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) November 29, 2004
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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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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instructions A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Following the review and approval of the Compensation Committee,
on November 29, 2004, Linens 'n Things, Inc. (the "Company") extended, modified
and restated its employment agreements with Norman Axelrod (Chief Executive
Officer), William T. Giles (Executive Vice President and Chief Financial
Officer) and Brian D. Silva (Senior Vice President, Human Resources,
Administration and Corporate Secretary) and entered into an employment agreement
with Jack E. Moore, Jr. (President and Chief Operating Officer) (the "Employment
Agreements").
The Employment Agreements provide for payment of an annual base
salary that will be reviewed at the discretion of the Compensation Committee but
limit any reduction in base salary during the term. The initial annual base
salaries are $875,000 for Mr. Axelrod, $575,000 for Mr. Moore, $342,000 for Mr.
Giles and $280,000 for Mr. Silva. The Employment Agreements also include
provisions concerning annual incentive compensation with minimum target annual
incentive awards of not less than eighty percent of base salary for Messrs.
Axelrod and Moore, not less than fifty-five percent for Mr. Giles and not less
than forty-five percent for Mr. Silva, as well as long-term incentive
compensation with a minimum target award opportunity of not less than
thirty-five percent of base salary for Mr. Axelrod and not less than twenty-five
percent for Messrs. Giles and Silva.
The Employment Agreements generally provide for (i)
participation during the employment term in benefit plans and programs including
retirement benefits, life insurance, medical benefits and, in the case of Mr.
Axelrod, a supplemental executive retirement benefit and a split dollar life
insurance arrangement (or an alternative replacement arrangement), and (ii)
restrictive covenants including non-competition, non-disclosure and
non-solicitation of employees. Upon a termination for cause, the executives have
agreed not to compete with the Company for a period of two years. In the case of
voluntary termination by the executive from their executive officer position (as
well as, in the case of Mr. Axelrod, retirement from his Chairman and CEO
positions), the Company may elect to pay, over a one year period, the
executive's base salary and target annual incentive compensation in exchange for
the executive's agreement not to compete with the Company for a period of one
year.
In the event an executive's employment is terminated by the
Company other than for cause, the Employment Agreements provide for (i)
continued payment of salary and target annual incentive compensation for 24
months in the case of Messrs. Axelrod and Moore and 18 months in the case of
Messrs. Giles and Silva, (ii) pro rata annual incentive award at the executive's
target rate payable in a lump sum, (iii) continuation at Company cost of
medical, health and life insurance benefits for 24 months (and thereafter, in
the case of Mr. Axelrod, at his own cost, to age 65), (iv) in the case of Mr.
Axelrod, vesting of outstanding options, restricted or deferred stock awards,
and long-term incentive awards (and pro rata payment of such long-term incentive
awards based on actual and target performance) and the right in certain cases to
exercise vested options for the remainder of the term of the options, (v) in the
case of Mr. Axelrod, 24 months of additional age and service credit under the
supplemental executive retirement plan, and a lump sum actuarial amount to
account for the benefit he would have received under a split dollar insurance
arrangement (or its equivalent replacement arrangement) had the Company
continued to make the required premium payments for an additional 24 months.
In the event an executive's employment is terminated by the
Company within 2 years following a change in control and other than for cause,
or in the case of Mr. Axelrod, he elects to terminate within a sixty day period
beginning six months following a change in control, the Employment Agreements
generally provide for (i) lump sum severance benefits equal to 2 times (2.5
times for Mr. Moore and 2.99 for Mr. Axelrod) the annual base salary and target
annual incentive compensation, (ii) pro rata annual incentive award at the
executive's target annual incentive compensation payable in a lump sum, (iii)
continuation of medical, health and life insurance, at Company cost, until age
60 for Mr. Axelrod (and, at Mr. Axelrod's cost, from age 60 to the date he
attains age 65) and 24 months for the other executives, (iv) vesting of
outstanding options, restricted stock or stock unit awards, deferred stock
awards and long-term incentive awards (and pro rata payment of such long-term
incentive awards based on actual and target performance), and the right in
certain cases to exercise outstanding options for the remainder of their term,
(v) in the case of Mr. Axelrod, 36 months of additional age and service credit
for purposes of determining the amount payable under the supplemental executive
retirement plan, and a lump sum actuarial amount to account for the benefit he
would have received under his split dollar insurance arrangement (or its
equivalent replacement arrangement) had the Company continued to make required
insurance premium payments for an additional 36 months.
