LINENS ’N THINGS,
INC.
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Definitions |
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Term of Employment | |
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Position, Duties and Responsibilities | |
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Base Salary | |
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Annual Incentive Awards | |
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Long-Term Stock Incentive Programs | |
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Employee Benefit Programs | |
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Disability | |
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Reimbursement of Business and Other Expenses; Perquisites | |
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Termination of Employment | |
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Forfeiture Provisions | |
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Confidentiality; Cooperation with Regard to Litigation; | |
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Non-Disparagement; Return of Company Materials | |
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Non-competition | |
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Non-solicitation of Employees | |
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Remedies | |
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Resolution of Disputes | |
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Indemnification | |
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Excise Tax Gross-Up | |
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Effect of Agreement on Other Benefits | |
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Assignability; Binding Nature | |
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Representation | |
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Entire Agreement | |
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Amendment or Waiver | |
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Severability | |
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Survivorship | |
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Beneficiaries/References | |
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Governing Law/Jurisdiction | |
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Notices | |
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Headings | |
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Counterparts | |
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AGREEMENT, made and entered into as of the 13th day of July, 2001 by and among Linens
’n Things, Inc., a Delaware corporation (together with its successors and assigns,
the “Company”), and Xxxxxx Xxxxxxxxxx (the “Executive”).
W I T N E S S E T H:
WHEREAS,
the Company desires to continue to employ Executive pursuant to an agreement embodying
the terms of such employment (this “Agreement”) and Executive desires to enter
into this Agreement and to accept such employment, subject to the terms and provisions of
this Agreement;
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, the
Company and Executive (individually a “Party” and together the “Parties”)
agree as follows:
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(a) |
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“Award”
shall have the meaning set forth in Section 11 below. |
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(b) |
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“Base
Salary” shall have the meaning set forth in Section 4 below. |
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(c) |
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“Board” shall
have the meaning set forth in Section 3(a) below. |
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(d) |
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“Cause”
shall have the meaning set forth in Section 10(b) below. |
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(e) |
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“Change
in Control” shall have the meaning set forth in Section 10(c) below. |
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(f) |
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“Committee” shall
have the meaning set forth in Section 4 below. |
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(g) |
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“Competition” shall have the meaning set forth in Section 13(a) below. |
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(h) |
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“Confidential
Information” shall have the meaning set forth in Section 12(c) below. |
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(i) |
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“Constructive
Termination Without Cause” shall have the meaning set forth in Section 10(c) below. |
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(j) |
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“Effective
Date” shall have the meaning set forth in Section 2(a) below. |
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(k) |
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“Fair
Market Value” shall have the meaning set forth in Section 6(b) below. |
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(l) |
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“Forfeiture
Event” shall have the meaning set forth in Section 11 below. |
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(m) |
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“Original
Term of Employment” shall have the meaning set forth in Section 2(a) below. |
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(n) |
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“Renewal
Term” shall have the meaning set forth in Section 2(a) below. |
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(o) |
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“Restriction Period” shall have the meaning set forth in Section 13(b) below. |
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(p) |
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“Retirement” shall
have the meaning set forth in Section 10(f) below. |
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(q) |
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“Target Performance”
shall have the meaning set forth in Section 10(a) below. |
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(r) |
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“Severance
