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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.
APPENDIX A
Participant Effective Date
Norman Axelrod July 1, 1999
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
-------------------------------- ----------------
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.
APPENDIX C
Mortality: 1983 GAM Table (Unisex Variation)
Interest: 5.5%