SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 20, 1999
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LINENS 'N THINGS, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-12381 22-3463939
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
6 Brighton Road, Clifton, New Jersey 07015
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (973) 778-1300
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Inapplicable
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
Supplemental Executive Retirement Plan, Split Dollar Agreement and
Collateral Assignment.
Linens 'n Things, Inc. (the "Company") adopted a Supplemental Executive
Retirement Plan, effective as of July 1, 1999. The Company and Norman Axelrod
entered into an Executive Life Program Collateral Assignment Split Dollar
Agreement (the "Split Dollar Agreement") dated as of December 20, 1999, whereby
the Company agreed to Mr. Axelrod's eligibility to participate in the Company's
Executive Life Program and Mr. Axelrod agreed to assign an interest in his life
insurance policy under the Executive Life Program (the "Policy") to the Company
as collateral to secure repayment of the Company's premium payments. In
accordance with the terms of the Split Dollar Agreement, the Company and Mr.
Axelrod executed a Split-Dollar Collateral Assignment whereby Mr. Axelrod
assigned his Policy to the Company as collateral security.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 99.1 Linens 'n Things, Inc. Supplemental Executive
Retirement Plan.
Exhibit 99.2 Split Dollar Agreement dated as of December 20, 1999,
between Norman Axelrod and the Company.
Exhibit 99.3 Split-Dollar Collateral Assignment between
Norman Axelrod and the Company.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LINENS 'N THINGS, INC.
WILLIAM T. GILES
Dated: March 27, 2000 By: _______________________________
William T. Giles
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit 99.1 Linens 'n Things, Inc. Supplemental Executive
Retirement Plan.
Exhibit 99.2 Split Dollar Agreement dated as of December 20, 1999,
between Norman Axelrod and the Company.
Exhibit 99.3 Split-Dollar Collateral Assignment between Norman
Axelrod and the Company.
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Linens 'n Things, Inc.
Supplemental Executive Retirement Plan
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Linens 'n Things, Inc.
Supplemental Executive Retirement Plan
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Page
1. Purposes............................................ 1
2. Definitions......................................... 1
3. Administration...................................... 3
4. Participation....................................... 4
5. Benefit Amount...................................... 4
6. Distributions....................................... 4
7. Amendment/Termination............................... 5
8. General Provisions.................................. 5
9. Claim and Appeal Procedure.......................... 7
10. Effective Date...................................... 8
Appendix A .................................................. 9
Appendix B .................................................. 10
Appendix C .................................................. 11
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Linens 'n Things, Inc.
Supplemental Executive Retirement Plan
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1. Purposes. The purpose of this Linens 'n Things, Inc. Supplemental Executive
Retirement Plan (the "Plan") is to provide a select group of management or
highly compensated employees of Linens 'n Things, Inc. (the "Company") and its
subsidiaries and certain affiliated entities with a nonqualified defined benefit
pension benefit.
2. Definitions. In addition to the terms defined in Section 1 above, the
following terms used in the Plan shall have the meanings set forth below:
(a) "Administrator" shall mean the Committee.
(b) "Benefit Amount" shall have the meaning set forth in Section 5.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall have the meaning set forth in a Participant's employment
agreement. In the event that a Participant is not subject to an
employment agreement, or if a Participant's employment agreement does
not define Cause, then Cause shall be defined at the discretion of the
Committee.
(e) "Change of Control" shall be deemed to occur on the date upon which one
of the following events occurs:
(i) any person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or
any company owned, directly, or indirectly, by the stockholders of the
Company immediately prior to the occurrence with respect to which the
evaluation is being made in substantially the same proportions as their
ownership of the common stock of the Company) becomes the Beneficial
Owner (except that a person shall be deemed to be the Beneficial Owner
of all shares that any such person has the right to acquire pursuant to
any agreement or arrangement or upon exercise of conversion rights,
warrants or options or otherwise, without regard to the sixty day
period referred to in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company or any Significant Subsidiary
(as defined below), representing 25% or more of the combined voting
power of the Company's or such subsidiary's then outstanding
securities;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (iii) or (iv) of this paragraph) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved, but
excluding for this purpose any such new director whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of an
individual, corporation, partnership, group, associate or other entity
or person other than the Board, cease for any reason to constitute at
least a majority of the Board;
(iii) the consummation of a merger or consolidation of the Company or any
subsidiary owning directly or indirectly all or substantially all of
the consolidated assets of the Company (a "Significant Subsidiary")
with any other entity, other than a merger or consolidation which would
result in the voting securities of the Company or a Significant
Subsidiary outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving or resulting entity) more than 50%
of the combined voting power of the surviving or resulting entity
outstanding immediately after such merger or consolidation;
(iv) the stockholders of the Company approve a plan or agreement for the
sale or disposition of all or substantially all of the consolidated
assets of the Company (other than such a sale or disposition
immediately after which such assets will be owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company
immediately prior to such sale or disposition) in which case the Board
shall determine the effective date of the Change in Control resulting
therefrom; or
(v) any other event occurs which the Board determines, in its discretion,
would materially alter the structure of the Company or its ownership.
