the Existing Debt and to refinance
such Existing Debt.

        3.2.    Property Refinance.

        On the Closing Date and subject to the terms and conditions of this
Agreement (a) the Holders will each make a Holder Advance in accordance with
Sections 1 and 5 of this Agreement and the terms and provisions of the Trust
Agreement, (b) the Lenders will each make Loans in accordance with Sections 1
and 5 of this Agreement and the terms and provisions of the Credit Agreement,
(c) the Lessor will grant the Agent a lien on each Property by execution of
the required Security Documents, (d) the Lessee will grant the Owner Trustee a
lien on certain of its assets, which lien will be assigned to Agent as
collateral, (e) the Agent, the Lessee and the Lessor shall execute and deliver
a Lease Supplement relating to each Property and (f) the Term shall commence
with respect to each Property.

        3.3.    Intentionally Reserved.

        3.4.    Intentionally Reserved.

SECTION 4.  THE CLOSINGS.

        All documents and instruments required to be delivered on the Closing
Date shall be delivered at the offices of Moore & Van Allen, PLLC, Charlotte,
North Carolina, or at such other location as may be determined by the Lessor,
the Agent and the Lessee.

        Lessee shall deliver to the Agent an irrevocable requisition (a
"Requisition") in accordance with Section 5.2, in the form attached hereto as
EXHIBIT A or in such other form as is satisfactory to the Agent, in its
reasonable discretion, in connection with the Loans and Holder Advances to be
extended on the Closing Date.

SECTION 5.  CLOSING CONDITIONS.

        5.1.    General.

                To the extent funds have been advanced to the Lessor as Loans
by the Lenders and to the Lessor as Holder Advances by the Holders, the Lessor
will use such funds in accordance with the terms and conditions of this
Agreement and the other Operative Agreements (i) at the direction of Lessee to
refinance the Existing Debt in accordance with the terms of this Agreement and
the other Operative Agreements, and (ii) to pay Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Section 7.1.

        5.2.    Procedures for Funding.

                (a)     Lessee shall deliver to the Agent, prior to 12:00 Noon
Charlotte, North Carolina time at least three (3) Business Days prior to the
Closing Date, a Requisition as described in Section 4 hereof and Agent shall
promptly provide copies thereof to Lenders.

                (b)     Subject to the satisfaction of the conditions precedent
set forth in Section 5.3 on the Closing Date (i) the Lenders shall make Loans
based on their respective Lender Commitments to the Lessor in an aggregate
amount equal to ninety-seven percent (97%) of the Requested Funds specified in
the Requisition (ratably between the Tranche A Lenders and the Tranche B
Lenders with the Tranche A Lenders funding sixty-nine and ninety-three
hundredths percent (69.93%) of the Requested Funds and the Tranche B Lenders
funding twenty-seven and seven hundredths percent (27.07%) of the Requested
Funds), up to an aggregate principal amount equal to the aggregate of the
Lender Commitments; (ii) the Holders shall make Holder Advances based on their
respective Holder Commitments in an aggregate amount equal to three percent
(3%) of the amounts requested in the Requisition, up to the aggregate advanced
amount equal to the aggregate of the Holder Commitments; and (iii) the total
amount of such Loans and Holder Advances made on the Closing Date shall be used
by the Lessor to refinance the Existing Debt and pay the Transaction Expenses
related thereto.

                (c)     [Intentionally Reserved]

                (d)     All Operative Agreements which are to be delivered to
the Lessor, the Agent, the Lenders or the Holders shall be delivered to the
Agent, on behalf of the Lessor, the Agent, the Lenders or the Holders, and such
items (except for Notes and Certificates, with respect to which in each case
there shall be only one original) shall be delivered with originals sufficient
for the Lessor, the Agent, each Lender and each Holder.  All other items which
are to be delivered to the Lessor, the Agent, the Lenders or the Holders shall
be delivered to the Agent, on behalf of the Lessor, the Agent, the Lenders or
the Holders, and such other items shall be held by the Agent.  To the extent
any such other items are requested in writing from time to time by the Lessor,
any Lender or any Holder, the Agent shall provide a copy of such item to the
party requesting it.

        5.3.    Conditions Precedent for the Lessor, the Agent, the Lenders
and the Holders Relating to the Advances on the Closing Date.

        The obligations on the Closing Date, of the Lessor, the Agent, the
Lenders and the Holders to enter into the transactions contemplated by this
Agreement, including without limitation the obligation to execute and deliver
the applicable Operative Agreements to which each is a party are subject to the
satisfaction or waiver of the following conditions precedent on or prior to the
Closing Date, as the case may be:

                (a)     the correctness of the representations and warranties
of the parties to this Agreement contained herein, in each of the other
Operative Agreements and each certificate delivered pursuant to any Operative
Agreement (including without limitation the Incorporated Representations and
Warranties);

                (b)     the performance by the parties to this Agreement of
their respective agreements contained herein and in the other Operative
Agreements to be performed by them on or prior to the Closing Date;

                (c)     the Agent shall have received a fully executed
counterpart copy of the Requisition, appropriately completed;

                (d)     title to each such Property shall conform to the
representations and warranties set forth in Section 6.2(l) hereof;

                (e)     the relevant Lessee shall have delivered to the Agent
a good standing certificate for Lessee in the state where each Property is
located.

                (f)     there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements and no
Default or Event of Default under any of the Operative Agreements will have
occurred after giving effect to the Advance requested by the Requisition;

                (g)     Lessee shall have delivered to the Agent title
insurance commitments to issue policies respecting each such Property, with
such endorsements as the Agent deems reasonably necessary, in favor of the
Lessor and the Agent from a title insurance company reasonably acceptable to
the Agent, but only with such title exceptions thereto as are acceptable to
the Agent;

                (h)     Lessee shall have delivered to the Agent an
environmental insurance policy providing coverage for each such Property, in
form and substance reasonably acceptable to the Agent;

                (i)     Lessee shall have delivered to the Agent a survey (with
a flood hazard certification) and a separate flood hazard certificate
respecting each Property prepared by (i) an independent recognized professional
acceptable to the Agent and (ii) in a manner and including such information as
is required by the Agent;

        (j)     Lessee shall have caused to be delivered to the Agent a legal
opinion in the form attached hereto as EXHIBIT B or in such other form as is
acceptable to the Agent with respect to local law real property issues
respecting the state in which each such Property is located addressed to the
Lessor, the Agent, the Lenders and the Holders, from counsel located in the
state where each such Property is located, prepared by counsel acceptable to
the Agent and a separate flood hazard certificate respecting the Property
prepared by an independent recognized professional acceptable to the Agent;

                (k)     Each of the parties hereto shall agree to the Loan
Property Cost, the Holder Property Cost and the Property Cost for each Property
and such amounts for each Property shall be contained on Exhibit M attached
hereto.

                (l)     Lessee shall have delivered to the Agent invoices for,
or other reasonably satisfactory evidence of, the various Transaction Expenses
and other fees, expenses and disbursements referenced in Section 7.1 of this
Agreement, as appropriate;

                (m)     Lessee shall have caused to be delivered to the Agent
Mortgage Instruments (in such form as is acceptable to the Agent, with
revisions as necessary to conform to applicable state law), Lessor Financing
Statements and Lender Financing Statements respecting each such Property, all
fully executed and in recordable form;

                (n)     Lessee shall have delivered to the Agent with respect
to each such Property a Lease Supplement and a memorandum (or short form lease)
regarding the Lease and such Lease Supplement (such memorandum or short form
lease to be in the form attached to the Lease as EXHIBIT B or in such other
form as is acceptable to the Agent, with modifications as necessary to conform
to applicable state law, and in form suitable for recording);

                (o)     Lessee shall have caused all of the conditions
precedent to the initial loans under the Lessee Credit Agreement to be
satisfied or waived in writing;

                (p)     [Intentionally Reserved];

                (q)     Lessee shall have provided evidence to the Agent proof
of insurance with respect to the Property as provided in the Lease;

                (r)     Lessee shall have caused an Appraisal regarding the
Property to be provided to the Agent from an appraiser selected by the Agent
and the other Financing Parties and the aggregate amount of such Appraisal
shall be acceptable to the Agent;

                (s)     Lessee shall cause (i) Uniform Commercial Code lien
searches, tax lien searches and judgment lien searches regarding the Lessee to
be conducted (and copies thereof to be delivered to the Agent) in such
jurisdictions as determined by the Agent by a nationally recognized search
company acceptable to the Agent and (ii) the liens referenced in such lien
searches which are objectionable to the Agent to be either removed or otherwise
handled in a manner reasonably satisfactory to the Agent;

                (t)     all taxes, fees and other charges in connection with
the execution, delivery, recording, filing and registration of the Operative
Agreements and/or documents related thereto shall have been paid or provisions
for such payment shall have been made to the reasonable satisfaction of the
Agent;

                (u)     [Intentionally Reserved];

                (v)     since the date of the most recent audited financial
statements (as delivered pursuant to the requirements of the Lessee Credit
Agreement) of the Credit Parties (on a consolidated basis), there shall not
have occurred any event, condition or state of facts which shall have or could
reasonably be expected to have a Material Adverse Effect, other than as
specifically contemplated by the Operative Agreements;

                (w)     the Agent shall have received an Officer's Certificate,
dated as of the Closing Date, of the Lessee, including without limitation Pep
Boys Parent, Pep Boys - California and Pep Boys - Delaware in the form attached
hereto as EXHIBIT C or in such other form as is acceptable to the Agent stating
that (i) each and every representation and warranty of each Credit Party
contained in the Operative Agreements to which it is a party is true and
correct on and as of the Closing Date; (ii) no Default or Event of Default has
occurred and is continuing under any Operative Agreement; (iii) each Operative
Agreement to which any Credit Party is a party is in full force and effect with
respect to it; and (iv) each Credit Party has duly performed and complied in
all material respects with all covenants, agreements and conditions contained
herein or in any Operative Agreement required to be performed or complied with
by it on or prior to the Closing Date;

                (x)     the Agent shall have received (i) a certificate of the
Secretary or an Assistant Secretary of each Credit Party, dated as of the
Closing Date, in the form attached hereto as EXHIBIT D or in such other form as
is acceptable to the Agent attaching and certifying as to (1) the resolutions
of the Board of Directors of such Credit Party duly authorizing the execution,
delivery and performance by such Credit Party of each of the Operative
Agreements to which it is or will be a party, (2) the articles of incorporation
of such Credit Party certified as of a recent date by the Secretary of State of
its state of incorporation and its by-laws and (3) the incumbency and signature
of persons authorized to execute and deliver on behalf of such Credit Party the
Operative Agreements to which it is or will be a party and (ii) a good standing
certificate (or local equivalent) from the respective states where such Credit
Party is incorporated and where the principal place of business of such Credit
Party is located as to its good standing in each such state.  To the extent any
Credit Party is a partnership, a limited liability company or is otherwise
organized, such Person shall deliver to the Agent (in form and substance
satisfactory to the Agent) as of the Closing Date (A) a certificate regarding
such Person and any corporate general partners covering the matters described
in EXHIBIT D and (B) a good standing certificate, a certificate of limited
partnership or a local equivalent of either the foregoing as applicable;

                (y)     [Intentionally Reserved];

                (z)     the Agent shall have received an Officer's Certificate
of the Lessor dated as of the Closing Date in the form attached hereto as
EXHIBIT E or in such other form as is reasonably acceptable to the Agent,
stating that (i) each and every representation and warranty of the Lessor
contained in the Operative Agreements to which it is a party is true and
correct on and as of the Closing Date, (ii) each Operative Agreement to which
the Lessor is a party is in full force and effect with respect to it and (iii)
the Lessor has duly performed and complied in all material respects with all
covenants, agreements and conditions contained herein or in any Operative
Agreement required to be performed or complied with by it on or prior to the
Closing Date;

                (aa)    the Agent shall have received (i) a certificate of the
Secretary, an Assistant Secretary, Trust Officer or Vice President of the Trust
Company in the form attached hereto as EXHIBIT F or in such other form as is
acceptable to the Agent, attaching and certifying as to (A) the signing
resolutions duly authorizing the execution, delivery and performance by the
Lessor of each of the Operative Agreements to which it is or will be a party,
(B) its articles of association or other equivalent charter documents and its
by-laws, as the case may be, certified as of a recent date by an appropriate
officer of the Trust Company and (C) the incumbency and signature of persons
authorized to execute and deliver on its behalf the Operative Agreements to
which it is a party and (ii) a good standing certificate from the Office of
the Comptroller of the Currency;

                (bb)    counsel for the Lessor acceptable to the Agent shall
have issued to the Lessee, the Holders, the Lenders and the Agent its opinion
in the form attached hereto as EXHIBIT G or in such other form as is reasonably
acceptable to the Agent; and

                (cc)    Lessee shall have caused to be delivered to the Agent
a legal opinion in the form attached hereto as EXHIBIT H or in such other form
as is reasonably acceptable to the Agent, addressed to the Lessor, the Agent,
the Lenders and the Holders, from counsel acceptable to the Agent.

        5.4.    [Intentionally Reserved].

        5.5.    [Intentionally Reserved].

        5.6.    [Intentionally Reserved].

        5.7.    [Intentionally Reserved].

        5.8.    Payments.

        All payments of principal, interest, Holder Advances, Holder Yield and
other amounts to be paid by Lessee under this Agreement or the Lease
(including, without limitation, Rent, damages, payments in respect of the
Termination Value and other amounts) or any other Operative Agreements
(excluding Excepted Payments which shall be paid directly to the party to whom
such payments are owed) shall be paid by or on behalf of Lessee to the Agent at
the office designated by the Agent from time to time in Dollars and in
immediately available funds, without setoff, deduction, or counterclaim.
Subject to the definition of "Interest Period" in Appendix A attached hereto,
whenever any payment under this Agreement or any other Operative Agreements
shall be stated to be due on a day that is not a Business Day, such payment may
be made on the next succeeding Business Day, and such extension of time in such
case shall be included in the computation of interest, Holder Yield and fees
payable pursuant to the Operative Agreements, as applicable and as the case may
be.

SECTION 6.  REPRESENTATIONS AND WARRANTIES.

        6.1.    Representations and Warranties of the Borrower.

        The Trust Company in its individual capacity and as the Borrower, as
indicated, represents and warrants to each of the other parties hereto as
follows, provided, that the representations in the following paragraphs (c)
(second sentence), (g), (h), (j) and (k) are made solely in its capacity as
the Borrower:

                (a)     It is a national banking association and is duly
organized and validly existing and in good standing under the laws of the
United States of America and has the power and authority to enter into and
perform its obligations under the Trust Agreement and (assuming due
authorization, execution and delivery of the Trust Agreement by the Holders)
has the corporate and trust power and authority to act as the Owner Trustee
and to enter into and perform the obligations under each of the other Operative
Agreements to which the Trust Company or the Owner Trustee, as the case may be,
is or will be a party and each other agreement, instrument and document to be
executed and delivered by it on or before the Closing Date in connection with
or as contemplated by each such Operative Agreement to which the Trust Company
or the Owner Trustee, as the case may be, is or will be a party;

                (b)     The execution, delivery and performance of each
Operative Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the Trust
Agreement by the Holders) as the Owner Trustee, as the case may be, has been
duly authorized by all necessary action on its part and neither the execution
and delivery thereof, nor the consummation of the transactions contemplated
thereby, nor compliance by it with any of the terms and provisions thereof (i)
does or will require any approval or consent of any trustee or holders of any
of its indebtedness or obligations, (ii) does or will contravene any federal or
Connecticut Legal Requirement relating to its banking or trust powers, (iii)
does or will contravene or result in any breach of or constitute any default
under, or result in the creation of any Lien upon any of its property under,
(A) its charter or by-laws, or (B) any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement or
other agreement or instrument to which it is a party or by which it or its
properties may be bound or affected, which contravention, breach, default or
Lien under clause (B) would materially and adversely affect its ability, in its
individual capacity or as the Owner Trustee, to perform its obligations under
the Operative Agreements to which it is a party or (iv) does or will require
any federal or Connecticut Governmental Action by any federal or Connecticut
Governmental Authority regulating its banking or trust powers;

                (c)     The Trust Agreement and, assuming the Trust Agreement
is the legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case may be,
is or will be a party have been, or on or before the Closing Date will be, duly
executed and delivered by the Trust Company or the Owner Trustee, as the case
may be, and the Trust Agreement and each such other Operative Agreement to
which the Trust Company is a party constitutes, or upon execution and delivery
will constitute, a legal, valid and binding obligation enforceable against the
Trust Company in accordance with the terms thereof.  The Trust Agreement and
each other Operative Agreement to which the Owner Trustee is a party
constitutes, or upon execution and delivery will constitute, a legal, valid and
binding obligation enforceable against the Owner Trustee, in accordance with
the terms thereof;

                (d)     There is no action or proceeding pending or, to its
knowledge, threatened to which it is or will be a party, either in its
individual capacity or as the Owner Trustee, before any Governmental Authority
that, if adversely determined, would materially and adversely affect its
ability, in its individual capacity or as the Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or would
question the validity or enforceability of any of the Operative Agreements to
which it is or will become a party;

                (e)     It, either in its individual capacity or as the Owner
Trustee, has not assigned or transferred any of its right, title or interest in
or under the Lease, or its interest in any Property or any portion thereof,
except in accordance with the Operative Agreements;

                (f)     No Default or Event of Default under the Operative
Agreements attributable to it has occurred and is continuing;

                (g)     Except as otherwise contemplated in the Operative
Agreements, the proceeds of the Loans and Holder Advances shall not be applied
by the Owner Trustee, either in its individual capacity or as the Owner
Trustee, for any purpose other than to refinance the Existing Debt and to pay
Transaction Expenses and the fees, expenses and other disbursements referenced
in Section 7 of this Agreement;

                (h)     Neither the Owner Trustee nor any Person authorized by
the Owner Trustee to act on its behalf has offered or sold any interest in the
Trust Estate or the Notes, or in any similar security relating to a Property,
or in any security the offering of which for the purposes of the Securities Act
would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the same
from, any Person other than, in the case of the Notes, the Agent, and neither
the Owner Trustee nor any Person authorized by the Owner Trustee to act on its
behalf will take any action which would subject, as a direct result of such
action alone, the issuance or sale of any interest in the Trust Estate or the
Notes to the provisions of Section 5 of the Securities Act or require the
qualification of any Operative Agreement under the Trust Indenture Act of 1939,
as amended;

                (i)     The Owner Trustee's principal place of business, chief
executive office and office where the documents, accounts and records relating
to the transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 225 Asylum Street, Goodwin Square, Hartford,
CT  06103;

                (j)     The Owner Trustee is not an "investment company" or a
company controlled by an "investment company" within the meaning of the
Investment Company Act;

                (k)     Each Property is free and clear of all Lessor Liens
attributable to the Owner Trustee, either in its individual capacity or as the
Owner Trustee; and

                (l)     The Owner Trustee, in its trust capacity, is not a
party to any documents, instruments or agreements other than the Operative
Agreements executed by the Owner Trustee, in its trust capacity.

        6.2.    Representations and Warranties of Each Credit Party.

        Each Credit Party represents and warrants to each of the other parties
hereto that as of the date hereof and with respect to specific paragraphs, as
of the dates referenced therein:

                (a)     The Incorporated Representations and Warranties are
true and correct (unless such relate solely to an earlier point in time) and
the Lessee has delivered to the Agent the financial statements and other
reports referred to in Section 9.6 of the Lessee Credit Agreement;

        (b)     (i) The Lessee is a corporation duly organized and validly
existing and in good standing under the laws of the State set forth after its
name: The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation, The Pep
Boys Manny Moe & Jack of California, a California corporation and Pep Boys -
Manny, Moe & Jack of Delaware, Inc., a Delaware corporation and each Guarantor,
except The Pep Boys - Manny, Moe & Jack, is a corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware
and each Credit Party has the power and authority to enter into and perform
its obligations under the Operative Agreements to which it is a party and has
the corporate power and authority to act as the Lessee or the Guarantor, as
the case may be, and to enter into and perform the obligations under each of
the other Operative Agreements to which it is a party or will be a party and
each other agreement, instrument and document to be executed and delivered by
it on or before such date in connection with or as contemplated by each such
Operative Agreement to which it is a party or will be a party;

        (ii)    The execution and delivery by each Credit Party of this
Agreement and the other applicable Operative Agreements as of the Closing Date
and the performance by each Credit Party of its respective obligations under
this Agreement and the other applicable Operative Agreements are within the
corporate, partnership or limited liability company (as the case may be) powers
of each Credit Party, have been duly authorized by all necessary corporate,
partnership or limited liability company (as the case may be) action on the
part of each Credit Party (including without limitation any necessary
shareholder action), have been duly executed and delivered, have received all
necessary governmental approval, and do not and will not (A) violate any Legal
Requirement which is binding on any Credit Party or any of its Subsidiaries,
(B) contravene or conflict with, or result in a breach of, any provision of
the Articles of Incorporation, By-Laws or other organizational documents of
any Credit Party or any of its Subsidiaries or of any agreement, indenture,
instrument or other document which is binding on any Credit Party or any of its
Subsidiaries or (C) result in, or require, the creation or imposition of any
Lien (other than pursuant to the terms of the Operative Agreements) on any
asset of any Credit Party or any of its Subsidiaries;

                (c)     This Agreement and the other applicable Operative
Agreements, executed prior to and as of such date by any Credit Party,
constitute the legal, valid and binding obligation of such Credit Party, as
applicable, enforceable against such Credit Party, as applicable, in accordance
with their terms.  Each Credit Party has executed the various Operative
Agreements required to be executed by such Credit Party as of such date;

                (d)     There are no material actions, suits or proceedings
pending or, to our knowledge, threatened against any Credit Party in any court
or before any Governmental Authority (nor shall any order, judgment or decree
have been issued or proposed to be issued by any Governmental Authority to set
aside, restrain, enjoin or prevent the full performance of any Operative
Agreement or any transaction contemplated thereby) that have or could
reasonably be expected to have a Material Adverse Effect; provided, for
purposes of disclosure, the Credit Parties have described the litigation set
forth on EXHIBIT K;

                (e)     No Governmental Action by any Governmental Authority or
other authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person pursuant to any Legal Requirement,
contract, indenture, instrument or agreement or for any other reason is
required to authorize or is required in connection with (i) the execution,
delivery or performance of any Operative Agreement, (ii) the legality,
validity, binding effect or enforceability of any Operative Agreement, (iii)
the acquisition, ownership, completion, occupancy, operation, leasing or
subleasing of any Property or (iv) any Advance, in each case, except those
which have been obtained and are in full force and effect;

                (f)     Upon the execution and delivery of each Lease
Supplement to the Lease, (i) the Lessee will have unconditionally accepted the
Property subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in such Property, subject only to the Permitted Liens, and
(ii) no offset will exist with respect to any Rent or other sums payable under
the Lease;

                (g)     Except as otherwise contemplated by the Operative
Agreements, Lessee shall not use the proceeds of any Holder Advance or Loan
for any purpose other than to the refinance of the Existing Debt and to pay
Transaction Expenses and the fees, expenses and other disbursements referenced
in Section 7 of this Agreement;

                (h)     All information heretofore or contemporaneously
herewith furnished by each Credit Party or its Subsidiaries to the Agent, the
Owner Trustee, any Lender or any Holder for purposes of or in connection with
this Agreement and the transactions contemplated hereby is, and all information
hereafter furnished by or on behalf of each Credit Party or its Subsidiaries to
the Agent, the Owner Trustee, any Lender or any Holder pursuant hereto or in
connection herewith will be, true and accurate in every material respect on the
date as of which such information is dated or certified, and such information,
taken as a whole, does not and will not omit to state any material fact
necessary to make such information, taken as a whole, not misleading;

                (i)     The principal place of business, chief executive office
and office of the Lessee where the documents, accounts and records relating to
the transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 3111 W. Allegheny Ave., Philadelphia, PA
19132 and the states of formation and the chief executive offices of each other
Credit Party are located at the places set forth in EXHIBIT L;

                (j)     The representations and warranties of each Credit
Party set forth in any of the Operative Agreements are true and correct in all
material respects on and as of each such date as if made on and as of such
date.  Each Credit Party is in all material respects in compliance with its
obligations under the Operative Agreements and there exists no Default or
Event of Default under any of the Operative Agreements which is continuing
and which has not been cured within any cure period expressly granted under
the terms of the applicable Operative Agreement or otherwise waived in
accordance with the applicable Operative Agreement.  No Default or Event of
Default will occur under any of the Operative Agreements as a result of, or
after giving effect to, the Advance requested by the Requisition on the date
of the Advance;

                (k)     [Intentionally Reserved];

                (l)     The Lessor has good and marketable fee simple title
to subject only to (i) such Liens referenced in the title exceptions on the
title commitment (issued in connection with Section 5.3(g)) and reasonably
acceptable to the Agent on the Closing Date and (ii) subject to Section 5.7,
Permitted Liens after the Closing Date;

                (m)     No portion of any Property is located in an area
identified as a special flood hazard area by the Federal Emergency Management
Agency or other applicable agency, or if any such Property is located in an
area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, then flood insurance has been
obtained for such Property in accordance with Section 14.2(b) of the Lease and
in accordance with the National Flood Insurance Act of 1968, as amended;

                (n)     Each Property complies with all Insurance Requirements
and all standards of Lessee with respect to similar properties owned by Lessee;

                (o)     Each Property complies with all Legal Requirements in
all material respects as of such date (including without limitation all zoning
and land use laws and Environmental Laws), except to the extent that failure
to comply therewith, individually or in the aggregate, shall not have and could
not reasonably be expected to have a Material Adverse Effect; and

                (p)     All utility services and facilities necessary for the
operation of the Improvements and the operation of the Equipment regarding each
Property (including without limitation gas, electrical, water and sewage
services and facilities) are available at the applicable Land.

SECTION 6B.  GUARANTY

        6B.1.   Guaranty of Payment and Performance.

        Subject to Section 6B.7, each Guarantor hereby, jointly and severally,
unconditionally guarantees to each Financing Party and the Trust Company the
prompt payment and performance of the Company Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) or when such is otherwise to be performed; provided, notwithstanding
the foregoing, the obligations of the Guarantors under this Section 6B shall
not constitute a direct guaranty of the indebtedness of the Lessor evidenced
by the Notes but rather a guaranty of the Company Obligations arising under the
Lease.  This Section 6B is a guaranty of payment and performance and not of
collection and is a continuing guaranty and shall apply to all Company
Obligations whenever arising.  All rights granted to the Financing Parties
and the Trust Company under this Section 6B shall be subject to the provisions
of Section 8.2(h) and 8.6.

        6B.2.   Obligations Unconditional.

        Each Guarantor agrees that the obligations of the Guarantors
hereunder are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of any of the Operative
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release or exchange of any other guarantee of or security for
any of the Company Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety,
guarantor or co-obligor, it being the intent of this Section 6B.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances.  Each Guarantor agrees that this Section 6B
may be enforced by the Financing Parties without the necessity at any time of
resorting to or exhausting any other security or collateral and without the
necessity at any time of having recourse to the Notes, the Certificates or any
other of the Operative Agreements or any collateral, if any, hereafter securing
the Company Obligations or otherwise and each Guarantor hereby waives the right
to require the Financing Parties to proceed against the Lessee or any other
Person (including without limitation a co-guarantor) or to require the
Financing Parties to pursue any other remedy or enforce any other right.  Each
Guarantor further agrees that it hereby waives any and all right of
subrogation, indemnity, reimbursement or contribution against the Lessee or any
other Guarantor of the Company Obligations for amounts paid under this Section
6B until such time as the Loans, Holder Advances, accrued but unpaid interest,
accrued but unpaid Holder Yield and all other amounts owing under the Operative
Agreements have been paid in full.  Without limiting the generality of the
waiver provisions of this Section 6B, each Guarantor hereby waives any rights
to require the Financing Parties to proceed against the Lessee or any
co-guarantor or to require Lessor to pursue any other remedy or enforce any
other right, including without limitation, any and all rights under N.C. Gen.
Stat.  26-7 through 26-9.   Each Guarantor further agrees that nothing
contained herein shall prevent the Financing Parties from suing on any
Operative Agreement or foreclosing any security interest in or Lien on any
collateral, if any, securing the Company Obligations or from exercising any
other rights available to it under any Operative Agreement, or any other
instrument of security, if any, and the exercise of any of the aforesaid rights
and the completion of any foreclosure proceedings shall not constitute a
discharge of any Guarantor's obligations hereunder; it being the purpose and
intent of each Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances; provided that
any amounts due under this Section 6B which are paid to or for the benefit of
any Financing Party shall reduce the Company Obligations by a corresponding
amount (unless required to be rescinded at a later date).  Neither any
Guarantor's obligations under this Section 6B nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Lessee or by reason of the bankruptcy or insolvency of
the Lessee.  Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Company Obligations and notice of or proof
of reliance by any Financing Party upon this Section 6B or acceptance of this
Section 6B.  The Company Obligations shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon this Section 6B.  All dealings between the Lessee and any of the
Guarantors, on the one hand, and the Financing Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Section 6B.

        6B.3.   Modifications.

        Each Guarantor agrees that (a) all or any part of the security now or
hereafter held for the Company Obligations, if any, may be exchanged,
compromised or surrendered from time to time; (b) no Financing Party shall have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Company
Obligations or the properties subject thereto; (c) the time or place of payment
of the Company Obligations may be changed or extended, in whole or in part, to
a time certain or otherwise, and may be renewed or accelerated, in whole or in
part; (d) the Lessee and any other party liable for payment under the Operative
Agreements may be granted indulgences generally; (e) any of the provisions of
the Notes, the Certificates or any of the other Operative Agreements may be
modified, amended or waived; (f) any party (including any co-guarantor) liable
for the payment thereof may be granted indulgences or be released; and (g) any
deposit balance for the credit of the Lessee or any other party liable for the
payment of the Company Obligations or liable upon any security therefor may be
released, in whole or in part, at, before or after the stated, extended or
accelerated maturity of the Company Obligations, all without notice to or
further assent by such Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.

        6B.4.   Waiver of Rights.

        Each Guarantor expressly waives to the fullest extent permitted by
applicable law:  (a) notice of acceptance of this Section 6B by any Financing
Party and of all extensions of credit or other Advances to the Lessee by the
Lenders pursuant to the terms of the Operative Agreements; (b) presentment and
demand for payment or performance of any of the Company Obligations; (c)
protest and notice of dishonor or of default with respect to the Company
Obligations or with respect to any security therefor; (d) notice of any
Financing Party obtaining, amending, substituting for, releasing, waiving or
modifying any security interest, lien or encumbrance, if any, hereafter
securing the Company Obligations, or any Financing Party's subordinating,
compromising, discharging or releasing such security interests, liens or
encumbrances, if any; and (e) all other notices to which such Guarantor might
otherwise be entitled.  Notwithstanding anything to the contrary herein, each
Guarantor's payments hereunder shall be due five (5) Business Days after
written demand by the Agent for such payment (unless the Company Obligations
are automatically accelerated pursuant to the applicable provisions of the
Operative Agreements in which case the Guarantors' payments shall be
automatically due).

        6B.5.   Reinstatement.

        The obligations of the Guarantors under this Section 6B shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Company Obligations is
rescinded or must be otherwise restored by any holder of any of the Company
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
each Financing Party on demand for all reasonable costs and expenses
(including, without limitation, reasonable fees of counsel) incurred by any
Financing Party in connection with such rescission or restoration, including
without limitation any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.

        6B.6.   Remedies.

        The Guarantors agree that, as between the Guarantors, on the one
hand, and each Financing Party, on the other hand, the Company Obligations
may be declared to be forthwith due and payable as provided in the applicable
provisions of the Operative Agreements (and shall be deemed to have become
automatically due and payable in the circumstances provided therein)
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Company Obligations from becoming
automatically due and payable) as against any other Person and that, in the
event of such declaration (or such Company Obligations being deemed to have
become automatically due and payable), such Company Obligations (whether or not
due and payable by any other Person) shall forthwith become due and payable by
the Guarantors in accordance with the applicable provisions of the Operative
Agreements.

        6B.7.   Limitation of Guaranty.

        Notwithstanding any provision to the contrary contained herein or
in any of the other Operative Agreements, to the extent the obligations of any
Guarantor shall be adjudicated to be invalid or unenforceable for any reason
(including without limitation because of any applicable state or federal law
relating to fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including without limitation
the Bankruptcy Code).

        Subject to Section 6B.5, upon the satisfaction of the Company
Obligations in full, regardless of the source of payment, the Guarantors'
obligations hereunder shall be deemed satisfied, discharged and terminated
other than indemnifications set forth herein that expressly survive.

        6B.8.   Payment of Amounts to the Agent.

        Each Financing Party hereby instructs each Guarantor, and each
Guarantor hereby acknowledges and agrees, that until such time as the Loans and
the Holder Advances are paid in full and the Liens evidenced by the Security
Agreement and the Mortgage Instruments have been released, any and all Rent
(excluding Excepted Payments which shall be payable to each Holder or other
Person as appropriate) and any and all other amounts of any kind or type under
any of the Operative Agreements due and owing or payable to any Person shall
instead be paid directly to the Agent (excluding Excepted Payments which shall
be payable to each Holder or other Person as appropriate) or as the Agent may
direct from time to time for allocation and distribution in accordance with the
procedures set forth in Section 8.7 hereof.

SECTION 7. PAYMENT OF CERTAIN EXPENSES.

        7.1.    Transaction Expenses.

                The Lessor agrees on the Closing Date, to pay, or cause to be
paid, all Transaction Expenses arising from the transactions consummated on
the Closing Date, including without limitation all reasonable fees, expenses
and disbursements of the various legal counsels for the Lessor and the Agent
in connection with the transactions contemplated by the Operative Agreements,
the initial fees and expenses of the Owner Trustee due and payable on the
Closing Date, all fees, taxes and expenses for the recording, registration
and filing of documents and all other reasonable fees, expenses and
disbursements incurred in connection with the Closing Date; provided,
however, the Lessor shall pay such amounts described in this Section 7.1
only from the proceeds of Loans and Holder Advances received by the Owner
Trustee.  The Lessee agrees to timely pay all amounts referenced to in this
Section 7.1 to the extent not paid by the Owner Trustee.

        7.2.    Brokers' Fees.

        The Lessee agrees to pay or cause to be paid any and all brokers'
fees, if any, including without limitation any interest and penalties thereon,
which are payable in connection with the transactions contemplated by this
Agreement and the other Operative Agreements.  Except fees due to First Union
Securities, Inc., no Financing Party has dealt with any broker in connection
with the transactions contemplated by the Operative Agreements.

        7.3.    Certain Fees and Expenses.

        The Lessee agrees to pay or cause to be paid (a) the initial and
annual Owner Trustee's fee and all reasonable expenses of the Owner Trustee
and any co-trustees (including without limitation reasonable counsel fees
and expenses) or any successor owner trustee and/or co-trustee, for acting as
the owner trustee under the Trust Agreement, (b) all reasonable costs and
expenses (including without limitation, reasonable counsel fees and expenses)
incurred by the Credit Parties, the Agent, the Lenders, the Holders or the
Lessor in entering into any Lease Supplement, any of the Operative Agreements
and any future amendments, modifications, supplements, restatements and/or
replacements with respect to any of the Operative Agreements, whether or not
such Lease Supplement, amendments, modifications, supplements, restatements
and/or replacements are ultimately entered into, or giving or withholding of
waivers of consents hereto or thereto, which have been requested by any Credit
Party, the Agent, the Lenders, the Holders or the Lessor, (c) all reasonable
costs and expenses (including without limitation, reasonable counsel fees and
expenses) incurred by the Credit Parties, the Agent, the Lenders, the Holders
or the Lessor in connection with any exercise of remedies under any Operative
Agreement or any purchase of any Property by the Lessee or any third party and
(d) all reasonable costs and expenses (including without limitation, reasonable
counsel fees and expenses) incurred by the Credit Parties, the Agent, the
Lenders, the Holders or the Lessor in connection with any transfer or
conveyance of any Property, whether or not such transfer or conveyance is
ultimately accomplished.

