Pep Boys 2013 Annual Report Download - page 63

B-5
(c) Exercise. No Option shall be exercised prior to the receipt by the Company of written
notice of such exercise and of payment in full of the Option Price and the amount of any withholding tax due
(pursuant to Section 15) as specified by the Committee for the Shares to be purchased. Each such notice shall
specify the number of Shares to be purchased and shall (unless the Shares are covered by a then current registration
statement or a Notification under Regulation A under the Act) contain the Optionee’s acknowledgment in form and
substance satisfactory to the Company that (a) such Shares are being purchased for investment and not for
distribution or resale (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company,
may be made without violating the registration provisions of the Act), (b) the Optionee has been advised and
understands that (i) the Shares have not been registered under the Act and are “restricted securities” within the
meaning of Rule 144 under the Act and are subject to restrictions on transfer and (ii) the Company is under no
obligation to register the Shares under the Act or to take any action which would make available to the Optionee any
exemption from such registration, (c) such Shares may not be transferred without compliance with all applicable
federal and state securities laws, and (d) an appropriate legend referring to the foregoing restrictions on transfer and
any other restrictions imposed under the Option Documents may be endorsed on the certificates. Notwithstanding
the above, should the Company be advised by counsel that issuance of Shares should be delayed pending (A)
registration under federal or state securities laws or (B) the receipt of an opinion that an appropriate exemption
therefrom is available, the Company may defer exercise of any Option granted hereunder until either such event in
(A) or (B) has occurred.
(d) Medium of Payment. An Optionee shall pay for Shares subject to an Option (i) in cash,
(ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee
may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board or by “net exercise,” which is the surrender of Shares for which the Option is exercisable to
the Company in exchange for a distribution of Shares equal to the amount by which the then Fair Market Value of
the Shares subject to the exercised Option exceeds the applicable Option Price. Furthermore, the Committee may
provide in an Option Document issued to an employee (and shall provide in the case of Option Documents issued to
Non-management Directors) that payment may be made all or in part in shares of the Company’s Common Stock
held by the Optionee for at least six months, subject to such limitations and prohibitions as the Committee deems
appropriate. If payment is made in whole or in part in shares of the Company’s Common Stock, then such Optionee
shall deliver to the Company certificates registered in the name of such Optionee representing such shares of the
Company’s Common Stock owned by such Optionee, free of all liens, claims and encumbrances of every kind and
having an aggregate Fair Market Value on the date of delivery that is equal to but not greater than the Option Price
of the Shares with respect to which such Option is to be exercised, accompanied by stock powers duly endorsed in
blank by the Optionee. The Committee may impose from time to time such limitations and prohibitions on the use of
shares of the Company’s Common Stock to exercise an Option as it deems appropriate.
(e) Termination of Options. No Option shall be exercisable after the first to occur of the
following:
(i) Expiration of the Option term specified in the Option Document, which shall not
exceed (A) ten years from the date of grant, or (B), with respect to ISOs, five years from the date of grant if the
Optionee on the date of grant owns, directly or by attribution under Section 424(d) of the Code, shares possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of an
Affiliate;
(ii) Expiration of sixty (60) days (or such other period determined by the
Committee) from the date the Optionee’s employment or service with the Company or its Affiliates terminates for
any reason other than Disability, death or as specified in subsection 8(e)(iv), (v) or (vi) or Section 10, below;
(iii) Expiration of one hundred and eighty (180) days (or such other period
determined by the Committee) from the date the Optionee’s employment or service with the Company or its
Affiliates terminates due to the Optionee’s Disability or death;