For purposes of this definition, the term "Beneficial Owner" shall have the
meaning ascribed to such term in Rule 13d-3 under the Exchange Act (including
any successor to such Rule), and the term "Person" shall have the meaning
ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Section
13(d) and 14(d) thereof, including "group" as defined in Section 13(d) thereof.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended. References
to any provision of the Code or regulation (including a proposed regulation)
thereunder shall include any successor provisions or regulations.
(g) "Committee" shall mean the Compensation Committee of the Board. Any function
of the Committee may be delegated to such person or committee or entity as may
be elected by the Committee.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act or rule thereunder shall include
any successor provisions or rules.
(i) "Final Average Compensation" shall mean the average of the Participant's
base and bonus taxable compensation (determined without regard to any income
deferral elections), but not including income arising from stock option
exercise, restricted stock grants and other forms of equity compensation, for
the three (3) calendar years (which need not be consecutive) with the Company,
its subsidiaries and affiliates, that yield the greatest average. For this
purpose, the same calendar years need not be used for determining the largest
base and bonus compensation amounts.
(j) "Participant" shall mean any employee of the Company or any subsidiary or
affiliated entity who is on U.S. payroll and subject to taxation in the United
States and who is designated by the Committee as an eligible Participant in the
Plan. Participants shall be listed in Appendix A hereto.
(k) "Plan Year" shall mean the period from July 1, 1999 through December 31,
1999, and thereafter shall mean the calendar year.
(l) "Year of Service" shall mean a calendar year in which the Participant was
employed by the Company, its predecessors, subsidiaries or its affiliates on a
full-time basis for the majority of the business days therein.
3. Administration.
(a) Authority. The Committee shall administer the Plan in accordance with its
terms, and shall have all powers necessary to accomplish such purpose, including
the power and authority to construe and interpret the Plan, to define the terms
used herein, to prescribe, amend and rescind rules and regulations, agreements,
forms, and notices relating to the administration of the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
Any actions of the Committee with respect to the Plan shall be conclusive and
binding upon all persons interested in the Plan. The Committee may appoint
agents and delegate thereto powers and duties under the Plan, except as
otherwise limited by the Plan.
(b) Limitation of Liability. Each member of the Committee shall be entitled to,
in good faith, rely or act upon any report or other information furnished to him
or her by any officer or other employee of the Company or any subsidiary or
affiliated entity, the Company's independent certified public accountants, or
any executive compensation consultant, legal counsel, or other professional
retained by the Company to assist in the administration of the Plan. To the
maximum extent permitted by law, no member of the Committee, nor any person to
whom ministerial duties have been delegated, shall be liable to any person for
any action taken or omitted in connection with the interpretation and
administration of the Plan.
4. Participation. The Administrator will notify each Participant of his or her
participation in the Plan at such time as is deemed appropriate.
5. Benefit Amount. Upon termination of employment with the Company and its
subsidiaries and affiliated entities, a Participant will be entitled to the
Benefit Amount hereunder, if the Participant has either attained age 55 or
completed ten (10) Years of Service with the Company, its subsidiaries, and/or
its affiliated entities. If the Participant has not then attained age 55,
however, then commencement of the Benefit Amount will not occur until attainment
of age 55. The Benefit Amount is equal to an annual annuity amount for the life
of the Participant, equal to 1.6% times Final Average Compensation times Years
of Service, minus the amount set forth in Appendix B. In no event will the
Benefit Amount exceed fifty percent (50%) of the Participant's Final Average
Compensation. In the event that a Participant becomes entitled to another
defined benefit pension benefit from the Company, its subsidiaries or
affiliates, then the Benefit Amount will be reduced by the amount of such other
defined benefit pension benefit.
6. Distributions.
(a) Form of Payment. The normal form of payment of the Benefit Amount is a
single life annuity for the life of the Participant.
(b) Timing of Payments. Commencement of payment of the Benefit Amount will be as
of the first day of the month following the Participant's termination of
employment, if the Participant has then attained age 55, unless otherwise
provided herein. If the Participant has not then attained age 55, then
commencement of payment of the Benefit Amount will occur at age 55, unless
otherwise provided herein. If a Participant who is eligible to commence receipt
of the Benefit Amount elects to defer commencement of such Benefit Amount, then
the Benefit Amount shall be adjusted actuarially (using the mortality factors
set forth in Appendix C) to reflect the delay in payment.