        7.4.    [Intentionally Reserved].

        7.5.    Administrative and Up Front Fees.

        The Lessee shall pay or cause to paid an administrative fee to the
Agent (for its individual account) and such other fees set forth in and on the
terms and conditions set forth in the engagement letter dated on or about
August 8, 2000 addressed to Mr. George Babich, Chief Financial Officer of The
Pep Boys - Manny, Moe & Jack from Mr. Peter M. Budko, Managing Director -
Corporate Real Estate and Asset Finance.  The Lessee shall pay or cause to be
paid an up front fee to the Agent for the account of the Tranche B Lenders and
the Holders on the terms and conditions set forth in the up front fee letter
dated as of August 21, 2000 addressed to Mr. George Babich, Chief Financial
Officer of The Pep Boys - Manny Moe & Jack, from Mr. William C. Green, Director
at First Union Securities, Inc.

SECTION 8.  OTHER COVENANTS AND AGREEMENTS.

        8.1.    Cooperation with Lessee.

        The Holders, the Lenders, the Lessor (at the direction provided
pursuant to the Intercreditor Agreement) and the Agent shall, at the expense of
and to the extent reasonably requested by Lessee (but without assuming
additional liabilities on account thereof and only to the extent such is
acceptable to the Holders, the Lenders, the Lessor (at the direction of the
Majority Secured Parties) and the Agent in their reasonable discretion),
cooperate with Lessee in connection with Lessee satisfying its covenant
obligations contained in the Operative Agreements including without limitation
at any time and from time to time, promptly and duly executing and delivering
any and all such further instruments, documents and financing statements (and
continuation statements related thereto).

        8.2.    Covenants of the Owner Trustee and the Holders.

        Each of the Owner Trustee and the Holders hereby agrees that so long as
this Agreement is in effect:

                (a)     Neither the Owner Trustee (in its trust capacity or in
its individual capacity) nor any Holder will create or permit to exist at any
time, and each of them will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Properties attributable to it; provided, however, that the
Owner Trustee and the Holders shall not be required to so discharge any such
Lessor Lien while the same is being contested in good faith by appropriate
proceedings diligently prosecuted so long as such proceedings shall not
materially and adversely affect the rights of the Lessee under the Lease and
the other Operative Agreements or involve any material danger of impairment of
the Liens of the Security Documents or of the sale, forfeiture or loss of, and
shall not interfere with the use or disposition of, any Property or title
thereto or any interest therein or the payment of Rent;

                (b)     Without prejudice to any right under the Trust
Agreement of the Owner Trustee to resign (subject to the requirement set forth
in the Trust Agreement that such resignation shall not be effective until a
successor shall have agreed to accept such appointment), or the Holders' rights
under the Trust Agreement to remove the institution acting as the Owner Trustee
(after consent to such removal by the Agent as provided in the Trust
Agreement), each of the Owner Trustee and the Holders hereby agrees with the
Lessee and the Agent (i) not to terminate or revoke the trust created by the
Trust Agreement except as permitted by Article VIII of the Trust Agreement,
(ii) not to amend, supplement, terminate or revoke or otherwise modify any
provision of the Trust Agreement in such a manner as to adversely affect the
rights of any such party without the prior written consent of such party and
(iii) to comply with all of the terms of the Trust Agreement, the
nonperformance of which would adversely affect such party;

                (c)     The Owner Trustee or any successor may resign or be
removed by the Holders as the Owner Trustee, a successor Owner Trustee may be
appointed and a corporation may become the Owner Trustee under the Trust
Agreement, only in accordance with the provisions of Article IX of the Trust
Agreement and, with respect to such appointment, with the consent of the Lessee
(so long as there shall be no Lease Event of Default that shall have occurred
and be continuing), which consent shall not be unreasonably withheld or
delayed;

                (d)     The Owner Trustee, in its capacity as the Owner Trustee
under the Trust Agreement, and not in its individual capacity, shall not
contract for, create, incur or assume any Indebtedness, or any other
obligations or enter into any business or other activity or enter into any
contracts or agreements, other than pursuant to or under the Operative
Agreements;

                (e)     The Holders will not instruct the Owner Trustee to take
any action in violation of the terms of any Operative Agreement and the Holders
will instruct the Owner Trustee to take any action required by it under the
terms of any Operative Agreement;

                (f)     Neither any Holder nor the Owner Trustee shall (i)
commence any case, proceeding or other action with respect to the Owner Trustee
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, arrangement, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (ii) seek appointment of a receiver, trustee, custodian or other
similar official with respect to the Owner Trustee or for all or any
substantial benefit of the creditors of the Owner Trustee; and neither any
Holder nor the Owner Trustee shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in this paragraph;

                (g)     The Owner Trustee shall give prompt notice to the
Lessee, the Holders and the Agent if the Owner Trustee's principal place of
business or chief executive office, or the office where the records concerning
the accounts or contract rights relating to any Property are kept, shall cease
to be located at 225 Asylum Street, Goodwin Square, Hartford, CT  06103 (or
with respect to Properties located in the State of California, 633 West 5th
Street, Los Angeles, CA  90017) or if it shall change its name or its
jurisdiction of organization; and

                (h)     The Owner Trustee shall take or refrain from taking
such actions and grant or refrain from granting such approvals with respect
to the Operative Agreements and/or relating to any Property in each case as
directed in writing by the Agent (until such time as the Loans are paid in
full, and then by the Majority Holders) or, in connection with Sections 8.5 and
9.2 hereof, the Lessee; provided, however, that notwithstanding the foregoing
provisions of this subparagraph (h), (i) the Owner Trustee, the Agent, the
Lenders and the Holders each acknowledge, covenant and agree that neither the
Owner Trustee nor the Agent shall act or refrain from acting, in a manner
inconsistent with the terms of the Intercreditor Agreement and (ii) Owner
Trustee shall, or Agent on behalf of Owner Trustee, shall during the
continuance of an Event of Default and immediately upon the request of the
Congress demand immediate payment in full of all of the Company Obligations
under the Lease (including the payment in respect of the Termination Value).

        8.3.    Credit Party Covenants, Consent and Acknowledgment.

                (a)     Each Credit Party acknowledges and agrees that the
Owner Trustee, pursuant to the terms and conditions of the Security Agreement
and the Mortgage Instruments, shall create Liens respecting the various
personal property, fixtures and real property described therein.  Each Credit
Party hereby irrevocably consents to the creation, perfection and maintenance
of such Liens.  Each Credit Party shall, to the extent reasonably requested by
any of the other parties hereto, cooperate with the other parties in connection
with their covenants herein or in the other Operative Agreements and shall from
time to time duly execute and deliver any and all such future instruments,
documents and financing statements (and continuation statements related
thereto) as any other party hereto may reasonably request.

                (b)     The Lessor hereby instructs each Credit Party, and each
Credit Party hereby acknowledges and agrees, that until such time as the Loans
and the Holder Advances are paid in full and the Liens evidenced by the
Security Agreement and the Mortgage Instruments have been released (i) any and
all Rent (excluding Excepted Payments which shall be payable to each Holder or
other Person as appropriate) and any and all other amounts of any kind or type
under any of the Operative Agreements due and owing or payable to any Person
shall instead be paid directly to the Agent (excluding Excepted Payments which
shall be payable to each Holder or other Person as appropriate) or as the Agent
may direct from time to time for allocation and distribution in accordance with
the procedures set forth in Section 8.7 hereof, (ii) all rights of the Lessor
under the Lease shall be exercised by the Agent in accordance with the terms of
the Intercreditor Agreement and (iii) each Credit Party shall cause all
notices, certificates, financial statements, communications and other
information which are delivered, or are required to be delivered, to the
Lessor, to also be delivered at the same time to the Agent.

                (c)     No Credit Party shall consent to or permit any
amendment, supplement or other modification of the terms or provisions of any
Operative Agreement except in accordance with Section 12.4 of this Agreement.

                (d)     Each Credit Party hereby covenants and agrees that,
except for amounts payable as Basic Rent, any and all payment obligations owing
from time to time by any Credit Party under the Lease by any Person to the
Lessor, the Agent (whether as assignee of Lessor or otherwise), any Lender, any
Holder or any other Person shall (without further action) be deemed to be
Supplemental Rent obligations payable by the Lessee and guaranteed by the other
Credit Parties.  Without limitation, such obligations of the Credit Parties
shall include without limitation arrangement fees, administrative fees, unused
fees, breakage costs, indemnities, trustee fees and transaction expenses
incurred by the parties hereto in connection with the transactions contemplated
by the Lease.

                (e)     The Lessee hereby covenants and agrees to cause an
Appraisal or reappraisal (in form and substance satisfactory to the Agent and
from an appraiser selected by the Agent) to be issued respecting any Property
as requested by the Agent from time to time (i) at each and every time as such
shall be required to satisfy any regulatory requirements imposed on the Agent,
the Lessor, the Trust Company, any Lender and/or any Holder and (ii) after the
occurrence and continue of an Event of Default and for so long as the same is
continuing.

                (f)     The Lessee hereby covenants and agrees that, except for
amounts payable as Basic Rent, any and all payment obligations owing from time
to time under the Lease by any Person to the Lessor, the Agent (whether as
assignee of Lessor or otherwise), any Lender, any Holder or any other Person
shall (without further action) be deemed to be Supplemental Rent obligations
payable by the Lessee.  Without limitation, such obligations of the Lessee
shall include the Supplemental Rent obligations pursuant to this Section
8.3(f), Section 3.3 of the Lease, arrangement fees, administrative fees,
participation fees, commitment fees, prepayment penalties, breakage costs,
indemnities, trustee fees and transaction expenses incurred by the parties
hereto in connection with the transactions contemplated by the Lease.

                (g)     At any time the Lessor or the Agent is entitled under
the Operative Agreements to possession of a Property or any component thereof,
and the Lessee hereby covenants and agrees, at its own cost and expense, to
assemble and make the same available to the Agent (on behalf of the Lessor).

                (h)     [Intentionally Reserved].

                (i)     [Intentionally Reserved].

                (j)     The Lessee hereby covenants and agrees that it shall
give prompt notice to the Agent if the Lessee's principal place of business
or chief executive office, or the office where the records concerning the
accounts or contract rights relating to any Property are kept, shall cease to
be located at 3111 W. Allegheny Ave., Philadelphia, PA  19132 or if it shall
change its name or jurisdiction of incorporation.

        (k)     [Intentionally Reserved].

                (l)     [Intentionally Reserved].

                (m)     [Intentionally Reserved].

                (n)     Each Credit Party shall promptly notify the Agent, or
cause the Agent to be promptly notified, upon such Credit Party gaining
knowledge of the occurrence of any Default or Event of Default which is
continuing at such time.  In any event, such notice shall be provided to the
Agent within ten (10) days of when such Credit Party gains such knowledge.

                (o)     Until all of the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in full and
the Lender Commitments and the Holder Commitments terminated unless consent has
been obtained pursuant to the Intercreditor Agreement, each Credit Party will:

                (i)     except as permitted by the express provisions of the
Lessee Credit Agreement, preserve and maintain its separate legal existence and
all rights, franchises, licenses and privileges necessary to the conduct of its
business, and qualify and remain qualified as a foreign corporation (or
partnership, limited liability company or other such similar entity, as the
case may be) and authorized to do business in each jurisdiction in which the
failure to so qualify would have a Material Adverse Effect;

                (ii)    pay and perform all obligations of the Credit Parties
under the Operative Agreements and pay and perform (A) all taxes, assessments
and other governmental charges that may be levied or assessed upon it or any of
its property, and (B) all other indebtedness, obligations and liabilities in
accordance with customary trade practices, which if not paid would have a
Material Adverse Effect; provided that any Credit Party may contest any item
described in this Section 8.3(p)(ii) in good faith so long as adequate reserves
are maintained with respect thereto in accordance with GAAP;

                (iii)   to the extent failure to do so would have a Material
Adverse Effect, observe and remain in compliance with all applicable Laws and
maintain in full force and effect all Governmental Actions, in each case
applicable to the conduct of its business; keep in full force and effect all
licenses, certifications or accreditations necessary for any Property to carry
on its business; and not permit the termination of any insurance reimbursement
program available to any Property; and

                (iv)    provided that the Agent, the Lenders and the Holders
use reasonable efforts to minimize disruption to the business of the Credit
Parties, permit representatives of the Agent or any Lender or Holder, from time
to time, to visit and inspect its Properties; inspect, audit and make extracts
from its books, records and files, including without limitation management
letters prepared by independent accountants; and discuss with its principal
officers, and its independent accountants, its business, assets, liabilities,
financial condition, results of operations and business prospects.

        8.4.    Sharing of Certain Payments.

        Except for Excepted Payments, the parties hereto acknowledge and agree
that all payments due and owing by any Credit Party to the Lessor under the
Lease or any of the other Operative Agreements shall be made by such Credit
Party directly to the Agent as more particularly provided in Section 8.3
hereof.  The Lessor, the Holders, the Agent, the Lenders and the Credit Parties
acknowledge the terms of Section 8.7 of this Agreement regarding the allocation
of payments and other amounts made or received from time to time under the
Operative Agreements and agree, that all such payments and amounts are to be
allocated as provided in Section 8.7 of this Agreement.

        8.5.    Grant of Easements, etc.

        The Agent, the Lenders and the Holders hereby agree that, so long as no
Event of Default shall have occurred and be continuing, the Owner Trustee
shall, from time to time at the request of the Lessee (and with the prior
consent of the Agent), in connection with the transactions contemplated by the
Lease or the other Operative Agreements, (i) grant easements and other rights
in the nature of easements with respect to any Property, (ii) release existing
easements or other rights in the nature of easements which are for the benefit
of any Property, (iii) execute and deliver to any Person any instrument
appropriate to confirm or effect such grants or releases, and (iv) execute and
deliver to any Person such other documents or materials in connection with the
acquisition, testing or operation of any Property, including without limitation
reciprocal easement agreements, operating agreements, development agreements,
plats, replats or subdivision documents; provided, that each of the agreements
referred to in this Section 8.5 shall be of the type normally executed by the
Lessee in the ordinary course of the Lessee's business and shall be on
commercially reasonable terms so as not to diminish the value of any Property
in any material respect.

        8.6.    Appointment by the Agent, the Lenders, the Holders and the
Owner Trustee.

        Each Holder hereby appoints the Agent to act as collateral agent for
the Holders in connection with the Lien granted by the Security Documents to
secure the Holder Amount.  The Lenders and the Holders acknowledge and agree
and direct that the rights and remedies of the beneficiaries of the Lien of
the Security Documents shall be exercised by the Agent on behalf of the Lenders
and the Holders as determined in accordance with the terms of the Intercreditor
Agreement; provided, in all cases, the Agent shall allocate payments and other
amounts received in accordance with Section 8.7 or as may otherwise be required
under the Intercreditor Agreement.  The Agent is further appointed to provide
notices under the Operative Agreements on behalf of the Owner Trustee (as
determined by the Agent, in its reasonable discretion), to receive notices
under the Operative Agreements on behalf of the Owner Trustee and (subject to
Sections 8.5 and 9.2) to take such other action under the Operative Agreements
on behalf of the Owner Trustee as the Agent shall determine in its reasonable
discretion from time to time.  The Agent hereby accepts such appointments.  For
purposes hereof, the provisions of Section 7 of the Credit Agreement, together
with such other terms and provisions of the Credit Agreement and the other
Operative Agreements as required for the full interpretation and operation of
Section 7 of the Credit Agreement are hereby incorporated by reference as if
restated herein for the mutual benefit of the Agent and each Holder as if each
Holder were a Lender thereunder.  Further, the Agent shall be entitled to take
such action on behalf of the Owner Trustee as is delegated to the Agent under
any Operative Agreement (whether express or implied) as may be reasonably
incidental thereto.  The parties hereto hereby agree to the provisions
contained in this Section 8.6.  Any appointment of a successor agent under
Section 7.9 of the Credit Agreement shall also be effective as an appointment
of a successor agent for purposes of this Section 8.6.

        8.7.    Collection and Allocation of Payments and Other Amounts.

                (a)     Each Credit Party has agreed pursuant to Section 5.8
and otherwise in accordance with the terms of this Agreement to pay to (i) the
Agent any and all Rent (excluding Excepted Payments) and any and all other
amounts of any kind or type under any of the Operative Agreements due and owing
or payable to any Person (including without limitation, payments in respect of
the Termination Value) and (ii) each Person as appropriate the Excepted
Payments.  Promptly after receipt, the Agent shall apply and allocate, in
accordance with the terms of this Section 8.7, such amounts received from any
Credit Party and all other payments, receipts and other consideration of any
kind whatsoever received by the Agent pursuant to the Security Agreement or
otherwise received by the Agent, the Holders or any of the Lenders in
connection with the Collateral, the Security Documents or any of the other
Operative Agreements.  Subject to the terms and condition set forth below,
ratable distributions among the Lenders and the Holders under this Section 8.7
shall be made based on (in the case of the Lenders) the ratio of the
outstanding Loans to the aggregate Property Cost and (in the case of the
Holders) the ratio of the outstanding Holder Advances to the aggregate
Property Cost.  Ratable distributions among the Tranche A Lenders under this
Section 8.7 shall be made based on the ratio of the individual Tranche A
Lender's Tranche A Loans to the aggregate of all the Tranche A Loans. Ratable
distributions among the Tranche B Lenders under this Section 8.7 shall be made
based on the ratio of the individual Tranche B Lender's Tranche B Loans to the
aggregate of all the Tranche B Loans.  Ratable distributions among the Lenders
(in situations where the Tranche A Lenders are not differentiated from the
Tranche B Lenders) shall be made based on the ratio of the individual Lender's
Loans to the aggregate of all the Loans.  Subject to the terms and condition
set forth below, ratable distributions among the Holders under this Section 8.7
shall be based on the ratio of the individual Holder's Holder Advances to the
aggregate of all the Holder Advances.

                (b)     Payments and other amounts received by the Agent from
time to time in accordance with the terms of subparagraph (a) or otherwise
shall be applied and allocated as follows (subject in all cases to Section 8.7
(c)):

                (i)     Any such payment or amount identified as or deemed to
be Basic Rent and not otherwise required to be distributed pursuant to Sections
8.7(b)(iii) or 8.7(b)(iv) shall be applied and allocated by the Agent ratably
to the Lenders and the Holders for application and allocation to the payment of
interest on the Loans and thereafter the principal of the Loans which is due
and payable on such date and to the payment of accrued Holder Yield with
respect to the Holder Advances and thereafter the portion of the Holder
Advances which is due on such date.

                (ii)    If on any date the Agent or the Lessor shall receive
any amount in respect of (A) any Casualty or Condemnation pursuant to Sections
15.1(a) or 15.1(g) of the Lease (excluding any payments in respect thereof
which are payable to the Lessee in accordance with the Lease), or (B) the
Termination Value in connection with the delivery of a Termination Notice
pursuant to Article XVI of the Lease, or (C) the Termination Value in
connection with the exercise of the Purchase Option under Section 20.1 of the
Lease or the exercise of the option of the Lessor to transfer the Properties to
the Lessee pursuant to Section 20.3 of the Lease, then in each case, the Lessor
shall be required to pay such amount received (1) if no Acceleration has
occurred, to prepay the principal balance of the Loans and the Holder Advances,
on a pro rata basis, a portion of such amount to be distributed to the Lenders
and the Holders or (2) if an Acceleration has occurred, to apply and allocate
the proceeds respecting Sections 8.7(b)(ii)(A) through 8.7(b)(ii)(C) in
accordance with Sections 8.7(b)(iii) and 8.7(b)(iv) hereof.

                (iii)   Any proceeds of the sale or other disposition (or lease
upon the exercise of remedies) of the Properties or any portion thereof,
whether pursuant to Article XXII of the Lease or the exercise of remedies under
the Security Documents or otherwise, the execution of remedies set forth in the
Lease and any payment in respect of excess wear and tear pursuant to Section
22.3 of the Lease shall be applied and allocated by the Agent first, ratably to
the payment of the principal and interest of the Tranche B Loans then
outstanding, second, to any and all other amounts owing under the Operative
Agreements to the Lenders under or in connection with the Tranche B Loans,
third, ratably to the payment of the principal and interest of the Tranche A
Loans then outstanding, fourth, to any and all other amounts owing under the
Operative Agreements to the Tranche A Lenders under or in connection with the
Tranche A Loans, fifth, to the extent such amount exceeds the maximum amount
to be returned pursuant to the foregoing provisions of this paragraph (iii),
ratably to the payment to the Holders of the outstanding principal balance of
all Holder Advances plus all outstanding Holder Yield with respect to such
outstanding Holder Advances, sixth, to any and all other amounts owing under
the Operative Agreements to the Holders, and seventh, to the extent moneys
remain after application and allocation pursuant to clauses first through
sixth above, to the Owner Trustee for application and allocation to any and
all other amounts owing to any Financing Party pursuant to the Operative
Agreements as the Holders shall determine in accordance with the Operative
Agreements; provided, where no Event of Default shall exist and be continuing
and a prepayment is made for any reason with respect to less than the full
amount of the outstanding principal amount of the Loans and the outstanding
Holder Advances, the proceeds shall be applied and allocated ratably to the
Lenders and to the Holders.

                (iv)    (A) Any such payment pursuant to Section 22.1(b) of
the Lease (or otherwise) of the Maximum Residual Guarantee Amount (and any
such lesser amount as may be required by Section 22.1(b) of the Lease) in
respect of the Properties, (B) any other amount payable upon any exercise
of remedies after the occurrence of an Event of Default not covered by
Sections 8.7(b)(i) or 8.7(b)(iii) or otherwise under this Section 8.7(b)(iv)
(including without limitation any amount received in connection with an
Acceleration which does not represent proceeds from the sale or liquidation
of the Properties) (C) any proceeds from the sale or other disposition of the
Tranche A Priority Collateral, and (D) any other amount payable by any
Guarantor, not otherwise covered by Sections 8.7(b)(i) or 8.7(b)(iii) or
otherwise under this Section 8.7(b)(iv), pursuant to Section 6B shall be
applied and allocated by the Agent first, ratably, to the payment of the
principal and interest balance of Tranche A Loans then outstanding (and to
the extent amounts received are received pursuant to 8.7(b)(iv)(C), to the
payment of the Revolving Loan Obligations, as Congress may determine), second,
to any and all other amounts owing under the Operative Agreements to the
Tranche A Lenders under or in connection with the Tranche A Loans, third,
ratably to the payment of the principal and interest balance of the Tranche B
Loans then outstanding, fourth, to the payment of any other amounts owing
under the Operative Agreements to the Tranche B Lenders under or in connection
with the Tranche B Loans, fifth, to the extent amounts received are not
received pursuant to 8.7(b)(iv)(C), ratably to the payment of the principal
balance of all Holder Advances plus all outstanding Holder Yield with respect
to such outstanding Holder Advances, sixth, to the extent amounts received are
not received pursuant to 8.7(b)(iv)(C), to any and all other amounts owing
under the Operative Agreements to the Holders, and seventh, to the extent
moneys remain after application and allocation pursuant to clauses first
through sixth above, to the Owner Trustee for application and allocation to
Holder Advances and Holder Yield and any other amounts owing to any Financing
Party pursuant to the Operative Agreements as the Holders shall determine in
accordance with the Operative Agreements.

                (v)     Any payment identified as Supplemental Rent shall be
applied and allocated by the Agent to the payment of any amounts then owing
to the Agent, the Lenders, the Holders and the other parties to the Operative
Agreements (or any of them) (other than any such amounts payable pursuant to
the preceding provisions of this Section 8.7(b)) as shall be determined by the
Agent in its reasonable discretion; provided, however, that Supplemental Rent
received upon the exercise of remedies after the occurrence and continuance of
an Event of Default in lieu of or in substitution of the Maximum Residual
Guarantee Amount or as a partial payment thereon shall be applied and allocated
as set forth in Section 8.7(b)(iv).

                (vi)    The Agent in its reasonable judgment shall identify
the nature of each payment or amount received by the Agent and apply and
allocate each such amount in the manner specified above.

                (c)     Upon the payment in full of the Loans, the Holder
Advances and all other amounts then due and owing by the Owner Trustee
hereunder or under any Credit Document and the payment in full of all other
amounts then due and owing to the Lenders, the Holders, the Agent, the Owner
Trustee and the other Financing Parties pursuant to the Operative Agreements,
any moneys remaining with the Agent shall be returned to the Lessee except as
may otherwise be required by applicable law.  It is agreed that, prior to the
application and allocation of amounts received by the Agent in the order
described in Section 8.7(b) above or any distribution of money to the Lessee,
any such amounts shall first be applied and allocated to the payment of (i) any
and all sums advanced by the Agent in order to preserve the Collateral or to
preserve its Lien thereon, (ii) the expenses of retaking, holding, preparing
for sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by the Agent of its rights under the Security
Documents, together with reasonable attorneys' fees and expenses and court
costs and (iii) any and all other amounts reasonably owed to the Agent under
or in connection with the transactions contemplated by the Operative Agreements
(including without limitation any accrued and unpaid administration fees).

        8.8.    Release of Properties, etc.

        If the Lessee shall at any time purchase any Property pursuant to the
Lease, or if any Property shall be sold in accordance with Article XXII of the
Lease, then, upon satisfaction by the Owner Trustee of its obligation to prepay
the Loans, Holder Advances and all other amounts owing to the Lenders and the
Holders under the Operative Agreements, the Agent is hereby authorized and
directed to release such Property from the Liens created by the Security
Documents to the extent of its interest therein.  In addition, upon the
termination of the Lender Commitments and the Holder Commitments and the
payment in full of the Loans, the Holder Advances and all other amounts owing
by the Owner Trustee and the Lessee hereunder or under any other Operative
Agreement the Agent is hereby authorized and directed to release all of the
Properties from the Liens created by the Security Documents to the extent of
its interest therein.  Upon request of the Owner Trustee following any such
release, the Agent shall, at the sole cost and expense of the Lessee, execute
and deliver to the Owner Trustee and the Lessee such documents as the Owner
Trustee or the Lessee shall reasonably request to evidence such release.

        8.9.    Lessor; Borrower; Owner Trustee; Lessee.

                (a)     The parties hereto acknowledge and agree that term
"Lessor" includes the Trust Company not in its individual capacity, but
solely as trustee under 1995 Pep Boys Leased Property Trust and Trust Company
not in its individual capacity, but solely as trustee under 1997 Pep Boys II
Leased Property Trust, in each case, to the extent of such Person's interest in
any Property being leased to the Lessee.  Similarly, the parties hereto
acknowledge and agree that the term "Borrower" includes Trust Company not in
its individual capacity, but solely as trustee under 1995 Pep Boys Leased
Property Trust and Trust Company not in its individual capacity, but solely as
trustee under 1997 Pep Boys II Leased Property Trust jointly and severally as
co-borrowers as specified in Appendix A hereto.  Similarly, the parties hereto
acknowledge and agree that the term "Owner Trustee" includes Trust Company not
in its individual capacity, but solely as trustee under 1995 Pep Boys Leased
Property Trust and Trust Company not in its individual capacity, but
solely as trustee under 1997 Pep Boys II Leased Property Trust.  Similarly,
the parties hereto acknowledge and agree that the term "Lessee" includes Pep
Boys Parent, Pep Boys California and Pep Boys Delaware jointly and severally
as co-lessees.  The parties further acknowledge and agree that the multi-
Person Lessor, multi-Person Owner Trustee, multi-Person Borrower and multi-
Person Lessee provided for in the Operative Agreements was implemented at
the request of and as an accommodation to the Credit Parties.  Accordingly,
the use of such structure shall not be interpreted or construed in any manner
(and no Credit Party shall take any action or make any claim or counterclaim
as a result of such structure) that would be disadvantageous to or would result
in any cost or expense to, the Agent, any Lender, any Holder, the Owner
Trustee, or any other Financing Party or that would limit the responsibility
of any Credit Party under the Operative Agreements that would not have resulted
had the multi-Person Lessor, multi-Person Owner Trustee, multi-Person Borrower
and multi-Person Lessee structure not been implemented, and Lessee agrees to
indemnify and hold harmless each such party from any such cost or expense.
Notwithstanding the foregoing, at the direction of the Lessee, on behalf of
Credit Parties, each of the foregoing parties agrees to take such action but
at the risk, cost and expense of the Lessee as reasonably requested by the
Lessee, on behalf of Credit Parties, in order to minimize any incremental cost
and expenses inherent in the multi-Person Lessor, multi-Person Owner Trustee,
multi-Person Borrower and multi-Person Lessee structure provided for in the
Operative Agreements.

                (b)     With respect to any action required to be taken by the
Lessor under any Operative Agreement, which action has not been delegated to
the Agent hereunder, such action may be taken by the Person comprising the
Lessor that owns the Property affected by such action.  In the event that no
Property is affected or all Properties are affected, such action shall be
required to be taken by all Persons comprising the Lessor or by any such
Person designated by all Persons comprising the Lessor. Similarly, in the case
of any action to be taken by the Borrower under any Operative Agreement, which
action is not delegated to any other Person pursuant to any Operative
Agreement, such action shall be taken by all Persons comprising the Borrower or
by such Person as designated by all Persons comprising the Borrower.
Similarly, in the case of any action to be taken by the Owner Trustee under any
Operative Agreement, which action is not delegated to any other Person pursuant
to any Operative Agreement, such action shall be taken by all Persons
comprising the Owner Trustee or by such Person as designated by all Persons
comprising the Owner Trustee.

        8.10    Distribution of Proceeds from the Properties.

        Each of the Financing Parties hereby agrees that to the extent any
amounts that are to be distributed pursuant to Section 8.7(b)(iii) have been
received, such amounts shall be applied in the order set forth in such Section
8.7(b)(iii) but subject to the procedure for distribution set forth in this
Section 8.10.  All amounts owing to the Tranche B Lenders pursuant to Section
8.7(b)(iii) shall be distributed to the Tranche B Lenders, in accordance with
Section 8.7(b)(iii), as such amounts are received.  All amounts to be
distributed pursuant to third through seventh of Section 8.7(b)(iii) shall be
deposited into an account controlled by the Agent and held for the benefit of
the parties to which amounts are due pursuant to third through seventh of
Section 8.7(b)(iii) until such time as all of the Tranche A Lenders provide
the Agent written notice that either (a) each Tranche A Lenders' Loan,
interest and all other amounts due and owing or accrued in favor of any
Tranche A Lender with respect to the Operative Agreements have been fully
satisfied or (b) the Tranche A Lenders have substantially completed, in each
Tranche A Lender's reasonable judgment, the exercise of remedies against the
Tranche A Priority Collateral and all other remedies other than remedies
against the Property.  After such written notice has been provided to the
Agent, then the Agent shall distribute the funds held in the account in
accordance with Section 8.7(b)(iii).  The Tranche A Lenders covenant to
exercise all remedies, whether provided by the Operative Agreements, at
law or equity, which are reasonably available to them, other than remedies
against the Properties, available to the Tranche A Lenders to collect all
amounts owed to the Tranche A Lenders under any Operative Agreement prior
to receiving any distribution of proceeds pursuant to Section 8.7(b)(iii).
To the extent practicable in the reasonable judgment of the Agent, all
amounts deposited into such account shall be invested by the Agent in
investments backed by the United States government or in certificates of
deposit issued by First Union National Bank provided the term of such
investments shall not exceed thirty (30) days.  The Agent shall be entitled to
draw the account for its reasonable fees and out of pocket expenses incurred
with respect to the administration of such account.

SECTION 9.  CREDIT AGREEMENT AND TRUST AGREEMENT.

        9.1.    The Lessee's Credit Agreement Rights.

        Notwithstanding anything to the contrary contained in the Credit
Agreement, the Agent, the Lenders, the Holders, the Credit Parties and the
Owner Trustee hereby agree that, prior to the occurrence and continuation of
any Default or Event of Default, Lessee shall have the following rights:

                (a)      the right to receive any notice and any certificate,
in each case issued pursuant to Section 2.8(a)of the Credit Agreement;

                (b)     the right to replace any Lender pursuant to Section
2.8(b) of the Credit Agreement; and

                (c)     the right to approve any successor agent pursuant to
Section 7.9 of the Credit Agreement.

        9.2.    Lessee's Trust Agreement Rights.

        Notwithstanding anything to the contrary contained in the Trust
Agreement, the Credit Parties, the Owner Trustee and the Holders hereby agree
that, prior to the occurrence and continuation of any Default or Event of
Default, Lessee shall have the following rights:

                (a)     the right to receive any notice and any certificate,
in each case issued pursuant to Section 3.9(a) of the Trust Agreement;

                (b)     the right to replace any Holder pursuant to Section
3.9(b) of the Trust Agreement; and

                (c)     the right to exercise the removal options contained in
Section 9.1 of the Trust Agreement; provided, however, that no removal of the
Owner Trustee and appointment of a successor Owner Trustee by the Holders
pursuant to Section 9.1 of the Trust Agreement shall be made without the prior
written consent (not to be unreasonably withheld or delayed) of the Lessee.

SECTION 10.  TRANSFER OF INTEREST.

        10.1.   Restrictions on Transfer.

        Each Lender may participate, assign or transfer all or a portion of
its interest hereunder and under the other Operative Agreements in accordance
with Sections 9.7 and 9.8 of the Credit Agreement; provided, that each Lender
that assigns or transfers all or a portion of its interest hereunder and under
the other Operative Agreements (but not in the case of a participation) shall
(i) deliver to the Agent a copy of each Assignment and Acceptance (as
referenced in Section 9.8 of the Credit Agreement) for purposes of maintaining
the Register and (ii) cause the assignee or transferee to execute a joinder to
the Intercreditor Agreement reasonably acceptable to the Agent.  The Holders
may, directly or indirectly, assign, convey or otherwise transfer any of their
right, title or interest in or to the Trust Estate or the Trust Agreement with
the prior written consent of the Agent (which consent shall not be unreasonably
withheld or delayed) and in accordance with the terms of Section 11.8(b) of the
Trust Agreement provided, that each assignee or transferee executes a joinder
to the Intercreditor Agreement reasonably acceptable to the Agent.  In addition
to the foregoing, provided no Default or Event of Default has occurred and is
continuing, no Lender or Holder may assign, transfer or participate all or any
portion of its interest to any Person engaged principally in the wholesale or
retail sale of automotive parts, tires or automotive accessories, automotive
maintenance or service and installation of automotive parts without the prior
written consent of the Lessee.  The Owner Trustee may, subject to the rights
of the Lessee under the Lease and the other Operative Agreements and to the
Lien of the applicable Security Documents but only with the prior written
consent of the Agent (which consent may be withheld by the Agent in its sole
discretion) and (provided, no Default or Event of Default has occurred and is
continuing) with the consent of the Lessee which consent shall not be
unreasonably withheld, conditioned or delayed, directly or indirectly, assign,
convey, appoint an agent with respect to enforcement of, or otherwise transfer
any of its right, title or interest in or to any Property, the Lease, the Trust
Agreement and the other Operative Agreements (including without limitation any
right to indemnification thereunder), or any other document relating to a
Property or any interest in a Property as provided in the Trust Agreement and
the Lease.  The provisions of the immediately preceding sentence shall not
apply to the obligations of the Owner Trustee to transfer Property to the
Lessee or a third party purchaser pursuant to Article XXII of the Lease upon
payment for such Property in accordance with the terms and conditions of the
Lease.  No Credit Party may assign any of the Operative Agreements or any of
their respective rights or obligations thereunder or with respect to any
Property in whole or in part to any Person without the prior written consent
of the Agent, the Lenders, the Holders and the Lessor.

