EMPLOYMENT AGREEMENT



This EMPLOYMENT AGREEMENT is made by and between THE PEP BOYS-MANNY, MOE &

JACK, a Pennsylvania corporation (the "Corporation"), and George Babich, Jr.

(the "Executive"), dated as of the 28th day of February, 2003.

W I T N E S S E T H :



WHEREAS, the Executive is currently employed by the Corporation and the

Corporation desires to continue to retain the services of the Executive by

entering into this Employment Agreement on the terms and conditions as set

forth herein (the "Agreement").  This Agreement shall be in addition to and

shall not supercede the Agreement between the Corporation and the Employee,

dated as of March 28, 2000 (the "Change of Control Agreement"), which Change

of Control Agreement shall continue in effect under the terms and conditions

set forth therein.



NOW, THEREFORE, in consideration of the representations, warranties and mutual

covenants set forth herein, the parties agree as follows:



1. Employment Period; Effectiveness.  The Corporation hereby agrees to

continue the Executive in its employ, for the period commencing on the

Effective Date (as defined herein) and ending on the earlier to occur of (i)

the second anniversary of the Effective Date or (ii) the date of a Change of

Control under the Change of Control Agreement (the "Employment Period").

This Agreement shall only become effective upon the earlier of the date (the

"Effective Date") of retirement of the current Chairman and Chief Executive

Officer of the Corporation or appointment of his successor, as contemplated

by the letter agreement, dated December 10, 2002.



2. Position and Duties.



(a) As of the date hereof, the Executive is employed as President and Chief

Financial Officer of the Corporation and shall perform the duties and services

incident to such positions and such other reasonably related duties as may be

assigned to him from time to time.  During the Employment Period, the

Executive shall report directly to and take direction from the Chief Executive

Officer of the Corporation.  The majority of Executive's services shall be

performed at the Corporation's main headquarters in Philadelphia Pennsylvania

or at an office or location no more than twenty (20) miles from Philadelphia.



(b) Excluding periods of vacation, sick leave and disability to which the

Executive is entitled, the Executive agrees to devote his full time, attention

and energy to the business of the Corporation and to use his reasonable best

efforts to perform faithfully and efficiently such responsibilities.  Executive

shall not, without the prior written consent of the Corporation, actively

engage in any other business or business activity during the Employment Period.

The Executive may, however, (i) serve on corporate, civic or charitable boards

or committees, (ii) deliver lectures, fulfill speaking engagements or teach at

educational institutions and (iii) manage personal investments, so long as such

activities do not significantly interfere with the performance of the

Executive's responsibilities hereunder.  It is expressly understood and agreed

that to the extent that any such activities have been conducted by the

Executive prior to the Effective Date, the continued conduct of such activities

(or the conduct of activities similar in nature and scope thereto) subsequent

to the Effective Date shall not thereafter be deemed to interfere with the

performance of the Executive's responsibilities to the Corporation.



3. Compensation.



(a) Base Salary.  During the Employment Period, as consideration for services

rendered, the Corporation shall pay to the Executive a base salary at an annual

rate at least equal to $500,000 ("Base Salary") payable over the calendar year

at the regular pay periods of the Corporation.  During the Employment Period,

Base Salary shall be reviewed by the Board (or the Compensation Committee

thereof) at least annually and may be increased, but not decreased, at any time

and from time to time as shall be determined by the Board (or the Compensation

Committee) in its sole discretion.  Any increase in Base Salary shall not serve

to limit or reduce any other obligation to the Executive under this Agreement.

Executive's Base Salary shall not be reduced after any such increase.



(b) Executive Incentive Bonus Plan.  During the Employment Period, the

Executive shall be eligible to earn an annual bonus (a "Bonus") under the

Corporation's Executive Incentive Bonus Plan (the "Bonus Plan") based on

Executive's target percentage of Base Salary established pursuant to the Bonus

Plan.



(c) Employee Benefit Plans.  In addition to the Base Salary and Bonus payable

as hereinabove provided, the Executive shall be entitled to participate during

the Employment Period in all incentive programs, savings, pension and

retirement plans and programs applicable to other similar key executives, and

to receive such automobile allowance as is provided to such other key

executives.



(d) Welfare Benefit Plans.  During the Employment Period, the Executive and/or

the Executive's family, as the case may be, shall be eligible for participation

in and shall receive all benefits under each welfare benefit plan of the

Corporation, including, without limitation, all medical, prescription, dental,

disability, salary continuance, life, accidental death and travel accident

insurance plan and programs of the Corporation and its affiliated companies.



(e) Expenses.  During the Employment Period, the Executive shall be entitled to

receive prompt reimbursement, in accordance with the general expense

reimbursement policy of the Corporation for all reasonable expenses incurred by

the Executive in the performance of his duties hereunder.



(f) Vacation.  During the Employment Period, the Executive shall be entitled to

four weeks per calendar year of paid vacation.



4. Termination.  This Agreement shall terminate under the following

circumstances:



(a) Death or Disability.  This Agreement shall terminate automatically upon the

Executive's death.  During the Employment Period, if, as a result of physical

or mental incapacity or infirmity, Executive shall be unable to perform his

duties under this Agreement for (i) a continuous period of at least 90 days, or

(ii) periods aggregating at least 120 days during any period of 12 consecutive

months (each a "Disability Period"), and at the end of the Disability Period

there is no reasonable probability that Executive can promptly resume his

duties hereunder, Executive shall be deemed disabled (the "Disability") and

Corporation, by notice to Executive, shall have the right to terminate the

Employment Period for Disability at, as of or after the end of the Disability

Period.  The existence of the Disability shall be determined by a reputable,

licensed physician selected by Corporation in good faith, whose determination

shall be final and binding on the parties.  Executive shall cooperate in all

reasonable respects to enable an examination to be made by such physician.

Notwithstanding the foregoing, the Corporation may conclusively determine

Executive to be disabled and terminate the Employment Period on account of

Disability at any time after Executive has commenced receiving benefits under

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