(c) Change of Control. Notwithstanding anything else herein to the contrary,
upon the occurrence of a Change of Control, all Participants will automatically
become fully vested hereunder and have an immediate right to begin receiving the
Benefit Amount (regardless of the Participant's age or Years of Service, and
regardless of whether the Participant is then employed by the Company). The
Participant need not terminate employment in order to receive the Benefit Amount
under this Section 6(c). Upon a Change of Control, the Participant may elect to
receive the Benefit Amount in the standard form or in a lump sum (using the
mortality factors set forth in Appendix C).
(d) Disability. In the event that the Participant becomes disabled, within the
meaning of the Company's long term disability plan, and if such Participant has
attained age 55 or completed ten (10) Years of Service, and if such Participant
has been determined to be disabled and eligible for benefits under the Company's
long term disability plan, then such Participant will begin receiving the
Benefit Amount as of the first day of the month following such determination;
provided, however, that if the Participant has not then attained age 55, then
commencement will not occur until he attains age 55. In such event, however, the
Participant may elect to defer commencement of the Benefit Amount until such
time as he thereafter elects (but not later than age 65), during which deferral
period he shall continue to accrue additional Years of Service for purposes of
the Benefit Amount, but his Final Average Compensation shall be determined as of
the onset of his disability. In the event that the Participant has neither
attained age 55 nor completed ten (10) Years of Service at the time of the onset
of disability, then he shall be treated as accruing additional age and Years of
Service (but not compensation) during the period of disability, until he has
satisfied the criteria for payment hereunder.
(e) Preretirement Death Benefits. In the event that a Participant dies prior to
the date as of which payment of the Benefit Amount commences, then no benefit
shall be payable under the Plan with respect to such Participant and/or his
beneficiary.
(f) Forfeiture. A Participant will forfeit all rights to the Benefit Amount in
the event that he or she is terminated by the Company for Cause. In addition, in
the event that the Participant is determined by the Committee to be an employee,
consultant, or independent contractor of a competitor of the Company as defined
in the Participant's employment agreement or otherwise in the one (1) year
period following termination of employment, then he or she will irrevocably
forfeit all rights to the Benefit Amount hereunder.
7. Amendment/Termination. The Committee may, with prospective or retroactive
effect, amend, alter, suspend, discontinue, or terminate the Plan at any time
without the consent of Participants, stockholders, or any other person;
provided, however, that, without the consent of a Participant, no such action
shall adversely affect the rights of such Participant with respect to any rights
to payment of benefits accrued as of the date of termination.
8. General Provisions.
(a) Limits on Transfer of Awards. Other than by will or the laws of descent and
distribution, no right, title or interest of any kind in the Plan shall be
transferable or assignable by a Participant or his or her Beneficiary or be
subject to alienation, anticipation, encumbrance, garnishment, attachment, levy,
execution or other legal or equitable process, nor subject to the debts,
contracts, liabilities or engagements, or torts of any Participant or his or her
Beneficiary. Any attempt to alienate, sell, transfer, assign, pledge, garnish,
attach or take any other action subject to legal or equitable process or
encumber or dispose of any interest in the Plan shall be void.
(b) Receipt and Release. Payments (in any form) to any Participant or
Beneficiary in accordance with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of a Participant's Benefit Amount to which the
payments relate against the Company or any subsidiary or affiliated entity
thereof, the Committee, and the Committee may require such Participant or
Beneficiary, as a condition to such payments, to execute a receipt and release
to such effect.
(c) Unfunded Status of Awards: Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for deferred compensation and Participants shall
rely solely on the unsecured promise of the Company or applicable affiliated
entity for payment hereunder. With respect to any payment not yet made to a
Participant under the Plan, nothing contained in the Plan shall give a
Participant any rights that are greater than those of a general unsecured
creditor of the Company or the applicable affiliated entity; provided, however,
that the Committee may authorize the creation of trusts (including the purchase
of certain life insurance products) or make other arrangements to meet the
Company's obligations under the Plan, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
(d) Compliance. A Participant in the Plan shall have no right to receive payment
(in any form) with respect to his or her Benefit Amount until legal and
contractual obligations of the Company relating to establishment of the Plan and
the making of such payments shall have been complied with in full. In addition,
the Company shall impose such restrictions on any interest constituting a
security as it may deem advisable in order to comply with the Securities Act of
1933, as amended, the requirements of the New York Stock Exchange or any other
applicable stock exchange or automated quotation system, any state securities
laws applicable to such a transfer, any provision of the Company's Certificate
of Incorporation or Bylaws, or any other law, regulation, or binding contract to
which the Company is a party.
(e) Other Participant Rights. No provision of the Plan or transaction hereunder
shall confer upon any Participant any right to be employed by the Company or a
subsidiary or affiliate thereof, or to interfere in any way with the right of
the Company or a subsidiary or affiliate to increase or decrease the amount of
any compensation payable to such Participant. The Plan shall inure to the
benefit of, and be binding upon, the parties hereto and their successors and
assigns.