        10.2.   Effect of Transfer.

        From and after any transfer effected in accordance with this Section
10, the transferor shall be released, to the extent of such transfer, from its
liability hereunder and under the other documents to which it is a party in
respect of obligations to be performed on or after the date of such transfer;
provided, however, that any transferor shall remain liable hereunder and under
such other documents to the extent that the transferee shall not have assumed
the obligations of the transferor thereunder.  Upon any transfer by the Owner
Trustee, a Holder or a Lender as above provided, any such transferee shall
assume the obligations of the Owner Trustee, the Holder or the Lender, as the
case may be, and shall be deemed an "Owner Trustee", "Holder", or "Lender", as
the case may be, for all purposes of such documents and each reference herein
to the transferor shall thereafter be deemed a reference to such transferee
for all purposes, except as provided in the preceding sentence.
Notwithstanding any transfer of all or a portion of the transferor's interest
as provided in this Section 10, the transferor shall be entitled to all
benefits accrued and all rights vested prior to such transfer including without
limitation rights to indemnification under any such document.

SECTION 11.  INDEMNIFICATION.

        11.1.   General Indemnity.

        Whether or not any of the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees
to defend, indemnify and hold harmless each Indemnified Person on an After Tax
Basis from and against any Claims, which may be imposed on, incurred by or
asserted against an Indemnified Person by any third party, including without
limitation Claims arising from the negligence of an Indemnified Person (but not
to the extent such Claims arise from the gross negligence or willful misconduct
of such Indemnified Person itself, as determined by a court of competent
jurisdiction, as opposed to gross negligence or willful misconduct imputed to
such Indemnified Person) in any way relating to or arising or alleged to arise
out of the execution, delivery, performance or enforcement of this Agreement,
the Lease or any other Operative Agreement or on or with respect to any
Property or any component thereof, including without limitation Claims in any
way relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance, rejection, ownership, design, delivery,
acceptance, nondelivery, leasing, subleasing, possession, use, occupancy,
operation, maintenance repair, modification, transportation, condition, sale,
return, repossession (whether by summary proceedings or otherwise), or any
other disposition of any Property or any part thereof, including without
limitation the acquisition, holding or disposition of any interest in the
Property, lease or agreement comprising a portion of any thereof; (b) any
latent or other defects in any Property or any portion thereof whether or not
discoverable by an Indemnified Person or the Indemnity Provider; (c) a
violation of Environmental Laws, Environmental Claims or other loss of or
damage to any Property or the environment relating to the Property, the Lease,
or the Indemnity Provider; (d) the Operative Agreements, or any transaction
contemplated thereby; (e) any breach by the Indemnity Provider of any of its
representations or warranties under the Operative Agreements to which the
Indemnity Provider is a party or failure by the Indemnity Provider to perform
or observe any covenant or agreement to be performed by it under any of the
Operative Agreements; (f) the transactions contemplated hereby or by any other
 Operative Agreement, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA; (g) personal injury, death or property damage,
including without limitation Claims based on strict or absolute liability in
tort; and (h) any fees, expenses and/or other assessments by any business park
or any other applicable entity with oversight responsibility for the applicable
Property; provided, however, this Section 11.1 shall not be applicable to
Claims arising from Taxes (except to the extent that any payment hereunder is
required to be made on an After Tax Basis) and Indemnified Persons acknowledge
that the Indemnified Provider's obligations for Taxes is set forth in Section
11.2.

        If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including
without limitation a written notice of such proceeding), for any Claim, such
Indemnified Person shall promptly notify the Indemnity Provider in writing and
shall not take action with respect to such Claim without the consent of the
Indemnity Provider for thirty (30) days after the receipt of such notice by
the Indemnity Provider; provided, however, that in the case of any such Claim,
if action shall be required by law or regulation to be taken prior to the end
of such period of thirty (30) days, such Indemnified Person shall endeavor to,
in such notice to the Indemnity Provider, inform the Indemnity Provider of
such shorter period, and no action shall be taken with respect to such Claim
without the consent of the Indemnity Provider before seven (7) days before the
end of such shorter period; provided, further, that the failure of such
Indemnified Person to give the notices referred to in this sentence shall not
diminish the Indemnity Provider's obligation hereunder except to the extent
such failure precludes in all respects the Indemnity Provider from contesting
such Claim.

        If, within thirty (30) days of receipt of such notice from the
Indemnified Person (or such shorter period as the Indemnified Person has
notified the Indemnity Provider is required by law or regulation for the
Indemnified Person to respond to such Claim), the Indemnity Provider shall
request in writing that such Indemnified Person respond to such Claim, the
Indemnified Person shall, at the expense of the Indemnity Provider, in good
faith conduct and control such action (including without limitation by pursuit
of appeals) (provided, however, that (A) if such Claim, in the Indemnity
Provider's reasonable discretion, can be pursued by the Indemnity Provider on
behalf of or in the name of such Indemnified Person, the Indemnified Person, at
the Indemnity Provider's request, shall allow the Indemnity Provider to conduct
and control the response to such Claim and (B) in the case of any Claim (and
notwithstanding the provisions of the foregoing subsection (A)), the
Indemnified Person may request the Indemnity Provider to conduct and control
the response to such Claim (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not to be
unreasonably withheld, delayed or conditioned; provided, however, that any
Indemnified Person may retain separate counsel at the expense of the Indemnity
Provider in the event of a conflict of interest between such Indemnified Person
and the Indemnity Provider)) by, in the sole discretion of the Person
conducting and controlling the response to such Claim (1) resisting payment
thereof, (2) not paying the same except under protest, if protest is necessary
and proper, (3) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings, or (4)
taking such other action as is reasonably requested by the Indemnity Provider
from time to time.

        The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the
controlling party.  The parties agree that an Indemnified Person may at any
time decline to take further action with respect to the response to such Claim
and may settle such Claim if (i) such Indemnified Person shall waive its rights
to any indemnity from the Indemnity Provider that otherwise would be payable in
 respect of such Claim (and any future Claim, the pursuit of which is precluded
 by reason of such resolution of such Claim) and shall pay to the Indemnity
Provider any amount previously paid or advanced by the Indemnity Provider
pursuant to this Section 11.1 by way of indemnification or advance for the
payment of an amount regarding such Claim and (ii) such settlement would not
adversely affect the rights or increase the obligations of the Indemnity
Provider.

        Notwithstanding the foregoing provisions of this Section 11.1, an
Indemnified Person shall not be required to take any action and the Indemnity
Provider shall not be permitted to respond to any Claim in its own name or that
of the Indemnified Person unless (A) the Indemnity Provider shall have agreed
to pay and shall pay to such Indemnified Person on demand and on an After Tax
Basis all reasonable costs, losses and expenses that such Indemnified Person
actually incurs in connection with such Claim, including without limitation all
reasonable legal, accounting and investigatory fees and disbursements and the
Indemnity Provider shall have agreed that the Claim is an indemnifiable Claim
hereunder, (B) in the case of a Claim that must be pursued in the name of an
Indemnified Person (or an Affiliate thereof), the amount of the potential
indemnity (taking into account all similar or logically related Claims that
have been or could be raised for which the Indemnity Provider may be liable to
pay an indemnity under this Section 11.1) exceeds $25,000 (or such lesser
amount as may be subsequently agreed between the Indemnity Provider and the
Indemnified Person), (C) the Indemnified Person shall have reasonably
determined that the action to be taken will not result in any material danger
of sale, forfeiture or loss of the Property, or any part thereof or interest
therein, will not interfere with the payment of Rent, and will not result in
risk of criminal liability, (D) if such Claim shall involve the payment of any
amount prior to the resolution of such Claim, the Indemnity Provider shall
provide to the Indemnified Person an interest-free advance in an amount equal
to the amount that the Indemnified Person is required to pay (with no
additional net after-tax cost to such Indemnified Person) prior to the date
such payment is due, (E) in the case of a Claim that must be pursued in the
name of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider
shall have provided to such Indemnified Person an opinion of independent
counsel selected by the Indemnity Provider and reasonably satisfactory to the
Indemnified Person stating that a reasonable basis exists to contest such Claim
(or, in the case of an appeal of an adverse determination, an opinion of such
counsel to the effect that the position asserted in such appeal will more
likely than not prevail) and (F) no Event of Default shall have occurred and be
continuing.  In no event shall an Indemnified Person be required to appeal an
adverse judicial determination to the United States Supreme Court.  In
addition, an Indemnified Person shall not be required to contest any Claim in
its name (or that of an Affiliate) if the subject matter thereof shall be of a
continuing nature and shall have previously been decided adversely by a court
of competent jurisdiction pursuant to the contest provisions of this Section
11.1, unless there shall have been a change in law (or interpretation thereof)
and the Indemnified Person shall have received, at the Indemnity Provider's
expense, an opinion of independent counsel selected by the Indemnity Provider
and reasonably acceptable to the Indemnified Person stating that as a result of
such change in law (or interpretation thereof), it is more likely than not that
the Indemnified Person will prevail in such contest.  In no event shall the
Indemnity Provider be permitted to adjust or settle any Claim without the
consent of the Indemnified Person to the extent any such adjustment or
settlement involves, or is reasonably likely to involve, an adverse admission
by or with respect to the Indemnified Person.

        11.2.   General Tax Indemnity.

                (a)     The Indemnity Provider shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend each Property and
all Indemnified Persons, and hold them harmless against, all Impositions on an
After Tax Basis, and all payments by or on behalf of the Indemnity Provider or
the Owner Trustee or in respect of any of the obligations of the Indemnity
Provider or the Owner Trustee pursuant to the Operative Agreements shall be
made free and clear of and without deduction for any and all present and future
Impositions.

                (b)     Notwithstanding anything to the contrary in Section
11.2(a) hereof, the following shall be excluded from the indemnity required by
Section 11.2(a):

                        (i)     Taxes (other than Taxes that are, or are in the
 nature of, sales, use, rental, value added, transfer or property taxes) that
are imposed on a Indemnified Person (other than the Lessor, the Owner Trustee
and the Trust) by the United States federal government (or with respect to any
Indemnified Person, other than the Lessor, the Owner Trustee and the Trust, any
foreign jurisdiction in which such Indemnified Person is organized or from
which such Indemnified Person books, maintains and administers its Loans or
Holder Advances; provided, that this provision shall not be construed to
supersede Section 11.2(e) hereof) that are based on or measured by the net
income (including without limitation taxes based on capital gains and minimum
taxes) of such Person; provided, that this clause (i) shall not be interpreted
to prevent a payment from being made on an After Tax Basis if such payment is
otherwise required to be so made;

                        (ii)    Taxes (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or property taxes) that
are imposed on any Indemnified Person (other than the Lessor, the Owner Trustee
and the Trust) by any state or local jurisdiction or taxing authority within
any state or local jurisdiction and that are based upon or measured by the
gross (to the extent in lieu of a net income tax) or net income (including
without limitation taxes based on capital gains and minimum taxes) or are
franchise Taxes of such Person (or with respect to any Indemnified Person
(other than the Lessor, the Owner Trustee and the Trust) and solely with
respect to net income taxes, any state or local jurisdiction or taxing
authority within any state or local jurisdiction, in which case within a
foreign jurisdiction in which such Indemnified Person books, maintains and
administers its Loans or Holder Advances; provided, that this provision shall
not be construed to supersede Section 11.2(e) hereof); provided that such Taxes
shall not be excluded under this subparagraph (ii) to the extent such Taxes
would have been imposed had the location, possession or use of any Property in,
 the location or the operation of the Lessee in, or the Lessee's making
payments under the Operative Agreements from, the jurisdiction imposing such
Taxes been the sole connection between such Indemnified Person and the
jurisdiction imposing such Taxes; provided, further, that this clause (ii)
shall not be interpreted to prevent a payment from being made on an After Tax
Basis if such payment is otherwise required to be so made;

                        (iii)   any Tax to the extent it relates to any act,
event or omission that occurs after the termination of the Lease and redelivery
or sale of the Property in accordance with the terms of the Lease (but not any
Tax that relates to such termination, redelivery or sale and/or to any period
prior to such termination, redelivery or sale); and

                        (iv)    any Taxes which are imposed on an Indemnified
Person as a result of the gross negligence or willful misconduct of such
Indemnified Person itself, as determined by a court of competent jurisdiction
(as opposed to gross negligence or willful misconduct imputed to such
Indemnified Person), but not Taxes imposed as a result of ordinary negligence
of such Indemnified Person;

        (c)     (i)     Subject to the terms of Section 11.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to the taxing
authorities where feasible and otherwise to the Indemnified Person, as
appropriate, and the Indemnity Provider shall at its own expense, upon such
Indemnified Person's reasonable request, furnish to such Indemnified Person
copies of official receipts or other satisfactory proof evidencing such
payment.

                        (ii)    In the case of Impositions for which no contest
is conducted pursuant to Section 11.2(f) and which the Indemnity Provider pays
directly to the taxing authorities, the Indemnity Provider shall pay such
Impositions prior to the latest time permitted by the relevant taxing authority
for timely payment.  In the case of Impositions for which the Indemnity
Provider reimburses an Indemnified Person, the Indemnity Provider shall do so
within thirty (30) days after receipt by the Indemnity Provider of demand by
such Indemnified Person describing in reasonable detail the nature of the
Imposition and the basis for the demand (including without limitation the
computation of the amount payable), accompanied by receipts or other reasonable
evidence of such demand.  In the case of Impositions for which a contest is
conducted pursuant to Section 11.2(f), the Indemnity Provider shall pay such
Impositions or reimburse such Indemnified Person for such Impositions, to the
extent not previously paid or reimbursed pursuant to subsection (a), prior to
the latest time permitted by the relevant taxing authority for timely payment
after conclusion of all contests under Section 11.2(f).

                        (iii)   At the Indemnity Provider's request, the amount
of any indemnification payment by the Indemnity Provider pursuant to subsection
(a) shall be verified and certified by an independent public accounting firm
mutually acceptable to the Indemnity Provider and the Indemnified Person.  The
fees and expenses of such independent public accounting firm shall be paid by
the Indemnity Provider unless such verification shall result in an adjustment
in the Indemnity Provider's favor of fifteen percent (15%) or more of the
payment as computed by the Indemnified Person, in which case such fee shall be
paid by the Indemnified Person.

                (d)     The Indemnity Provider shall be responsible for
preparing and filing any real and personal property or ad valorem tax returns
in respect of each Property and any other tax returns required for the Owner
Trustee respecting the transactions described in the Operative Agreements.  In
case any other report or tax return shall be required to be made with respect
to any obligations of the Indemnity Provider under or arising out of subsection
(a) and of which the Indemnity Provider has knowledge or should have knowledge,
the Indemnity Provider, at its sole cost and expense, shall notify the relevant
Indemnified Person of such requirement and (except if such Indemnified Person
notifies the Indemnity Provider that such Indemnified Person intends to prepare
and file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in the Indemnity Provider's
name such return, statement or report; and (B) in the case of any other such
return, statement or report required to be made in the name of such Indemnified
Person, advise such Indemnified Person of such fact and prepare such return,
statement or report for filing by such Indemnified Person or, where such
return, statement or report shall be required to reflect items in addition to
any obligations of the Indemnity Provider under or arising out of subsection
(a), provide such Indemnified Person at the Indemnity Provider's expense with
information sufficient to permit such return, statement or report to be
properly made with respect to any obligations of the Indemnity Provider under
or arising out of subsection (a).  Such Indemnified Person shall, upon the
Indemnity Provider's request and at the Indemnity Provider's expense, provide
any data maintained by such Indemnified Person (and not otherwise available to
or within the control of the Indemnity Provider) with respect to each Property
which the Indemnity Provider may reasonably require to prepare any required tax
returns or reports.

                (e)     As between the Indemnity Provider on one hand, and each
Financing Party on the other hand, the Indemnity Provider shall be responsible
for, and the Indemnity Provider shall indemnify and hold harmless each
Financing Party (without duplication of any indemnification required by
subsection (a)) on an After Tax Basis against, any obligation for United States
or foreign withholding taxes or similar levies, imposts, charges, fees,
deductions or withholdings (collectively, "Withholdings") imposed in respect of
the interest payable on the Notes, Holder Yield payable on the Certificates or
with respect to any other payments under the Operative Agreements (all such
payments being referred to herein as "Exempt Payments") which are intended to
be made without deduction, withholding or set off (and, if any Financing Party
receives a demand for such payment from any taxing authority or a Withholding
is otherwise required with respect to any Exempt Payment, the Indemnity
Provider shall discharge such demand on behalf of such Financing Party);
provided, however, that the obligation of the Indemnity Provider under this
Section 11.2 shall not apply to:

        (i)     Withholdings on any Exempt Payment to any Financing Party which
is a non-U.S. Person unless such Financing Party is, on the date hereof (or on
the date it becomes a Financing Party hereunder) and on the date of any change
in the principal place of business or the lending office of such Financing
Party, entitled to submit a Form 1001 (relating to such Financing Party and
entitling it to a complete exemption from Withholding on such Exempt Payment)
or Form 4224 or is otherwise subject to exemption from Withholding with respect
to such Exempt Payment (except where the failure of the exemption results from
a change in the principal place of business of the Lessee; provided if a
failure of exemption for any Financing Party results from a change in the
principal place of business or lending office of any other Financing Party,
then such other Financing Party shall be liable for any Withholding or
indemnity with respect thereto), or

        (ii)    Any U.S. Taxes imposed solely by reason of the failure by a
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the nationality,
residence, identity or connections with the United States of America of such
non-U.S. Person if such compliance is required by statute or regulation of the
United States of America as a precondition to relief or exemption from such
U.S. Taxes.

For the purposes of this Section 11.2(e), (A) "U.S. Person" shall mean a
citizen, national or resident of the United States of America, a corporation,
partnership or other entity created or organized in or under any laws of the
United States of America or any State thereof, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income,
(B) "U.S. Taxes" shall mean any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof or therein, (C) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America and (D) "Form 4224" shall mean Form
4224 (Exemption from Withholding of Tax on Income Effectively Connected with
the Conduct of a Trade or Business in the United States) of the Department of
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates).  Each of the Forms referred to in the foregoing
clauses (C) and (D) shall include such successor and related forms as may from
time to time be adopted by the relevant taxing authorities of the United States
of America to document a claim to which such Form relates.

        If a Financing Party or an Affiliate with whom such Financing Party
files a consolidated tax return (or equivalent) subsequently receives the
benefit in any country of a tax credit or an allowance resulting from U.S.
Taxes with respect to which it has received a payment of an additional amount
under this Section 11.2(e), such Financing Party will pay to the Indemnity
Provider such part of that benefit as in the opinion of such Financing Party
will leave it (after such payment) in a position no more and no less favorable
than it would have been in if no additional payment had been required to be
paid, provided always that (i) such Financing Party will be the sole judge of
the amount of any such benefit and of the date on which it is received, (ii)
such Financing Party will have the absolute discretion as to the order and
manner in which it employs or claims tax credits and allowances available to it
and (iii) such Financing Party will not be obliged to disclose to the Borrower
any information regarding its tax affairs or tax computations.

        Each non-U.S. Person that shall become a Financing Party after the date
hereof shall, upon the effectiveness of the related transfer or otherwise upon
becoming a Financing Party hereunder, be required to provide all of the forms
and statements referenced above or other evidences of exemption from
Withholdings.

                (f)     If a written Claim is made against any Indemnified
Person or if any proceeding shall be commenced against such Indemnified Person
(including without limitation a written notice of such proceeding), for any
Impositions, the provisions in Section 11.1 relating to notification and rights
to contest shall apply; provided, however, that the Indemnity Provider shall
have the right to conduct and control such contest only if such contest
involves a Tax other than a Tax on net income of the Indemnified Person and can
be pursued independently from any other proceeding involving a Tax liability of
such Indemnified Person.

        11.3.   Increased Costs, Illegality, etc.

                (a)     If, due to either (i) the introduction of or any change
in or in the interpretation of any law or regulation or (ii) the compliance
with any guideline or request hereafter adopted, promulgated or made by any
central bank or other governmental authority (whether or not having the force
of law), there shall be any increase in the cost to any Financing Party of
agreeing to make or making, funding or maintaining Advances, then the Lessee
shall from time to time, upon demand by such Financing Party (with a copy of
such demand to the Agent but subject to the terms of Section 2.11 of the Credit
Agreement and 3.9 of the Trust Agreement, as the case may be), pay to the Agent
for the account of such Financing Party additional amounts sufficient to
compensate such Financing Party for such increased cost.  A certificate as to
the amount of such increased cost, submitted to the Lessee and the Agent by
such Financing Party, shall be conclusive and binding for all purposes, absent
manifest error.

                (b)     If any Financing Party determines that compliance with
any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law, but in
each case promulgated or made after the date hereof) affects or would affect
the amount of capital required or expected to be maintained by such Financing
Party or any corporation controlling such Financing Party and that the amount
of such capital is increased by or based upon the existence of such Financing
Party's commitment to make Advances and other commitments of this type or upon
the Advances, then, upon demand by such Financing Party (with a copy of such
demand to the Agent but subject to the terms of Section 2.11 of the Credit
Agreement and 3.9 of the Trust Agreement), the Lessee shall pay to the Agent
for the account of such Financing Party, from time to time as specified by such
Financing Party, additional amounts sufficient to compensate such Financing
Party or such corporation in the light of such circumstances, to the extent
that such Financing Party reasonably determines such increase in capital to be
allocable to the existence of such Financing Party's commitment to make such
Advances.  A certificate as to such amounts submitted to the Lessee and the
Agent by such Financing Party shall be conclusive and binding for all purposes,
absent manifest error.

                (c)     Without limiting the effect of the foregoing, the
Lessee shall pay to each Financing Party on the last day of the Interest Period
therefor so long as such Financing Party is maintaining reserves against
"Eurocurrency liabilities" under Regulation D an additional amount (determined
by such Financing Party and notified to the Lessee through the Agent) equal to
the product of the following for each Eurodollar Loan or Eurodollar Holder
Advance, as the case may be, for each day during such Interest Period:

                (i)     the principal amount of such Eurodollar Loan or
Eurodollar Holder Advance, as the case may be, outstanding on such day; and

                (ii)    the remainder of (x) a fraction the numerator of which
is the rate (expressed as a decimal) at which interest accrues on such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, for such
Interest Period as provided in the Credit Agreement or the Trust Agreement, as
the case may be (less the Applicable Percentage), and the denominator of which
is one (1) minus the effective rate (expressed as a decimal) at which such
reserve requirements are imposed on such Financing Party on such day minus (y)
such numerator; and

                (iii)   1/360.

                (d)     Without affecting its rights under Sections 11.3(a),
11.3(b) or 11.3(c) or any other provision of any Operative Agreement, each
Financing Party agrees that if there is any increase in any cost to or
reduction in any amount receivable by such Financing Party with respect to
which the Lessee would be obligated to compensate such Financing Party pursuant
to Sections 11.3(a) or 11.3(b), such Financing Party shall use reasonable
efforts to select an alternative office for Advances which would not result in
any such increase in any cost to or reduction in any amount receivable by such
Financing Party; provided, however, that no Financing Party shall be obligated
to select an alternative office for Advances if such Financing Party determines
that (i) as a result of such selection such Financing Party would be in
violation of any applicable law, regulation, treaty, or guideline, or would
incur additional costs or expenses or (ii) such selection would be inadvisable
for regulatory reasons or materially inconsistent with the interests of such
Financing Party.

                (e)     With reference to the obligations of the Lessee set
forth in Sections 11.3(a) through 11.3(d), the Lessee shall not have any
obligation to pay to any Financing Party amounts owing under such Sections for
any period which is more than one (1) year prior to the date upon which the
request for payment therefor is delivered to the Lessee.

                (f)     Notwithstanding any other provision of this Agreement,
if any Financing Party shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is
unlawful, for any Financing Party to perform its obligations hereunder to make
or maintain Eurodollar Loans or Eurodollar Holder Advances, as the case may be,
then (i) each Eurodollar Loan or Eurodollar Holder Advance, as the case may be,
will automatically, at the earlier of the end of the Interest Period for such
Eurodollar Loan or Eurodollar Holder Advance, as the case may be, or the date
required by law, convert into an ABR Loan or an ABR Holder Advance, as the case
may be, and (iii) the obligation of the Financing Parties to make, convert or
continue Eurodollar Loans or Eurodollar Holder Advances, as the case may be,
shall be suspended until the Agent shall notify the Lessee that such Financing
Party has determined that the circumstances causing such suspension no longer
exist.

        11.4.   Funding/Contribution Indemnity.

        Subject to the provisions of Section 2.8(a) of the Credit Agreement and
3.9(a) of the Trust Agreement, as the case may be, the Lessee agrees to
indemnify each Financing Party and to hold each Financing Party harmless from
any loss or reasonable expense which such Financing Party may sustain or incur
as a consequence of (a) any default in connection with the drawing of funds for
any Advance, (b) any default in making any prepayment after a notice thereof
has been given in accordance with the provisions of the Operative Agreements or
(c) the making of a voluntary or involuntary payment of Eurodollar Loans or
Eurodollar Holder Advances, as the case may be, on a day which is not the last
day of an Interest Period with respect thereto.  Such indemnification shall be
in an amount equal to the excess, if any, of (x) the amount of interest or
Holder Yield, as the case may be, which would have accrued on the amount so
paid, or not so borrowed, accepted, converted or continued for the period from
the date of such payment or of such failure to borrow, accept, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, accept, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable
Eurodollar Rate plus the Applicable Percentage for such Loan or Holder Advance,
as the case may be, for such Interest Period over (y) the amount of interest
(as determined by such Financing Party in its reasonable discretion) which
would have accrued to such Financing Party on such amount by (i) (in the case
of the Lenders) reemploying such funds in loans of the same type and amount
during the period from the date of payment or failure to borrow to the last
day of the then applicable Interest Period (or, in the case of a failure to
borrow, the Interest Period that would have commenced on the date of such
failure) and (ii) (in the case of the Holders) placing such amount on deposit
for a comparable period with leading banks in the relevant interest rate
market.  This covenant shall survive the termination of the Operative
Agreements and the payment of all other amounts payable hereunder.

11.5.   EXPRESS INDEMNIFICATION FOR ORDINARY NEGLIGENCE, STRICT LIABILITY, ETC.

        WITHOUT LIMITING THE GENERALITY OF THE INDEMNIFICATION PROVISIONS OF
ANY AND ALL OF THE OPERATIVE AGREEMENTS, EACH PERSON PROVIDING INDEMNIFICATION
OF ANOTHER PERSON UNDER ANY OPERATIVE AGREEMENT HEREBY FURTHER EXPRESSLY
RELEASES EACH BENEFICIARY OF ANY SUCH INDEMNIFICATION FROM ALL CLAIMS FOR LOSS
OR DAMAGE, DESCRIBED IN ANY OPERATIVE AGREEMENT, CAUSED BY ANY ACT OR OMISSION
ON THE PART OF ANY SUCH BENEFICIARY ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE
(WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY, AND
INDEMNIFIES, EXONERATES AND HOLDS EACH SUCH BENEFICIARY FREE AND HARMLESS FROM
AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, LOSSES,
COSTS, LIABILITIES, DAMAGES AND EXPENSES (INCLUDING WITHOUT LIMITATION
ATTORNEY'S FEES AND EXPENSES), DESCRIBED ABOVE, INCURRED BY ANY SUCH
BENEFICIARY (IRRESPECTIVE OF WHETHER ANY SUCH BENEFICIARY IS A PARTY TO THE
ACTION FOR WHICH INDEMNIFICATION UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT IS SOUGHT) ATTRIBUTABLE TO THE ORDINARY NEGLIGENCE (WHETHER
SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF ANY SUCH BENEFICIARY.

SECTION 12.  MISCELLANEOUS.

        12.1.   Survival of Agreements.

        The representations, warranties, covenants, indemnities and agreements
of the parties provided for in the Operative Agreements, and the parties'
obligations under any and all thereof, shall survive the execution and delivery
of this Agreement, the transfer of any Property to the Owner Trustee, the
acquisition of any Property (or any of its components), any disposition of any
interest of the Owner Trustee in any Property or any interest of the Holders in
the Trust Estate, the payment of the Notes and any disposition thereof and
shall be and continue in effect notwithstanding any investigation made by any
party and the fact that any party may waive compliance with any of the other
terms, provisions or conditions of any of the Operative Agreements.  Except as
otherwise expressly set forth herein or in other Operative Agreements, the
indemnities of the parties provided for in the Operative Agreements shall
survive the expiration or termination of any thereof.

        12.2.   Notices.

        All notices required or permitted to be given under any Operative
Agreement shall be in writing.  Notices may be served by certified or
registered mail, postage paid with return receipt requested; by private
courier, prepaid; by facsimile, or other telecommunication device capable of
transmitting or creating a written record; or personally.  Mailed notices shall
be deemed delivered five (5) days after mailing, properly addressed.  Couriered
notices shall be deemed delivered when delivered as addressed, or if the
addressee refuses delivery, when presented for delivery notwithstanding such
refusal.  Telecommunicated notices shall be deemed delivered when receipt is
either confirmed by confirming transmission equipment or acknowledged by the
addressee or its office.  Personal delivery shall be effective when
accomplished.  Unless a party changes its address by giving notice to the other
party as provided herein, notices shall be delivered to the parties at the
following addresses:

If to Lessee, to such entity at the following address:

The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Ave.
Philadelphia, PA  19132
Attention:  Ronald Neifield, Esq.
Telephone: 215-430-9009
Telecopy:  215-229-5076

With a copy to:

Willkie Farr & Gallagher
787 7th Avenue
New York, NY  10019
Attention:  Daniel Rubino, Esq.
Telephone:  212-728-8000
Telecopy:  212-728-8111

If to any Guarantor, to such entity in care of The Pep Boys - Manny, Moe & Jack
at the following address:

The Pep Boys - Manny, Moe & Jack
3111 W. Allegheny Ave.
Philadelphia, PA  19132
Attention:  Bernard McElroy
Telephone: 215-430-9203
Telecopy:  215-227-3275

If to the Owner Trustee, to it at the following address:

State Street Bank and Trust Company of Connecticut, National Association
225 Asylum Street, Goodwin Square
Hartford, CT  06103
Attention:  Donald E. Smith
Telephone: (617) 662-1727
Telecopy: (617) 662-1462

If to the Holders, to each such Holder at the address set forth for such Holder
on Schedule I of the Trust Agreement.

If to the Agent, to it at the following address:

First Union National Bank
c/o First Union Securities, Inc.
201 South College Street, 8th Floor
Charlotte, North Carolina  28288-0166
Attention:      Tim Ritch,
Associate
Telephone:      704-383-0819
Telecopy:       704-383-8108

If to any Lender, to it at the address set forth for such Lender in Schedule
2.1 of the Credit Agreement.

                From time to time any party may designate additional parties
and/or another address for notice purposes by notice to each of the other
parties hereto.  Each notice hereunder shall be effective upon receipt or
refusal thereof.

        12.3.   Counterparts.

        This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one (1) and
the same instrument.

        12.4.   Terminations, Amendments, Waivers, Etc.; Unanimous Vote
Matters.

        Each Operative Agreement may be terminated, amended, supplemented,
waived or modified only by an instrument in writing signed by, subject to
Article VIII of the Trust Agreement regarding termination of the Trust
Agreement, the Agent (as directed by the Secured Parties in accordance with the
terms of the Intercreditor Agreement) and each Credit Party that is a party to
such Operative Agreement; provided, that the consent of the Credit Parties
shall not be required to the extent any Default or Event of Default shall have
occurred and be continuing.  Without limiting the generality of the foregoing,
no provision of the Lease or any other Operative Agreement affecting (i) any
payment obligations of the Lessee, (ii) the material rights of Lessor or Agent
to demand or receive any payment thereunder or (iii) any provision of any
Security Document with respect to the Tranche A Priority Collateral, may be
terminated, amended, supplemented, waived or modified without the prior written
consent of Congress.

        12.5.   Headings, etc.

        The Table of Contents and headings of the various Articles and Sections
of this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.

        12.6.   Parties in Interest.

        Except as expressly provided herein, none of the provisions of this
Agreement are intended for the benefit of any Person except the parties hereto.

        12.7.   GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; VENUE.

                (a)     THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, INTERPRETED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).  Any legal
action or proceeding with respect to this Agreement or any other Operative
Agreement may be brought in the courts of the State of New York in the borough
of Manhattan or of the United States for the Southern District of New York,
and, by execution and delivery of this Agreement, each of the parties to this
Agreement hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such courts.
Each of the parties to this Agreement further irrevocably consents to the
service of process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address set out for notices pursuant to Section
12.2, such service to become effective three (3) days after such mailing.
Nothing herein shall affect the right of any party to serve process in any
other manner permitted by Law or to commence legal proceedings or to otherwise
proceed against any party in any other jurisdiction.

                (b)     EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY, TO THE FULLEST EXTENT ALLOWED BY APPLICABLE LAW, WAIVES TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO ANY DISPUTE OR THIS
AGREEMENT, ANY OTHER OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

                (c)     Each of the parties to this Agreement hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of
or in connection with this Agreement or any other Operative Agreement brought
in the courts referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.

        12.8.   Severability.

        Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

        12.9.   Liability Limited.

                (a)     The Lenders, the Agent, the Credit Parties, the Owner
Trustee and the Holders each acknowledge and agree that the Owner Trustee is
(except as otherwise expressly provided herein or therein) entering into this
Agreement and the other Operative Agreements to which it is a party (other than
the Trust Agreement and to the extent otherwise provided in Section 6.1 of this
Agreement), solely in its capacity as trustee under the Trust Agreement and not
in its individual capacity and that the Trust Company shall not be liable or
accountable under any circumstances whatsoever in its individual capacity for
or on account of any statements, representations, warranties, covenants or
obligations stated to be those of the Owner Trustee, except for its own gross
negligence or willful misconduct and as otherwise expressly provided herein or
in the other Operative Agreements.

                (b)     Anything to the contrary contained in this Agreement,
the Credit Agreement, the Notes or in any other Operative Agreement
notwithstanding, no Exculpated Person shall be personally liable in any respect
for any liability or obligation arising hereunder or in any other Operative
Agreement including without limitation the payment of the principal of, or
interest on, the Notes, or for monetary damages for the breach of performance
of any of the covenants contained in the Credit Agreement, the Notes, this
Agreement, the Security Agreement or any of the other Operative Agreements.
The Lenders, the Holders and the Agent agree that, in the event any remedies
under any Operative Agreement are pursued, neither the Lenders, the Holders nor
the Agent shall have any recourse against any Exculpated Person, for any
deficiency, loss or Claim for monetary damages or otherwise resulting therefrom
and recourse shall be had solely and exclusively against the Trust Estate
(excluding Excepted Payments) and
the Credit Parties (with respect to the Credit Parties' obligations under the
Operative Agreements); but nothing contained herein shall be taken to prevent
recourse against or the enforcement of remedies against the Trust Estate
(excluding Excepted Payments) in respect of any and all liabilities,
obligations and undertakings contained herein and/or in any other Operative
Agreement.  Notwithstanding the provisions of this Section, nothing in any
Operative Agreement shall:  (i) constitute a waiver, release or discharge of
any indebtedness or obligation evidenced by the Notes and/or the Certificates
arising under any Operative Agreement or secured by any Operative Agreement,
but the same shall continue until paid or discharged; (ii) relieve any
Exculpated Person from liability and responsibility for (but only to the extent
of the damages arising by reason of):  active waste knowingly committed by any
Exculpated Person with respect to any Property, any fraud, gross negligence or
willful misconduct on the part of any Exculpated Person; (iii) relieve any
Exculpated Person from liability and responsibility for (but only to the extent
of the moneys misappropriated, misapplied or not turned over) (A) except for
Excepted Payments, misappropriation or misapplication by the Lessor (i.e.,
application in a manner contrary to any of the Operative Agreements) of any
insurance proceeds or condemnation award paid or delivered to the Lessor by any
Person other than the Agent, (B) except for Excepted Payments, any deposits or
any escrows or amounts owed by Lessee held by the Lessor or (C) except for
Excepted Payments, any rent or other income received by the Lessor from any
Credit Party that is not turned over to the Agent; or (iv) affect or in any way
limit the Agent's rights and remedies under any Operative Agreement with
respect to the Rents and rights and powers of the Agent under the Operative
Agreements or to obtain a judgment against the Lessee's interest in the
Properties or the Agent's rights and powers to obtain a judgment against the
Lessor or any Credit Party (provided, that no deficiency judgment or other
money judgment shall be enforced against any Exculpated Person except to the
extent of the Lessor's interest in the Trust Estate (excluding Excepted
Payments) or to the extent the Lessor may be liable as otherwise contemplated
in clauses (ii) and (iii) of this Section 12.9(b)).