Period” shall have the meaning set forth in Section 10(c)(ii) below, except as
provided otherwise in Section 10(e) below. |
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(s) |
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“Subsidiary”
shall have the meaning set forth in Section 12(d) below. |
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(t) |
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“Term of Employment”
shall have the meaning set forth in Section 2(a) below. |
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(a)
The term of Executive’s employment under this Agreement shall commence immediately
upon the date of this agreement (the “Effective Date”) and end on the fourth
yearly anniversary of the effective date, (the “Original Term of Employment”),
unless terminated earlier in accordance herewith. The Original Term of Employment shall
be automatically renewed for successive one-year terms (the “Renewal Terms”)
unless at least 180 days prior to the expiration of the Original Term of Employment or
any Renewal Term, either Party notifies the other Party in writing that he or it is
electing to terminate this Agreement at the expiration of the then current Term of
Employment. “Term of Employment” shall mean the Original Term of Employment
and all Renewal Terms. |
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(b)
In the event that this Agreement is not renewed because the Company has given the 180-day
notice prescribed in the preceding paragraph on or before the expiration of the Original
Term of Employment or any Renewal Term and, in either case, should such notice result in
the expiration of the Term of Employment prior to Executive’s 60th birthday, such
non-renewal shall be treated as a “Constructive Termination Without Cause” pursuant
to Section 10(c). |
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(c)
In the event that this Agreement is not renewed because Executive has given the 180-day
notice prescribed in Section 2(a) on or before the expiration of the Original Term of
Employment or any Renewal Term, such non-renewal shall be treated as a Termination for
Cause for the purposes of Sections 10(b)(iii) and 13(b) but not for purposes of Section
11 and Executive shall have the same entitlements as provided in Section 10(b)(iii)
below. |
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(d)
Notwithstanding anything in this Agreement to the contrary, at least one year prior to
the expiration of the Original Term of Employment, upon the written request of the
Company or Executive, the Parties shall meet to discuss this Agreement and may agree in
writing to modify any of the terms of this Agreement. |
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3. |
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Position,
Duties and Responsibilities. |
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(a) |
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Generally.
Executive shall serve as a senior executive of the Company. Executive shall have and
perform such duties, responsibilities, and authorities as shall be specified by the
Company from time to time and as are customary for a senior executive of a publicly held
corporation of the size, type, and nature of the Company as they may exist from time to
time and as are consistent with such position and status. Executive shall devote
substantially all of his business time and attention (except for periods of vacation or
absence due to illness), and his best efforts, abilities, experience, and talent to his
position and the businesses of the Company. |
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(b) |
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Other
Activities. Anything herein to the contrary notwithstanding, nothing in this
Agreement shall preclude Executive from (i) serving on the boards of directors of a
reasonable number of other corporations or the boards of a reasonable number of trade
associations and/or charitable organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal investments and affairs, provided that
such activities do not materially interfere with the proper performance of his duties and
responsibilities under this Agreement. |
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(c) |
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Place
of Employment. Executive's principal place of employment shall be the principal
corporate offices of the Company. |
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Executive shall
be paid an annualized salary, (“Base Salary”) payable in accordance with the
regular payroll practices of the Company, of not less than $400,000, subject to review
for increase at the discretion of the Compensation Committee (the “Committee”)
of the Company’s Board of Directors (the “Board”). |
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5. |
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Annual
Incentive Awards. |
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Executive shall
participate in the Company’s annual incentive compensation plan with a target annual
incentive award opportunity of no less than 40% of Base Salary and a maximum annual
incentive award opportunity of 80% of Base Salary. Payment of annual incentive awards
shall be made no later than 75 days after the Company’s fiscal year-end unless
Executive agrees otherwise. |
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Long-Term
Incentive Programs. |
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Executive shall
be eligible to participate in the Company’s long-term incentive compensation
programs including cash and/or stock grants with or without restrictions on a deferred or
current basis with a target award opportunity of not less than 15% of Base Salary, and
stock option grants. |
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7. |
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Employee
Benefit Programs. |
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(a) |
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General
Benefits.During the Term of Employment, Executive shall be entitled to participate in
such employee pension and welfare benefit plans and programs of the Company as are made
available to the Company’s senior-level executives or to its employees generally, as
such plans or programs may be in effect from time to time, including, without limitation,
health, medical, dental, long-term disability, travel accident and life insurance plans.