(f) Tax Withholding. The Company and any subsidiary or affiliated entity shall
have the right to deduct from amounts otherwise payable in settlement of a
Benefit Amount any sums that federal, state, local or foreign tax law requires
to be withheld with respect to such payment.
Amounts payable under this Plan will be subject to FICA
withholding at such times and in such amounts as determined by the
Administrator, under Section 3121(v) of the Code and the regulations thereunder.
FICA withholding amounts will be withheld from non-deferred compensation or from
such other sources (including from the applicable Benefit Amount) as is
determined by the Administrator.
(g) Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of New Jersey, without giving effect to principles of
conflicts of laws, and applicable provisions of federal law.
(h) Construction. The captions and numbers preceding the sections of the Plan
are included solely as a matter of convenience of reference and are not to be
taken as limiting or extending the meaning of any of the terms and provisions of
the Plan. Whenever appropriate, words used in the singular shall include the
plural or the plural may be read as the singular, and male references shall
include female and neuter, and vice versa.
(i) Severability. In the event that any provision of the Plan shall be declared
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions of the Plan but shall be fully severable, and
the Plan shall be construed and enforced as if said illegal or invalid provision
had never been inserted herein.
(j) Status. The establishment and maintenance of the rights of Participants and
Beneficiaries hereunder shall not vest in any Participant or Beneficiary any
right, title or interest in and to any specific assets or benefits except at the
time or times and upon the terms and conditions and to the extent expressly set
forth in the Plan.
9. Claim and Appeal Procedure. The Administrator shall provide adequate notice
in writing to any Participant or to any Beneficiary ("Claimant") whose claim for
benefits under the Plan has been denied. The Administrator's notice to the
Claimant shall set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions
upon which the Administrator based its denial;
(c) A description of any additional material and
information that is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Administrator within seventy-five (75)
days after receipt of the Administrator's notice of denial of benefits. The
Administrator's notice must further advise the Claimant that his failure to
appeal the action to the Administrator in writing within the seventy-five (75)
day period will render the Administrator's determination final, binding and
conclusive.
If the Claimant should appeal to the Administrator, he, or his
duly authorized representative, may submit, in writing, whatever issues and
comments he or his duly authorized representative feels are pertinent. The
Claimant, or his duly authorized representative, may review pertinent Plan
documents. The Administrator shall re-examine all facts to the appeal and make a
final determination as to whether the denial of benefits is justified under the
circumstances. The Administrator shall advise the Claimant of its decision
within sixty (60) days of the Claimant's written request for review, unless
special circumstances (such as a hearing) would make the rendering of a decision
within the sixty (60) day limit unfeasible, but in no event shall the
Administrator render a decision respecting a denial for a claim of benefits
later than one hundred twenty (120) days after its receipt of a request for
review.
The Administrator's notice of denial of benefits shall
identify the name and address to whom the Claimant may forward his appeal.
10. Effective Date. The Plan shall be effective July 1, 1999.
<PAGE>
APPENDIX A
Participant Effective Date
Norman Axelrod July 1, 1999
<PAGE>
APPENDIX B
For Norman Axelrod, the annual Benefit Amount, as defined in the second
sentence of Section 5, shall be reduced by the amount determined below (but not
below zero) and prorated accordingly between ages:
Age at Termination of Employment Reduction Amount
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Age 55 .. $530,000
Age 54... $475,000
Age 53... $424,000
Age 52... $370,000
Age 51... $318,000
Age 50... $260,000
Age 49... $195,000
Age 48... $130,000
Age 47... $ 38,000
The above amounts will be prorated for the number of completed calendar
months between the Participant's birthday and his termination of employment.
<PAGE>
APPENDIX C
Mortality: 1983 GAM Table (Unisex Variation)
Interest: 5.5%
Executive Life Program
Collateral Assignment Split Dollar Agreement
This Split Dollar Agreement is entered into as of December 20, 1999, by and
between Norman Axelrod, (the "Employee")(hereinafter, the Employee or this trust
shall be referred to as the "Owner" when referred to in that capacity) and
Linens 'n Things, Inc., a Delaware corporation (the "Employer").