        12.10.  Rights of the Credit Parties.

        If at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents and the other Operative Agreements and
(ii) of the Credit Parties under the Operative Agreements have in each case
been satisfied or discharged in full, then the Credit Parties shall be entitled,
to the extent permitted under applicable law, to (a) terminate the Lease and
guaranty obligations under Section 6B and (b) receive all amounts then held
under the Operative Agreements and all proceeds with respect to any of the
Properties.  Upon the termination of the Lease and Section 6B pursuant to the
foregoing clause (a), the Lessor shall transfer to the Lessee all of its right,
title and interest free and clear of the Lien of the Lease, the Lien of the
Security Documents and all Lessor Liens in and to any Properties then subject
to the Lease and any amounts or proceeds referred to in the foregoing clause
(b) shall be paid over to the Lessee.

        12.11.  Further Assurances.

        The parties hereto shall promptly cause to be taken, executed,
acknowledged or delivered, at the sole expense of the Lessee, all such further
acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and effectuate the intent and
purposes of this Participation Agreement, the other Operative Agreements and
the transactions contemplated hereby and thereby (including without limitation
the preparation, execution and filing of any and all Uniform Commercial Code
financing statements, filings of Mortgage Instruments and other filings or
registrations which the parties hereto may from time to time request to be
filed or effected).  The Lessee, at its own expense and without need of any
prior request from any other party, shall take such action as may be necessary
(including without limitation any action specified in the preceding sentence),
or (if the Owner Trustee shall so request) as so requested, in order to
maintain and protect all security interests provided for hereunder or under
any other Operative Agreement.  In addition, in connection with the sale or
other disposition of any Property or any portion thereof, the Lessee agrees to
execute such instruments of conveyance as reasonably required in connection
therewith.

        12.12.  Calculations under Operative Agreements.

        The parties hereto agree that all calculations and numerical
determinations to be made under the Operative Agreements by the Owner Trustee
shall be made by the Agent and that such calculations and determinations shall
be conclusive and binding on the parties hereto in the absence of manifest
error.

        12.13.  Confidentiality.

        Each Financing Party severally agrees to use reasonable efforts to keep
confidential all non-public information pertaining to any Credit Party or any
of its Subsidiaries which is provided to it by any Credit Party or any of its
Subsidiaries and which an officer of any Credit Party or any of its
Subsidiaries has requested in writing be kept confidential, and shall not
intentionally disclose such information to any Person except:

                (a)     to the extent such information is public when received
by such Person or becomes public thereafter due to the act or omission of any
party other than such Person;

                (b)     to the extent such information is independently
obtained from a source other than any Credit Party or any of its Subsidiaries
and such information from such source is not, to such Person's knowledge,
subject to an obligation of confidentiality or, if such information is subject
to an obligation of confidentiality, that disclosure of such information is
permitted;

                (c)     to counsel, auditors or accountants retained by any
such Person or any Affiliates of any such Person (if such Affiliates are
permitted to receive such information pursuant to clause (f) or (g) below),
provided they agree to keep such information confidential as if such Person or
Affiliate were party to this Agreement and to financial institution regulators,
including examiners of any Financing Party or any Affiliate thereof in the
course of examinations of such Persons;

                (d)     in connection with any litigation or the enforcement or
preservation of the rights of any Financing Party under the Operative
Agreements;

                (e)     to the extent required by any applicable statute, rule
or regulation or court order (including without limitation, by way of subpoena)
or pursuant to the request of any regulatory or Governmental Authority having
jurisdiction over any such Person; provided, however, that such Person shall
endeavor (if not otherwise prohibited by Law) to notify the Lessee prior to any
disclosure made pursuant to this clause (e), except that no such Person shall
be subject to any liability whatsoever for any failure to so notify the Lessee;

                (f)     any Financing Party may disclose such information to
another Financing Party or to any Affiliate of a Financing Party that is a
direct or indirect owner of any Financing Party;

                (g)     any Financing Party may disclose such information to
an Affiliate of any Financing Party to the extent required in connection with
the transactions contemplated hereby or to the extent such Affiliate is
involved in, or provides advice or assistance to such Person with respect to,
such transactions (provided, in each case that such Affiliate has agreed in
writing to maintain confidentiality as if it were such Financing Party (as
the case may be)); or

                (h)     to the extent disclosure to any other financial
institution or other Person is appropriate in connection with any proposed or
actual (i) assignment or grant of a participation by any of the Lenders of
interests in the Credit Agreement or any Note to such other financial
institution (who will in turn be required by the Agent to agree in writing to
maintain confidentiality as if it were a Lender originally party to this
Agreement) or (ii) assignment by any Holder of interests in the Trust Agreement
to another Person (who will in turn be required by the transferring Holder to
agree in writing to maintain confidentiality as if it were a Holder originally
party to this Agreement).

        Subject to the terms of Sections 12.13(a)-12.13(h), under the terms of
any one or more of which circumstances disclosure shall be permitted, each
Financing Party severally agrees to use reasonable efforts to keep confidential
all non-public information pertaining to the financing structure described in
the unrecorded Operative Agreements.

        12.14.  Financial Reporting/Tax Characterization.

        All parties hereto intend to treat, for all US federal and state income
tax purposes, the Lessee as the owner of the Property.  Lessee agrees to obtain
advice from its own accountants and tax counsel regarding the financial
reporting treatment and the tax characterization of the transactions described
in the Operative Agreements.  Lessee further agrees that Lessee shall not rely
upon any statement of any Financing Party or any of their respective Affiliates
and/or Subsidiaries regarding any such financial reporting treatment and/or tax
characterization.

        12.15.  Set-off.

        In addition to any rights now or hereafter granted under applicable Law
and not by way of limitation of any such rights, upon and after the occurrence
of any Event of Default and during the continuance thereof, the Lenders, the
Holders, their respective Affiliates and any assignee or participant of a
Lender or a Holder in accordance with the applicable provisions of the
Operative Agreements are hereby authorized by the Credit Parties at any time or
from time to time, without notice to the Credit Parties or to any other Person,
any such notice being hereby expressly waived, to set-off and to appropriate
and to apply any and all deposits (general or special, time or demand,
including without limitation indebtedness evidenced by certificates of deposit,
whether matured or unmatured) and any other indebtedness at any time held or
owing by the Lenders, the Holders, their respective Affiliates or any assignee
or participant of a Lender or a Holder in accordance with the applicable
provisions of the Operative Agreements to or for the credit or the account of
any Credit Party against and on account of the obligations of any Credit Party
under the Operative Agreements irrespective of whether or not (a) the Lenders
or the Holders shall have made any demand under any Operative Agreement or (b)
the Agent shall have declared any or all of the obligations of any Credit Party
under the Operative Agreements to be due and payable and although such
obligations shall be contingent or unmatured.  Notwithstanding the foregoing,
neither the Agent nor any other Financing Party shall exercise, or attempt to
exercise, any right of setoff, banker's lien, or the like, against any deposit
account or property of any Credit Party held by the Agent or any other
Financing Party, without the prior written consent pursuant to the
Intercreditor Agreement, and any Financing Party violating this provision shall
indemnify the Agent and the other Financing Parties from any and all costs,
expenses, liabilities and damages resulting therefrom.  The contractual
restriction on the exercise of setoff rights provided in the foregoing sentence
is solely for the benefit of the Agent and the Financing Parties and may not be
enforced by any Credit Party.

12.16.  Approval of Exhibits.

Each Lender and Holder has reviewed and hereby consents to and approves each of
the exhibits attached to any Operative Agreement and each Mortgage Instrument.

12.17.  Filing of Security Documents.

Lessee and the Owner Trustee each hereby: (i) stipulates and agrees that it
intends for the security interests, including without limitation the interests
referenced in the Mortgage Instruments or any other Security Document, granted
pursuant to any Operative Agreement to or for the benefit of any Financing
Party to be substantially contemporaneous with the value received in connection
with and arising from the execution and delivery of, and performance under this
Agreement and the other Operative Agreements, notwithstanding any delay in the
filing of any document, statement, instrument, including without limitation any
Mortgage Instrument, any UCC financing statement, any Security Document, any
assignment and any termination of previous filings, necessary or otherwise, for
the perfection of any such security interest; (ii) waives, on its own behalf
and on behalf of any successor or assign, its right to assert that the granting
or perfection of such security interests, in whole  or in part, was not
substantially contemporaneous with the value received in connection with and
arising from the execution and delivery of, and performance under, this
Agreement and the other Operative Agreements; and (iii) agrees that it will use
its best efforts to cooperate with the Agent and each other Financing Party to
ensure that the security interests granted pursuant to any Operative Agreement
are timely and properly perfected.

[signature pages follow]
        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.

LESSEE:
        THE PEP BOYS - MANNY, MOE & JACK, a Pennsylvania corporation

        By:
        Name:
        Title:

THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA, a California corporation

        By:
        Name:
        Title:

PEP BOYS - MANNY, MOE & JACK OF DELAWARE, Inc., a Delaware corporation

        By:
        Name:
        Title:

GUARANTORS:
        THE PEP BOYS - MANNY, MOE & JACK, a Pennsylvania corporation

        By:
        Name:
        Title:

PEP BOYS - MANNY, MOE & JACK OF PUERTO RICO, INC.

        By:
        Name:
        Title:

[signature pages continue]

PBY CORPORATION

        By:
        Name:
        Title:

[signature pages continue]

CARRUS SUPPLY CORPORATION

        By:
        Name:
        Title:

[signature pages continue]

OWNER TRUSTEE AND
LESSOR: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not individually, except as expressly stated herein, but solely as
the Owner Trustee under the 1995 Pep Boys Leased Property Trust and the 1997
Pep Boys II Leased Property Trust (as applicable)

        By:
        Name:
        Title:

[signature pages continue]

AGENT AND
LENDERS:        FIRST UNION NATIONAL BANK, as a Lender and as the Agent

By:
Name:
Title:

[signature pages continue]

CONGRESS FINANCIAL CORPORATION, as a Lender

By:
Name:
Title:

[signature pages continue]
 HOLDERS:                                  FIRST UNION NATIONAL BANK, as a
  Holder

By:
Name:
Title:

[signature pages end]
 EXHIBIT A

REQUISITION FORM

[_______________, a __________] corporation (the "Company") hereby certifies as
true and correct and delivers the following Requisition to FIRST UNION NATIONAL
BANK, as the agent for the Lenders (hereinafter defined) and respecting the
Security Documents, as the agent for the Secured Parties (the "Agent"):

Reference is made herein to that certain Participation Agreement dated as of
September 22, 2000 (as amended, modified, extended, supplemented, restated
and/or replaced from time to time, the "Participation Agreement") The Pep Boys
- Manny, Moe & Jack, The Pep Boys Manny Moe & Jack of California, Pep Boys -
Manny, Moe & Jack of Delaware, Inc., as Lessees, The Pep Boys - Manny, Moe &
Jack and the various parties thereto from time to time, as the Guarantors,
State Street Bank and Trust Company of Connecticut, National Association, as
the Owner Trustee, the various banks and other lending institutions which are
parties thereto from time to time, as holders (the "Holders"), the various
banks and other lending institutions which are parties thereto from time to
time, as lenders (the "Lenders"), and the Agent.  Capitalized terms used herein
but not otherwise defined herein shall have the meanings set forth therefor in
the Participation Agreement.

        In connection with this Requisition, the Company hereby requests that
the Lenders make Loans to the Lessor in the amount of $______________ and that
the Holders make Holder Advances to the Lessor in the amount of $_____________.
The Company hereby certifies that each of the provisions of the Participation
Agreement applicable to the Loans and Holder Advances requested hereunder have
been complied with as of the date of this Requisition.

        The Company requests the Loans be allocated as follows:

                $______________  Eurodollar Loans

        The Company requests the Holder Advances be allocated as follows:

                $______________  Eurodollar Holder Advances

        The Company has caused this Requisition to be executed by its duly
authorized officer as of this _____ day of __________, ______.

THE PEP BOYS - MANNY, MOE & JACK a Pennsylvania corporation,

By:
Name:
Title:

THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA, a California corporation

By:
Name:
Title:

PEP BOYS - MANNY, MOE & JACK OF DELAWARE, Inc., a Delaware corporation

By:
Name:
Title:

 EXHIBIT B

[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(j) of the
Participation Agreement)

        ____________, ______

TO THOSE ON THE ATTACHED DISTRIBUTION LIST

        Re:     Synthetic Lease Financing Provided in favor of [______________]

Dear Sirs:

We have acted as special counsel to [_______________, a _______________] (the
"Lessee"), and the various parties thereto from time to time, as guarantors
(individually, a "Guarantor" and collectively, the "Guarantors"; individually,
Lessee and each Guarantor may be referred to herein as a "Credit Party" or
collectively, as the "Credit Parties"), in connection with certain transactions
contemplated by the Participation Agreement dated as of September 22, 2000 (the
"Participation Agreement"), The Pep Boys - Manny, Moe & Jack, The Pep Boys
Manny Moe & Jack of California, Pep Boys - Manny, Moe & Jack of Delaware, Inc.,
as Lessees, The Pep Boys - Manny, Moe & Jack and the various parties thereto
from time to time, as the Guarantors, State Street Bank and Trust Company of
Connecticut, National Association, as the Owner Trustee (the "Owner Trustee"),
the various banks and other lending institutions which are parties thereto from
time to time, as holders (the "Holders"), the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders") and First Union National Bank, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Secured Parties (the
"Agent").  This opinion is delivered pursuant to Section 5.3(j) of the
Participation Agreement.  All capitalized terms used herein, and not otherwise
defined herein, shall have the meanings assigned thereto in Appendix A to the
Participation Agreement.

In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of [identify the applicable Operative
Agreements, including each Mortgage Instrument, related UCC fixture filings,
Additional UCCs (hereinafter defined), Deeds and Memoranda of Lease] and such
other corporate documents and records of the Credit Parties, certificates of
public officials and representatives of the Credit Parties as to certain
factual matters, and such other instruments and documents which we have deemed
necessary or advisable to examine for the purpose of this opinion.  With
respect to such examination, we have assumed (i) the statements of fact made in
all such certificates, documents and instruments are true, accurate and
complete; (ii) the due authorization, execution and delivery of the Operative
Agreements by the parties thereto; (iii) the genuineness of all signatures, the
authenticity and completeness of all documents, certificates, instruments,
records and corporate records submitted to us as originals and the conformity
to the original instruments of all documents submitted to us as copies, and the
authenticity and completeness of the originals of such copies; (iv) that all
parties have all requisite corporate power and authority to execute, deliver
and perform the Operative Agreements; and (v) except as to the Credit Parties,
the enforceability of the Mortgage Instrument, the Memorandum of Lease and the
UCC financing statements against all parties thereto.

Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:

        (a)     The Mortgage Instrument and Memorandum of Lease are enforceable
in accordance with their respective terms, except as limited by laws generally
affecting the enforcement of creditors' rights, which laws will not materially
prevent the practical realization of the benefits intended by such documents.

        (b)     Each form of Mortgage Instrument and UCC fixture filing
relating thereto, attached hereto as Schedules 1 and 2, respectively, is in
proper form for filing and recording with the offices of [identify the
recording offices of the respective county clerks where the Properties are to
be located].  Upon filing of each Mortgage Instrument and UCC fixture filing in
[identify the recording offices of the respective county clerks where the
Properties are to be located], the Agent will have a valid, perfected lien and
security interest in that portion of the Collateral described in such Mortgage
Instrument or UCC fixture filing to the extent such Collateral is comprised of
real property and/or fixtures.

        (c)     The forms of UCC financing statements relating to the Security
Documents, attached hereto as Schedule 3 (the "Additional UCCs"), are in proper
form for filing and recording with the offices of [identify (i) the recording
offices of the respective county clerks where the Properties are to be located
and (ii) the Secretary of State where the Properties are to be located].  Upon
filing of the Additional UCCs in [identify (i) the recording offices of the
respective county clerks where the Properties are to be located and (ii) the
Secretary of State where the Properties are to be located], the Agent will have
a valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by filing UCC-1 financing statements under Article 9 of
the UCC.

        (d)     Each form of Deed and Memorandum of Lease is in appropriate
form for filing and recording with the [identify the recording offices of the
respective county clerks for the counties where the Properties are to be
located].

        (e)     Each Memorandum of Lease, when filed and recorded with the
[identify the recording offices of the respective county clerks for the
counties where the Properties are to be located], will have been filed and
recorded in all public offices in the State of [__________] in which filing or
recording is necessary to provide constructive notice of the Lease to third
Persons and to establish of record the interest of the Lessor thereunder as to
the Properties described in each such Memorandum of Lease.

        (f)     Title to the Properties located in the State of [___________]
may be held in the name of the Owner Trustee as follows:  State Street Bank and
Trust Company of Connecticut, National Association, not individually, but
solely as the Owner Trustee under the 1995 Pep Boys Leased Property Trust and
the 1997 Pep Boys II Leased Property Trust (as applicable).

        (g)     The execution and delivery by State Street Bank and Trust
Company of Connecticut, National Association, individually or as the Owner
Trustee, as the case may be, of the Operative Agreements to which it is a party
and compliance by State Street Bank and Trust Company of Connecticut, National
Association, individually or as the Owner Trustee, with all of the provisions
thereof do not and will not contravene any law, rule or regulation of [identify
the state].

        (h)     By reason of their participation in the transaction
contemplated under the Operative Agreements, none of the Agent, the Lenders,
the Holders or the Owner Trustee has to (a) qualify as a foreign corporation in
[identify the state], (b) file any application or any designation for service
of process in [identify the state] or (c) pay any franchise, income, sales,
excise, stamp or other taxes of any kind to [identify the state].

        (i)     The provisions in the Operative Agreements concerning Rent,
interest, fees, prepayment premiums and other similar charges do not violate
the usury laws or other similar laws regulating the use or forbearance of
money of [identify the state] or [ALTERNATE AFFIRMATIVE OPINION RE: USURY].

        (j)     If the transactions contemplated by the Operative Agreements
are characterized as a lease transaction by a court of competent jurisdiction,
the Lease and the applicable Lease Supplement shall demise to the Lessee a
valid leasehold interest in the Properties described in such Lease Supplement.

This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein.  This opinion is based on
and is limited to the laws of the State of [___________] and the federal laws
of the United States of America.  Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.

This opinion is for the sole benefit of the Lessee, the Guarantors, the Owner
Trustee, the Holders, the Lenders, the Agent and their respective successors
and assigns and may not be relied upon by any other Person other than such
parties and their respective successors and assigns without the express
written consent of the undersigned.  The opinions expressed herein are as of
the date hereof and we make no undertaking to amend or supplement such
opinions if facts come to our attention or changes in the current law of the
jurisdictions mentioned herein occur which could affect such opinions.

Very truly yours,

[LESSEE'S OUTSIDE COUNSEL]

 Distribution List

First Union National Bank, as the Agent, a Holder and a Lender

Congress Financial Corporation, as a Lender

The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders

The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders

The Pep Boys - Manny, Moe & Jack a Pennsylvania corporation, The Pep Boys
Manny Moe & Jack of California, a California corporation and Pep Boys -
Manny, Moe & Jack of Delaware, Inc., a Delaware corporation, as the Lessee

The various parties to the Participation Agreement from time to time, as the
Guarantors State Street Bank and Trust Company of Connecticut, National
Association, not individually, but solely as the Owner Trustee under the
1995 Pep Boys Leased Property Trust and the 1997 Pep Boys II Leased Property
Trust (as applicable)

 Schedule 1

Form of Mortgage Instrument

 Schedule 2

Forms of UCC Fixture Filings

 Schedule 3

Forms of UCC Financing Statements

 EXHIBIT C

[NAME OF LESSEE]

OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(w) of the Participation Agreement)

        [_______________, a __________] corporation (the "Company"), DOES
HEREBY CERTIFY as follows:

        1.      Each and every representation and warranty of each Credit Party
contained in the Operative Agreements to which it is a party is true and
correct on and as of the date hereof.

        2.      No Default or Event of Default has occurred and is continuing
under any Operative Agreement.

        3.      Each Operative Agreement to which any Credit Party is a party
is in full force and effect with respect to it.

        4.      Each Credit Party has duly performed and complied with all
covenants, agreements and conditions contained in the Participation Agreement
(hereinafter defined) or in any Operative Agreement required to be performed
or complied with by it on or prior to the date hereof.

        Capitalized terms used in this Officer's Certificate and not otherwise
defined herein have the respective meanings ascribed thereto in the
Participation Agreement dated as of September 22, 2000 among The Pep Boys -
Manny, Moe & Jack, The Pep Boys Manny Moe & Jack of California, Pep Boys -
Manny, Moe & Jack of Delaware, Inc., as Lessees, The Pep Boys - Manny, Moe &
Jack and the various parties thereto from time to time, as the guarantors (the
"Guarantors"), State Street Bank and Trust Company of Connecticut, National
Association, as the owner trustee (the "Owner Trustee"), the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as lenders (the "Lenders") and First
Union National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Secured Parties (the "Agent").

        IN WITNESS WHEREOF, the Company has caused this Officer's Certificate
to be duly executed and delivered as of this _____ day of __________, ______.

[                                               ]

        By:
        Name:
        Title:
 EXHIBIT D

[NAME OF CREDIT PARTY]

SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(x) of the Participation Agreement)

        [NAME OF CREDIT PARTY], a [__________] corporation (the "Company")
DOES HEREBY CERTIFY as follows:

1.      Attached hereto as Schedule 1 is a true, correct and complete copy of
the resolutions of the Board of Directors of the Company duly adopted by the
Board of Directors of the Company on __________.  Such resolutions have not
been amended, modified or rescinded since their date of adoption and remain in
full force and effect as of the date hereof.

2.      Attached hereto as Schedule 2 is a true, correct and complete copy of
the Articles of Incorporation of the Company on file in the Office of the
Secretary of State of __________.  Such Articles of Incorporation have not been
amended, modified or rescinded since their date of adoption and remain in full
force and effect as of the date hereof.

3.      Attached hereto as Schedule 3 is a true, correct and complete copy of
the Bylaws of the Company.  Such Bylaws have not been amended, modified or
rescinded since their date of adoption and remain in full force and effect as
of the date hereof.

4.      The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and titles are their true and
correct signatures.

        Name    Office  Signature

        ___________________     _______________________  ___________________

        ___________________     _______________________ ____________________

IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.

[NAME OF CREDIT PARTY]

By:
Name:
Title:
 Schedule 1

Board Resolutions

 Schedule 2

Articles of Incorporation

 Schedule 3

Bylaws

 EXHIBIT E

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION

OFFICER'S CERTIFICATE
(Pursuant to Section 5.3(z) of the Participation Agreement)

        STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association, not individually (except with
respect to paragraph 1 below, to the extent any such representations and
warranties are made in its individual capacity) but solely as the owner trustee
under the 1995 Pep Boys Leased Property Trust and the 1997 Pep Boys II Leased
Property Trust (as applicable) (the "Owner Trustee"), DOES HEREBY CERTIFY as
follows:

1.      Each and every representation and warranty of the Owner Trustee
contained in the Operative Agreements to which it is a party is true and
correct on and as of the date hereof.

2.      Each Operative Agreement to which the Owner Trustee is a party is
in full force and effect with respect to it.

3.      The Owner Trustee has duly performed and complied with all covenants,
agreements and conditions contained in the Participation Agreement (hereinafter
defined) or in any Operative Agreement required to be performed or complied
with by it on or prior to the date hereof.

Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Participation
Agreement dated as of September 22, 2000 among The Pep Boys - Manny, Moe &
Jack, The Pep Boys Manny Moe & Jack of California, Pep Boys - Manny, Moe & Jack
of Delaware, Inc., as Lessees, The Pep Boys - Manny, Moe & Jack and the various
parties thereto from time to time, as the Guarantors, State Street Bank and
Trust Company of Connecticut, National Association, as the Owner Trustee, the
various parties thereto from time to time, as guarantors (the "Guarantors"),
the Owner Trustee, the various banks and other lending institutions which are
parties thereto from time to time, as holders (the "Holders"), the various
banks and other lending institutions which are parties thereto from time to
time, as lenders (the "Lenders") and First Union National Bank, as the agent
for the Lenders and respecting the Security Documents, as the agent for the
Secured Parties (the "Agent").

IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to
be duly executed and delivered as of this _____ day of __________, ______.

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not
individually, except as expressly stated herein, but solely as the Owner Trustee
under the 1995 Pep Boys Leased Property Trust and the 1997 Pep Boys II Leased
Property Trust (as applicable)

By:
Name:
Title:

EXHIBIT F

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION

SECRETARY'S CERTIFICATE
(Pursuant to Section 5.3(aa) of the Participation Agreement)

CERTIFICATE OF ASSISTANT SECRETARY

        I, ______________________, duly elected and qualified [Assistant
Secretary of the Board of Directors] of State Street Bank and Trust Company of
Connecticut, National Association (the "Company"), hereby certify as follows:

1.      Attached hereto as Schedule 1 is a true, correct and complete copy of
the resolutions of the Board of Directors of the Company duly adopted by the
Board of Directors of the Company on __________.  Such resolutions have not
been amended, modified or rescinded since their date of adoption and remain in
full force and effect as of the date hereof.

2.      Attached hereto as Schedule 2 is a true, correct and complete copy of
the Articles of Incorporation of the Company on file in the Office of the
Secretary of State of __________.  Such Articles of Incorporation have not been
amended, modified or rescinded since their date of adoption and remain in full
force and effect as of the date hereof.

3.      Attached hereto as Schedule 3 is a true, correct and complete copy of
the Bylaws of the Company.  Such Bylaws have not been amended, modified or
rescinded since their date of adoption and remain in full force and effect as
of the date hereof.

4.      The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and titles are their true and
correct signatures.

        Name    Office  Signature

        ___________________     _______________________ ____________________

        ___________________     _______________________ ____________________

IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this _____ day of ___________, ______.

STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT

By:
Name:
Title:

 Schedule A

Articles of Association

 Schedule B

Bylaws

 Schedule C

Resolution

 EXHIBIT G

[State Street to provide their opinion in a form substantially similar to the
form below.]

[Outside Counsel Opinion for the Owner Trustee]
(Pursuant to Section 5.3(bb) of the
Participation Agreement)

        ___________, ______

TO THOSE ON THE ATTACHED DISTRIBUTION LIST

        Re:     Trust Agreement dated as of September 22, 2000

Dear Sirs:

        We have acted as special counsel for State Street Bank and Trust
Company of Connecticut, National Association, a national banking association,
in its individual capacity ("SSTB") and in its capacity as trustee (the "Owner
Trustee") under the Trust Agreement dated as of September 22, 2000 (the "Trust
Agreement") by and among it and the various banks and other lending
institutions which are parties thereto from time to time, as holders (the
"Holders"), in connection with the execution and delivery by the Owner Trustee
of the Operative Agreements to which it is a party.  Except as otherwise
defined herein, the terms used herein shall have the meanings set forth in
Appendix A to the Participation Agreement dated as of September 22, 2000 (the
"Participation Agreement") by and among The Pep Boys - Manny, Moe & Jack, The
Pep Boys Manny Moe & Jack of California, Pep Boys - Manny, Moe & Jack of
Delaware, Inc., as Lessees, The Pep Boys - Manny, Moe & Jack and the various
parties thereto from time to time, as the Guarantors, State Street Bank and
Trust Company of Connecticut, National Association, as the Owner Trustee, the
various parties thereto from time to time, as guarantors (the "Guarantors"),
State Street Bank and Trust Company of Connecticut, National Association, as
the Owner Trustee, the Holders, the various banks and other lending
institutions which are parties thereto from time to time, as lenders (the
"Lenders") and First Union National Bank, as the agent for the Lenders and
respecting the Security Documents, as the agent for the Secured Parties (the
"Agent").

        We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records and other instruments
as we have deemed necessary or advisable for the purpose of rendering this
opinion.

Based upon the foregoing, we are of the opinion that:

        1.      SSTB is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America
and each of SSTB and the Owner Trustee has under the laws of the State of
Connecticut and federal banking law the power and authority to enter into and
perform its obligations under the Trust Agreement and each other Operative
Agreement to which it is a party.

        2.      The Owner Trustee is the duly appointed trustee under the
Trust Agreement.

        3.      The Trust Agreement has been duly authorized, executed and
delivered by one (1) of the officers of SSTB and, assuming due authorization,
execution and delivery by the Holders, is a legal, valid and binding obligation
of the Owner Trustee (and to the extent set forth therein, against SSTB),
enforceable against the Owner Trustee (and to the extent set forth therein,
against SSTB) in accordance with its terms, and the Trust Agreement creates
under the laws of the State of Connecticut for the Holders the beneficial
interest in the Trust Estate it purports to create and is a valid trust under
the laws of the State of Connecticut.

        4.      The Operative Agreements to which it is party have been duly
authorized, executed and delivered by SSTB, and, assuming due authorization,
execution and delivery by the other parties thereto, are legal, valid and
binding obligations of SSTB, enforceable against SSTB in accordance with their
respective terms.

        5.      The Operative Agreements to which it is party have been duly
authorized, executed and delivered by the Owner Trustee, and, assuming due
authorization, execution and delivery by the other parties thereto, are legal,
valid and binding obligations of the Owner Trustee, enforceable against the
Owner Trustee in accordance with their respective terms.  The Notes and
Certificates have been duly issued, executed and delivered by the Owner
Trustee, pursuant to authorization contained in the Trust Agreement, and the
Certificates are entitled to the benefits and security afforded by the Trust
Agreement in accordance with its terms and the terms of the Trust Agreement.

        6.      The execution and delivery by each of SSTB and the Owner
Trustee of the Trust Agreement and the Operative Agreements to which it is a
party, and compliance by SSTB or the Owner Trustee, as the case may be, with
all of the provisions thereof do not and will not contravene any Laws
applicable to or binding on SSTB, or as the Owner Trustee, or contravene the
provisions of, or constitute a default under, its charter documents or by-laws
or, to our knowledge after due inquiry, any indenture, mortgage contract or
other agreement or instrument to which SSTB or Owner Trustee is a party or by
which it or any of its property may be bound or affected.

        7.      The execution and delivery of the Operative Agreements by each
of SSTB and the Owner Trustee and the performance by each of SSTB and the Owner
Trustee of their respective obligations thereunder does not require on or prior
to the date hereof the consent or approval of, the giving of notice to, the
registration or filing with, or the taking of any action in respect of any
Governmental Authority or any court.

        8.      Assuming that the trust created by the Trust Agreement is
treated as a grantor trust for federal income tax purposes within the
contemplation of Section 671 through 678 of the Internal Revenue Code of 1986,
there are no fees, taxes, or other charges (except taxes imposed on fees
payable to the Owner Trustee) payable to the State of [   ] or any political
subdivision thereof in connection with the execution, delivery or performance
by the Owner Trustee, the Agent, the Lenders, the Lessee or the Holders, as
the case may be, of the Operative Agreements or in connection with the
acquisition of any Property by the Owner Trustee or in connection with the
making by any Holder of its investment in the Trust or its acquisition of the
beneficial interest in the Trust Estate or in connection with the issuance and
acquisition of the Certificates, or the Notes, and neither the Owner Trustee,
the Trust Estate nor the trust created by the Trust Agreement will be subject
to any fee, tax or other governmental charge (except taxes on fees payable to
the Owner Trustee) under the laws of the State of Connecticut or any political
subdivision thereof on, based on or measured by, directly or indirectly, the
gross receipts, net income or value of the Trust Estate by reason of the
creation or continued existence of the trust under the terms of the Trust
Agreement pursuant to the laws of the State of Connecticut or the Owner
Trustee's performance of its duties under the Trust Agreement.

        9.      There is no fee, tax or other governmental charge under the
laws of the States of [                             ] or any political
subdivision thereof in existence on the date hereof on, based on or measured by
any payments under the Certificates, Notes or the beneficial interest in the
Trust Estate, by reason of the creation of the trust under the Trust Agreement
pursuant to the laws of the State of Connecticut or the Owner Trustee's
performance of its duties under the Trust Agreement within the State of
Connecticut.

        10.     Upon the filing of the financing statement on form UCC-1 (a
copy of which has been provided to the Owner Trustee and reviewed by us) with
the Connecticut Division of Corporations and Commercial Code, the Agent's
security interest in the Trust Estate, for the benefit of the Lenders and the
Holders, will be perfected, to the extent that such perfection is governed by
Article 9 of the Uniform Commercial Code as in effect in the State of
Connecticut (the "Connecticut UCC").

        Your attention is directed to the Connecticut UCC, which provides, in
part, that a filed financing statement which does not state a maturity date or
which states a maturity date of more than five (5) years is effective only for
a period of five (5) years from the date of filing, unless within six (6)
months prior to the expiration of said period a continuation statement is filed
in the same office or offices in which the original statement was filed.  The
continuation statement must be signed by the secured party, identify the
original statement by file number and state that the original statement is
still effective.  Upon the timely filing of a continuation statement, the
effectiveness of the original financing statement is continued for five (5)
years after the last date to which the original statement was effective.
Succeeding continuation statements may be filed in the same manner to continue
the effectiveness of the original statement.

The foregoing opinions are subject to the following assumptions, exceptions and
qualifications:

        A.      We are attorneys admitted to practice in the State of [       ]
and in rendering the foregoing opinions we have not passed upon, or purported
to pass upon, the laws of any jurisdictions other than the State of [        ]
and the federal banking law governing the banking and trust powers of SSTB.  In
addition, without limiting the foregoing we express no opinion with respect to
(i) federal securities laws, including the Securities Act of 1933, as amended,
the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) Title 49 of the United States Code Annotated (previously
 the Federal Aviation Act of 1958), as amended, (iii) the Federal
Communications Act of 1934, as amended, or (iv) state securities or blue sky
laws.  Insofar as the foregoing opinions relate to the legality, validity,
binding effect and enforceability of the documents involved in these
transactions, which by their terms are governed by the laws of a state other
than [  ], we have assumed that the laws of such state (as to which we express
no opinion), are in all material aspects identical to the laws of the State of
[               ].

        B.      The opinions set forth in paragraphs 3, 4, and 5 above are
subject to the qualification that enforceability of the Trust Agreement and
the other Operative Agreements to which SSTB and the Owner Trustee are
parties, in accordance with their respective terms, may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, receivership or similar
laws affecting enforcement of creditors' rights generally, and (ii) general
principles of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law.

        C.      As to the documents involved in these transactions, we have
assumed that each is a legal, valid and binding obligation of each party
thereto, other than SSTB or the Owner Trustee, and is enforceable against each
such party in accordance with their respective terms.

        D.      We have assumed that all signatures, other than those of the
Owner Trustee or SSTB, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
as copies conform with the originals, which facts we have not independently
verified.

