Pottery Barn 2014 Annual Report Download - page 173

reclassification, stock dividend, extraordinary cash dividend, stock split, reverse stock split or other similar
transaction, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or
kind of shares or other securities of the Company, or additional shares or new or different shares or other
securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other
securities, subject to the constraints of Code Sections 162(m) and 409A, the Administrator will 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. Substitute Awards shall not reduce the shares of Stock
available for issuance under the Plan, nor shall shares subject to a Substitute Award be added back to the shares
of Stock available for issuance under the Plan as provided in Section 3(a) above. Additionally, subject to the
rules of the applicable stock exchange on which the Stock is listed, in the event that a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a
pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination,
the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent
appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or
combination to determine the consolidation payable to holder of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares available for
issuance under the Plan (and shares subject to such Awards shall not be added back to the shares available for
Awards under the Plan as provided in Section 3(a) above); provided that Awards using such available shares
shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan,
absent the acquisition or combination, and shall only be made to individuals who were not eligible to receive
Awards as set forth in Section 4 below prior to such acquisition or combination.
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 one million 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). Awards
subject to variable payout will be counted at maximum payout for this purpose. For the avoidance of doubt, the
A-7