Recitals
Whereas, Employee is eligible for and wishes to participate in the
Employer's Executive Life Program (the "Program"); and
Whereas, Owner will be the sole owner and possessor of the Policy and
assign an interest in the Policy's death benefit and cash value to the Employer
as collateral to secure repayment of Employer's premium payments with respect to
the Policy; and
Whereas, it is the intent of the Employer and Owner to define the
limited extent of the Employer's security interest in the Policy;
Now, therefore, Employer and Owner mutually agree that:
(1) Interests in the Policy Cash Values
The Policy, which is the subject of this Split Dollar Agreement, is a variable
universal life policy issued by Nationwide Life and Annuity Company (the
"Insurer") Policy Number N056077170, on the life of the Employee. The Employer's
interest in the cash value of the Policy (the "Employer's Interest") shall be
equal to the total amount of the premium payments made on the Policy (including
any unused amounts paid to the Insurer as pre-paid premiums triggered by a
Change in Control Event as defined below). The Owner's interest in the cash
value of the Policy (the "Owner's Interest") shall be equal to the remaining
cash value of the Policy, if any, in excess of the Employer's Interest, reduced
by the amount of any distributions from the cash value of the Policy made to the
Owner as permitted by this Agreement.
(2) Premium Payments
On or before the due date of each premium payment on the Policies, Employer will
pay the entire premium due on the Policy. The Employer will make premium
payments as they are due until the termination of service of the Employee with
the Employer, or in the event the Employee becomes "disabled" as defined under
the Employer-maintained long term disability program, until the Employee's age
55, provided, however, that upon the happening of a Change in Control Event, the
Employer shall pay to the Insurer, in the form of pre-paid premiums, an amount
equal to the present value of the remaining premium payments due on the Policy
until the Employee attains age 55, such amount to be determined by the Insurer.
The Employee shall have imputed income each year in an amount equal to the
annual cost of current death benefit protection on the life of the Employee,
measured by the lower of (a) the PS 58 rate, as set forth in Revenue Ruling
55-747 (or the corresponding applicable provision of any future Revenue Ruling),
or (b) the Insurer's current published premium rate for annually renewable term
insurance for standard risks.
(3) Death Benefit Amounts
Upon the death of the Employee, and subject to the minimum death benefits
provided to the Owner as described below, the death benefit payable to the
Employer (or the Employer's designated beneficiaries) under this Agreement shall
be equal to the Employer's Interest in the Policy as defined in Section 1 above,
accumulated at interest at a rate of 3.4% per annum, except that, in the event
of Employee's death after a Change in Control as herein defined, the death
benefit payable to the Employer under this paragraph shall be limited to the
Employer's Interest in the Policy as defined in Section 1 above.
Upon the death of the Employee, the death benefit payable to the Owner (or the
Owner's designated beneficiaries) shall be equal to the excess of the total
death proceeds under the Policy less the amount payable to the Employer (or the
Employer's designated beneficiaries) as defined above, except that the minimum
death benefit payable to the Owner shall be twenty-five thousand dollars ($
25,000).
Owner understands that sufficiency of cash value in the Policy to provide
expected amounts of death benefit under this Agreement may vary as a result of
Policy performance and duration of premium payments and this is in no event
guaranteed by the Employer or the Insurer. The Employer makes no representation
or warranty as to the merits or risks of the investment performance of the
Policy.
(4) Ownership and Rights in the Policy
The Policy will be owned exclusively by the Owner or the Owner's Assignee (for
purposes of this Agreement, Owner's Assignee shall be included in the definition
of Owner). Any rights in the Policy other than those specifically mentioned in
this Agreement must be exercised with the written consent of both the Owner and
the Employer.
Employer's Rights. While this Agreement is in effect, the Employer has a
security interest in the Policy limited exclusively to: (a) that portion of the
cash value of the Policy equal to the Employer's Interest in the Policy; or (b)
the death benefit payable to the Employer as set forth in paragraph 3, above. In
addition, prior to the occurrence of a Change in Control Event, the Employer
shall have the right to make any investment choices permitted by the Policy with
respect to the cash value of the Policy, and Owner shall agree to waive this
right prior to the occurrence of a Change in Control Event as long as this
Agreement remains in force in accordance with the established procedures of the
Insurer. After a Change in Control Event, the Owner shall have the right to make
any investment choices permitted by the Policy with respect to the cash value of
the Policy.
Owner's Rights. The Owner's rights include the right to irrevocably assign any
of his or its rights under the Policy, with the consent of the Employer and the
Insurer and to select and change beneficiaries to receive Owner's death
benefits. The Owner will not be permitted to borrow against, or partially or
totally surrender the Policy as long as the Collateral Assignment remains in
force. The Owner shall not be permitted to receive a distribution from the cash
value of the Policy prior to the termination of the Employee's services with the
Employer, at which time the Owner may request an annual distribution from the
Owner's Interest in the cash value of the Policy, commencing on the first day of
the month coincident with or next following the date the Employee terminates
service with the Employer. The distribution shall be made annually and shall be
limited to an amount of five hundred and thirty thousand dollars ($530,000) per
year and shall continue for the remainder of the Employee's lifetime, or until
the Owner's Interest is exhausted.