        E.      We do not purport to be experts in respect of, or express any
opinion concerning laws, rules or regulations applicable to the particular
nature of the equipment or property involved in these transactions.

        F.      We have made no investigation of, and we express no opinion
concerning, the nature of the title to any part of the equipment or property
involved in these transactions or the priority of any mortgage or security
interest.

        G.      We have assumed that the Participation Agreement and the
transactions contemplated thereby are not within the prohibitions of Section
406 of the Employee Retirement Income Security Act of 1974.

        H.      In addition to any other limitation by operation of law upon
the scope, meaning, or purpose of this opinion, the opinions expressed herein
speak only as of the date hereof.  We have no obligation to advise the
recipients of this opinion (or any third party) and make no undertaking to
amend or supplement such opinions if facts come to our attention or changes in
the current law of the jurisdictions mentioned herein occur which could affect
such opinions the legal analysis, a legal conclusion or any information
confirmation herein.

        I.      This opinion is for the sole benefit of the Lessee, the
Guarantors, the Owner Trustee, the Holders, the Lenders, the Agent and their
respective successors and assigns in matters directly related to the
Participation Agreement or the transaction contemplated thereunder and may not
be relied upon by any other person other than such parties and their respective
successors and assigns without the express written consent of the undersigned.
The opinions expressed in this letter are limited to the matter set forth in
this letter, and no other opinions should be inferred beyond the matters
expressly stated.

Very truly yours,

[                                       ]

 Distribution List

First Union National Bank, as the Agent, a Holder and a Lender

Congress Financial Corporation, as a Lender

The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders

The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders

The Pep Boys - Manny, Moe & Jack a Pennsylvania corporation, The Pep Boys Manny
Moe & Jack of California, a California corporation and Pep Boys - Manny, Moe &
Jack of Delaware, Inc., a Delaware corporation, as the Lessee

The various parties to the Participation Agreement from time to time, as the
Guarantors

State Street Bank and Trust Company of Connecticut, National Association, not
individually, but solely as the Owner Trustee under the 1995 Pep Boys Leased
Property Trust and the 1997 Pep Boys II Leased Property Trust (as applicable)

 EXHIBIT H

[Outside Counsel Opinion for the Lessee]
(Pursuant to Section 5.3(cc) of the Participation Agreement)

        ____________, ______

TO THOSE ON THE ATTACHED DISTRIBUTION LIST

        Re:     Synthetic Lease Financing Provided in favor of [____________]

Dear Sirs:

We have acted as special counsel to [_______________, a __________] corporation
(the "Lessee") and the Guarantors (hereinafter defined) in connection with
certain transactions contemplated by the Participation Agreement dated as of
September 22, 2000 (the "Participation Agreement"), among The Pep Boys - Manny,
Moe & Jack, The Pep Boys Manny Moe & Jack of California, Pep Boys - Manny, Moe
& Jack of Delaware, Inc., as Lessees, The Pep Boys - Manny, Moe & Jack and the
various parties thereto from time to time, as the Guarantors, State Street Bank
and Trust Company of Connecticut, National Association, as the Owner Trustee,
the various parties thereto from time to time, as guarantors (the
"Guarantors"), State Street Bank and Trust Company of Connecticut, National
Association, as the Owner Trustee (the "Owner Trustee"), the various banks and
other lending institutions which are parties thereto from time to time, as
holders (the "Holders"), the various banks and other lending institutions which
are parties thereto from time to time, as lenders (the "Lenders") and First
Union National Bank, as the agent for the Lenders and respecting the Security
Documents, as the agent for the Secured Parties (the "Agent").  This opinion
is delivered pursuant to Section 5.3(ee) of the Participation Agreement.  All
capitalized terms used herein, and not otherwise defined herein, shall have the
meanings assigned thereto in Appendix A to the Participation Agreement.

In connection with the foregoing, we have examined originals, or copies
certified to our satisfaction, of the Operative Agreements, and such other
corporate, partnership or limited liability company documents and records of
the Credit Parties, certificates of public officials and representatives of the
Credit Parties as to certain factual matters, and such other instruments and
documents which we have deemed necessary or advisable to examine for the
purpose of this opinion.  With respect to such examination, we have assumed (i)
the statements of fact made in all such certificates, documents and instruments
are true, accurate and complete; (ii) the due authorization, execution and
delivery of the Operative Agreements by the parties thereto other than the
Credit Parties; (iii) the genuineness of all signatures (other than the
signatures of persons signing on behalf of the Credit Parties), the
authenticity and completeness of all documents, certificates, instruments,
records and corporate records submitted to us as originals and the conformity
to the original instruments of all documents submitted to us as copies, and the
authenticity and completeness of the originals of such copies; (iv) that all
parties other than the Credit Parties have all requisite corporate power and
authority to execute, deliver and perform the Operative Agreements; and (v) the
enforceability of the Operative Agreements against all parties thereto other
than the Credit Parties and respecting the opinion set forth below in section
(i), State Street Bank and Trust Company of Connecticut, National Association,
individually or as the Owner Trustee, as the case may be.  We have further
assumed that the laws of the States of [state of lawyer's admission] and
[governing law of Participation Agreement] are substantively identical.

Based on the foregoing, and having due regard for such legal considerations as
we deem relevant, and subject to the limitations and assumptions set forth
herein, including without limitation the matters set forth in the last two (2)
paragraphs hereof, we are of the opinion that:

        (a)     Each Credit Party is a [corporation, partnership or limited
liability company] duly [incorporated or organized], validly existing and in
good standing under the laws of the state of its [incorporation/formation] and
has the power and authority to conduct its business as presently conducted and
to execute, deliver and perform its obligations under the Operative Agreements
to which it is a party.  Each Credit Party is duly qualified to do business in
all jurisdictions in which its failure to so qualify would materially impair
its ability to perform its obligations under the Operative Agreements to which
it is a party or its financial position or its business as now and now proposed
to be conducted.

        (b)     The execution, delivery and performance by each Credit Party of
the Operative Agreements to which it is a party have been duly authorized by
all necessary [corporate] action on the part of each Credit Party and the
Operative Agreements to which each Credit Party is a party have been duly
executed and delivered by each Credit Party.

        (c)     The Operative Agreements to which each Credit Party is a party
constitute valid and binding obligations of each Credit Party enforceable
against each Credit Party in accordance with the terms thereof, subject to
bankruptcy, insolvency, liquidation, reorganization, fraudulent conveyance, and
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law).

        (d)     The execution and delivery by each Credit Party of the
Operative Agreements to which it is a party and compliance by each Credit Party
with all of the provisions thereof do not and will not (i) contravene the
provisions of, or result in any breach of or constitute any default under, or
result in the creation of any Lien (other than Permitted Liens and Lessor
Liens) upon any of its property under, its [Articles of Incorporation By-Laws,
operating agreement, partnership agreement or other similar document of
formation] or any indenture, mortgage, chattel mortgage, deed of trust, lease,
conditional sales contract, bank loan or credit agreement or other agreement or
instrument to which any Credit Party is a party or by which any Credit Party or
any property of any Credit Party may be bound or affected, or (ii) contravene
any Laws or any order of any Governmental Authority applicable to or binding on
any Credit Party.

        (e)     No Governmental Action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery or
performance by any Credit Party of any of the Operative Agreements to which any
Credit Party is a party or for the acquisition, ownership, construction and
completion of the Properties, except for those which have been obtained.

        (f)     Except as set forth on Schedule 1 hereto, there are no actions,
suits or proceedings pending or to our knowledge, threatened against any Credit
Party in any court or before any Governmental Authority, that concern the
Properties or the interest of any Credit Party therein or that question the
validity or enforceability of any Operative Agreement to which any Credit Party
is a party or the overall transaction described in the Operative Agreements to
which any Credit Party is a party.

        (g)     Neither the nature of the Properties, nor any relationship
between any Credit Party and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Operative
Agreements to which any Credit Party is a party is such as to require any
approval of stockholders of, or approval or consent of any trustee or holders
of indebtedness of, any Credit Party, except for such approvals and consents
which have been duly obtained and are in full force and effect.

        (h)     The Security Documents which have been executed and delivered
as of the date of this opinion create, for the benefit of the Agent, the
security interests in the Collateral described therein which by their terms
such Security Documents purport to create.  Upon filing of the UCC-1 financing
statements (attached hereto as Schedule 2) relating to the Security Documents
in the recording offices of (A) the respective county clerk where the principal
place of business of the Lessee is located and (B) the Secretary of State where
the principal place of business of the Lessee is located, the Agent will have a
valid, perfected lien and security interest in that portion of the Collateral
which can be perfected by the filing of UCC-1 financing statements under
Article 9 of the UCC in [identify the state].

        (i)     The Operative Agreements to which State Street Bank and Trust
Company of Connecticut, National Association, individually or as the Owner
Trustee, is a party constitute valid and binding obligations of such party and
are enforceable against State Street Bank and Trust Company of Connecticut,
National Association, individually or as the Owner Trustee, as the case may be,
in accordance with the terms thereof, subject to bankruptcy, insolvency,
liquidation, reorganization, fraudulent conveyance, and similar laws affecting
creditors, rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law).

        (j)     The offer, issuance, sale and delivery of the Notes and the
offer, issuance, sale and delivery of the Certificates under the circumstances
contemplated by the Participation Agreement do not, under existing law, require
registration of the Notes or the Certificates being issued on the date hereof
under the Securities Act of 1933, as amended, or the qualification of the Trust
Agreement under the Trust Indenture Act of 1939, as amended.

This opinion is limited to the matters stated herein and no opinion is implied
or may be inferred beyond the matters stated herein.  This opinion is based on
and is limited to the laws of the States of [__________], and the federal laws
of the United States of America.  Insofar as the foregoing opinion relates to
matters of law other than the foregoing, no opinion is hereby given.

This opinion is for the sole benefit of the Lessee, the Guarantors, the Owner
Trustee, the Holders, the Lenders, the Agent and their respective successors
and assigns and may not be relied upon by any other person other than such
parties and their respective successors and assigns without the express written
consent of the undersigned.  The opinions expressed herein are as of the date
hereof and we  make no undertaking to amend or supplement such opinions if
facts come to our attention or changes in the current law of the jurisdictions
mentioned herein occur which could affect such opinions.

Very truly yours,

[LESSEE'S OUTSIDE COUNSEL]

 Distribution List

First Union National Bank, as the Agent, a Holder and a Lender

Congress Financial Corporation, as a Lender

The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Holders

The various banks and other lending institutions which are parties to the
Participation Agreement from time to time, as additional Lenders

The Pep Boys - Manny, Moe & Jack a Pennsylvania corporation, The Pep Boys
Manny Moe & Jack of California, a California corporation and Pep Boys - Manny,
Moe & Jack of Delaware, Inc., a Delaware corporation, as the Lessee

The various parties to the Participation Agreement from time to time, as the
Guarantors

State Street Bank and Trust Company of Connecticut, National Association, not
individually, but solely as the Owner Trustee under the 1995 Pep Boys Leased
Property Trust and the 1997 Pep Boys II Leased Property Trust (as applicable)

 Schedule 1

(Litigation)

 Schedule 2

(UCC-1 Financing Statements)

 EXHIBIT I

[Intentionally Reserved]

 EXHIBIT J

[Intentionally Reserved]

 EXHIBIT K

Description of Material Litigation
(Pursuant to Section 6.2(d) of the Participation Agreement)

Coalition for a Level Playing Field, L.L.C. v. AutoZone, Inc., et al. in the
United States District Court for the Eastern District of New York.  There are
over 100 plaintiffs, consisting of automotive jobbers, warehouse distributors
and a coalition of several trade associations; the defendants are AutoZone,
Inc., Wal-Mart Stores, Inc., Advance Stores Company, Inc., CSK Auto, Inc.,
Pep Boys, Discount Auto Parts, Inc., O'Reilly Automotive, Inc. and Keystone
Automotive Operations, Inc.  The plaintiffs allege that the defendants violated
various provisions of the Robinson-Patman Act by, among other things, knowingly
inducing and receiving various forms of discriminatory prices from automotive
parts manufacturers.  The plaintiffs are seeking compensatory damages, which
would be trebled under applicable law, as well as injunctive and other
equitable relief.  Pep Boys believes the claims are without merit and intends
to vigorously defend this action.

Brian Lee, Anthony Baxton and Harry Schlein v. The Pep Boys - Manny, Moe & Jack
in the Circuit Court of Mobile County, Alabama.  The Circuit Court of Mobile
County, Alabama granted Pep Boys motion to dismiss the case; plaintiffs have
until September 20th to appeal.  In their complaint, the plaintiffs alleged
that Pep Boys sold old or used automotive batteries to consumers as if those
batteries were new. The complaint purported  to state causes of action for
fraud and deceit, negligent misrepresentation, breach of contract and violation
of state consumer protection statutes. The plaintiffs sought compensatory and
punitive damages, as well as injunctive and other equitable relief.  Pep Boys
believes the claims are without merit and will continue to vigorously defend
this action.

 EXHIBIT L

States of Incorporation/Formation and Principal Place of Business of Each
Guarantor
(Pursuant to Section 6.2(i) of the Participation Agreement)

Guarantors  State of Incorporation/Formation  State of Principal Place
                                              of Business

<TABLE>
EXHIBIT M

<CAPTION>
Store No.   Project                            Loan Property Cost      Holder Property Cost    Property Cost
<S>         <S>                                <C>                     <C>                     <C>
220         Southgate, MI                      $  2,540,476.56         $   78,571.44           $  2,619,048.00
226         Wyoming, MI  (28th St.)            $  2,685,056.03         $   83,042.97           $  2,768,099.00
235         Michigan Road, IN                  $  2,426,877.92         $   75,058.08           $  2,501,936.00
261         38th & Keystone, Indianapolis, IN  $    433,739.38         $   13,414.62           $    447,154.00
348         Bay Shore, NY                      $  3,666,134.40         $  113,385.60           $  3,779,520.00
354         Forest Avenue, NY                  $  3,975,948.52         $  122,967.48           $  4,098,916.00
373         Buffalo, NY                        $  2,685,056.03         $   83,042.97           $  2,768,099.00
378         Landover Hills, MD                 $  2,478,512.96         $   76,655.04           $  2,555,168.00
386         Lawrenceville, GA                  $  2,891,599.10         $   89,430.90           $  2,981,030.00
391         Virginia Beach, VA                 $  2,375,241.91         $   73,461.09           $  2,448,703.00
394         Fort Wayne, IN                     $  2,447,532.13         $   75,696.87           $  2,523,229.00
396         Williamsport, PA                   $  2,447,532.13         $   75,696.87           $  2,523,229.00
402         Clinton, MI                        $  2,623,093.40         $   81,126.60           $  2,704,220.00
406         Evans, Denver, CO                  $  2,994,870.15         $   92,624.85           $  3,087,495.00
428         Kettering, OH                      $  2,530,148.97         $   78,252.03           $  2,608,401.00
436         Queens Village, NY                 $  4,502,632.33         $  139,256.67           $  4,641,889.00
437         Long Island City,  NY              $  3,975,948.52         $  122,967.48           $  4,098,916.00
444         Irondequoit, NY                    $  2,685,056.03         $   83,042.97           $  2,768,099.00
494         Green Valley, NV                   $  2,788,327.08         $   86,236.92           $  2,874,564.00
514         Homewood, IL                       $  2,736,692.04         $   84,639.96           $  2,821,332.00
525         Winchester, VA                     $  2,891,599.10         $   89,430.90           $  2,981,030.00
535         Lincoln Park, MI                   $  2,685,056.03         $   83,042.97           $  2,768,099.00
562         Lodi, CA                           $  2,685,056.03         $   83,042.97           $  2,768,099.00
566         Germantown, MD                     $  3,098,142.17         $   95,818.83           $  3,193,961.00
580         S.Bend, IN                         $  2,685,056.03         $   83,042.97           $  2,768,099.00
830         Portsmouth, NH                     $  2,685,056.03         $   83,042.97           $  2,768,099.00
843         Lombard, IL                        $  2,994,870.15         $   92,624.85           $  3,087,495.00
847         San Leandro, CA                    $  3,201,413.22         $   99,012.78           $  3,300,426.00
851         Harbor City, CA                    $  3,511,227.34         $  108,594.66           $  3,619,822.00
868         NW Las Vegas, NV                   $  2,685,056.03         $   83,042.97           $  2,768,099.00
960         Upland, CA                         $  2,788,327.08         $   86,236.92           $  2,874,564.00
966         Waukegan, IL                       $  2,736,692.04         $   84,639.96           $  2,821,332.00
968         Pleasant Hill, CA                  $  3,924,312.51         $  121,370.49           $  4,045,683.00
972         Victorville, CA                    $  2,271,970.86         $   70,267.14           $  2,342,238.00
990         61st & Western, Chicago, IL        $  2,994,870.15         $   92,624.85           $  3,087,495.00
            Indiana WH, IN Distribution Center $ 17,622,230.56         $  545,017.44           $ 18,167,248.00
            Chester, NY Distribution Center    $ 21,358,589.08         $  660,574.92           $ 22,019,164.00
            Total                              $138,710,000.00         $4,290,000.00           $143,000,000.00
</TABLE>

 EXHIBIT N

INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT

THIS INTERCREDITOR AND LIEN SUBORDINATION AGREEMENT, dated as of September 22,
2000 (as amended, supplemented or otherwise modified from time to time, this
"Agreement"), is by and among THE PEP BOYS - MANNY, MOE & JACK, a Pennsylvania
corporation, THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA, a California
corporation and PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., a Delaware
corporation (jointly and severally, the "Lessee"); PEP BOYS - MANNY, MOE & JACK
OF PUERTO RICO, INC., a Delaware corporation, PBY CORPORATION, a Delaware
corporation and CARRUS SUPPLY CORPORATION, a Delaware corporation
(collectively, the "Guarantors"); STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not individually, except as expressly stated
herein, but solely as the Owner Trustee, jointly and severally, under the 1995
Pep Boys Leased Property Trust and/or 1997 Pep Boys II Leased Property Trust,
as applicable (the "Owner Trustee", the "Borrower" or the "Lessor"); FIRST
UNION NATIONAL BANK, as agent (in such capacity, the "Agent") for and on behalf
of the Financing Parties (as hereinafter defined); the Tranche A Lenders (as
hereinafter defined); the Tranche B Lenders (as hereinafter defined); the
Holders (as hereinafter defined) and the Revolving Loan Lender (as hereinafter
defined).  Capitalized terms used but not otherwise defined herein shall have
the respective meanings set forth in the Participation Agreement (as
hereinafter defined).

W I T N E S S E T H:

WHEREAS, the Lenders have agreed to make Loans to the Lessor and the Holders
have agreed to make Holder Advances to the Lessor on the Closing Date pursuant
to the terms of the Participation Agreement, the Tranche A Credit Agreement,
the Tranche B Credit Agreement, the Trust Agreement and the other Operative
Agreements;

NOW, THEREFORE, in consideration of the premises and the mutual agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

ARTICLE XIII

DEFINITIONS

Section 13.1    The rules of usage set forth in Appendix A to the Participation
Agreement shall apply to this Agreement.  For purposes of this Agreement, the
following terms shall have the following meanings:

"Agent" shall have the meaning assigned to such term in the heading hereof,
together with any successors or assigns.

"Bankruptcy Event" means with respect to Borrower or any Credit Party, any
voluntary or involuntary dissolution, winding-up, total or partial liquidation
or reorganization, or bankruptcy, insolvency, receivership or other statutory
or common law proceedings or arrangements involving the Borrower or such Credit
Party or the readjustment of its liabilities or any assignment for the benefit
of creditors or any marshalling of its assets or liabilities.

"Borrower" shall have the meaning assigned to such term in the heading hereof,
together with any successors and assigns (including, without limitation, a
receiver, trustee or debtor-in-possession on behalf of such Person or on behalf
of such successor or assign).

"Business Day" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Certificate" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Closing Date" shall mean September 22, 2000.

"Collateral" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Congress" means Congress Financial Corporation, a Delaware corporation,
together with any successors or assigns.

"Credit Parties" means the collective reference to the Lessee and the
Guarantors, and "Credit Party" means any one of them, and shall include their
respective successors and assigns (including, without limitation, a receiver,
trustee or debtor-in-possession on behalf of such Person or on behalf of such
successor or assign).

"Equipment" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Event of Default" shall have the meaning given to such term in Appendix A to
the Participation Agreement.

"Expiration Date" shall have the meaning given to such term in Appendix A to
the Participation Agreement.

"Financing Parties" shall have the meaning given to such term in Appendix A
to the Participation Agreement.

"First Priority Real Estate Liens" shall have the meaning given to such term
in Section 3.1(a).

"Guarantors" shall have the meaning assigned to such term in the heading
hereof.

"Holder Advances" shall have the meaning given to such term in Appendix A
to the Participation Agreement.

"Holder Indebtedness" means the collective reference to all obligations, now
existing or hereafter arising, owing by the Borrower and/or any or all of the
Credit Parties and/or any of their affiliates to the Holders under or pursuant
to the Operative Agreements (including, without limitation, interest accruing
and/or yield at the then applicable rates provided in the Operative Agreements
after the maturity date and interest and/or yield accruing at the then
applicable rate provided in the Operative Agreements, fees, costs and expenses,
in each case, after the commencement of any Bankruptcy Event or like
proceeding, relating to the Borrower and/or any Credit Party (or that would
accrue or be payable but for the commencement of such proceeding), whether or
not a claim for such post-filing or post-petition interest, fees, costs and
expenses is allowed in such proceeding) whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter incurred, which
may arise under, out of, or in connection with the Participation Agreement, the
Lease Agreement, the Trust Agreement, or any of the other Operative Agreements,
whether on account of principal, advanced amounts, interest, yield,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Agent or to the Holders that are required to be paid by the Borrower and/or the
Credit Parties pursuant to the terms of the Operative Agreements.  Without
limiting the generality of the foregoing, the term "Holder Indebtedness" shall
include, in addition and not in limitation, the obligations of any Credit Party
to the Owner Trustee arising under or pursuant to the Lease (including, without
limitation, for Rent and to pay the Termination Value, as such terms are
defined therein), whether now existing or hereafter arising, whether absolute
or contingent, and whether direct or indirect, which have been assigned as
collateral to, and are subject to the security interest of the Agent (for
the benefit of the Financing Parties) pursuant to the Security Documents to
the extent of the interest of the Holders therein.

"Holder Mortgage Instrument" means any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent (for the benefit
of the Holders) and evidencing a Lien on the Collateral described therein, in
form and substance reasonably acceptable to the Holders.

"Holder Yield" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Holders" shall have the meaning given to such term in Appendix A to the
Participation Agreement, together with any successors and assigns.

"Improvements" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Indebtedness" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Lease" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Lease Event of Default" shall have the meaning given to such term in Section
17.1 of the Lease.

"Lenders" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Lessee" shall have the meaning assigned to such term in the heading hereof.

"Lessee Credit Agreement" shall have the meaning given to such term in Appendix
A to the Participation Agreement.

"Lessee Security Agreement" shall have the meaning given to such term in
Appendix A to the Participation Agreement.

"Lessor" shall have the meaning assigned to such term in the heading hereof.

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind.

"Loans" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Majority Holders" means at any time, Holders whose Holder Advances outstanding
represent at least fifty-one percent (51%) of the aggregate Holder Advances
outstanding.

"Majority Secured Parties" means, at any time, (a) the Majority Tranche A
Lenders, (b) the Majority Tranche B Lenders and (c) the Majority Holders.

"Majority Tranche A Lenders" means, at any time, Tranche A Lenders holding in
the aggregate at least fifty-one percent (51%) of the outstanding Tranche A
Loans.

"Majority Tranche B Lenders" means, at any time, Tranche B Lenders holding in
the aggregate at least fifty-one percent (51%) of the outstanding Tranche B
Loans.

"Maturity Date" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Mortgage Instruments" means the collective reference to the Holder Mortgage
Instrument, the Tranche A Mortgage Instrument and the Tranche B Mortgage
Instrument.

"Notes" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Operative Agreements" shall have the meaning given to such term in Appendix A
to the Participation Agreement.

"Owner Trustee" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Participation Agreement" means the Participation Agreement dated on or about
the Closing Date, among the Lessee, the Guarantors, the Owner Trustee, not in
its individual capacity except as expressly stated therein, the Holders, the
Lenders and the Agent.

"Person" shall have the meaning given to such term in Appendix A to the
Participation Agreement.

"Revolving Loan Agreements" means, collectively, the Lessee Credit Agreement
and all agreements, documents and instruments at any time executed and/or
delivered by any Credit Party or any other Person with, to or in favor of the
Revolving Loan Lender in connection therewith or related thereto, as all of
the foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced (and including any agreements which
may be entered into in connection with the refinancing or replacement of the
existing arrangements of the Revolving Loan Lender).

"Revolving Loan Lender" means Congress in its capacity as lender pursuant to
the Lessee Credit Agreement and its successors and assigns (including any
other lender or group of lenders that at any time succeeds to or refinances,
replaces or substitutes for all or any portion of the Indebtedness arising
thereunder at any time and from time to time).

"Revolving Loan Obligations" means the collective reference to all obligations,
 now existing or hereafter arising, owing by any or all of the Credit Parties
and/or any of their affiliates to the Revolving Loan Lender under or pursuant
to the Revolving Loan Agreements (including, without limitation, interest
accruing at the then applicable rates provided in the Revolving Loan Agreements
after the maturity date and interest accruing at the then applicable rate
provided in the Revolving Loan Agreements and any fees, costs or other amounts
arising after the commencement of any Bankruptcy Event or like proceeding
relating to any Credit Party (or would accrue or be payable but for the
commencement of such proceeding), whether or not a claim for post-filing or
post-petition interest, fees, costs or expenses is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, which may arise under, out of, or in connection
with any of the Revolving Loan Agreements, whether on account of principal,
advanced amounts, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Revolving Loan Lender that are required to be
paid by any Credit Party pursuant to the terms of the Revolving Loan
Agreements).

"Second Priority Real Estate Liens" shall have the meaning given to such term
in Section 3.1(a).

"Security Documents" shall have the meaning given to such term in Appendix A
to the Participation Agreement.

"Third Priority Real Estate Liens" shall have the meaning given to such term in
Section 3.1(a).

"Tranche A Credit Agreement" shall have the meaning given to such term in
Appendix A to the Participation Agreement.

"Tranche A Indebtedness" means the collective reference to all obligations, now
existing or hereafter arising, owing by the Borrower and/or any or all of the
Credit Parties and/or any of their affiliates to the Tranche A Lenders under or
pursuant to the Operative Agreements (including, without limitation, interest
accruing at the then applicable rates provided in the Operative Agreements
after the maturity date and interest accruing at the then applicable rate
provided in the Operative Agreements, fees, costs and expenses, in each case,
after the commencement of any Bankruptcy Event or like proceeding, relating to
the Borrower and/or any Credit Party (or would accrue or be payable but for the
commencement of such proceeding), whether or not a claim for such post-filing
or post-petition interest, fees, costs and expenses is allowed in such
proceeding) whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under, out of,
or in connection with the Participation Agreement, the Lease Agreement, the
Trust Agreement, or any of the other Operative Agreements, whether on account
of principal, advanced amounts, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent or to the Tranche A Lenders that
 are required to be paid by the Borrower and/or the Credit Parties pursuant to
the terms of the Operative Agreements.  Without limiting the generality of the
foregoing, the term "Tranche A Indebtedness" shall include, in addition and not
in limitation, the obligations of any Credit Party to the Owner Trustee arising
 under or pursuant to the Lease (including, without limitation, for Rent and to
 pay the Termination Value, as such terms are defined therein), whether now
existing or hereafter arising, whether absolute or contingent, and whether
direct or indirect, which have been assigned as collateral to, and are subject
to the security interest of, the Agent (for the benefit of the Financing
Parties) pursuant to the Security Documents to the extent of the interest of
the Tranche A Lenders therein.

"Tranche A Lenders" shall have the meaning given to such term in Appendix A to
the Participation Agreement, together with any successors and assigns.

"Tranche A Loans" shall have the meaning assigned to such term in Appendix A to
the Participation Agreement.

"Tranche A Mortgage Instrument" means any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent (for the benefit
of the Tranche A Lenders) and evidencing a Lien on the Collateral described
therein, in form and substance reasonably acceptable to the Tranche A Lenders.

"Tranche A Priority Collateral" means all assets and properties of any Credit
Party, whether now owned or hereafter acquired at any time subject to a Lien of
 the Lessor or the Agent or the Revolving Loan Lender, other than the Tranche B
Priority Collateral.

"Tranche B Credit Agreement" shall have the meaning assigned to such term in
Appendix A to the Participation Agreement.

"Tranche B Credit Agreement Event of Default" means an Event of Default as
defined in Section 6 of Tranche B Credit Agreement.
"Tranche B Indebtedness" means the collective reference to all obligations, now
existing or hereafter arising, owing by the Borrower and/or any or all of the
Credit Parties and/or any of their affiliates to the Tranche B Lenders under or
pursuant to the Operative Agreements (including, without limitation, interest
accruing at the then applicable rates provided in the Operative Agreements
after the maturity date and interest accruing at the then applicable rate
provided in the Operative Agreements, fees, costs and expenses, in each case,
after the commencement of any Bankruptcy Event or like proceeding, relating to
the Borrower and/or any Credit Party (or would accrue or be payable but for the
commencement of such proceeding), whether or not a claim for such post-filing
or post-petition interest, fees, costs and expenses is allowed in such
proceeding) whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter incurred, which may arise under, out of,
or in connection with the Participation Agreement, the Lease Agreement, the
Trust Agreement, or any of the other Operative Agreements, whether on account
of principal, advanced amounts, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent or to the Tranche B Lenders
that are required to be paid by the Borrower and/or the Credit Parties pursuant
to the terms of the Operative Agreements. Without limiting the generality of
the foregoing, the term "Tranche B Indebtedness" shall include, in addition and
not in limitation, the obligations of any Credit Party to the Owner Trustee
arising under or pursuant to the Lease (including, without limitation, for Rent
and to pay the Termination Value, as such terms are defined therein), whether
now existing or hereafter arising, whether absolute or contingent, and whether
direct or indirect, which have been assigned as collateral to, and are subject
to the security interest of the Agent (for the benefit of the Financing
Parties) pursuant to the Security Documents to the extent of the interest of
the Tranche B Lenders therein.

"Tranche B Lenders" shall have the meaning given to such term in Appendix A to
the Participation Agreement, together with any successors and assigns.

"Tranche B Loans" shall have the meaning assigned to such term in Appendix A to
the Participation Agreement.

"Tranche B Mortgage Instrument" means any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent (for the benefit
of the Tranche B Lenders) and evidencing a Lien on the Collateral described
therein, in form and substance reasonably acceptable to the Tranche B Lenders.

        "Tranche B Priority Collateral" means, collectively, all of the real
and personal property  (including without limitation, the Improvements and
Equipment) and fixtures of the Lessor, whether now owned or hereafter acquired,
upon which a Lien is purported to be created by one or more of the Mortgage
Instruments and/or the  Security Agreement; provided, that, in no event shall
the Tranche B Priority Collateral include the property and assets of any Credit
Party subject to the Lessee Security Agreement.

"Trust Agreement" shall have the meaning given to such term in Appendix A to
the Participation Agreement.

ARTICLE XIV

APPOINTMENT AND AUTHORITY OF AGENT

Section 14.1    Appointment and Authority.

        (a)     The Tranche A Lenders, the Tranche B Lenders and the Holders
hereby appoint First Union National Bank to act as Agent on the terms and
conditions set forth in this Agreement and the Security Documents and authorize
the Agent to execute each of the Security Documents in the name of and for the
benefit of each of the Tranche A Lenders, the Tranche B Lenders or the Holders,
as applicable.  First Union National Bank hereby accepts such appointment and
shall have all of the rights and obligations of the Agent hereunder and under
the Security Documents (except to the extent limited herein and except to the
extent of the rights of Congress with respect to the Tranche A Priority
Collateral as provided herein).  The Tranche A Lenders and the Tranche B
Lenders hereby appoint the Agent to act as agent on behalf of the Tranche A
Lenders and the Tranche B Lenders for all purposes of perfecting any security
interest of the Tranche A Lenders or the Tranche B Lenders in the Tranche A
Priority Collateral.  The Tranche A Lenders, the Tranche B Lenders and the
Holders hereby appoint the Agent to act as agent on behalf of the Tranche A
Lenders, the Tranche B Lenders and the Holders for all purposes of perfecting
any security interest of the Tranche A Lenders, the Tranche B Lenders or the
Holders in the Tranche B Priority Collateral.  Each of the parties hereto
acknowledges and agrees that the Agent shall have no responsibility for, or
any liability with respect to, the security interest of the Revolving Loan
Lender, the Tranche A Lenders or the Tranche B Lenders in the Tranche A
Priority Collateral.  All decisions with respect to the security interest of
the Revolving Loan Lender, the Tranche A Lenders or the Tranche B Lenders in
the Tranche A Priority Collateral (including, without limitation, the time or
location of filing of any financing statements) shall be the sole
responsibility of the Revolving Loan Lender and Congress.

        (b)     In addition, and not in limitation of the foregoing subclause
(a), the Agent, the Tranche A Lenders and the Tranche B Lenders hereby also
appoint Congress to act as agent on their behalf for all purposes of perfecting
any security interest in the Tranche A Priority Collateral.  The Owner Trustee
hereby appoints both the Agent and Congress to act as agent for all purposes of
perfecting any security interest of Owner Trustee in the Tranche A Priority
Collateral.  Congress hereby accepts such appointment and, at its option after
notice to the Agent (with a copy to the Owner Trustee), shall have all of the
rights and obligations of the Agent with respect to the Tranche A Priority
Collateral hereunder and under the Lessee Security Agreement (as such Lessee
Security Agreement has been assigned to the Agent pursuant to the Security
Agreement).  In any event, the Agent shall only exercise or refrain from the
exercise of any of its rights and remedies with respect to the Tranche A
Priority Collateral upon the express instructions of Congress, and each of the
parties hereto acknowledges and agrees that the Agent shall have no
responsibility for, or any liability with respect to, the security interest of
the Owner Trustee in the Tranche A Priority Collateral.  All decisions with
respect to the security interest of the Owner Trustee in the Tranche A Priority
Collateral (including, without limitation, the time or location of filing of
any financing statements) shall be the sole responsibility of Congress.  In the
event that Congress shall notify the Agent that it has elected to exercise its
option  to act with respect to the rights and remedies of the Agent with
respect to the Tranche A Priority Collateral, the Agent shall not take any
action with respect to such rights or remedies, except as Congress may
specifically direct.

        (c)     Subject to the requirements of Sections 3.11 and 4.1 hereof,
each of the Tranche A Lenders and the Tranche B Lenders hereby authorizes the
Agent to take such action on its behalf hereunder and under the provisions of
the Security Documents and any other instrument and agreement referred to
therein or now and hereafter delivered thereunder and to exercise such powers
thereunder as are specifically delegated to or required of the Agent by the
terms thereof, subject to the provisions thereof and subject to the rights of
Congress with respect to the Tranche A Priority Collateral as provided herein
and subject to the provisions of the foregoing subclause (b).  Each of the
Tranche A Lenders, the Tranche B Lenders and the Agent hereby authorize
Congress at its option, to take such action on its behalf hereunder with
respect to the Tranche A Priority Collateral and under the Lessee Security
Agreement and under any other instrument and agreement referred to therein or
now and hereafter delivered thereunder and to exercise such powers thereunder
as are specifically delegated to or required of the Agent by the terms thereof,
subject to the provisions thereof.  In the event that Congress elects to
exercise its option to act with respect to the rights and remedies of the Agent
with respect to the Tranche A Priority Collateral it shall be entitled to all
of the rights and benefits of the Agent hereunder with respect to the Tranche
A Priority Collateral, under the Tranche A Credit Agreement and under the
Lessee Security Agreement.

