Pottery Barn 2010 Annual Report Download - page 228

make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance
under the Plan, (ii) the number of Awards that can be granted to any one individual Participant in any calendar
year , (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the
Plan, and (iv) the price for each share subject to any then outstanding Awards under the Plan, without changing
the aggregate exercise price. The adjustment by the Administrator shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any such adjustment.
(d) Substitute Awards. The Administrator may grant Awards under the Plan in substitution for stock and
stock based awards held by employees of another corporation who become employees of the Company or a
Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation.
The Administrator may direct that the substitute Awards be granted with such terms and conditions as the
Administrator considers appropriate in the circumstances.
SECTION 4.
ELIGIBILITY
Those persons eligible to participate in the Plan shall be officers, employees and Non-employee Directors of
the Company, its Parent and any Subsidiaries. Selection of Participants shall be made from time to time by the
Administrator, in its sole discretion.
SECTION 5.
CODE SECTION 162(m) LIMITATIONS
(a) Stock Options and SARs. A Participant can receive no more than one million shares of Stock in the
aggregate covered by Stock Options or SARs during any one calendar year, subject to adjustment under
Section 3(c).
(b) Restricted Stock, Restricted Stock Units and Deferred Stock Awards. A Participant can receive grants
covering no more than four hundred thousand shares of Stock in the aggregate covered by Restricted Stock,
Restricted Stock Units or Deferred Stock Awards during any one calendar year, subject to adjustment under
Section 3(c).
(c) Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock or
Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The
Performance Goals shall be set by the Administrator on or before the latest date permissible to enable the
Restricted Stock or Restricted Stock Units to qualify as “performance-based compensation” under
Section 162(m) of the Code. In granting Restricted Stock or Restricted Stock Units which are intended to qualify
under Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to
time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g.,
in determining the Performance Goals).
(d) Changes in Capitalization. The numerical limitations in Sections 5(a) and (b) shall be adjusted
proportionately in connection with any change in the Company’s capitalization as described in Section 3(c).
SECTION 6.
STOCK OPTIONS
Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time
approve. Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock
Options. Incentive Stock Options may be granted only to employees of the Company, its Parent or any
Subsidiary. To the extent that any Option does not qualify as an Incentive Stock Option, it shall be a
Non-Qualified Stock Option.
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