As an officer employee, Executive shall be entitled to participate in the Company’s
insured welfare benefit plans and programs. |
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(b) |
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Deferral
of Compensation. The Company shall implement deferral arrangements, reasonably
acceptable to Executive and the Company, permitting Executive to elect to defer receipt,
pursuant to written deferral election terms and forms (the “Deferral Election Forms”),
of all or a specified portion of (i) his annual Base Salary and annual incentive
compensation under Sections 4 and 5, (ii) long term incentive compensation under Section
6 and (iii) shares acquired upon exercise of stock options to purchase Company common
stock that are acquired in an exercise in which Executive pays the exercise price by the
surrender of previously acquired shares, to the extent of the net additional shares
otherwise issuable to Executive in such exercise; provided, however, that
such deferrals shall not reduce Executive’s total cash compensation in any calendar
year below the sum of (A) the FICA maximum taxable wage base plus (B) the amount needed,
on an after-tax basis, to enable Executive to pay the 1.45% Medicare tax imposed on his
wages in excess of such FICA maximum taxable wage base. |
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In accordance
with such duly executed Deferral Election Forms, the Company shall credit to a
bookkeeping account (the “Deferred Compensation Account”) maintained for
Executive on the respective payment date or dates, amounts equal to the compensation
subject to deferral, such credits to be denominated in cash if the compensation would
have been paid in cash but for the deferral or in shares if the compensation would have
been paid in shares but for the deferral. An amount of cash equal in value to all
cash-denominated amounts credited to Executive’s account and a number of shares of
Company common stock equal to the number of shares credited to Executive’s account
pursuant to this Section 7(b) shall be transferred as soon as practicable following such
crediting by the Company to, and shall be held and invested by, an independent trustee
selected by the Company and reasonably acceptable to Executive (a “Trustee”)
pursuant to a “rabbi trust” established by the Company in connection with such
deferral arrangement and as to which the Trustee shall make investments based on Executive’s
investment objectives (including possible investment in publicly traded stocks and bonds,
mutual funds, and insurance vehicles). Thereafter, Executive’s deferral accounts
will be valued by reference to the value of the assets of the “rabbi trust”.
The Company shall pay all costs of administration or maintenance of the deferral
arrangement, without deduction or reimbursement from the assets of the “rabbi trust.” |
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Except as
otherwise provided under Section 10, in the event of Executive’s termination of
employment with the Company or as otherwise determined by the Committee in the event of
Executive’s hardship, upon such date(s) or event(s) set forth in the Deferral
Election Forms (including forms filed after deferral but before settlement in which
Executive may elect to further defer settlement), the Company shall promptly distribute
to Executive any shares of Company common stock credited to Executive’s deferred
accounts and pay to Executive cash equal to the value of any other assets then credited
to Executive’s deferral accounts, less applicable withholding taxes, and such
distribution shall be deemed to fully settle such accounts; provided, however,
that the Company may instead settle such accounts by directing the Trustee to distribute
such other assets of the “rabbi trust.” The Company and Executive agree that
compensation deferred pursuant to this Section 7(b) shall be fully vested and
nonforfeitable (subject to Section 11); however, Executive acknowledges that his
rights to the deferred compensation provided for in this Section 7(b) shall be no greater
than those of a general unsecured creditor of the Company, and that such rights may not
be pledged, collateralized, encumbered, hypothecated, or liable for or subject to any
lien, obligation, or liability of Executive, or be assignable or transferable by
Executive, otherwise than by will or the laws of descent and distribution, provided that
Executive may designate one or more beneficiaries to receive any payment of such amounts
in the event of his death. |
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(a) |
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During
the Term of Employment, as well as during the Severance Period, Executive shall be
entitled to disability coverage as described in this Section 8(a). In the event Executive
becomes disabled, as that term is defined under the Company’s Long-Term Disability
Plan, Executive shall be entitled to receive pursuant to the Company’s Long-Term
Disability Plan or otherwise, and in place of his Base Salary, an amount equal to 60% of
his Base Salary, at the annual rate in effect on the commencement date of his eligibility
for the Company’s long-term disability benefits (“Commencement Date”) for
a period beginning on the Commencement Date and ending with the earlier to occur of (A)
Executive’s attainment of age 65 or (B) Executive’s commencement of retirement
benefits from the Company in accordance with Section 10(f) below. If (i) Executive ceases
to be disabled during the Term of Employment (as determined in accordance with the terms
of the Long-Term Disability Plan), (ii) his position or another senior executive position
is then vacant and (iii) the Company requests in writing that he resume such position, he
may elect to resume such position by written notice to the Company within 15 days after
the Company delivers its request. If he resumes such position, he shall thereafter be
entitled to his Base Salary at the annual rate in effect on the Commencement Date and,
for the year he resumes his position, a pro rata annual incentive award. If he ceases to
be disabled during the Term of Employment and does not resume his position in accordance
with the preceding sentence, he shall be treated as if he voluntarily terminated his