ARTICLE XV

GENERAL INTERCREDITOR AND SUBORDINATION PROVISIONS

Section 15.1    Agreement to Subordinate Tranche B Priority Collateral.

(a)      Each of the Credit Parties and the Borrower, for itself and its
successors and assigns, covenants and agrees, and each of the Holders, for
itself and its respective successors and assigns, and each of the Tranche A
Lenders, for itself and its respective successors and assigns, hereby agrees,
that, to the extent and in the manner set forth in this Section 3.1(a), all
Liens now or hereafter acquired by the Tranche B Lenders or the Agent, on
behalf of the Tranche B Lenders, in any or all of the Tranche B Priority
Collateral (the "First Priority Real Estate Liens") shall at all times be
prior and superior to (a) any Lien now held or hereafter acquired by the
Tranche A Lenders or the Agent, on behalf of the Tranche A Lenders, in the
Tranche B Priority Collateral (the "Second Priority Real Estate Liens") and
(b) any Lien now held or hereafter acquired by the Holders or the Agent, on
behalf of the Holders, in the Tranche B Priority Collateral (the "Third
Priority Real Estate Liens").  Said priority shall be applicable irrespective
of the time or order of attachment or perfection of any security interest or
the time or order of filing of any financing statements or other documents, or
any statutes, rules of law, or court decisions to the contrary.  The lien
subordination provisions in this Section 3.1(a) are for the benefit of and
shall be enforceable directly by the Tranche B Lenders and the Agent, on behalf
of the Tranche B Lenders, and each of the Tranche B Lenders shall be deemed to
have acquired the Tranche B Indebtedness in reliance upon this Agreement.  The
Agent shall have the right to act on behalf of the Tranche B Lenders pursuant
to this Agreement in enforcing the rights of the Tranche B Lenders under this
Agreement.

(b)     Each of the Credit Parties and the Borrower, for itself and its
successors and assigns, covenants and agrees, and each of the Holders, for
itself and its respective successors and assigns, hereby agrees, that, to the
extent and in the manner set forth in this Section 3.1(b), the Second Priority
Real Estate Liens shall at all times be prior and superior to all Third
Priority Real Estate Liens.  Said priority shall be applicable irrespective of
the time or order of attachment or perfection of any security interest or the
time or order of filing of any financing statements or other documents, or any
statutes, rules of law, or court decisions to the contrary.  The lien
subordination provisions in this Section 3.1(b) are for the benefit of and shall
be enforceable directly by the Tranche A Lenders and the Agent, on behalf of the
Tranche A Lenders, and each of the Tranche A Lenders shall be deemed to have
acquired the Tranche A Indebtedness in reliance upon this Agreement.  The Agent
shall have the right to act on behalf of the Tranche A Lenders pursuant to this
Agreement in enforcing the rights of the Tranche A Lenders subject to the terms
of this Agreement.

        Section 15.2    Disposition of Tranche B Priority Collateral.

(a)     The Holders, the Tranche A Lenders and the Revolving Loan Lender hereby
agree that, until all Tranche B Indebtedness has been paid in full in cash and
satisfied, upon the occurrence of a Tranche B Credit Agreement Event of Default,
the Tranche B Lenders (or the Agent acting on their behalf) may foreclose upon,
receive a deed in lieu of foreclosure, if applicable, or otherwise dispose of,
and exercise any other rights with respect to, any or all of the Tranche B
Priority Collateral, free of the Second Priority Real Estate Liens and the
Third Priority Real Estate Liens, provided that the Holders and the Tranche A
Lenders retain any rights they may have as a junior secured creditor with
respect to the surplus, if any, arising from any such disposition or
enforcement.
(b)     Upon any disposition of any of the Tranche B Priority Collateral by
the Tranche B Lenders or the Agent, on behalf of the Tranche B Lenders, the
Holders, the Tranche A Lenders and the Revolving Loan Lender agree, if
requested, to execute and immediately deliver any and all releases or other
documents or agreements which the Tranche B Lenders or the Agent, on behalf of
the Tranche B Lenders, deem necessary to accomplish a disposition thereof free
of the Second Priority Real Estate Liens and the Third Priority Real Estate
Liens.

(c)     The Holders and the Tranche A Lenders hereby agree that, at such time
as all Tranche B Indebtedness has been paid in full in cash and satisfied,
upon the occurrence of a Tranche B Credit Agreement Event of Default, the
Holders (or the Agent acting on their behalf) may foreclose upon, receive a
deed in lieu of foreclosure, if applicable, or otherwise dispose of, and
exercise any other rights with respect to, any or all of the Tranche B
Priority Collateral, provided, however, the Holders agree that any proceeds
from the sale or other disposition of the Tranche B Priority Collateral shall
be distributed in accordance with Section 8.7 of the Participation Agreement.

(d)     Upon any disposition of any of the Tranche B Priority Collateral by
the Holders or the Agent, on behalf of the Holders, the Tranche A Lenders
agree, if requested, to execute and immediately deliver any and all releases
or other documents or agreements which the Holders or the Agent deem
necessary to accomplish a disposition thereof free of the Second Priority
Real Estate Liens.

        Section 15.3    Agreement to Subordinate Tranche A Priority Collateral.

        (a)     Each of the Agent and the Tranche B Lenders covenants and
agrees that, to the extent and in the manner set forth in this Section 3.3(a),
all Liens now or hereafter acquired by or for the benefit of the Tranche A
Lenders or the Agent (or Congress) on behalf of the Tranche A Lenders, in any
or all of the Tranche A Priority Collateral shall at all times be prior and
superior to any Lien now held or hereafter acquired by or on behalf of the
Tranche B Lenders, or any such Liens of Agent to the extent held for the
benefit of the Tranche B Lenders.  Such priority shall be applicable
irrespective of the time or order of attachment or perfection of any
security interest or the time or order of filing of any financing statements
or other documents, or any statutes, rules of law, or court decisions to the
contrary.  The lien subordination provisions in this Section 3.3(a) are for
the benefit of and shall be enforceable directly by the Tranche A Lenders and
the Agent (or Congress), on behalf of the Tranche A Lenders, and each of the
Tranche A Lenders shall be deemed to have acquired its portion of the Tranche
A Indebtedness in reliance upon this Agreement.  The Agent or Congress, at its
option, shall have the right to act on behalf of the Tranche A Lenders pursuant
to this Agreement in enforcing the rights of the Tranche A Lenders under this
Agreement.

        (b)     In addition, and not in limitation of the foregoing, each of
the Agent and the Tranche B Lenders covenants and agrees that all Liens now or
hereafter acquired by or for the benefit of Revolving Loan Lender pursuant to
or in connection with the Lessee Credit Agreement in any or all of the Tranche
A Priority Collateral to the extent of the Revolving Loan Obligations shall at
all times be prior and superior to any Lien now held or hereafter acquired by
or on behalf of the Tranche B Lenders, or any such Liens of the Agent to the
extent held for the benefit of the Tranche B Lenders.  Such priority shall be
applicable irrespective of the time or order of attachment or perfection of any
security interest or the time or order of filing of any financing statements or
other documents, or any statutes, rules of law, or court decisions to the
contrary.  The lien subordination provisions in this Section 3.3(b) are for the
benefit of and shall be enforceable directly by the Revolving Loan Lender and
Revolving Loan Lender shall be deemed to have provided the loans, advances and
other financial accommodations giving rise to such Revolving Loan Obligations
in reliance upon this Agreement.  Notwithstanding anything to the contrary
contained in the Lessee Security Agreement, the security interest of the Agent
in the Tranche A Priority Collateral (arising pursuant to the assignment by the
Lessor under the Security Documents) shall only be for the benefit of the
Tranche A Lenders and the Tranche B Lenders.

Section 15.4    Disposition of Tranche A Priority Collateral.  The Agent and
the Tranche B Lenders hereby agree that, until all Tranche A Indebtedness has
been paid in full in cash and satisfied and all Revolving Loan Obligations have
 been paid in full in cash and satisfied and the Revolving Loan Agreements have
 been terminated, the Tranche A Lenders, or the Agent on behalf of and solely
upon the direction of the Tranche A Lenders, or at its option, Congress (on
behalf of and as agent for the Tranche A Lenders or the Agent), or the
Revolving Loan Lender, as Congress may elect, shall have the exclusive right to
manage, perform and enforce the terms of the Lessee Security Agreement or any of
the other Security Documents to the extent applicable to the Tranche A Priority
Collateral, to exercise and enforce all privileges and rights thereunder
according to its discretion and the exercise of its business judgment,
including, without limitation, the exclusive right to take or retake control
or possession of any or all of the Tranche A Priority Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate such Tranche A
Priority Collateral or to allow the Revolving Loan Lender to do any of the
foregoing.  Notwithstanding anything to the contrary contained in any of the
Operative Agreements or otherwise, only the Revolving Loan Lender shall have
the right to restrict or permit, or approve or disapprove, the sale, transfer
or other disposition of any Tranche A Priority Collateral.  The Agent shall,
and the Tranche B Lenders hereby irrevocably direct and authorize the Agent to,
immediately upon the request of the Revolving Loan Lender, or Congress as agent
 for the Agent or the Tranche A Lenders, to release or otherwise terminate its
Liens on such Tranche A Priority Collateral, to the extent such Tranche A
Priority Collateral is sold or otherwise disposed of either by the Revolving
Loan Lender, its agents, or the Lessee or any Guarantor, with the consent of
the Revolving Loan Lender and will immediately deliver such other release
documents as the Revolving Loan Lender may reasonably require in connection
therewith.  Any proceeds from such sale or other disposition may be applied to
the Tranche A Indebtedness or the Revolving Loan Obligations as the Revolving
Loan Lender may elect in its sole determination, provided that the Tranche B
Lenders retain any rights they may have as a junior secured creditor with
respect to the surplus, if any, arising from any such sale or disposition.

Section 15.5    Limitations on Rights and Remedies.
(a)     The Tranche A Lenders (and the Agent or Congress acting on their
behalf) shall not be entitled to (i) exercise any rights or remedies with
respect to the Second Priority Real Estate Liens, including without limitation
the right to (A) enforce any Liens or sell or otherwise foreclose on or realize
upon (judicially or non-judicially) any portion of the Tranche B Priority
Collateral or execute any amendment, supplement or acknowledgement thereof or
(B) request any action, institute proceedings, give any instructions, make any
election, notice account debtors or make collections with respect to any
portion of the Tranche  B Priority Collateral or (ii) demand, accept or obtain
any Lien on any Tranche B Priority Collateral (except for Liens subject to the
terms of this Agreement).  In the event that any Tranche A Lender, Holder, the
Agent, Congress (acting on behalf of the Tranche A Lenders) or the Revolving
Loan Lender shall receive any proceeds of the Tranche B Priority Collateral or
possession of any such Tranche B Priority Collateral, it shall receive and hold
the same in trust, as trustee, for the benefit of the Tranche B Lenders and
shall immediately deliver the same to the Tranche B Lenders (together with any
endorsement or assignment, as the case may be, where reasonably necessary) for
application in accordance with the terms of the Operative Agreements.

(b)     Until all Tranche B Indebtedness has been paid in full in cash and
satisfied, the Holders (and the Agent acting on their behalf) shall not be
entitled to (i) exercise any rights or remedies with respect to the Third
Priority Real Estate Liens, including without limitation the right to (A)
enforce any Liens or sell or otherwise foreclose on or realize upon (judicially
or non-judicially) any portion of the Tranche B Priority Collateral or execute
any amendment, supplement or acknowledgement thereof or (B) request any action,
institute proceedings, give any instructions, make any election, notice account
debtors or make collections with respect to any portion of the Tranche B
Priority Collateral or (ii) demand, accept or obtain any Lien on any  Tranche B
Priority Collateral (except for Liens subject to the terms of this Agreement).
At such time as all Tranche B Indebtedness has been paid in full in cash and
satisfied, in the event any Holder or the Agent acting on behalf of the Holders
shall receive any proceeds of the Tranche B Priority Collateral, it shall
receive and hold the same in trust, as trustee, for the benefit of the Tranche
A Lenders and shall immediately deliver the same to the Tranche A Lenders for
application in accordance with the terms of the Operative Agreements.

        (c)     Until all Tranche A Indebtedness has been paid in full in cash
and satisfied and all Revolving Loan Obligations have been paid in full in cash
and satisfied and the Revolving Loan Agreements have been terminated, the
Tranche B Lenders and the Holders shall not, and the Agent acting on their
behalf shall not (but without limiting the rights of the Agent to act at the
direction of Congress as provided for herein), exercise any rights or remedies
with respect to the Tranche A Priority Collateral, including, without
limitation, (i) enforcing any Liens or selling or otherwise seeking to
foreclose or realize upon (judicially or non-judicially) any portion of the
Tranche A Priority Collateral (including without limitation, by setoff or
notification of account debtors) or execute any amendment, supplement or
acknowledgement thereof or (ii) request any action, institute proceedings give
any instructions, or make any election with respect to any portion of the
Tranche A Priority Collateral.  In the event that any Tranche B Lender, Holder
or the Agent shall receive any proceeds of the Tranche A Priority Collateral or
possession of any such Tranche A Priority Collateral it shall receive and hold
the same in trust, as trustee, for the benefit of the Revolving Loan Lender and
the Tranche A Lenders and shall immediately deliver the same to the Revolving
Loan Lender (together with any endorsement or assignment of the Agent or such
Tranche B Lender or Holder, as the case may be, where reasonably necessary) for
application to any of the Tranche A Indebtedness or the Revolving Loan
Obligations, as the Revolving Loan Lender may, in its sole discretion, elect.

Section 15.6    Intercreditor Arrangements in Bankruptcy.

(a)     This Agreement shall remain in full force and effect and enforceable
pursuant to its terms in accordance with Section 510(a) of the Bankruptcy Code,
and all references herein to the Borrower or a Credit Party shall be deemed to
apply to such entity as debtor in possession and to any trustee in bankruptcy
for the estate of such entity.

(b)     Except as otherwise specifically permitted in this Section 3.6, until
the Tranche B Indebtedness has been paid in full in cash and satisfied,
neither the Holders, nor the Agent, on their behalf, shall assert without the
written consent of the Majority Tranche B Lenders any claim, motion, objection,
or argument in respect of Tranche B Priority Collateral in connection with any
Bankruptcy Event which could otherwise be asserted or raised in connection with
such Bankruptcy Event by such Holders or the Agent acting on their behalf as a
creditor of the Borrower or any Credit Party with a Lien on the Tranche B
Priority Collateral, including without limitation any claim, motion, objection
or argument seeking adequate protection or relief from the automatic stay in
respect of the Tranche B Priority Collateral.

(c)     Except as otherwise specifically permitted in this Section 3.6, neither
the Tranche A Lenders, nor the Agent or Congress, on their behalf, nor the
Revolving Loan Lender shall assert without the written consent of (x) the
Majority Tranche B Lenders and (y) the Majority Holders any claim, motion,
objection, or argument in respect of Tranche B Priority Collateral in
connection with any Bankruptcy Event which could otherwise be asserted or
raised in connection with such Bankruptcy Event by such Tranche A Lenders or
the Agent or Congress acting on their behalf or the Revolving Loan Lender as
a creditor of the Borrower or any Credit Party with a Lien on the Tranche B
Priority Collateral, including without limitation any claim, motion, objection
or argument seeking adequate protection or relief from the automatic stay in
respect of the Tranche B Priority Collateral.

(d)     Except as otherwise specifically permitted in this Section 3.6, until
the Tranche A Indebtedness has been paid in full in cash and satisfied and the
Revolving Loan Obligations have been paid in full in cash and satisfied and the
Revolving Loan Agreements have been terminated, neither the Holders, nor the
Tranche B Lenders shall assert without the written consent of the Majority
Tranche A Lenders any claim, motion, objection, or argument in respect of
Tranche A Priority Collateral in connection with any Bankruptcy Event which
could otherwise be asserted or raised in connection with such Bankruptcy Event
by such Holders or the Tranche B Lenders as a creditor of the Borrower or any
Credit Party with a Lien on the Tranche A Priority Collateral, including
without limitation any claim, motion, objection or argument seeking adequate
protection or relief from the automatic stay in respect of the Tranche A
Priority Collateral.

(e)     Without limiting the generality of the foregoing, the Holders, the
Tranche A Lenders and the Revolving Loan Lender agree that if a Bankruptcy
Event occurs, the Holders, the Tranche A Lenders and the Revolving Loan Lender
shall not oppose (and shall cause the Agent or Congress not to oppose) any sale
or other disposition of any assets comprising part of the Tranche B Priority
Collateral free and clear of security interests, liens or other claims of any
party, including any Holder, any Tranche A Lender or the Revolving Loan Lender,
under Section 363 of the Bankruptcy Code on the basis that the Holders', the
Tranche A Lenders' or the Revolving Loan Lender's interest in the Tranche B
Priority Collateral is impaired by such sale or inadequately protected as a
result of such sale if the Tranche B Lenders or the Agent, on  behalf of the
Tranche B Lenders, or the Holders or the Agent on behalf of the Holders, have
consented to such sale or disposition of such assets.

(f)     Without limiting the generality of the foregoing, the Holders and the
Tranche B Lenders agree that if a Bankruptcy Event occurs, the Holders and
Tranche B Lenders shall not oppose (and shall cause the Agent not to oppose)
any sale or other disposition of any assets comprising part of the Tranche A
Priority Collateral free and clear of security interests, liens or other claims
 of any party, including any Holder or any Tranche B Lender, under Section 363
of the Bankruptcy Code on the basis that the Holders' or Tranche B Lenders'
interest in the Tranche A Priority Collateral is impaired by such sale or
inadequately protected as a result of such sale if the Tranche A Lenders or any
agent, on  behalf of the Tranche A Lenders or the Revolving Loan Lender, has
consented to such sale or disposition of such assets.

(g)     The Tranche A Lenders and the Revolving Loan Lender agree that they
will not (nor cause the Agent or Congress to) initiate, prosecute, encourage,
or assist with any other person to initiate or prosecute any claim, action or
other proceeding (i) challenging the validity or enforceability of this
Agreement, (ii) challenging the validity or enforceability of any Tranche B
Lender's claim (or the claim of the Agent on behalf of any Tranche B Lender)
with respect to the Tranche B Priority Collateral, (iii) challenging the
perfection or enforceability of any First Priority Real Estate Liens or (iv)
asserting any claims which the Borrower or any Credit Party may hold with
respect to the Tranche B Lenders or the Tranche B Indebtedness, if any.

(h)     The Holders agree that they will not (nor cause the Agent to)
initiate, prosecute, encourage, or assist with any other person to initiate
or prosecute any claim, action or other proceeding (i) challenging the validity
or enforceability of this Agreement, (ii) challenging the validity or
enforceability of any Tranche B Lender's claim or any Tranche A Lender's claim
(or the claim of the Agent on behalf of any Tranche B Lender or the claim of
the Agent or Congress on behalf of any Tranche A Lender) with respect to the
Tranche B Priority Collateral, (iii) challenging the perfection or
enforceability of any First Priority Real Estate Liens or Second Priority Real
Estate Liens or (iv) asserting any claims which the Borrower or any Credit
Party may hold with respect to (A) the Tranche B Lenders or the Tranche B
Indebtedness, if any or (B) the Tranche A Lenders or the Tranche A
Indebtedness, if any.

(i)     The Agent, the Holders and the Tranche B Lenders agree that they will
 not initiate, prosecute, encourage, or assist with any other person to
initiate or prosecute any claim, action or other proceeding (i) challenging
the validity or enforceability of this Agreement, (ii) challenging the validity
 or enforceability of any Tranche A Lender's claim (or the claim of the Agent
on behalf of any Tranche A Lender) or the Revolving Loan Lender's claim with
respect to the Tranche A Priority Collateral or (iii) asserting any claims
which the Borrower or any Credit Party may hold with respect to the Tranche
A Lenders, the Tranche A Indebtedness, the Revolving Loan Lender or the
Revolving Loan Obligations, if any.

(j)     To the extent that the any Tranche B Lender or any Tranche A Lender
receives payments or transfers in respect of the Tranche B Indebtedness or
Tranche A Indebtedness or proceeds of the Tranche B Priority Collateral which
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then, to the extent of such payment or proceeds received, the Tranche B
Indebtedness or Tranche A Indebtedness, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by such Tranche B Lender or Tranche
A Lender, as applicable.

(k)     To the extent that the any Tranche A Lender receives payments or
transfers in respect of the Tranche A Indebtedness or proceeds of the Tranche
A Priority Collateral or the Revolving Loan Lender receives payments or
transfers in respect of the Revolving Loan Obligations or proceeds of the
Tranche A Priority Collateral which are subsequently invalidated, declared to
be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law, or equitable cause, then, to the extent of such payment or
proceeds received, the Tranche A Indebtedness, or part thereof, or the
Revolving Loan Obligations, as the case may be, intended to be satisfied shall
be revived and continue in full force and effect as if such payments or
proceeds had not been received by such Tranche A Lender or the Revolving Loan
Lender, as the case may be.

(l)     Notwithstanding any other provision of this Section, (i) the Tranche B
Lenders (or the Agent on their behalf), the Holders (or the Agent on their
behalf), the Tranche A Lenders (or the Agent on their behalf) and the Revolving
Loan Lender shall be entitled to file any necessary pleadings, motions,
objections or agreement which assert rights or interests available to unsecured
creditors of the Borrower or any Credit Party arising under either the
Bankruptcy Code or applicable non-bankruptcy law and (ii) the Lenders and the
Holders shall be entitled to make any indemnity claim afforded any such Lender
or Holder under the Participation Agreement or any other Operative Agreement.

Section 15.7    Obligations of Credit Parties Unconditional.

(a)     Nothing contained in this Agreement is intended to or shall relieve the
obligations of the Borrower or the Credit Parties to the Tranche B Lenders, the
Holders, the Tranche A Lenders, the Lessor, the Revolving Loan Lender or any
other Person with respect to its obligations under the Operative Agreements or
the Revolving Loan Agreements, to pay any amount in respect of the Tranche B
Indebtedness, the Holder Indebtedness, the Tranche A Indebtedness, the
Revolving Loan Obligations or any other amounts arising under the Operative
Agreements or the Revolving Loan Agreements, as the case may be, as and when
such amount shall become due and payable in accordance with the terms thereof,
or to affect the relative rights of the Tranche B Lenders, the Holders, the
Tranche A Lenders or the Revolving Loan Lender, on the one hand, and the other
creditors of the Borrower or any Credit Party, on the other hand.  All rights
and interests of the Tranche B Lenders, the Tranche A Lenders, the Holders and
the Revolving Loan Lender hereunder, and all agreements and obligations of the
Credit Parties, the Holders, the Tranche A Lenders, the Tranche B Lenders and
the Revolving Loan Lender hereunder, shall remain in full force and effect
irrespective of:

(i)     any lack of validity or enforceability of any Operative Agreement or
any other agreement or instrument relating thereto or the Revolving Loan
Agreements or any other agreement or instrument relating thereto;

(ii)    any change in the time, manner or place of, or in any other term of,
all or any of the Tranche B Indebtedness, the Holder Indebtedness, the
Tranche A Indebtedness or the Revolving Loan Obligations, or any amendment or
waiver of or any consent to departure from any provision of any Operative
Agreement or the Revolving Loan Agreements;

(iii)   any exchange, release, nonperfection, or unenforceability of any Lien
or security interest in any Tranche B Priority Collateral or any Tranche A
Priority Collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Tranche B Indebtedness, the
Holder Indebtedness, the Tranche A Indebtedness or the Revolving Loan
Obligations;

(iv)    any other circumstances which might otherwise constitute a defense
available to, or a discharge of, the Borrower or any Credit Party in respect of
the Tranche B Indebtedness, the Holder Indebtedness, or the Tranche A
Indebtedness in respect of this Agreement.

(b)     Nothing contained in this Agreement shall affect the obligation of the
Borrower or the Credit Parties to make, or prevent the Borrower or the Credit
Parties from making, at any time, payment of any amount in respect of the
Tranche B Indebtedness, the Holder Indebtedness, the Tranche A Indebtedness or
otherwise owing under any Operative Agreement.

Section 15.8    No Other Beneficiaries.  This Agreement and the provisions
contained herein are intended only for the benefit of the holders of the
Tranche B Indebtedness, the Holder Indebtedness, the Tranche A Indebtedness
and the Revolving Loan Obligations and no other creditor of the Borrower or
the Credit Parties.  Neither the Borrower, nor the Credit Parties will
publish or give to any creditor or prospective creditor of the Borrower or
the Credit Parties any copy, statement or summary (or acquiesce in the
publication or giving of any such copy, statement or summary) as to the
subordination of the rights of the Holders, the Tranche A Lenders or the
Tranche B Lenders without also stating or causing to be stated (in a
conspicuous manner in the case of any document) that such subordination is
solely for the benefit of the holders of Tranche B Indebtedness, the Holder
Indebtedness or the Tranche A Indebtedness, as applicable, and not for the
benefit of any other creditor of the Borrower or the Credit Parties.

Section 15.9    Rights Not to be Impaired.  No right of any present or future
holder of any Tranche B Indebtedness, any Holder Indebtedness, any Tranche A
Indebtedness or the Revolving Loan Obligations to enforce any agreement as
herein provided shall at any time in any way be prejudiced or impaired by any
act or omission in good faith by any such holder, or by any noncompliance by
Borrower or the Credit Parties with the terms and provisions and covenants
herein regardless of any knowledge thereof that any such holder may have or
otherwise be charged with.

Section 15.10   Waivers.

(a)     Each of the Agent, the Holders, the Tranche A Lenders and the Revolving
Loan Lender hereby waives and releases any claim which, the Agent or such
Holder or such Tranche A Lender or the Revolving Loan Lender may now or
hereafter have against the Agent or any Tranche B Lender arising out of any and
all actions which any of them, in good faith, takes or omits to take with
respect to the Tranche B Priority Collateral, including without limitation, (i)
actions with respect to the creation, perfection or continuation of liens or
security interest in the Tranche B Priority Collateral, (ii) actions with
respect to the foreclosure upon, sale, release, or depreciation of, or failure
to realize upon, any of the Tranche B Priority Collateral, and (iii) any other
action with respect to the valuation, use, protection or disposition of the
Tranche B Priority Collateral.

(b)     Each of the Agent, the Tranche A Lenders and the Revolving Loan Lender
 hereby waive and release any claim which the Agent, such Tranche A Lender or
the Revolving Loan Lender may now or hereafter have against the Agent or any
Holder arising out of any and all actions which any of them, in good faith,
takes or omits to take with respect to the Tranche B Priority Collateral,
including without limitation, (i) actions with respect to the creation,
perfection or continuation of liens or security interest in the Tranche B
Priority Collateral, (ii) actions with respect to the foreclosure upon, sale,
release, or depreciation of, or failure to realize upon, any of the Tranche B
Priority Collateral and (iii) any other action with respect to the valuation,
use, protection or disposition of the Tranche B Priority Collateral.

(c)     Each of the Agent, the Holders and the Tranche B Lenders hereby waives
and releases any claim which, the Agent or such Holder or such Tranche B Lender
 may now or hereafter have against the Agent (or Congress) or any Tranche A
Lender or the Revolving Loan Lender arising out of any and all actions which
any of them, in good faith, takes or omits to take with respect to the Tranche
A Priority Collateral, including without limitation, (i) actions with respect
to the creation, perfection or continuation of liens or security interest in
the Tranche A Priority Collateral, (ii) actions with respect to the foreclosure
upon, sale, release, or depreciation of, or failure to realize upon, any of the
Tranche A Priority Collateral, and (iii) any other action with respect to the
valuation, use, protection or disposition of the Tranche A Priority Collateral.

Section 15.11   Terminations, Amendments, Etc.  Each of the parties hereto
agrees that:

(a)     this Agreement may not be terminated, amended, supplemented, waived or
modified unless such termination, amendment, supplement, waiver or modification
has been approved in writing by the Borrower, each Credit Party and the
Majority Secured Parties, provided, however, (i) this Section 3.11 may not be
amended, modified or waived without the consent of each Financing Party
affected thereby and (ii) without the consent of the Revolving Loan Lender, no
Operative Agreement may be amended, changed or waived in a manner which would
affect in any way the Tranche A Priority Collateral;

(b)     any Operative Agreement (other than this Agreement and the Mortgage
Instruments and the UCC Financing Statements related thereto) may not be
terminated, amended, supplemented, waived or modified unless such termination,
amendment, supplement, waiver or modification has been approved in writing by
the Borrower, each of the Credit Parties and the Majority Tranche A Lenders,
provided, however, that:

(i)     without the consent of each Financing Party affected thereby, no
Operative Agreement may be amended, changed, waived, discharged or terminated
so as to

(I)     extend the scheduled date of maturity of any Note, extend the scheduled
Expiration Date, or extend any payment date of any Note or Certificate;

(II)    reduce the percentage specified in the definition of Majority Secured
Parties; or

(III)   consent to the assignment or transfer by the Owner Trustee of any of
its rights and obligations under any Operative Agreement or release the
Borrower or any Credit Party from its obligations under any Operative
Agreement or otherwise alter any payment obligations of the Borrower or any
Credit Party to the Lessor or any Financing Party under any Operative
Agreement;

(ii)    so long as no Default or Event of Default shall have occurred and be
continuing, the Lessee shall not be permitted to purchase a Property for less
than a price equal to the Termination Value of such Property, without the
consent of the Majority Secured Parties;

(iii)   without the consent of each Holder, no Operative Agreement may be
amended, changed, waived, discharged or terminated so as to (I) reduce the
stated Holder Yield payable on any Certificate, (II) reduce the percentage
specified in the definition of Majority Holders (III) affect any payment
obligations of the Lessee under the Lease or of the Owner Trustee with respect
to the Holder Indebtedness, (IV) affect the rights of the Lessor or the Agent
to demand or receive any payment under the Lease or any other Operative
Agreement with respect to the Holder Advances, including, without limitation
any such rights included in Section 3.1, 3.2, 3.3, 15.1, 17.1, 17.2, 17.3,
17.4, 17.5, 17.7, 19.1, 19.2, 20.1, 20.2, 20.3 or Article XXII of the Lease or
(V) affect in any way the Tranche B Priority Collateral (if the Tranche B
Indebtedness has been paid in full in cash and satisfied);

(iv)    without the consent of each Tranche A Lender, no Operative Agreement
may be amended, changed, waived, discharged or terminated so as to (I) reduce
the stated rate of interest payable on any Tranche A Note, (II) reduce the
percentage specified in the definition of Majority Tranche A Lenders, (III)
affect any payment obligations of the Lessee under the Lease or of the Owner
Trustee with respect to the Tranche A Indebtedness, or (IV) affect the rights
of the Lessor or the Agent to demand or receive any payment under the Lease or
any other Operative Agreement with respect to the Tranche A Indebtedness,
including, without limitation any such rights included in Sections 3.1, 3.2,
3.3, 15.1, 17.1, 17.2, 17.3, 17.4, 17.5, 17.6, 17.7, 19.1, 19.2, 20.1, 20.2,
20.3 or Article XXII of the Lease, (V) affect in any way the Tranche A
Priority Collateral;

(v)     without the consent of each Tranche B Lender, no Operative Agreement
may be amended, changed, waived, discharged or terminated so as to (I) reduce
the stated rate of interest payable on any Tranche B Note, (II) reduce the
percentage specified in the definition of Majority Tranche B Lenders, (III)
amend, modify or waive any provision of Sections 4.1, 8.2, 9.1, 10.1, 10.2,
11.1, 12.1, 13.1, 13.2, 14.1, 14.2, 14.3, 14.4, 15.1, 15.2 or 15.3 of the
Lease, (IV) affect any payment obligations of the Lessee under the Lease or
of the Owner Trustee with respect to the Tranche B Indebtedness, (V) affect
the rights of the Lessor or the Agent to demand or receive any payment under
the Lease or any other Operative Agreement with respect to the Tranche B
Indebtedness, including without limitation, any such rights contained in
Sections 3.1, 3.2, 3.3, 17.1, 17.2, 17.3, 17.4, 17.5, 17.6, 17.7, 19.1, 19.2,
20.1, 20.2, 20.3 or Article XXII of the Lease or (VI) affect in any way the
Tranche B Priority Collateral;

(c)     (i) the Holder Mortgage Instrument (and any UCC Financing Statement
related thereto) may not be terminated, amended, supplemented, waived or
modified unless such termination, amendment, supplement, waiver or modification
has been approved in writing by the Borrower, each of the Credit Parties and
the Majority Holders, (ii) the Tranche A Mortgage Instrument (and any UCC
Financing Statement related thereto) and the Lessee Security Agreement may not
be terminated, amended, supplemented, waived or modified unless such
termination, amendment, waiver or modification has been approved in writing by
the Borrower, each of the Credit Parties and the Majority Tranche A Lenders and
(iii) the Tranche B Mortgage Instrument (and UCC Financing Statement related
thereto) may not be terminated, amended, supplemented, waived or modified
unless such termination, amendment, supplement, waiver or modification has been
approved in writing by the Borrower, each of the Credit Parties and the
Majority Tranche B Lenders;
provided, further, however, notwithstanding the foregoing, the Tranche A
Lenders and the Holders agree that the Agent may enter into any amendment,
modification, waiver, discharge or termination of the Tranche A Mortgage
Instrument and the Holder Mortgage Instrument and the respective UCC Financing
Statements related thereto in a manner consistent with any amendment,
modification, waiver, discharge or termination of the Tranche B Mortgage
Instrument so long as such amendment, modification, waiver, discharge or
termination does not affect the Lessee Security Agreement, any rights related
to the Tranche A Priority Collateral or any right to demand or receive payments
under the Lease.

Section 15.12   Right to Purchase.

(a)     Following the occurrence of a Tranche B Credit Agreement Event of
Default, the Tranche A Lenders shall have, and the Tranche B Lenders, hereby
grant to the Tranche A Lenders, the option to purchase from the Tranche B
Lenders, all of the Tranche B Lenders' right, title and interest in, to and
under the Operative Agreements with respect to the Tranche B Loans, for a cash
price equal to the Outstanding Balance (as defined below) as of the date of
purchase.  If the Tranche A Lenders exercise such option to purchase prior to
the exercise of the Holders' option to purchase contained in Section 3.12(b)
below, the Tranche B Lenders shall sell to the Tranche A Lenders all of the
Tranche B Lenders' right, title and interest in, to and under the Operative
Agreements with respect to the Tranche B Loans at the price referenced above.
Such option may be exercised by delivery to the Agent of a notice exercising
such option, and specifying a closing date which shall be not less than 15 days
nor more than 30 days
after the date such notice is delivered.  Promptly after delivery of such
notice, the Tranche A Lenders shall enter into a definitive note purchase
agreement having substantially the terms of an Assignment and Acceptance and
containing such other customary terms as the parties may agree.  For purposes
of this Section 3.12(a) "Outstanding Balance" shall mean, as of any time, the
outstanding principal amount of the Tranche B Loans, any fees or interest
accrued thereon (including fees and interest accruing subsequent to the filing
of a petition of bankruptcy at the rate provided for in the documentation with
respect thereto (whether or not any such item is an allowed claim under
applicable law)) and unpaid at such time, and any other amounts then owing by
the Borrower and the Credit Parties to the Tranche B Lenders under the
Operative Agreements, including any amounts payable pursuant to any provision
of Section 11 of the Participation Agreement, any costs of collection or
enforcement (including reasonable attorneys' fees).

