Pottery Barn 2010 Annual Report Download - page 229

(a) Stock Option Grants. The Administrator, in its discretion, may grant Stock Options to eligible officers
and key employees of the Company, its Parent or any Subsidiary. Stock Options granted pursuant to this
Section 6(a) shall be subject to the following terms and conditions and each Stock Option Award Agreement
shall contain such additional terms and conditions, consistent with the terms of the Plan, as the Administrator
deems desirable.
(i) Exercise Price. The exercise price per share shall be determined by the Administrator at the time of
grant, but it shall not be less than 100% of the Fair Market Value on the date of grant. If an employee owns
or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and
an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall
be not less than 110% of the Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock
Option shall be exercisable more than seven (7) years after the date the option is granted. If an employee
owns or is deemed to own more than 10% of the combined voting power of all classes of stock of the
Company or any Parent or Subsidiary and an Incentive Stock Option is granted to such employee, the term
of such option shall be no more than five (5) years from the date of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options shall become exercisable at such time or
times, whether or not in installments, as shall be determined by the Administrator; provided, however, that
all Stock Options must be exercised within seven (7) years of the date they become exercisable or they shall
automatically expire. The Administrator may, at any time, accelerate the exercisability of all or any portion
of any Stock Option. An optionee shall have the rights of a shareholder only as to shares acquired upon the
exercise of a Stock Option and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or in part, by giving written or
electronic notice of exercise to the Company, specifying the number of shares to be purchased. To the extent
permitted by Applicable Law, payment of the purchase price may be made by one or more of the following
methods to the extent provided in the Award Agreement:
(A) In cash, by certified or bank check or other instrument acceptable to the Administrator;
(B) In the form of shares of Stock that are not then subject to restrictions under any Company plan
and that have been beneficially owned by the optionee for at least six months, if permitted by the
Administrator in its discretion. Such surrendered shares shall be valued at Fair Market Value on the
exercise date;
(C) By the optionee delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and
acceptable to the Company to pay the purchase price; provided that the payment method described in
this Section 6(a)(iv)(C) shall not be available to an optionee who is subject to the reporting and other
provisions of Section 16 of the Exchange Act unless the optionee and the broker comply with such
procedures and enter into such agreements as the Administrator shall prescribe as a condition of such
payment procedure; or
(D) By a net exercise procedure.
The actual or constructive delivery of certificates (as described in Section 18(b)) representing the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his or her stead in accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such shares and fulfilling any other requirements contained in the Stock
Option or Applicable Laws.
(b) Annual Limit on Incentive Stock Options. To the extent that the aggregate Fair Market Value
(determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted
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Exhibits