Pottery Barn 2008 Annual Report Download - page 146

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CERTIFICATIONS
The certification of our Chief Executive Officer required by the NYSE Listing Standards, Section 303A.12(a),
relating to our compliance with the NYSE Corporate Governance Listing Standards, was submitted to the NYSE
on June 26, 2008. The certifications of our Chief Executive Officer and Chief Financial Officer required by the
SEC in connection with our Annual Report on Form 10-K for the year ended February 1, 2009 were submitted to
the SEC on April 2, 2009 with our Annual Report on Form 10-K.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have in place policies in our Corporate Code of Conduct that provide that associates must not engage in any
transaction when an associate may face a real or perceived conflict of interest with the Company. Our Corporate
Code of Conduct is distributed to all employees on an annual basis and made available throughout the year in our
internal document database. It is also available on our website and in print to any shareholder who requests it. In
addition, we have in place policies and procedures with respect to related person transactions that provide that
our executive officers, directors, nominees and principal shareholders, as well as their immediate family
members and affiliates, are not permitted to enter into a related party transaction with us unless (i) the transaction
is approved or ratified by our Audit and Finance Committee or the disinterested members of our Board or (ii) the
transaction involves the service of one of our executive officers or directors or any related compensation, is
reportable under Item 402 of Regulation S-K and is approved by our Compensation Committee.
For the purposes of our related party transaction policy, “related party transaction” means any transaction in
which the amount involved exceeds $120,000 in any calendar year and in which any of our executive officers,
directors, director nominees and principal shareholders, as well as their immediate family members and affiliates,
had, has or will have a direct or indirect material interest, other than transactions available to all of our
employees.
It is our policy to approve related party transactions only when it has been determined that such transaction is in,
or is not inconsistent with, our best interests and those of our shareholders, including situations where we may
obtain products or services of a nature, quantity or quality, or on other terms, that are not readily available from
alternative sources or when the transaction is on terms comparable to those that could be obtained in arm’s length
dealings with an unrelated third party.
Memphis-based Distribution Facilities
Our Memphis-based distribution facilities include an operating lease entered into in July 1983 for a distribution
facility in Memphis, Tennessee. The lessor is a general partnership (“Partnership 1”) comprised of W. Howard
Lester, our Chairman of the Board of Directors and Chief Executive Officer and James A. McMahan, a Director
Emeritus, and a significant shareholder. Partnership 1 does not have operations separate from the leasing of this
distribution facility and does not have lease agreements with any unrelated third parties.
Partnership 1 financed the construction of this distribution facility through the sale of a total of $9,200,000 of
industrial development bonds in 1983 and 1985. Annual principal payments and monthly interest payments are
required through maturity in December 2010. The Partnership 1 industrial development bonds are collateralized
by the distribution facility and the individual partners guarantee the bond repayments. As of February 1, 2009,
$425,000 was outstanding under the Partnership 1 industrial development bonds.
We made annual rental payments in fiscal 2008, fiscal 2007 and fiscal 2006 of approximately $618,000, plus
interest on the bonds calculated at a variable rate determined monthly (approximately 3.0% as of February 1,
2009), applicable taxes, insurance and maintenance expenses. Although the current term of the lease expires in
August 2009, we are obligated to renew the operating lease on an annual basis until these bonds are fully repaid.
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