(b)     Following the occurrence of a Tranche B Credit Agreement Event of
Default, the Holders shall have, and the Tranche B Lenders, hereby grant to the
Holders, the option to purchase from the Tranche B Lenders, all of the Tranche
B Lenders' right, title and interest in, to and under the Operative Agreements
with respect to the Tranche B Loans, for a cash price equal to the Outstanding
Balance (as defined below) as of the date of purchase.  If the Holders exercise
such option to purchase prior to the exercise of the Tranche A Lenders' option
to purchase contained in Section 3.12(a) above, the Tranche B Lenders shall
sell to the Holders all of the Tranche B Lenders' right, title and interest in,
to and under the Operative Agreements with respect to the Tranche B Loans at
the price referenced above.  Such option may be exercised by delivery to the
Agent of a notice exercising such option and specifying a closing date which
shall be not less than 15 days nor more than 30 days after the date such notice
is delivered.  Promptly after delivery of such notice, the Holders shall enter
into a definitive note purchase agreement having substantially the terms of an
Assignment and Acceptance and containing such other customary terms as the
parties may agree.  For purposes of this Section 3.12(b), "Outstanding Balance"
shall mean, as of any time, the outstanding principal amount of the Tranche B
Loans, any fees or interest accrued thereon (including fees and interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto (whether or not any such
item is an allowed claim under applicable law)) and unpaid at such time, and
any other amounts then owing by the Borrower and the Credit Parties to the
Tranche B Lenders under the Operative Agreements, including any amounts payable
pursuant to any provision of Section 11 of the Participation Agreement, any
costs of collection or enforcement (including reasonable attorneys' fees).

(c)     Following the occurrence of a Tranche B Credit Agreement Event of
Default, if the Holders shall have exercised their option to purchase contained
in Section 3.12(b) above, the Tranche A Lenders shall have the option to
purchase from the Holders, all of the Holders' right, title and interest in, to
and under the Operative Agreements with respect to the Tranche B Loans, for a
cash price equal to the Outstanding Balance (as defined below) as of the date
of purchase.  Such option may be exercised by delivery to the Agent of a notice
exercising such option, and specifying a closing date which shall be not less
than 15 days nor more than 30 days after the date such notice is delivered.
Promptly after delivery of such notice, the Tranche A Lenders shall enter into
a definitive note purchase agreement having substantially the terms of an
Assignment and Acceptance and containing such other customary terms as the
parties may agree.  For purposes of this Section 3.12(c), "Outstanding Balance"
shall mean, as of any time, the outstanding principal amount of the Tranche B
Loans, any fees or interest accrued thereon (including fees and interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto (whether or not any such
 item is an allowed claim under applicable law) and unpaid at such time, and
any other amounts then owing by the Borrower and the Credit Parties to the
Holders with respect to the Tranche B Loans under the Operative Agreements,
including any amounts payable pursuant to any provision of Section 11 of the
Participation Agreement, any costs of collection or enforcement (including
reasonable attorneys' fees).

Section 15.13   Lease Subordination.  Each of the parties hereto agrees, for
itself and its successors and assigns, that the Lease shall at all times be
subordinate to the Mortgage Instruments and the liens thereof.

ARTICLE XVI

ENFORCEMENT AGAINST COLLATERAL;
APPLICATION OF PROCEEDS FROM COLLATERAL

        Section 16.1    Limit on Enforcement.

        Each of the Agent, the Tranche A Lenders, the Tranche B Lenders, the
Holders and the Revolving Loan Lender hereby agree among themselves that (a)(i)
the liens and security interests granted to the Agent, on behalf of the Lenders
and the Holders, in the Security Documents against the Tranche B Priority
Collateral shall not be enforced as against any of Tranche B Priority
Collateral except at the direction of the Majority Tranche B Lenders in
compliance with the provisions hereof and (ii) any and all rights and interests
 of the Financing Parties under the Lease related to the Tranche B Priority
Collateral shall not be enforced except at the direction of the Majority
Tranche B Lenders in compliance with the provisions hereof, (b) at such time as
all Tranche B Indebtedness has been paid in full in cash and satisfied, (i) the
liens and security interests granted to the Agent, on behalf of the Lenders and
the Holders, in the Security Documents against the Tranche B Priority
Collateral shall not be enforced as against any of the Tranche B Priority
Collateral except at the direction of the Majority Holders in compliance with
the provisions hereof and (ii) any and all rights and interests of the
Financing Parties under the Lease related to the Tranche B Priority Collateral
shall not be enforced except at the direction of the Majority Holders in
compliance with the provisions hereof, (c)(i) the liens and security interests
granted to the Agent, on behalf of the Lenders and the Holders, in the Security
Documents against the Tranche A Priority Collateral shall not be enforced as
against any of the Tranche A Priority Collateral except at the direction of
Congress in compliance with the provisions hereof and (ii) any and all rights
and interests under the Lease with respect to those payments under the Lease
(including, without limitation, any payment of the Termination Value in
accordance with Section 17.6 of the Lease) which would be distributed to the
Tranche A Lenders first in accordance with Section 8.7 of the
Participation Agreement shall not be enforced except at the direction of
Congress in compliance with the provisions hereof and (d) the enforcement of
any and all rights and interests (other than those identified in subclauses
(a), (b) and (c) above) created and existing under the Operative Agreements
including, without limitation, all rights and remedies against a Guarantor
shall not be taken by the Agent except at the direction of the Majority Tranche
A Lenders in compliance with the provisions hereof.  Notwithstanding any
provision herein to the contrary, each Financing Party is entitled to exercise
as such Financing Party sees fit its rights and interests existing under any
indemnification provision contained in any Operative Agreement.  Each of the
parties hereto agrees that, until all the obligations under the Operative
Agreements have been finally and indefeasibly paid and satisfied in full, the
provisions of this Agreement shall provide the exclusive method by which any
Financing Party may exercise rights and remedies under any Operative Agreement.

        Section 16.2    Enforcement.

        (a)     Upon the occurrence of any Tranche B Credit Agreement Event of
Default, the Agent, at the direction of the Majority Tranche B Lenders, shall
seek to realize upon the security interests and liens granted to the Agent, for
the benefit of the Tranche B Lenders, in the Tranche B Priority Collateral in
such manner as directed by the Majority Tranche B Lenders.  If the Agent has
requested instructions from the Majority Tranche B Lenders at a time when a
Tranche B Credit Agreement Event of Default shall be outstanding and the
Majority Tranche B Lenders have not responded to such request within 30 days
thereafter, the Agent may take, but shall have no obligation to take, any and
all actions under the Security Documents, or otherwise, including foreclosure
of any liens or any other exercise of remedies, as the Agent shall determine
to be in the best interests of the Tranche B Lenders; provided, however, if
instructions are thereafter received from the Majority Tranche B Lenders, then
any subsequent actions of the Agent shall be subject to such instructions.

        (b)     After all Tranche B Indebtedness has been paid in full and
satisfied, upon the occurrence of any Tranche B Credit Agreement Event of
Default, the Agent, at the direction of the Majority Holders, shall seek to
realize upon the security interests and liens granted to the Agent, for the
benefit of the Tranche A Lenders and the Holders, in the Tranche B Priority
Collateral in such manner as directed by the Majority Holders.  If the Agent
has requested instructions from the Majority Holders at a time when a Tranche
B Credit Agreement Event of Default shall be outstanding and the Majority
Holders have not responded to such request within 30 days thereafter, the Agent
may take, but shall have no obligation to take, any and all actions under the
Security Documents, or otherwise, including foreclosure of any liens or any
other exercise of remedies, as the Agent shall determine to be in the best
interests of the Holders; provided, however, if instructions are thereafter
received from the Majority Holders, then any subsequent actions of the Agent
shall be subject to such instructions.

        (c)     Subject to the terms of Article III hereof, upon the occurrence
 of any Event of Default, the Agent, at the direction of Congress, shall (i)
seek to realize upon the security interests and liens granted to the Agent, for
 the benefit of the Tranche A Lenders, in the Tranche A Priority Collateral in
such manner as directed by Congress and (ii) enforce, on behalf of the
Financing Parties, any and all rights and interests (other than those
identified in Sections 4.2(a), (b) and (c)(i) above) created and existing under
 the Operative Agreements, including, without limitation, all rights and
remedies against a Guarantor and any and all rights to demand payment of the
obligations of the Lessee arising under or pursuant to the Lease.  The
Revolving Loan Lender may, at its option, enter any or all of the Collateral
during normal business hours or in order to inspect, remove or take any action
with respect to the Tranche A Priority Collateral or to enforce the Revolving
Loan Lender's rights with respect thereto, including, but not limited to, the
examination and removal of the Tranche A Priority Collateral and the
examination and duplication of the books and records of any Credit Party
related to the Tranche A Priority Collateral or to otherwise handle, deal with
or dispose of any Tranche A Priority Collateral, such right to include, without
limiting the generality of the foregoing, the right to conduct one or more
public or private sales or auctions thereon; and use any of the Equipment
consisting of computers or other data processing equipment related to the
storage or processing of records, documents or files pertaining to the Tranche
A Priority Collateral and use any other Equipment to handle, deal with or
dispose of any Tranche A Priority Collateral pursuant to the Revolving Loan
Lender's rights as set forth in the Revolving Loan Agreements, the Uniform
Commercial Code of any applicable jurisdiction and other applicable law.  The
rights granted to the Revolving Loan Lender hereunder shall be binding
upon any transferee or assignee of any of the Collateral.  The Lenders and the
Holders shall not have any responsibility or liability for the acts or
omissions of the Revolving Loan Lender arising in connection with the Revolving
Loan Lender's use and/or occupancy of any of the Collateral as provided herein.

        Section 16.3    Application of Proceeds.

        Each of the Agent, the Tranche A Lenders, the Tranche B Lenders, the
Holders and the Revolving Loan Lender agrees that the proceeds and avails of
any sale of the Collateral, or any part thereof, and the proceeds and avails or
any right or remedy under the Operative Agreements shall be applied in
accordance with the terms of Section 8.7 of the Participation Agreement, except
that notwithstanding anything to the contrary contained herein or in the
Participation Agreement or any of the other Operative Agreements, proceeds of
the Tranche A Priority Collateral shall be applied first to the Tranche A
Indebtedness and the Revolving Loan Obligations and may, at the option of
Congress, be applied to either all or any portion of the Tranche A Indebtedness
or the Revolving Loan Obligations, as Congress may determine.  The Credit
Parties, the Tranche B Lenders, the Holders and the Agent each hereby consents
and agrees to the right of Congress to so apply such proceeds of the Tranche A
Priority Collateral as it may determine and each waives and releases any claim
or right against the Tranche A Lenders, Congress or the Revolving Loan Lender
in connection with such determination.

ARTICLE XVII

MISCELLANEOUS

Section 17.1    Successors; Continuing Effect.  This Agreement is being entered
 into for the benefit of, and shall be binding upon, (i) the Tranche B Lenders
and their respective successors and assigns, including subsequent holders of
Tranche B Indebtedness, and the term "holders of Tranche B Indebtedness" shall
include any such subsequent or additional holder of Tranche B Indebtedness,
wherever the context permits, (ii) the Holders and their respective successors
and assigns, including subsequent holders of the Holder Indebtedness, and the
term "holders of Holder Indebtedness" shall include any such subsequent or
additional holder of Holder Indebtedness, wherever the context permits, (iii)
the Tranche A Lenders and their respective successors and assigns, including
subsequent holders of the Tranche A Indebtedness, and the term "holders of
Tranche A Indebtedness" shall include any such subsequent or additional holder
of "Tranche A Indebtedness" wherever the context permits and (iv) the Revolving
Loan Lender and its successors and assigns, including subsequent holders of the
Revolving Loan Obligations, and the Revolving Loan Lender shall include any
subsequent holder of Revolving Loan Obligations wherever the context permits.

Section 17.2    Bankruptcy Financing.  If any Credit Party shall become subject
to a proceeding under the U.S. Bankruptcy Code and if the Revolving Loan Lender
desires to permit the use of cash collateral or to provide financing to the
Lessee under either Section 363 or Section 364 of the U.S. Bankruptcy Code, the
Agent, each Lender and each Holder agrees as follows:  (a) adequate notice to
the Agent, the Lenders and the Holders shall have been provided for such
financing or use of cash collateral if the Agent receives notice two (2)
Business Days prior to any hearing on or the entry of the order approving such
financing or use of cash collateral, and no objection will be raised by the
Agent, the Tranche A Lenders, the Tranche B Lenders or the Holders to any such
financing on the ground of a failure to provide "adequate protection" for the
Liens of the Agent with respect to the Collateral, provided, that, (i) the
Agent retains a Lien, for the benefit of the Lenders and the Holders, on the
post-petition Collateral with the same respective priority as existed prior to
the commencement of the proceeding under the U.S. Bankruptcy Code, (ii) the
Revolving Loan Lender shall not receive or obtain a Lien on any of the Tranche
B Priority Collateral and (iii) any such financing provided to the Lessee shall
not exceed the lesser of (x) the Maximum Credit (as defined in the Revolving
Loan Agreements) and (y) $325,000,000.

Section 17.3    Further Assurances.  Each of the parties hereto will, at the
expense of the Credit Parties, and at any time and from time to time, promptly
execute and deliver all further instruments and documents, and take all further
action, that the Agent, the Tranche A Lenders, the Tranche B Lenders, the
Holders or the Revolving Loan Lender may reasonably request in order to perfect
or otherwise protect any right or interest granted or purported to be granted
hereby or to enable the  Agent, the Tranche A Lenders, the Holders, the Tranche
B Lenders or the Revolving Loan Lender to exercise and enforce their rights and
remedies hereunder, including, without limitation appropriate amendments to
financing statements executed by the Borrower or the Credit Parties in order to
refer to this Agreement (but this Agreement shall remain fully effective
notwithstanding any failure to execute any additional documents or
instruments).

Section 17.4    Expenses.  The Credit Parties shall pay upon demand, the amount
of any and all reasonable expenses of the Agent, the Tranche A Lenders, the
Tranche B Lenders and the Holders and the Revolving Loan Lender, including,
without limitation, the reasonable fees and expenses of counsel which any of
the Agent, the Tranche A Lenders, the Tranche B Lenders, the Holders or the
Revolving Loan Lender may incur in connection with the exercise or enforcement
of any of their rights or interests hereunder.

Section 17.5    Notices; Amendments etc.

(a)     All notices required or permitted to be given hereunder shall be in
conformance with Section 12.2 of the Participation Agreement.  Unless a party
changes its address by giving notice to the other parties as provided herein,
notices shall be delivered to the applicable parties (other than the Revolving
Loan Lender) at the addresses and transmission numbers for notices referenced
in Section 12.2 of the Participation Agreement.  Any notice to the Revolving
Lender shall be sent to the following address:

Congress Financial Corporation
1133 Avenue of the Americas
New York, New York 10036
Attention: Mr. Laurence S. Forte
Telephone: 212-540-2000
Telecopy: 212-545-4283

The parties to this Agreement may change their addresses and transmission
numbers for notices by providing written notice of such new address to the
other parties hereto.

(b)     This Agreement may be amended and the terms hereof may be waived only
with the written consent of each of the parties hereto, or their authorized
successors and assigns.

Section 17.6    Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or invalidity
without invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

Section 17.7    WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

Section 17.8    Entire Agreement; Governing Law.  This Agreement embodies the
entire agreement and understanding of the parties hereto regarding the subject
matter hereof.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 17.9    Counterparts.  This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.

Section 17.10   Liability Limited.  The provisions of Section 12.9 of the
Participation Agreement are incorporated herein by reference to the same extent
and with the same effect as if set forth fully herein.

[Remainder of this page intentionally left blank.]
 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered by their duly authorized officers on the date and year
first above written.

CREDIT PARTIES: THE PEP BOYS - MANNY, MOE & JACK

By:
Name:
Title:

THE PEP BOYS MANNY MOE & JACK OF CALIFORNIA

By:
Name:
Title:

PEP BOYS - MANNY, MOE & JACK OF DELAWARE, Inc.

By:
Name:
Title:

PEP BOYS - MANNY, MOE & JACK OF PUERTO RICO, INC.

By:
Name:
Title:

PBY CORPORATION

By:
Name:
Title:

CARRUS SUPPLY CORPORATION

By:
Name:
Title:

[signature pages continue]

OWNER TRUSTEE:  STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not individually, except as expressly stated herein, but solely
as the Owner Trustee under the 1995 Pep Boys Leased Property Trust and/or the
1997 Pep Boys II Leased Property Trust (as applicable)

By:
Name:
Title:

[signature pages continue]
 TRANCHE B LENDERS:                     FIRST UNION NATIONAL BANK

By:
Name:
Title:

[signature pages continue]

HOLDERS:                                        FIRST UNION NATIONAL BANK

By:
Name:
Title:

[signature pages continue]

TRANCHE A LENDERS AND
REVOLVING LOAN LENDER:  CONGRESS FINANCIAL CORPORATION, in its capacity as
Tranche A Lender and Revolving Loan Lender

By:
Name:
Title:

[signature pages continue]

AGENT:  FIRST UNION NATIONAL BANK, in its capacity
   as Agent

By:
Name:
Title:

[signature pages end]

Appendix A
Rules of Usage and Definitions

I.  Rules of Usage

The following rules of usage shall apply to this Appendix A and the Operative
Agreements (and each appendix, schedule, exhibit and annex to the foregoing)
unless otherwise required by the context or unless otherwise defined therein:

        (a)     Except as otherwise expressly provided, any definitions set
forth herein or in any other document shall be equally applicable to the
singular and plural forms of the terms defined.

        (b)     Except as otherwise expressly provided, references in any
document to articles, sections, paragraphs, clauses, annexes, appendices,
schedules or exhibits are references to articles, sections, paragraphs,
clauses, annexes, appendices, schedules or exhibits in or to such document.

        (c)     The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute a
part of any such document nor shall they affect the meaning, construction or
effect of any provision thereof.

        (d)     References to any Person shall include such Person, its
successors, permitted assigns and permitted transferees.

        (e)     Except as otherwise expressly provided, reference to any
agreement means such agreement as amended, modified, extended, supplemented,
restated and/or replaced from time to time in accordance with the applicable
provisions thereof.

        (f)     Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or regulations
issued thereunder or any law enacted in substitution or replacement therefor.

        (g)     When used in any document, words such as "hereunder",
"hereto", "hereof" and "herein" and other words of like import shall, unless
the context clearly indicates to the contrary, refer to the whole of the
applicable document and not to any particular article, section, subsection,
paragraph or clause thereof.

        (h)     References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.

        (i)     References herein to "attorney's fees", "legal fees", "costs
of counsel" or other such references shall be deemed to include the allocated
cost of in-house counsel.

        (j)     Each of the parties to the Operative Agreements and their
counsel have reviewed and revised, or requested revisions to, the Operative
Agreements, and the usual rule of construction that any ambiguities are to be
resolved against the drafting party shall be inapplicable in the construction
and interpretation of the Operative Agreements and any amendments or exhibits
thereto.

        (k)     Capitalized terms used in any Operative Agreements which are
not defined in this Appendix A but are defined in another Operative Agreement
shall have the meaning so ascribed to such term in the applicable Operative
Agreement.

        (l)     In computing any period of time for purposes of any Operative
Agreement, the mechanics for counting the number of days set forth in Rule 6
of the Federal Rules of Civil Procedure shall be observed.

II.  Definitions

        "1995 Pep Boys Leased Property Trust" shall mean the grantor trust
amended and restated pursuant to the terms and conditions of the Trust
Agreement (1995).

        "1997 Pep Boys II Leased Property Trust" shall mean the grantor trust
amended and restated pursuant to the terms and conditions of the Trust
Agreement (1997).

        "ABR" shall mean, for any day, the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.

        "ABR Holder Advance" shall mean a Holder Advance bearing a Holder Yield
based on the ABR.

        "ABR Loans" shall mean Loans the rate of interest applicable to which
is based upon the ABR.

        "Acceleration" shall have the meaning given to such term in Section 6
of the Credit Agreement.

        "Accounts" shall have the meaning given to such term in Section 1 of
the Security Agreement.

        "Additional Incorporated Terms" shall have the meaning given to such
term in Section 28.1 of the Lease.

        "Advance" shall mean an the funding as of the Closing Date to refinance
the Existing Debt and pay the Transaction Expenses in connection therewith.

        "Affiliate" shall mean, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person.

        "After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after deduction of the
amount of all taxes required to be paid by the recipient calculated at the then
maximum marginal rates generally applicable to Persons of the same type as the
recipients with respect to the receipt by the recipient of such amounts (less
any tax savings realized as a result of the payment of the indemnified amount),
such increased payment (as so reduced) is equal to the payment otherwise
required to be made.

        "Agent" shall mean First Union National Bank, as agent for the Lenders
pursuant to the Credit Agreement, or any successor agent appointed in
accordance with the terms of the Credit Agreement and respecting the Security
Documents, as agent for the Secured Parties.

        "Applicable Insolvency Laws" shall have the meaning given to such term
in the definition of "Borrower" in this Appendix A.

        "Applicable Percentage" shall mean the Applicable Margin (as such term
is defined in the Lessee Credit Agreement and calculated in accordance with the
terms and conditions set forth in the Lessee Credit Agreement) for Tranche A
Eurodollar Loans, two percent (2.00%) for Tranche B Eurodollar Loans, and two
and seventy-five hundredths percent (2.75%) for Eurodollar Holder Advances.

        "Appraisal" shall mean, with respect to any Property, an appraisal to
be delivered in connection with the Participation Agreement or in accordance
with the terms of the Lease, in each case prepared by a reputable appraiser
reasonably acceptable to the Agent, which in the judgment of counsel to the
Agent, complies with all of the provisions of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989, as amended, the rules and
regulations adopted pursuant thereto, and all other applicable Legal
Requirements.

        "Appraisal Procedure" shall have the meaning given such term in
Section 22.4 of the Lease.

        "Appurtenant Rights" shall mean (a) all agreements, easements,
rights of way or use, rights of ingress or egress, privileges, appurtenances,
tenements, hereditaments and other rights and benefits at any time belonging
or pertaining to the Land underlying the Improvements or the Improvements,
including without limitation the use of any streets, ways, alleys, vaults or
strips of land adjoining, abutting, adjacent or contiguous to the Land and
(b) all permits, licenses and rights, whether or not of record, appurtenant
to such Land or the Improvements.

        "Assignment and Acceptance" shall mean the Assignment and Acceptance
in the form attached to the Credit Agreement as EXHIBIT B.

        "Bankruptcy Code" shall mean Title 11 of the U. S. Code entitled
"Bankruptcy," as now or hereafter in effect or any successor thereto.

        "Bankruptcy Event" shall have the meaning given to such term in Section
1.1 of the Intercreditor Agreement.

        "Base Amount" shall have the meaning given to such term in Section 10.1
(e) of the Lease.

        "Basic Documents" shall mean the following:  the Participation
Agreement, the Trust Agreement, the Certificates, the Credit Agreement, the
Notes, the Lease, the Intercreditor Agreement and the Security Agreement.

        "Basic Rent" shall mean, the sum of (a) the Loan Basic Rent and (b)
the Lessor Basic Rent, calculated as of the applicable date on which Basic Rent
is due.

        "Benefitted Lender" shall have the meaning specified in Section 9.10(a)
of the Credit Agreement.

        "Bill of Sale" shall mean a Bill of Sale regarding Equipment in form
and substance satisfactory to the Agent.

        "Board" shall mean the Board of Governors of the Federal Reserve System
of the United States (or any successor).

        "Borrower" shall mean the Trust Company not in its individual capacity,
but solely as Owner Trustee under 1995 Pep Boys Leased Property Trust and 1997
Pep Boys II Leased Property Trust, jointly and severally as co-borrowers under
the Credit Agreement; provided, that notwithstanding anything to the contrary
contained in any Operative Agreement, it is the intention of the Owner Trustee
and the Lenders that, in any proceeding involving the bankruptcy,
reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution or insolvency or any similar proceeding with respect to the Owner
Trustee or its assets, the amount of the obligations of the Owner Trustee
arising under the Credit Agreement shall be in, but not in excess of, the
maximum amount thereof not subject to avoidance or recovery by operation of
applicable law governing bankruptcy, reorganization, arrangement, adjustment
of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or
conveyances or other similar laws, including, without limitation, 11 U.S.C.
545, 548, 550 and other "avoidance" provisions of the Bankruptcy Code
(applicable in any proceeding to the Owner Trustee, as the case may be, and
the Credit Agreement, collectively, "Applicable Insolvency Laws").  To that
end, but only in the event and to the extent that the obligations of the Owner
Trustee, as the case may be, under the Credit Agreement or any payment made
thereunder would, but for the operation of the foregoing provision, be subject
to avoidance or recovery in any such proceeding under Applicable Insolvency
Laws, the amount of the obligations of the Owner Trustee under the Credit
Agreement shall be limited to the largest amount which, after giving effect
thereto, would not, under Applicable Insolvency Laws, render the obligations
of the Owner Trustee under the Credit Agreement unenforceable or avoidable or
otherwise subject to recovery under Applicable Insolvency Laws.  To the extent
any payment actually made pursuant to the Credit Agreement exceeds the
limitation of the foregoing provision and is otherwise subject to avoidance
and recovery in any such proceeding under Applicable Insolvency Laws,
the amount subject to avoidance shall in all events be limited to the
amount by which such actual payment exceeds such limitation and the obligations
under the Credit Agreement is limited by the foregoing proviso, subject to the
other terms and provisions of the Credit Agreement and the Operative
Agreements, shall remain in full force and effect and be fully enforceable
against the Owner Trustee, as the case may be.  The foregoing proviso is
intended solely to preserve the rights of the Agent under the Credit Agreement
against the Owner Trustee and such proceeding to the maximum extent permitted
by Applicable Insolvency Laws and Owner Trustee shall not have any right or
claim under such proviso that would not otherwise be available under Applicable
Insolvency Laws in such proceeding. To the extent the context required,
"Borrower" shall refer to the Owner Trustee as the Borrower.

        "Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or any other states
from which the Agent, any Lender or any Holder funds or engages in
administrative activities with respect to the transactions under the Operative
Agreements are authorized or required by law to close; provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

        "Capitalized Lease" shall mean, as applied to any Person, any lease
of property (whether real, personal, tangible, intangible or mixed of such
Person) by such Person as the lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.

        "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, partnership interests or limited liability
company interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).

        "Casualty" shall mean any damage or destruction of all or any portion
of the Property as a result of a fire or other casualty.

        "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C.  9601 et seq., as amended
by the Superfund Amendments and Reauthorization Act of 1986.

        "Certificate" shall mean a Certificate in favor of each Holder
regarding the Holder Commitment of such Holder issued pursuant to the terms and
conditions of the Trust Agreement in favor of each Holder.

        "Change of Control" shall mean (a) the transfer (in one transaction or
a series of transactions) of all or substantially all of the assets of any
Credit Party to any Person or group (as such term is used in Section 13(d)(3)
of the Exchange Act other than as permitted in Section 9.7 of the Lessee Credit
Agreement); (b) the liquidation or dissolution of any Credit Party or the
adoption of a plan by the stockholders of any Credit Party relating to the
dissolution or liquidation of such Credit Party other than as permitted in
Section 9.7 of the Lessee Credit Agreement, (c) the acquisition by any Person
or group (as such term is used in Section 13(d)(3) of the Exchange Act), of
beneficial ownership, directly or indirectly, of fifty (50%) percent or more of
the voting power of the total outstanding Voting Stock of Pep Boys Parent; (d)
during any period of two (2) consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of Pep Boys Parent
(together with any new directors whose nomination for election by the
stockholders of Pep Boys Parent was approved by a vote of at least sixty-six
and two thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of Pep Boys Parent then still
in office; or (e) the failure of Pep Boys Parent to own one hundred percent
(100%) of the voting power of the total outstanding Voting Stock of any Credit
Party other than Pep Boys Parent.

        "Chattel Paper" shall have the meaning given to such term in Section
1 of the Security Agreement.

        "Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses (including
without limitation reasonable attorney's fees and expenses) of any nature
whatsoever.

        "Closing Date" shall mean September ___, 2000.

        "Code" shall mean the Internal Revenue Code of 1986 together with
rules and regulations promulgated thereunder, as amended from time to time, or
any successor statute thereto.

        "Collateral" shall mean all assets of the Lessor, now owned or
hereafter acquired, upon which a Lien is purported to be created by one or
more of the Security Documents.

        "Commencement Date" shall have the meaning specified in Section 2.2 of
the Lease.

        "Commitment" shall mean, as to any Lender, the Tranche A Commitment and
the Tranche B Commitment of such Lender.

        "Company Obligations" shall mean all present and future obligations
(whether contingent or otherwise) of The Pep Boys - Manny, Moe & Jack, a
Pennsylvania corporation, The Pep Boys Manny Moe & Jack of California, a
California corporation, Pep Boys - Manny, Moe & Jack of Delaware, Inc., a
Delaware corporation, Pep Boys - Manny, Moe & Jack of Puerto Rico, Inc., a
Delaware corporation, PBY Corporation, a Delaware corporation and Carrus Supply
Corporation, a Delaware corporation, each in any and all capacities under and
with respect to the Operative Agreements and each Property.

        "Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to any Property or any part thereof,
wholly or partially (temporarily or permanently), by or on account of any
actual or threatened eminent domain proceeding or other taking of action by any
Person having the power of eminent domain, including without limitation an
action by a Governmental Authority to change the grade of, or widen the streets
adjacent to, any Property or alter the pedestrian or vehicular traffic flow to
any Property so as to result in a change in access to such Property, or by or
on account of an eviction by paramount title or any transfer made in lieu of
any such proceeding or action.

        "Congress" shall have the meaning given to such term in Section 1.1 of
the Intercreditor Agreement.

        "Consolidated Subsidiary" shall mean, as to any Person, any Subsidiary
of such Person which under the rules of GAAP consistently applied should have
its financial results consolidated with those of such Person for purposes of
financial accounting statements.

        "Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414 of the Code.

        "Co-Owner Trustee" shall have the meaning specified in Section 9.2 of
the Trust Agreement.

        "Credit Agreement" shall mean, collectively or individually as the
context requires, the Tranche A Credit Agreement and the Tranche B Credit
Agreement.

        "Credit Agreement Default" shall mean any event or condition which,
with the lapse of time or the giving of notice, or both, would constitute a
Credit Agreement Event of Default.

        "Credit Agreement Event of Default" shall mean any event or
condition defined as an "Event of Default" in Section 6 of the Credit
Agreement.

        "Credit Documents" shall mean the Participation Agreement, the Credit
Agreement, the Notes, the Intercreditor Agreement and the Security Documents.

        "Credit Parties" shall mean each Lessee and each Guarantor.

        "Deed" shall mean a special or limited warranty deed regarding the
Land and/or Improvements in form and substance satisfactory to the Agent.

        "Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.

        "Defaulting Holder" shall have the meaning given to such term in
Section 12.4 of the Participation Agreement.

        "Defaulting Lender" shall have the meaning given to such term in
Section 12.4 of the Participation Agreement.

        "Deficiency Balance" shall have the meaning given in Section
22.1(b) of the Lease Agreement.

        "Documents" shall have the meaning given to such term in Section 1 of
the Security Agreement.

        "Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.

        "Election Date" shall have the meaning given to such term in Section
20.1 of the Lease.

        "Election Notice" shall have the meaning given to such term in Section
20.1 of the Lease.

        "Employee Benefit Plan" or "Plan" shall mean an employee benefit plan
(within the meaning of Section 3(3) of ERISA, including without limitation any
Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of the Code
and as interpreted by the Internal Revenue Service and the Department of Labor
in rules, regulations, releases or bulletins in effect on any Closing Date.

        "Environmental Claims" shall mean any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Substance, Environmental
Law, or other order of a Tribunal or (d) from any actual or alleged damage,
injury, threat, or harm to health, safety, natural resources, or the
environment.

        "Environmental Laws" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Tribunal relating
to emissions, discharges, releases, threatened releases of any Hazardous
Substance into ambient air, surface water, ground water, publicly owned
treatment works, septic system, or land, or otherwise relating to the handling,
storage, treatment, generation, use, or disposal of Hazardous Substances,
pollution or to the protection of health or the environment, including without
limitation CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C.
6901, et seq., and state statutes analogous thereto.

        "Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires remediation under
any Environmental Law and must be remediated during any grace period allowed
under such Environmental Law) to violate or results in or threatens (if the
threat requires remediation under any Environmental Law and must be remediated
during any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.

        "Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Advances by
Lessee or the Lessor and all improvements and modifications thereto and
replacements thereof, whether or not now owned or hereafter acquired or now
or subsequently attached to, contained in or used or usable in any way in
connection with any operation of any Improvements, including but without
limiting the generality of the foregoing, all equipment described in the
Appraisal including without limitation all heating, electrical, and mechanical
equipment, lighting, switchboards, plumbing, ventilation, air conditioning and
air-cooling apparatus, refrigerating, and incinerating equipment, escalators,
elevators, loading and unloading equipment and systems, cleaning systems
(including without limitation window cleaning apparatus), (but excluding
telephones, communication systems, satellite dishes, antennae, televisions
and computers), sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, appliances, fittings and fixtures of every kind and
description.

        "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

        "ERISA Affiliate" shall mean each entity required to be aggregated
with any Credit Party pursuant to the requirements of Section 414(b) or (c) of
the Code.

        "Eurocurrency Reserve Requirements" shall mean for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including without limitation basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed on eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D) maintained by a member bank of the Federal
Reserve System.

        "Eurodollar Holder Advance" shall mean a Holder Advance bearing a
Holder Yield based on the Eurodollar Rate.

        "Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

"Eurodollar Rate" shall mean, with respect to each Interest Period for each
Eurodollar Loan or Eurodollar Holder Advance, the rate per annum (rounded
upwards, if necessary, to the next one sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b)
a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage.  For
purposes hereof, "Reserve Percentage" shall mean the reserve percentage,
expressed as a decimal, prescribed by any United States or applicable to
deposits of United States dollars in a non-United States or an international
banking office of Reference Bank used to fund a Eurodollar Loan or Eurodollar
Holder Advance or any Eurodollar Loan or Eurodollar Holder Advance made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans.  The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.

        "Event of Default" shall mean a Lease Event of Default or a Credit
Agreement Event of Default.

        "Excepted Payments" shall mean:

                (a)     all indemnity payments (including without limitation
indemnity payments made pursuant to Section 11 of the Participation Agreement),
whether made by adjustment to Basic Rent or otherwise, to which the Owner
Trustee, any Holder or any of their respective Affiliates, agents, officers,
directors or employees is entitled;

                (b)     any amounts (other than Basic Rent or Termination
Value) payable under any Operative Agreement to reimburse the Owner Trustee,
any Holder or any of their respective Affiliates (including without limitation
the reasonable expenses of the Owner Trustee, the Trust Company and the Holders
incurred in connection with any such payment) for performing or complying with
any of the obligations of any Credit Party under and as permitted by any
Operative Agreement;

                (c)     any amount payable to a Holder by any transferee of
such interest of a Holder as the purchase price of such Holder's interest in
the Trust Estate (or a portion thereof);

                (d)     any insurance proceeds (or payments with respect to
risks self-insured or policy deductibles) under liability policies other than
such proceeds or payments payable to the Agent or any Lender;

                (e)     any insurance proceeds under policies maintained by the
Owner Trustee for its own benefit or any Holder for its own benefit;

                (f)     Transaction Expenses or other amounts, fees,
disbursements or expenses paid or payable to or for the benefit of the Owner
Trustee or any Holder;

                (g)     any payments in respect of interest to the extent
attributable to payments referred to in clauses (a) through (f) above; and

                (h)     any rights of either the Owner Trustee or the Trust
Company to demand, collect, sue for or otherwise receive and enforce payment of
any of the foregoing amounts, provided that such rights shall not include the
right to terminate the Lease.