As under his existing employment agreement, Mr. Axelrod has the
option under the extended agreement to relinquish his executive officer
positions and to remain with the Company in a non-officer consulting capacity,
including assisting in the transition to a successor CEO. If he elects to go
into such non-officer position under the extended agreement, he is required to
continue in such position for a minimum of one year and for a maximum of up to
age 60. In such position, the Company would not have the right to terminate Mr.
Axelrod or fail to renew the Employment Agreement prior to his reaching age 60,
other than for cause. His compensation in such capacity would be reasonably
established by the Board consistent with his services to be provided to the
Company but in no event less than the amount being paid to the Company's
non-employee directors. While in such capacity he would be precluded from
competing with the Company but would be permitted to work elsewhere. In the
case of a voluntary termination from this non-officer capacity while continuing
to receive his non-officer compensation, he would also be precluded from
competing with the Company through the one-year anniversary of the date he
initially assumed such position. In such capacity, Mr. Axelrod would be entitled
to continue to participate in the Company's welfare benefit plans and programs
(so long as he was not working full time elsewhere during this period), pro rata
payment of any outstanding annual and long-term incentive awards, and continued
service vesting in all awards, stock options and deferred or restricted stock or
units.
Upon his retirement at or after age 55, Mr. Axelrod would be
entitled to, among other things, (i) continued service vesting of outstanding
options, restricted or deferred stock awards, and long-term incentive awards
(and pro rata payment of such long-term incentive awards based on valuation at
the end of the applicable performance period(s)) and the right in certain cases
to exercise vested options for the remainder of the term of the options and (ii)
continuation of medical, health and life insurance at Company cost until age 60
and at Mr. Axelrod's cost from age 60 to age 65. Upon Mr. Axelrod's retirement
or upon any assumption of the above non-officer position and ending at age 65,
he will also be entitled to use of an executive office at the Company and the
services of a full time secretary.
The Employment Agreements obligate the Company to indemnify the
executives to the fullest extent permitted by law, including the advancement of
expenses, and reimbursement of expenses incurred in seeking enforcement of an
Employment Agreement unless in bad faith or frivolous.
If payments under the Employment Agreements following a change
in control are subject to the golden parachute excise tax, the Company will make
an additional gross-up payment sufficient to ensure that the net after-tax
amount retained by the executive (taking into account all taxes, including those
on the gross-up payment) is the same as it would have been had such excise tax
not applied.
Mr. Axelrod's Employment Agreement is for an initial term ending
on July 31, 2007. The initial term of the other Employment Agreements end on
December 31, 2008. The Employment Agreements contain automatic one-year
extensions at the end of the term unless the executive fails to seek renewal or
the Company gives notice of non-renewal. A Company notice of non-renewal prior
to the executive reaching age 60 would constitute a constructive termination of
the executive without cause.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Employment Agreement between Linens 'n Things, Inc. and Norman Axelrod,
as amended through November 29, 2004.
10.2 Employment Agreement between Linens 'n Things, Inc. and Brian D. Silva,
as amended through November 29, 2004.
10.3 Employment Agreement between Linens 'n Things, Inc. and William T.
Giles, as amended through November 29, 2004.
10.4 Employment Agreement between Linens 'n Things, Inc. and Jack E. Moore,
Jr., dated November 29, 2004.
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.
Dated: December 3, 2004 By: /s/ Brian D. Silva
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Name: Brian D. Silva
Title: Senior Vice President,
Human Resources, Administration
and Corporate Secretary
EXHIBIT INDEX
Exhibit No. Description
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10.1 Employment Agreement between Linens 'n Things, Inc. and Norman Axelrod,
as amended through November 29, 2004.
10.2 Employment Agreement between Linens 'n Things, Inc. and Brian D. Silva,
as amended through November 29, 2004.
10.3 Employment Agreement between Linens 'n Things, Inc. and William T.
Giles, as amended through November 29, 2004.
10.4 Employment Agreement between Linens 'n Things, Inc. and Jack E. Moore,
Jr., dated November 29, 2004.