Pottery Barn 2010 Annual Report Download - page 154

Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding
stock of the company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly
or indirectly, by a Person. For purposes of this subsection (iii), gross fair market value means the value of the
assets of the company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets. For purposes of this definition, persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the company. Notwithstanding the foregoing, a transaction shall not be deemed
a change of control unless the transaction qualifies as a change in the ownership of the company, change in the
effective control of the company or a change in the ownership of a substantial portion of the company’s assets,
each within the meaning of Section 409A.
For purposes of the management retention agreement “good reason” means, without the executive’s consent, (i) a
reduction in his or her annual base salary (except pursuant to a reduction generally applicable to senior
executives of the company), (ii) a material diminution of his or her authority or responsibilities, (iii) a reduction
of the executive’s title, (iv) the executive ceasing to report directly to a specified individual or the Board of the
company or the entity holding all or substantially all of the company’s assets following a change of control, or
(v) relocation of the executive to a location more than 50 miles from the company’s San Francisco, California
main office location. In addition, upon any such voluntary termination for good reason the executive must
provide written notice to the company of the existence of one or more of the above conditions within 90 days of
its initial existence and the company must be provided with at least 30 days to remedy the condition.
Laura J. Alber
We entered into an employment agreement with Laura J. Alber, effective as of May 26, 2010. The employment
agreement has an initial three-year term and will be automatically extended for one-year following the initial
term unless either party provides notice of non-extension. If we terminate Ms. Alber’s employment without
“cause,” if she terminates her employment with us for “good reason,” or her employment is terminated due to her
death or “disability,” she will be entitled to receive (i) continuation of her base salary at the time of termination
for up to two years, (ii) if such termination occurs in 2010, an amount equal to 200% of the annual bonus
received in the last 12 months, if such termination occurs in 2011, an amount equal to 200% of the average
annual bonus received in the last 24 months, or if such termination occurs in 2012 or later, an amount equal to
200% of the average annual bonus received in the last 36 months, (iii) in lieu of continued employment benefits
(other than as required by law), payments of $3,000 per month for 18 months and (iv) accelerated vesting of her
then-outstanding equity awards that vest solely based upon Ms. Alber’s continued service by up to an additional
18 months’ of vesting credit, and if the awards were subject to cliff-vesting of more than one-year, the cliff-
vesting provision will be lifted and vesting credit given as if the award had been subject to monthly vesting, and
equity awards subject to performance based vesting will remain outstanding through the date upon which the
achievement of the applicable performance milestones are certified with such awards paid out, subject to the
attainment of the applicable performance milestones, to the same extent and at the same time as if Ms. Alber had
remained employed through the 18-month anniversary of her termination date. Ms. Alber’s receipt of the
severance benefits discussed above is contingent on her signing and not revoking a release of claims against us,
her continued compliance with our Corporate Code of Conduct (including its provisions relating to confidential
information and non-solicitation), her not accepting employment with one of our competitors, and her continued
non-disparagement of us.
For purposes of the employment agreement with Ms. Alber, “cause” is defined as (i) an act of dishonesty made
by her in connection with her responsibilities as an employee, (ii) Ms. Alber’s conviction of or plea of nolo
contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude,
(iii) Ms. Alber’s gross misconduct, (iv) Ms. Alber’s unauthorized use or disclosure of any proprietary
information or trade secrets of the company or any other party to whom she owes an obligation of nondisclosure
as a result of her relationship with the company, (v) Ms. Alber’s willful breach of any obligations under any
written agreement or covenant with the company or breach of the company’s Corporate Code of Conduct, or
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