        "Excess Proceeds" shall mean the excess, if any, of the aggregate of
all awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the Termination Value paid by the Lessee pursuant
to the Lease with respect to such Casualty or Condemnation.

        "Exculpated Persons" shall mean the Trust Company (except with respect
to the representations and warranties and the other obligations of the Trust
Company pursuant to the Operative Agreements expressly undertaken in its
individual capacity, including without limitation the representations and
warranties of the Trust Company pursuant to Section 6.1 of the Participation
Agreement, the obligations of the Trust Company pursuant to Section 8.2 of the
Participation Agreement and the obligations of the Trust Company pursuant to
the Trust Agreement), the Holders (except with respect to the obligations of
the Holders pursuant to the Participation Agreement and the Trust Agreement
expressly undertaken in their respective individual capacities), their
officers, directors, shareholders and partners.

        "Exempt Payments" shall have the meaning specified in Section 11.2(e)
of the Participation Agreement.

        "Existing Debt" shall mean the combined obligations evidenced by the
Transaction Documents (as amended, modified, extended, supplemented, restated
or replaced from time to time) as such term is defined in Schedule 1 to the
Transaction Agreements respectively dated as of November 13, 1995 and
February 28, 1997 each among The Pep Boys - Manny, Moe & Jack, State Street
Bank and Trust Company, a Massachusetts trust company, not in its individual
capacity except as expressly stated therein, Citicorp Leasing, Inc., and such
other banks or lending institutions party thereto, respectively, from time to
time.

        "Expiration Date" shall mean the last day of the Term; provided, in
no event shall the Expiration Date be later than September 30, 2004, unless
such later date has been expressly agreed to in writing by each of the Lessor,
the Lessee, the Agent, the Lenders and the Holders.

        "Fair Market Sales Value" shall mean, with respect to any Property,
the amount, which in any event, shall not be less than zero (0), that would be
paid in cash in an arms-length transaction between an informed and willing
purchaser and an informed and willing seller, neither of whom is under any
compulsion to purchase or sell, respectively, such Property.  Fair Market Sales
Value of any Property shall be determined based on the assumption that, except
for purposes of Section 17 of the Lease, such Property is in the condition and
state of repair required under Section 10.1 of the Lease and each Credit Party
is in compliance with the other requirements of the Operative Agreements.

        "Federal Funds Effective Rate" shall have the meaning given to such
term in the definition of ABR.

        "Financing Parties" shall mean the Lessor, the Owner Trustee, in its
trust capacity, the Agent, the Holders and the Lenders.

        First Priority Real Estate Liens" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.

        "Fixtures" shall mean all fixtures relating to the Improvements,
including without limitation all components thereof, located in or on the
Improvements, together with all replacements, modifications, alterations and
additions thereto.

        "Form 1001" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.

        "Form 4224" shall have the meaning specified in Section 11.2(e) of the
Participation Agreement.

        "GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the accounting principles board of the
American Institute of Certified Public Accountants, and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, that are applicable to the circumstances as of the
date of determination.

        "Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions,
publications, filings, notices to and declarations of or with, or required by,
any Governmental Authority, or required by any Legal Requirement, and shall
include, without limitation, all environmental and operating permits and
licenses that are required for the full use, occupancy, zoning and operating
of the Property.

        "Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.

        "Guarantors" shall mean the various parties to the Participation
Agreement from time to time, as guarantors of the Lessee with respect to the
Operative Agreements and the Properties.

        "Hazardous Substance" shall mean any of the following:  (a) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (b) any substance,
material, product, derivative, compound or mixture, mineral, chemical, waste,
gas, medical waste, or pollutant, in each case whether naturally occurring,
man-made or the by-product of any process, that is toxic, harmful or hazardous
to the environment or human health or safety as determined in accordance with
any Environmental Law; or (c) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.

        "Holder Advance" shall mean any advance made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.

        "Holder Amount" shall mean as of any date, the aggregate amount of
Holder Advances made by each Holder to the Trust Estate pursuant to Section 2
of the Participation Agreement and Section 3.1 of the Trust Agreement less any
payments of any Holder Advances received by the Holders pursuant to Section 3.4
of the Trust Agreement.

        "Holder Commitments" shall mean the Holder Commitment of each Holder as
set forth in Schedule I to the Trust Agreement as such Schedule I may be
amended and replaced from time to time.

        "Holder Mortgage Instrument" shall have the meaning given to such term
in Section 1.1 of the Intercreditor Agreement.

        "Holder Overdue Rate" shall mean the lesser of (a) the ABR plus four
percent (4%) and (b) the highest rate permitted by applicable law.

        "Holder Property Cost" shall mean, with respect to each Property the
amount set forth in the column labeled "Holder Property Cost" opposite such
Property's location in Exhibit M to the Participation Agreement.

        "Holder Yield" shall mean with respect to Holder Advances from time to
time either the Eurodollar Rate plus the Applicable Percentage or the ABR as
elected by the Owner Trustee from time to time with respect to such Holder
Advances in accordance with the terms of the Trust Agreement; provided,
however, (a) upon delivery of the notice described in Section 3.7(c) of the
Trust Agreement, the outstanding Holder Advances of each Holder shall bear a
yield at the ABR applicable from time to time from and after the dates and
during the periods specified in Section 3.7(c) of the Trust Agreement, and (b)
upon the delivery by a Holder of the notice described in Section 11.3(f) of
the Participation Agreement, the Holder Advances of such Holder shall bear a
yield at the ABR applicable from time to time after the dates and during the
periods specified in Section 11.3(f) of the Participation Agreement.

        "Holders" shall mean First Union National Bank and shall include the
other banks and financial institutions which may be from time to time holders
of Certificates in connection with the 1995 Pep Boys Leased Property Trust
and the 1997 Pep Boys II Leased Property Trust (as applicable).

        "Impositions" shall mean any and all liabilities, losses, expenses,
costs, charges and Liens of any kind whatsoever for fees, taxes, levies,
imposts, duties, charges, assessments or withholdings ("Taxes") including but
not limited to (i) real and personal property taxes, including without
limitation personal property taxes on any property covered by the Lease that
is classified by Governmental Authorities as personal property, and real
estate or ad valorem taxes in the nature of property taxes; (ii) sales taxes,
use taxes and other similar taxes (including rent taxes and intangibles taxes);
(iii) excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp
taxes and documentary recording taxes and fees; (v) taxes that are or are in
the nature of franchise, income, value added, privilege and doing business
taxes, license and registration fees; (vi) assessments on any Property,
including without limitation all assessments for public Improvements or
benefits, whether or not such improvements are commenced or completed
within the Term; and (vii) taxes, Liens, assessments or charges asserted,
imposed or assessed by the PBGC or any governmental authority succeeding to or
performing functions similar to, the PBGC; and in each case all interest,
additions to tax and penalties thereon, which at any time prior to, during or
with respect to the Term or in respect of any period for which the Lessee shall
be obligated to pay Supplemental Rent, may be levied, assessed or imposed by
any Governmental Authority upon or with respect to (a) any Property or any part
thereof or interest therein; (b) the leasing, financing, refinancing,
substitution, subleasing, assignment, control, condition, occupancy, servicing,
maintenance, repair, ownership, possession, activity conducted on, delivery,
insuring, use, operation, improvement, sale, transfer of title, return or other
disposition of such Property or any part thereof or interest therein; (c) the
Notes, other indebtedness with respect to any Property, or the Certificates, or
any part thereof or interest therein; (d) the rentals, receipts or earnings
arising from any Property or any part thereof or interest therein; (e) the
Operative Agreements, the performance thereof, or any payment made or accrued
pursuant thereto; (f) the income or other proceeds received with respect to any
Property or any part thereof or interest therein upon the sale or disposition
thereof; (g) any contract relating to the acquisition or delivery of the
Improvements or any part thereof or interest therein; (h) the issuance of the
Notes or the Certificates; (i) the Owner Trustee, the Trust or the Trust
Estate; or (j) otherwise in connection with the transactions contemplated by
the Operative Agreements.

        "Improvements" shall mean, with respect to the construction,
renovations and/or Modifications on any Land, all buildings, structures,
Fixtures, and other improvements of every kind existing at any time and from
time to time on or under the Land refinanced or otherwise acquired using the
proceeds of the Loans or the Holder Advances together with any and all
appurtenances to such buildings, structures or improvements, including without
limitation sidewalks, utility pipes, conduits and lines, parking areas and
roadways, and including without limitation all Modifications and other
additions to or changes in the Improvements at any time, including without
limitation any Improvements existing as of the Closing Date.

        "Incorporated Covenants" shall have the meaning given to such term in
Section 28.1 of the Lease.

        "Incorporated Representations and Warranties" shall have the meaning
given to such term in Section 28.1 of the Lease.

        "Indebtedness" of a Person shall mean, without duplication, such
Person's:

                (a)     obligations for borrowed money;

                (b)     obligations representing the deferred purchase price of
Property (whether real, personal, tangible, intangible or mixed) or services
(other than accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade);

                (c)     obligations, whether or not assumed, secured by liens
or payable out of the proceeds or production from property now or hereafter
owned or acquired by such Person;

                (d)     obligations which are evidenced by notes, acceptances
or other instruments;

                (e)     Capitalized Lease obligations and the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product to which
such Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP;

                (f)     net liabilities under interest rate swap, exchange or
cap agreements; and

                (g)     contingent obligations.

        "Indemnified Person" shall mean the Lessor, the Owner Trustee, in its
individual and its trust capacity, the Trust, the Trust Company, the Agent,
First Union Securities, Inc., the Holders, the Lenders and their respective
successors, assigns, directors, shareholders, partners, officers, employees,
agents and Affiliates.

        "Indemnity Provider" shall mean, respecting each Property, the Lessee.

        "Instruments" shall have the meaning given to such term in Section 1 of
the Security Agreement.

        "Insurance Requirements" shall mean all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee,
and all requirements of the issuer of any such policy and, regarding self
insurance, any other requirements of the Lessee.

        "Intercreditor Agreement"  shall mean the Intercreditor and Lien
Subordination Agreement, dated on or about the Closing Date, among each of the
parties to the Participation Agreement.

        "Interest Period" shall mean as to any Eurodollar Loan or Eurodollar
Holder Advance (i) with respect to the initial Interest Period, the period
beginning on the date of the first Eurodollar Loan and Eurodollar Holder
Advance and ending on September 30, 2000 and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable
to such Eurodollar Loan or Eurodollar Holder Advance and ending one (1) month
thereafter; provided, however, that all of the foregoing provisions relating
to Interest Periods are subject to the following:  (A) if any Interest Period
would end on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that where the next
succeeding Business Day falls in the next succeeding calendar month, then on
the next preceding Business Day), (B) no Interest Period shall extend beyond
the Maturity Date or the Expiration Date, as the case may be, (C) where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last Business Day of such calendar
month, and (D) there shall not be more than one (1) Interest Period outstanding
at any one (1) time.

        "Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, together with the rules and regulations promulgated thereunder.

        "Joinder Agreement" shall mean a joinder agreement, in the form of
EXHIBIT J to the Participation Agreement, executed from time to time between a
Domestic Subsidiary of any Credit Party and the Agent.

        "Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Lessee on the Closing Date relating to such parcel
and (b) the schedules to each applicable Lease Supplement executed and
delivered in accordance with the requirements of Section 2.4 of the Lease.

        "Law" shall mean any statute, law, ordinance, regulation, rule,
directive, order, writ, injunction or decree of any Tribunal.

        "Lease" or "Lease Agreement" shall mean the Lease Agreement dated on
or about the Closing Date, between the Lessor and the Lessee, together with
any Lease Supplements thereto.

        "Lease Default" shall mean any event or condition which, with the lapse
of time or the giving of notice, or both, would constitute a Lease Event of
Default.

        "Lease Event of Default" shall have the meaning specified in Section
17.1 of the Lease.

        "Lease Supplement" shall mean each Lease Supplement substantially in
the form of EXHIBIT A to the Lease, together with all attachments and
schedules thereto.

        "Legal Requirements" shall mean all foreign, federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee,
any Holder, the Lessor, any Credit Party, the Agent, any Lender or any
Property, Land, Improvement, Equipment or the taxation, use of such
Improvements, whether now or hereafter enacted and in force, including without
limitation any that require repairs, modifications or alterations in or to any
Property or in any way limit the use and enjoyment thereof (including without
limitation all building, zoning and fire codes and the Americans with
Disabilities Act of 1990, 42 U.S.C. 12101 et. seq., and any other similar
federal, state or local laws or ordinances and the regulations promulgated
thereunder) and any that may relate to environmental requirements (including
without limitation all Environmental Laws), and all permits, certificates of
occupancy, licenses, authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments which are either of record or known to any Credit Party affecting
any Property or the Appurtenant Rights.

        "Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to procure a security interest in favor of
the Agent in the Collateral subject to the Security Documents.

        "Lenders" shall mean Congress Financial Corporation, First Union
National Bank and shall include the other banks and financial institutions
which may be from time to time party to the Participation Agreement and the
Credit Agreement.

        "Lessee" shall have the meaning set forth in the Lease.

        "Lessee Credit Agreement" shall mean that certain Loan and Security
Agreement dated as of the Closing Date by and among the Lessee, certain of its
subsidiaries and Congress Financial Corporation, as such may hereafter be
amended, modified, supplemented, restated and/or replaced from time to time.

        "Lessee Credit Agreement Event of Default" shall mean an Event of
Default as defined in Section 10.1 of the Lessee Credit Agreement.

        "Lessee Security Agreement"  shall mean that certain Security Agreement
dated as of the Closing Date between the Lessee and Lessor, as assigned by
Lessor as collateral to Agent, as such may hereafter be amended, modified,
supplemented, restated and/or replaced from time to time.

        "Lessor" shall mean the Owner Trustee, not in its individual capacity,
but as the Lessor under the Lease.

        "Lessor Basic Rent" shall mean the scheduled Holder Yield due on the
Holder Advances on any Scheduled Interest Payment Date pursuant to the Trust
Agreement (but not including interest on (a) any such scheduled Holder Yield
due on the Holder Advances prior to the Rent Commencement Date with respect
to the Property to which such Holder Advances relate or (b) overdue amounts
under the Trust Agreement or otherwise).

        "Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to protect the Lessor's interest under the
Lease to the extent the Lease is a security agreement or a mortgage.

        "Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Lessor
or the Trust Company, in its individual capacity, not resulting from the
transactions contemplated by the Operative Agreements, (b) any act or omission
of the Lessor or the Trust Company, in its individual capacity, which is not
required by the Operative Agreements or is in violation of any of the terms of
the Operative Agreements, (c) any claim against the Lessor or the Trust
Company, in its individual capacity, with respect to Taxes or Transaction
Expenses against which the Lessee is not required to indemnify the Lessor or
the Trust Company, in its individual capacity, pursuant to Section 11 of the
Participation Agreement or (d) any claim against the Lessor arising out of
any transfer by the Lessor of all or any portion of the interest of the
Lessor in the Properties, the Trust Estate or the Operative Agreements other
than the transfer of title to or possession of any Properties by the Lessor
pursuant to and in accordance with the Lease, the Credit Agreement, the
Security Agreement or the Participation Agreement or pursuant to the exercise
of the remedies set forth in Article XVII of the Lease.

        "Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, option or charge of any kind.

        "Limited Recourse Amount" shall mean with respect to all the Properties
on an aggregate basis, an amount equal to the sum of the Termination Values
with respect to all the Properties on an aggregate basis on each Payment Date,
less the Maximum Residual Guarantee Amount as of such date with respect to all
the Properties on an aggregate basis.

        "Loan Basic Rent" shall mean the scheduled interest due on the Loans
on any Scheduled Interest Payment Date pursuant to the Credit Agreement (but
not including any overdue amounts under Section 2.8(b) of the Credit Agreement
or otherwise).

        "Loan Property Cost" shall mean, with respect to each Property the
amount set forth in the column labeled "Loan Property Cost" opposite such
Property's location in Exhibit M to the Participation Agreement.

        "Loans" shall mean the loans extended pursuant to the Tranche A Credit
Agreement or the Tranche B Credit Agreement and shall include both the Tranche
A Loans and the Tranche B Loans.

"Majority Holders" shall have the meaning given to such term in Section 1.1 of
the Intercreditor Agreement.

"Majority Secured Parties" shall have the meaning given to such term in Section
1.1 of the Intercreditor Agreement.

        "Marketing Period" shall mean, if the Lessee has given a Sale Notice in
accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the Expiration Date.

        "Material Adverse Effect" shall mean a material adverse effect on (a)
the business, condition (financial or otherwise), assets, liabilities or
operations of the Credit Parties (on a consolidated basis), (b) the ability of
any Credit Party to perform its respective obligations under any Operative
Agreement to which it is a party, (c) the validity or enforceability of any
Operative Agreement or the rights and remedies of the Agent, the Lenders,
the Holders, or the Lessor thereunder, (d) the validity, priority or
enforceability of any Lien on any Property created by any of the Operative
Agreements, or (e) the value, utility or useful life of any Property or the
use, or ability of the Lessee to use, any Property for the purpose for which
it was intended.

        "Maturity Date" shall mean the Expiration Date.

"Maximum Residual Guarantee Amount" shall mean the greater of (a) an amount
equal to the product of the aggregate Property Cost for all of Properties times
seventy percent (70%) and (b) the outstanding balance of Tranche A Loans for
all Properties.

        "Modifications" shall have the meaning specified in Section 11.1(a) of
the Lease.

"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent (for the benefit
of the Lenders and the Holders) and evidencing a Lien on any Property, in form
and substance reasonably acceptable to the Agent.

        "Multiemployer Plan" shall mean any plan described in Section 4001(a)
(3) of ERISA to which contributions are or have been made or required by any
Credit Party or any of its Subsidiaries or ERISA Affiliates.

        "Multiple Employer Plan" shall mean a plan to which any Credit Party
or any ERISA Affiliate and at least one (1) other employer other than an ERISA
Affiliate is making or accruing an obligation to make, or has made or accrued an
obligation to make, contributions.

        "New Facility" shall have the meaning given to such term in Section
28.1 of the Lease.

        "Notes" shall mean those notes issued to the Lenders pursuant to the
Credit Agreement and shall include both the Tranche A Notes and the Tranche B
Notes.

        "Obligations" shall have the meaning given to such term in Section 1 of
the Security Agreement.

        "Officer's Certificate" with respect to any person shall mean a
certificate executed on behalf of such person by a Responsible Officer who has
made or caused to be made such examination or investigation as is necessary to
enable such Responsible Officer to express an informed opinion with respect to
the subject matter of such Officer's Certificate.

        "Operative Agreements" shall mean the following: the Participation
Agreement, the Trust Agreement, the Certificates, the Credit Agreement, the
Notes, the Lease, the Lease Supplements (and memoranda of the Lease and each
Lease Supplement in a form reasonably acceptable to the Agent), the Security
Agreement, the Mortgage Instruments, the Intercreditor Agreement, the other
Security Documents, the Deeds and the and any and all other agreements,
documents and instruments executed in connection with any of the foregoing.

"Original Executed Counterpart" shall have the meaning given to such term in
Section 5 of EXHIBIT A to the Lease.

"Out Parcel" shall have the meaning given to such term in Section 22.6 of the
Lease.

        "Overdue Interest" shall mean any interest payable pursuant to Section
2.8(b) of the Credit Agreement.

        "Overdue Rate" shall mean (a) with respect to the Loan Basic Rent, and
any other amount owed under or with respect to the Credit Agreement or the
Security Documents, the rate specified in Section 2.8(b) of the Credit
Agreement, (b) with respect to the Lessor Basic Rent, the Holder Yield and
any other amount owed under or with respect to the Trust Agreement, the Holder
Overdue Rate, and (c) with respect to any other amount, the amount referred to
in clause (y) of Section 2.8(b) of the Credit Agreement.

        "Owner Trustee," "Borrower" or "Lessor" shall mean State Street Bank
and Trust Company of Connecticut, National Association, not individually,
except as expressly stated in the various Operative Agreements, but solely as
the Owner Trustee jointly and severally under the 1995 Pep Boys Leased Property
Trust and the 1997 Pep Boys II Leased Property Trust (as applicable), and any
successor, replacement and/or additional Owner Trustee expressly permitted
under the Operative Agreements.

        "Participant" shall have the meaning given to such term in Section 9.7
of the Credit Agreement.

        "Participation Agreement" shall mean the Participation Agreement dated
on or about the Closing Date, among the Lessee, the Guarantors, the Owner
Trustee, not in its individual capacity except as expressly stated therein, the
Holders, the Lenders and the Agent.

        "Payment Date" shall mean any Scheduled Interest Payment Date and any
date on which interest or Holder Yield in connection with a prepayment of
principal on the Loans or of the Holder Advances is due under the Credit
Agreement or the Trust Agreement.

        "PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.

        "Pension Plan" shall mean a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan), and to which any Credit Party or any ERISA Affiliate may
have any liability, including without limitation any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five (5) years, or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.

        "Pep Boys California" shall mean The Pep Boys Manny Moe & Jack of
California, a California corporation.

        "Pep Boys Delaware" shall mean Pep Boys - Manny, Moe & Jack of
Delaware, Inc., a Delaware corporation.

        "Pep Boys Parent" shall mean The Pep Boys - Manny, Moe & Jack, a
Pennsylvania corporation.

        "Permitted Facility" shall mean a retail outlet or distribution
center, as applicable, of the type and size customarily used and operated by
the Lessee in its ordinary course of business as of the Closing Date.

        "Permitted Holders" shall have the meaning given to such term in the
Lessee Credit Agreement.

        "Permitted Liens" shall mean:

                (a)     the respective rights and interests of the parties to
the Operative Agreements as provided in the Operative Agreements;

                (b)     the rights of any sublessee or assignee under a
sublease or an assignment expressly permitted by the terms of the Lease for no
longer than the duration of the Lease;

                (c)     Liens for Taxes that either are not yet due or are
being contested in accordance with the provisions of Section 13.1 of the Lease;

                (d)     Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers', warehousemen's and
other like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than thirty (30) days past
due or are being diligently contested in good faith by appropriate proceedings,
so long as such proceedings satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 13.1 of the Lease;

                (e)     Liens of any of the types referred to in clause (d)
above that have been bonded for not less than the full amount in dispute (or as
to which other security arrangements satisfactory to the Lessor and the Agent
have been made), which bonding (or arrangements) shall comply with applicable
Legal Requirements, and shall have effectively stayed any execution or
enforcement of such Liens;

                (f)     Liens arising out of judgments or awards with respect
to which appeals or other proceedings for review are being prosecuted in good
faith and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments or
awards and satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease;

                (g)     Liens in favor of municipalities to the extent agreed
to by the Lessor;

                (h)     to the extent agreed to by the Lessor, easements,
rights of way, covenants, restrictions and similar liens and encumbrances which
do not individually or in the aggregate have a material adverse effect on the
value of the Property as currently used; and

                (i)     any other Liens approved or otherwise permitted by the
Agent.

        "Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or any other entity.

        "Prime Lending Rate" shall have the meaning given to such term in the
definition of ABR.

        "Property" shall mean the properties described on the schedules to the
Lease Supplements and in the attachments to the Mortgage Instruments
(including, without limitation, all Improvements and Equipment related
thereto).

        "Property Cost" shall mean, with respect to each Property the amount
set forth in the column labeled "Property Cost" opposite such Property's street
address in Exhibit M to the Participation Agreement.

        "Purchase Option" shall have the meaning given to such term in Section
20.1 of the Lease.

        "Purchasing Lender" shall have the meaning given to such term in
Section 9.8(a) of the Credit Agreement.

        "Reference Bank" shall mean First Union National Bank or such other
bank as the Agent may from time to time designate.

        "Register" shall have the meaning given to such term in Section 9.9(a)
of the Credit Agreement.

        "Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

        "Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

        "Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

        "Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

        "Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.

        "Rent" shall mean, collectively, the Basic Rent and the Supplemental
Rent, in each case payable under the Lease.

        "Reportable Event" shall have the meaning specified in ERISA.

        "Requested Funds" shall mean any funds requested by the Lessee,
as applicable, in accordance with Section 5 of the Participation Agreement.

        "Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.

        "Responsible Officer" shall mean the Chairman or Vice Chairman of the
Board of Directors, the Chairman or Vice Chairman of the Executive Committee
of the Board of Directors, the President, any Senior Vice President or
Executive Vice President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer, or any Assistant Treasurer, except that when used
with respect to the Trust Company or the Owner Trustee, "Responsible Officer"
shall also include the Cashier, any Assistant Cashier, any Trust Officer or
Assistant Trust Officer, the Controller and any Assistant Controller or any
other officer of the Trust Company or the Owner Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

        "Restoration" shall have the meaning given to such term in Section
15.1(e) of the Lease.

        "Revolving Loan Agreements" shall have the meaning given to such term
in Section 1.1 of the Intercreditor Agreement.

        "Revolving Loan Lender" shall have the meaning given to such term in
Section 1.1 of the Intercreditor Agreement.

        "Revolving Loan Obligations" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.

        "Sale Date" shall have the meaning given to such term in Section
20.3(a) of the Lease.

        "Sale Notice" shall mean a notice given to the Lessor in connection
with the election by the Lessee of its Sale Option.

        "Sale Option" shall have the meaning given to such term in Section
20.1 of the Lease.

        "Sale Proceeds Shortfall" shall mean the amount by which the
proceeds of a sale described in Section 22.1 of the Lease are less than the
Limited Recourse Amount with respect to the Properties if it has been
determined that the Fair Market Sales Value of the Properties at the
expiration of the term of the Lease has been impaired by greater than ordinary
wear and tear during the Term of the Lease.

        "Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar
Loan or Eurodollar Holder Advance, the first day of each calendar month,
unless such day is not a Business Day and in such case on the immediately
preceding Business Day, (b) as to any ABR Loan or any ABR Holder Advance, the
first day of each calendar month, unless such day is not a Business Day and in
such case on the immediately preceding Business Day and (c) as to all Loans and
Holder Advances, the date of any voluntary or involuntary payment, prepayment,
return or redemption, and the Maturity Date or the Expiration Date, as the case
may be.

        "Second Priority Real Estate Liens" shall have the meaning given to
such term in Section 1.1 of the Intercreditor Agreement.

        "Secured Parties" shall have the meaning given to such term in the
Security Agreement.

        "Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.

        "Security Agreement" shall mean the Security Agreement dated on or
about the Closing Date between the Lessor and the Agent, for the benefit of
the Secured Parties, and accepted and agreed to by the Lessee.

        "Security Documents" shall mean the collective reference to the
Security Agreement, the Lessee Security Agreement, the Mortgage Instruments,
(to the extent the Lease is construed as a security instrument) the Lease, the
UCC Financing Statements and all other security documents hereafter delivered
to the Agent granting a lien on any asset or assets of any Person to secure the
obligations and liabilities of the Lessor under the Credit Agreement and/or
under any of the other Credit Documents or to secure any guarantee of any such
obligations and liabilities.

        "Soft Costs" shall mean all costs which are ordinarily and reasonably
incurred in relation to the acquisition of the Property other than hard costs,
including without limitation structuring fees, administrative fees, legal fees,
upfront fees, fees and expenses related to appraisals, title examinations, title
insurance, document recordation, surveys, environmental site assessments,
geotechnical soil investigations and similar costs and professional fees
customarily associated with a real estate closing, fees and expenses of the
Owner Trustee payable or reimbursable under the Operative Agreements and costs
and expenses incurred pursuant to Sections 7.3 of the Participation Agreement.

        "Subsidiary" shall mean, as to any Person, any corporation of which at
least a majority of the outstanding stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person, or by one
(1) or more Subsidiaries, or by such Person and one (1) or more Subsidiaries.

        "Supplemental Amounts" shall have the meaning given to such term in
Section 9.18 of the Credit Agreement.

        "Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to the
Lessor, the Trust Company, the Holders, the Agent, the Lenders or any other
Person under the Lease or under any of the other Operative Agreements including
without limitation payments of the Termination Value and the Maximum Residual
Guarantee Amount and all indemnification amounts, liabilities and obligations.

        "Taxes" shall have the meaning specified in the definition of
"Impositions".

        "Term" shall have the meaning specified in Section 2.2 of the Lease.

        "Termination Date" shall have the meaning specified in Section 16.2(a)
of the Lease.

        "Termination Event" shall mean (a) with respect to any Pension Plan,
the occurrence of a Reportable Event or an event described in Section 4062(e)
of ERISA, (b) the withdrawal of any Credit Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a substantial
employer (as such term is defined in Section 4001(a)(2) of ERISA), or the
termination of a Multiple Employer Plan, (c) the distribution of a notice of
intent to terminate a Plan or Multiemployer Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA, (d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any other event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (f) the complete or partial withdrawal of any Credit
Party or any ERISA Affiliate from a Multiemployer Plan.

        "Termination Notice" shall have the meaning specified in Section 16.1
of the Lease.

        "Termination Value" shall mean the sum of (a) either (i) with respect
to all Properties, an amount equal to the aggregate outstanding Property Cost
for all the Properties, in each case as of the last occurring Payment Date, or
(ii) with respect to a particular Property, an amount equal to the Property
Cost allocable to such Property, plus (b) respecting the amounts described in
each of the foregoing subclause (i) or (ii), as applicable, any and all accrued
but unpaid interest on the Loans and any and all Holder Yield on the Holder
Advances related to the applicable Property Cost, plus (c) to the extent the
same is not duplicative of the amounts payable under clause (b) above, all
other Rent and other amounts then due and payable or accrued under the Lease
and/or under any other Operative Agreement (including without limitation
amounts under Sections 11.1 and 11.2 of the Participation Agreement and all
costs and expenses referred to in clause FIRST of Section 22.2 of the Lease).

        "Third Priority Real Estate Liens" shall have the meaning given to
such term in Section 1.1 of the Intercreditor Agreement.

        "Tranche A Commitments" shall mean the obligation of the Tranche A
Lenders to make the Tranche A Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche A Lender's name on Schedule 2.1 to
the Credit Agreement, provided, no Tranche A Lender shall be obligated to make
Tranche A Loans in excess of such Tranche A Lender's share of the Tranche A
Commitments as set forth adjacent to such Tranche A Lender's name on Schedule
2.1 to Credit Agreement.

        "Tranche A Credit Agreement" shall mean the Credit Agreement, dated on
or about the Closing Date, among the Lessor, the Agent and the Tranche A
Lenders, as specified therein.

        "Tranche A Indebtedness" shall have the meaning given to such term
in Section 1.1 of the Intercreditor Agreement.

        "Tranche A Lenders" shall mean Congress Financial Corporation and
shall include the several banks and other financial institutions from time to
time party to the Credit Agreement that commit to make the Tranche A Loans.

        "Tranche A Loans" shall mean the Loans made pursuant to the Tranche A
Commitments.

        "Tranche A Mortgage Instrument" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.

        "Tranche A Note" shall have the meaning given to it in Section 2.2 of
the Credit Agreement.

        "Tranche A Priority Collateral" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.

        "Tranche B Commitments" shall mean the obligation of the Tranche B
Lenders to make the Tranche B Loans to the Lessor in an aggregate principal
amount at any one (1) time outstanding not to exceed the aggregate of the
amounts set forth opposite each Tranche B Lender's name on Schedule 2.1 to the
Credit Agreement, provided, no Tranche B Lender shall be obligated to make
Tranche B Loans in excess of such Tranche B Lender's share of the Tranche B
Commitments as set forth adjacent to such Tranche B Lender's name on Schedule
2.1 to Credit Agreement.

        "Tranche B Credit Agreement" shall mean the Credit Agreement, dated on
or about the Closing Date, among the Lessor, the Agent and the Tranche B
Lenders, as specified therein.

        "Tranche B Credit Agreement Event of Default" shall have the meaning
given to such term in Section 1.1 of the Intercreditor Agreement.

        "Tranche B Indebtedness" shall have the meaning given to such term in
Section 1.1 of the Intercreditor Agreement.

        "Tranche B Lenders" shall mean First Union National Bank and shall
include the several banks and other financial institutions from time to time
party to the Credit Agreement that commit to make the Tranche B Loans.

        "Tranche B Loans" shall mean the Loans made pursuant to the Tranche B
Commitments.

        "Tranche B Mortgage Instrument" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.

        "Tranche B Note" shall have the meaning given to it in Section 2.2 of
the Credit Agreement.

        "Tranche B Priority Collateral" shall have the meaning given to such
term in Section 1.1 of the Intercreditor Agreement.

        "Transaction Expenses" shall mean all Soft Costs and all other costs
and expenses incurred in connection with the preparation, execution and
delivery of the Operative Agreements and the transactions contemplated by the
Operative Agreements including without limitation all costs and expenses
described in Section 7.1 of the Participation Agreement and the following:

                (a)     the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the Operative Agreements
and the other transaction documents, preparing for the closings under, and
rendering opinions in connection with, such transactions and in rendering
other services customary for counsel representing parties to transactions
of the types involved in the transactions contemplated by the Operative
Agreements;

                (b)     the reasonable fees, out-of-pocket expenses and
disbursements of accountants for any Credit Party in connection with the
transaction contemplated by the Operative Agreements;

                (c)     any and all other reasonable fees, charges or other
amounts payable to the Lenders, the Agent, the Holders, the Owner Trustee or
any broker which arises under any of the Operative Agreements;

                (d)     any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or any of the
other transaction documents; and

                (e)     any and all Taxes and fees incurred in recording or
filing any Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection with
the transactions contemplated by the Operative Agreements.

        "Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency, department,
commission, board, bureau or instrumentality of a governmental body.

        "Trust" shall mean the 1995 Pep Boys Leased Property Trust and the 1997
Pep Boys II Leased Property Trust (as applicable).

        "Trust Agreement" shall mean, collectively or individually as the
context requires, the Trust Agreement (1995) and the Trust Agreement (1997).

        "Trust Agreement (1995)"  shall mean the Amended and Restated Trust
Agreement dated on or about the Closing Date between the Holders and the
Owner Trustee under the 1995 Pep Boys Leased Property Trust.

        "Trust Agreement (1997)"  shall mean the Amended and Restated Trust
Agreement dated on or about the Closing Date between the Holders and the Owner
Trustee under the 1997 Pep Boys II Leased Property Trust.

        "Trust Company" shall mean State Street Bank and Trust Company of
Connecticut, National Association, in its individual capacity, and any
successor owner trustee under the Trust Agreement in its individual capacity.

        "Trust Estate" shall have the meaning specified in Section 2.2 of the
Trust Agreement.

        "Type" shall mean, as to any Loan, whether it is an ABR Loan or a
Eurodollar Loan.

        "UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.

        "Unanimous Vote Matters" shall have the meaning given it in Section
12.4 of the Participation Agreement.

        "Unfunded Liability" shall mean, with respect to any Plan, at any time,
the amount (if any) by which (a) the present value of all benefits under such
Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of the Company or any member of the Controlled Group to the PBGC or such Plan
under Title IV of ERISA.

        "Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
Code as in effect in any applicable jurisdiction.

        "United States Bankruptcy Code" shall mean Title 11 of the United
States Code.

        "U.S. Person" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.

        "U.S. Taxes" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.

        "Voting Stock" shall mean respect to any Person, (a) one (1) or more
classes of Capital Stock of such Person having general voting powers to elect
at least a majority of the board of directors, managers or trustees of such
Person, irrespective of whether at the time Capital Stock of any other class
or classes have or might have voting power by reason of the happening of any
contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.

        "Withholdings" shall have the meaning specified in Section 11.2(e) of
the Participation Agreement.

        "Wholly-Owned Entity" shall mean a Person all of the shares of capital
stock or other ownership interest of which are owned by Pep Boys Parent and/or
one of its wholly-owned Subsidiaries or other wholly-owned entities.

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