Pottery Barn 2012 Annual Report Download - page 137

not be considered a change of control; or (ii) a change in the effective control of the company which occurs on
the date that a majority of members of the Board of Directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors
prior to the date of the appointment or election; provided, however, that for purposes of this subsection (ii), if any
Person is considered to effectively control the company, the acquisition of additional control of the company by
the same Person will not be considered a change of control; or (iii) a change in the ownership of a substantial
portion of the company’s assets which occurs on the date that any Person acquires (or has acquired during the 12-
month period ending on the date of the most recent acquisition by such person or persons) assets from the
company that have a total gross fair market value equal to or more than 50% of the total gross fair market value
of all of the assets of the company immediately prior to such acquisition or acquisitions; provided, however, that
for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial
portion of the company’s assets: (A) a transfer to an entity that is controlled by the company’s stockholders
immediately after the transfer, or (B) a transfer of assets by the company to: (1) a stockholder of the company
(immediately before the asset transfer) in exchange for or with respect to the company’s stock, (2) an entity, 50%
or more of the total value or voting power of which is owned, directly or indirectly, by the company, (3) a 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 amended and restated employment agreement with Laura J. Alber, effective as of
September 6, 2012, which amended and restated the prior agreement entered into with Ms. Alber, effective
May 26, 2010. The employment agreement restates substantially all of the material terms of the prior agreement,
with the exception of extending the term of the agreement through September 7, 2033 and referencing
Ms. Alber’s current base salary of $1,300,000. 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) severance equal to 24 months of her base salary to be paid over 24
months, (ii) a lump sum payment equal to 200% of the average annual bonus received by her in the last 36
months prior to the termination, (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
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