(5) Assignment of Policy to Secure Employer's Payments
To secure Employer's Interest in the Policy under this Agreement, Owner will
collaterally assign the Policy to the Employer by signing the separate
Collateral Assignment. The Collateral Assignment cannot be altered without the
Employer's, Owner's, and Insurer's consent.
(6) Termination of Split Dollar Agreement
This Split Dollar Agreement, and all obligations of the Employer to pay premiums
under it, will terminate upon the earliest to occur of the following:
a) Death of the Employee;
b) Written agreement of both the Owner and the Employer to terminate this
Agreement;
c) Termination of Employee's employment with the Employer for Cause;
d) Voluntary termination by the Employee of Employee's service with the Employer
unless;
(i) Employer fails to renew Owner's Employment Agreement prior to the
Employee attaining age 60;
(ii) Termination of service is due to any "Constructive Termination
Without Cause" as defined in the Employment Agreement; or
(iii) Employee terminates service with the Employer under an "Approved Early
Retirement" or "Normal Retirement" as defined in the Employment Agreement;
e) Failure of the Employee or Owner to complete all necessary requirements for
the Insurer to issue a policy, including the waiver of investment choices;
and,
f) At the sole discretion of the Employer, upon the Employee entering into
Competition with the Employer during the "Restriction Period" as defined
in the Employment Agreement.
Upon termination of this Agreement, as set forth above, the Employer shall
receive the Employer's Interest in the Policy as soon as is practical, but in no
event shall receipt be later than sixty (60) days from the earliest of the dates
listed above. In the event of termination of this Agreement for reason other
than the death of the Employee, the Employer's Interest in the Policy and under
this Agreement shall be satisfied either directly from the cash value of the
Policy or by direct payment by the Owner, at the discretion of the Owner. In
this event, the recovery of the Employer's Interest shall be limited to the cash
value of the Policy at that time. In the event of Termination of this Agreement
by reason of the death of the Employee, the Employer's Interest in the Policy
and under this Agreement shall be satisfied through direct payment from the
Insurer from the Policy proceeds.
(7) Payment of Proceeds or Cash Value to Employer
Upon receipt of the Employer's Interest in the Policy, as provided in paragraph
1 above, whether from the Policy or from the Owner, the Employer will release
the Collateral Assignment. Upon satisfaction of the Employer's Interest in the
Policy, the Owner shall have unrestricted ownership to the Policy.
Upon termination of this Split Dollar Agreement by reason of the death of the
Insured, the Insurer in satisfaction of the Owner's obligations, will issue a
check directly to the Employer as collateral assignee in an amount equal to the
Employer's Interest in the Policy.
(8) Miscellaneous
Not an Employment Agreement. This Split Dollar Agreement does not in any way
constitute an employment agreement, and the Employer reserves the right to
terminate Employee's employment to the same extent as though the Split Dollar
Agreement did not exist. This Split Dollar Agreement may be amended at any time
by written agreement signed on behalf of the Employer and by the Owner.
Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Employer and its successors and assigns, and to the Employee and the
Employee's successors, assigns, heirs, executor or personal representative, and
beneficiaries.
Certain Defined Terms. For purposes of this Agreement, the following terms have
the meanings set forth below:
"Approved Early Retirement" has the meaning set forth in Section 10(f) of
the Employment Agreement.
"Cause" has the meaning set forth in Section 10(b) of the Employment
Agreement.
"Change in Control" has the meaning set forth in Section 10(c) of the
Employment Agreement.
"Competition" has the meaning set forth in Section 12(a) of the Employment
Agreement.
"Constructive Termination Without Cause" has the meaning set forth in
Section 10(c) of the Employment Agreement.
"Employment Agreement" means the Employment Agreement dated October 16,
1996 between Employee and Employer.
"Normal Retirement" has the meaning set forth in Section 10(f) of the
Employment Agreement.
"Restriction Period" has the meaning set forth in Section 12(b) of the
Employment Agreement.
"Termination Without Cause" has the meaning set forth in Section 10(c) of
the Employment Agreement.
Notices. Any notice, consent or demand required or permitted under this
Agreement shall be made in writing and shall be signed by the party making the
notice, consent, or demand. Such notice shall be sent by United States certified
mail, postage pre-paid and shall be sent to the other party's last known address
as shown on the records of the Employer. The date of such mailing shall be
deemed to be the date of such notice, consent or demand.
Entire Agreement; Amendment of Agreement. This Agreement, including only those
provisions of the Employment Agreement specifically referred to above, evidences
the entire agreement of the parties with respect the subject matter hereof and
supercedes all prior discussions or understandings. This Agreement may be
altered, amended or modified, including the addition of any additional policy
provisions, only by a written agreement signed by the Employer and the Owner. It
shall be the responsibility of the Employer to notify the Insurer of any
amendments or changes to this Agreement.
Governing Law. This Agreement shall be governed by and be construed in
accordance with the laws of the State of New Jersey.