employment pursuant to Section 10(d) as of the date Executive ceases to be disabled. If
Executive is not offered his position or another senior executive position after he
ceases to be disabled during the Term of Employment, he shall be treated as if his
employment was terminated Without Cause pursuant to Section 10(c) as of the date
Executive ceases to be disabled. |
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(b) |
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Executive
shall be entitled to a pro rata annual incentive award for the year in which the
Commencement Date occurs based on 40% of Base Salary paid to her during such year prior
to the Commencement Date, payable in a lump sum not later than 15 days after the
Commencement Date. Executive shall not be entitled to any annual incentive award with
respect to the period following the Commencement Date. If Executive recommences his
position in accordance with Section 8(a), he shall be entitled to a pro rata annual
incentive award for the year he resumes such position and shall thereafter be entitled to
annual incentive awards in accordance with Section 5 hereof. |
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(c) |
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Executive
shall be entitled to a pro rata long term incentive award for the period through the
Commencement Date based on target performance, payable in a lump sum not later than 15
days after the Commencement Date. Executive shall not be entitled to any long term
incentive award with respect to the period following the Commencement Date. If Executive
recommences his position in accordance with Section 8(a), he shall be entitled to a pro
rata long term incentive award for the period in which he resumes such position and shall
thereafter be entitled to long term incentive awards in accordance with Section 6 hereof. |
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(d) |
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During
the period Executive is receiving disability benefits pursuant to Section 8(a) above, he
shall continue to be treated as an employee for purposes of all employee benefits and
entitlements in which he was participating on the Commencement Date, including without
limitation, the benefits and entitlements referred to in Sections 6 and 7 above, except
that Executive shall not be entitled to receive any annual salary increases or any new
long-term incentive plan grants following the Commencement Date. |
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9. |
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Reimbursement
of Business and Other Expenses. |
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Executive is
authorized to incur reasonable expenses in carrying out his duties and responsibilities
under this Agreement, and the Company shall promptly reimburse her for all such business
expenses incurred in connection therewith, subject to documentation in accordance with
the Company’s policy. |
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10. |
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Termination
of Employment. |
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(a) |
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Termination
Due to Death. In the event Executive’s employment with the Company is terminated
due to his death, his estate or his beneficiaries, as the case may be, shall be entitled
to and their sole remedies under this Agreement shall be: |
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(i) |
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Base
Salary through the date of death, which shall be paid in a single lump sum not later than
15 days following Executive’s death; |
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(ii) |
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pro
rata annual incentive award for the year in which Executive’s death occurs assuming
that Executive would have received an award equal to 40% of Base Salary for such year,
which shall be payable in a lump sum promptly (but in no event later than 15 days) after
his death; |
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(iii) |
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elimination
of all restrictions on any restricted stock or deferred stock awards outstanding at the
time of his death; |
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(iv) |
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immediate
vesting of all outstanding stock options and the right to exercise such stock options for
a period of one year following death (or such longer period as may be provided in stock
options granted to other similarly situated executive officers of the Company) or for the
remainder of the exercise period, if less; |
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(v) |
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immediate
vesting of all outstanding long-term incentive awards and a pro rata payment of such
awards based on Target Performance, payable in a lump sum in cash or stock promptly (but
in no event later than 15 days) after his death. “Target Performance” for
purposes of this Agreement shall mean (i) the actual performance for each completed year
under each applicable award, plus (ii) the “target” performance for the
then current year under each applicable award; |
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(vi) |
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the
balance of any incentive awards earned as of December 31 of the prior year (but not yet
paid), which shall be paid in a single lump sum not later than 15 days following Executive’s
death; |
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(vii) |
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settlement
of all deferred compensation arrangements in accordance with Executive’s duly executed
Deferral Election Forms; and |
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(viii) |
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other
or additional benefits then due or earned in accordance with applicable plans and
programs of the Company. |
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(b) |
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Termination
by the Company for Cause. |
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(A) |
