Pottery Barn 2010 Annual Report Download - page 125

Provision W-S California W-S Delaware
Elimination of Director
Personal Liability for
Monetary Damages
California law permits a corporation to
eliminate the personal liability of
directors for monetary damages,
except where such liability is based on:
• Intentional misconduct or knowing
and culpable violation of law;
• Acts or omissions that a director
believes to be contrary to the best
interests of the corporation or its
shareholders or that involve the
absence of good faith on the part of
the director;
• Receipt of an improper personal
benefit;
• Acts or omissions that show reckless
disregard for the director’s duty to
the corporation or its shareholders,
where the director in the ordinary
course of performing a director’s
duties should be aware of a risk of
serious injury to the corporation or
its shareholders;
• Acts or omissions that constitute an
unexcused pattern of inattention that
amounts to an abdication of the
director’s duty to the corporation
and its shareholders;
• Transactions between the
corporation and a director who has a
material financial interest in such
transaction; or
• Liability for improper distributions,
loans or guarantees.
The California Articles eliminate the
liability of directors for monetary
damages to the fullest extent
permissible under California law.
The DGCL permits a corporation to
eliminate the personal liability of
directors for monetary damages,
except where such liability is based on:
• Breaches of the director’s duty of
loyalty to the corporation or its
stockholders;
• Acts or omissions not in good faith
or involving intentional misconduct
or knowing violations of law;
• The payment of unlawful dividends
or unlawful stock repurchases or
redemption; or
• Transactions in which the director
received an improper personal
benefit.
Such a limitation of liability provision
also may not limit a director’s liability
for violation of, or otherwise relieve
the company or directors from the
necessity of complying with, federal or
state securities laws, or affect the
availability of non-monetary remedies
such as injunctive relief or rescission.
The Delaware Certificate eliminates
the liability of directors to the
company for monetary damages to the
fullest extent permissible under the
DGCL. As a result, following the
Reincorporation, directors of W-S
Delaware cannot be held liable for
monetary damages even for gross
negligence or lack of due care in
carrying out their fiduciary duties as
directors, so long as that gross
negligence or lack of due care does not
involve bad faith or a breach of their
duty of loyalty to the company.
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