(9) Named Fiduciary
The Employer is designated as the Named Fiduciary of this Agreement for purposes
of the Employee Retirement Income Security Act of 1974, as amended. The business
address and telephone number of the Named Fiduciary are as follows:
Linens 'n Things, Inc.
c/o Corporate Secretary
6 Brighton Rd.
Clifton, NJ 07015
The Named Fiduciary shall have the authority to control and manage the operation
and administration of the Executive Life Program, of which this Agreement forms
a part thereof. The Named Fiduciary is empowered to construe and interpret the
terms of the Program and this Agreement, to supply omissions consistent with the
intent of the Program and the Agreement, and to make all determinations and
resolve all disputes regarding eligibility for and the amount of, benefits under
the Program and Agreement, consistent with the terms of the Policy. The Named
Fiduciary may delegate some or all of its duties and responsibilities to another
person or entity (e.g. a committee designated by the Employer), including
persons who are not Named Fiduciaries. Any decisions and determinations made by
the Named Fiduciary (or its delegate) shall be conclusive and binding on all
parties. The Named Fiduciary shall have the sole discretion of carrying out its
responsibilities. Any person or entity claiming a benefit, requesting an
interpretation or ruling under the Plan, or requesting information under the
Plan (hereinafter referred to as "Claimant") shall present the request in
writing to the Employer, which shall respond in writing as soon as practicable.
If the claim or request is denied, the written notice of denial shall state the
reason for denial, with specific reference to the provisions on which the denial
is based, a description of any additional material or information required and
an explanation of why it is necessary, and an explanation of the program's
claims review procedure.
(10) Claims Procedures
Any person or entity claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan (hereinafter referred
to as "Claimant") shall present the request in writing to the Employer, which
shall respond in writing as soon as practicable. If the claim or request is
denied, the written notice of denial shall state the reason for denial, with
specific reference to the provisions on which the denial is based, a description
of any additional material or information required and an explanation of why it
is necessary, and an explanation of the program's claims review procedure.
Review of Claim. Any Claimant whose claim or request is denied or who has not
received a response within sixty (60) days may request a review by notice given
in writing to the Employer. Such request must be made within sixty (60) days
after receipt by the Claimant of the written notice of denial, or in the event
Claimant has not received a response sixty (60) days after receipt by the
Employer of Claimant's claim or request. The claim or request shall be reviewed
by the Employer which may, but shall not be required to, grant the Claimant a
hearing. On review, the Claimant may have representation, examine pertinent
documents, and submit issues and comments in writing.
Final Decision. The decision on review shall normally be made within thirty (30)
days after the Employer's receipt of Claimant's claim or request. If an
extension of time is required for a hearing or other special circumstances, the
Claimant shall be notified and the time limit shall be sixty (60) days. The
decision shall be in writing and shall state the reason and the relevant
provisions. All decisions on review shall be final and bind all parties
concerned.
IN WITNESS WHEREOF, the Employer and the Owner or the Owner's Assignee have
signed this Split Dollar Agreement, which is effective as of the effective date
of the Policy described herein.
BRIAN SILVA
__________________________________________
Officer of Corporation
Title: Sr. V.P. Human Resources &
Corp. Secretary
________________________________
Witness NORMAN AXELROD
__________________________________________
Owner
Date: 12/20/99
SPLIT-DOLLAR COLLATERAL ASSIGNMENT
Owner: NORMAN AXELROD shall refer to the Employee, Third Party, or Trust,
and his/her/its successors and assigns;
Assignee: LINENS 'N THINGS shall refer to Employer, and its successors and
assigns;
Insurer: NATIONWIDE LIFE AND ANNUITY COMPANY;
Policy No.: N056077170;
Insured: NORMAN AXELROD;
Split Dollar Agreement: shall refer to the Agreement entered into between the
Owner and the Assignee dated December 20, 1999, which is the subject of this
Collateral Assignment.
In consideration of the Split-Dollar Agreement (the "Agreement") entered into
between the above named Assignee and Owner, Assignee and Owner agree as follows:
a) The above numbered Policy is assigned by Owner to Assignee as
collateral security of Owner's liability to Assignee as defined in the
Agreement (the "Assignee's Interest"), subject to all terms and
conditions of the Policy and to all superior liens, if any, which the
Insurer may have against the Policy.
b) The rights of the Owner and Assignee are specified in the Agreement.
This Collateral Assignment is intended to provide direction to the
Insurer as to the required signatures when either or both parties
exercise certain policy rights.
In accordance with the Split Dollar Agreement, the parties agree to the
following limitations of the ability to exercise the rights provided under the
Policy:
Death Benefits
The Assignee shall have the right to receive from the Policy Proceeds, an amount
equal to the Assignee's Interest in the Policy, as defined and modified in the
Split Dollar Agreement. The Owner shall have the right to receive the balance,
if any, of the Policy Proceeds, but in no event, less than twenty-five thousand
dollars ($ 25,000). Each Party shall have the right to designate and change the
beneficiary or beneficiaries to receive its portion of the Policy Proceeds
payable in accordance with the Split Dollar Agreement.
Cash Values
1. Investment Choices: Prior to a Change in Control as defined in the
Split Dollar Agreement, the Assignee shall have the right to exercise
any investment choices permitted by the Policy with respect to the cash
value of the Policy, and Owner shall agree to waive this right in
accordance with the established procedures of the Insurer. After a
Change in Control, the Owner shall have the right to exercise any
investment choices permitted by the Policy with respect to the cash
value of the Policy, and Assignee shall agree to waive this right in
accordance with the established procedures of the Insurer. The Insurer
may rely on the statement of the Assignee as to whether a Change of
Control has occurred.
2. Policy Loans and Partial Withdrawals: Neither party shall have the
right to request and receive a loan secured by Policy Cash Values
without the express, written consent of the other party. Neither party
shall have the right to receive a distribution from the cash value of
the Policy (in the form of a Cash Withdrawal, Partial Surrender or
otherwise) prior to the termination of service by the Insured with the
Assignee without the express, written consent of the other party. After
the termination of service of the Insured with the Assignee, the Owner
shall have the right to receive distributions from the Policy Cash
Values, but only at the time and in the amount set forth in the Split
Dollar Agreement. Insurer may rely on the Assignee's representation as
to the amount so set forth in the Split Dollar Agreement and the manner
in which the distribution is to be accomplished.
3. Termination of the Split Dollar Agreement: In the event of the
termination of the Split Dollar Agreement in accordance with the
provisions thereof, the Assignee shall have the right to receive an
amount equal to its Interest in the Policy payable from the cash values
of the Policy. Pursuant to the Split Dollar Agreement, the Owner may
exercise the right to satisfy the Assignee's Interest in the Policy by
direct payment to the Assignee.
Miscellaneous Rights
1. Any other rights not provided for in this Collateral Assignment,
including the right to surrender the Policy or exercise any
non-forfeiture options under the Policy, shall require the written
consent of both Owner and Assignee unless otherwise provided.
2. Insurer may rely on the Assignee's representation as to the amount of
the Assignee's Interest in the Policy in accordance with the Split
Dollar Agreement
3. Insurer may act on any request to exercise any right based on the
required signatures as set forth in this Collateral Assignment, and
Insurer has no duty to investigate the reason for any such exercise.
Upon payment of any amounts from the Policy based on this request,
during Insured's lifetime or at death, Insurer shall be fully
discharged and released as to its actions.
4. Owner represents that there are no other collateral assignments of the
Policy and no proceedings in bankruptcy are pending.
5. This Split-Dollar Collateral Assignment shall be binding upon the
parties and their successors, assigns, devisees, personal
representatives and other legal representatives.
6. Insurer will not be liable for any action it takes before this Split-
Dollar Collateral Assignment is received and acknowledged at the
Insurer's Home Office.
7. In the event of any conflict between the terms specifying the required
signatures in this Split-Dollar Collateral Assignment and the
signatures required in the Agreement, the terms of this Split-Dollar
Collateral Assignment shall prevail as to signatures.
The Owner hereby assigns, transfers, and sets over the Policy to the Assignee,
as collateral, to secure the rights of the Assignee as set out in this
Collateral Assignment, and for no other purpose. The Policy shall remain subject
to this assignment notwithstanding any assignment, transfer or conveyance of the
Policy or any interest therein by the Owner. Nothing in this assignment shall
change the rights and obligations of the Owner and the Company as set out
herein, or in the Split Dollar Agreement as described in the preamble language
of this Assignment.
- -------------------------------------------------------------------------------
Agreed to this 17 day of January, 2000.
If signing for an entity, the undersigned represents that she/he has authority
to bind the entity.
NORMAN AXELROD LINENS 'N THINGS
- ------------------------------------ ---------------------------------------
OWNER (Print name) ASSIGNEE (Print name of entity or
individual)
NORMAN AXELROD BRIAN SILVA
- ------------------------------------ --------------------------------------
SIGNATURE OF OWNER SIGNATURE OF ASSIGNEE
(and if an entity print title of
authorized signor)
6 Sunflower Drive 6 Brighton Road
Upper Saddle River, NJ 07458 Clifton, NJ 07015
- ------------------------------------ ---------------------------------------
ADDRESS ADDRESS
================================================================================
Filed at the Home Office of the Insurer this ______ day of _______, 20___. Aon
Consulting assumes no responsibility for the validity of the contents of this
document.
By ___________________________________
Authorized Officer