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Executive’s willful and material breach of Sections 12, 13 or 14 of this Agreement; |
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(B) |
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Executive is convicted of a felony involving moral turpitude; or |
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(C) |
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Executive engages in conduct that constitutes willful gross neglect or willful gross
misconduct in carrying out his duties under this Agreement, resulting, in either case, in
material harm to the financial condition or reputation of the Company. |
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For purposes
of this Agreement, an act or failure to act on Executive’s part shall be considered
“willful” if it was done or omitted to be done by her not in good faith, and
shall not include any act or failure to act resulting from any incapacity of Executive. |
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(ii) |
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A
termination for Cause shall not take effect unless the provisions of this paragraph (ii)
are complied with. Executive shall be given written notice by the Company of its
intention to terminate her for Cause, such notice (A) to state in detail the particular
act or acts or failure or failures to act that constitute the grounds on which the
proposed termination for Cause is based and (B) to be given within 90 days of the Company’s
learning of such act or acts or failure or failures to act. Executive shall have 20 days
after the date that such written notice has been given to her in which to cure such
conduct, to the extent such cure is possible. If he fails to cure such conduct, Executive
shall then be entitled to a hearing before the Committee of the Board at which Executive
is entitled to appear. Such hearing shall be held within 25 days of such notice to
Executive, provided he requests such hearing within 10 days of the written notice from
the Company of the intention to terminate her for Cause. If, within five days following
such hearing, Executive is furnished written notice by the Board confirming that, in its
judgment, grounds for Cause on the basis of the original notice exist, he shall thereupon
be terminated for Cause. |
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(iii) |
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In
the event the Company terminates Executive’s employment for Cause, he shall be
entitled to and his sole remedies under this Agreement shall be: |
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(A) |
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Base Salary through the date of the termination of his employment for Cause, which shall be paid in a single
lump sum not later than 15 days following Executive’s termination of
employment; |
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(B) |
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any incentive awards earned as
of December 31 of the prior year (but not yet paid), which shall be paid in a
single lump sum not later than 15 days following Executive’s termination of
employment; |
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(C) |
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settlement of all
deferred compensation arrangements in accordance with Executive's duly executed Deferral
Election Forms; and |
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(D) |
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other or additional benefits
then due or earned in accordance with applicable plans or programs of the
Company. |
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(c) |
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Termination
Without Cause or Constructive Termination Without Cause Prior to a Change in Control.
In the event Executive’s employment with the Company is terminated without Cause
(which termination shall be effective as of the date specified by the Company in a
written notice to Executive), other than due to death, or in the event there is a
Constructive Termination Without Cause (as defined below), in either case prior to a
Change in Control (as defined below) Executive shall be entitled to and his sole remedies
under this Agreement shall be: |
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(i) |
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Base
Salary through the date of termination of Executive’s employment, which shall be
paid in a single lump sum not later than 15 days following Executive’s termination
of employment; |
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(ii) |
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Base
Salary, at the annualized rate in effect on the date of termination of Executive’s
employment (or in the event a reduction in Base Salary is a basis for a Constructive
Termination Without Cause, then the Base Salary in effect immediately prior to such
reduction), for a period of 12 months following such termination (the “Severance
Period”); |
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(iii) |
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pro
rata annual incentive award for the year in which termination occurs equal to 40% of Base
Salary (determined in accordance with Section 10(c)(ii) above) for such year, payable in
a lump sum promptly (but in no event later than 15 days) following termination; |
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(iv) |
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an
amount equal to 40% of Base Salary (determined in accordance with Section 10(c)(ii)
above), payable in equal monthly payments over the Severance Period; |
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(v) |
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the
balance of any incentive awards earned as of December 31 of the prior year (but not yet
paid), which shall be paid in a single lump sum not later than 15 days following Executive’s
termination of employment; |
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(vi) |
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settlement
of all deferred compensation arrangements in accordance with Executive’s duly
executed Deferral Election Forms (unless Executive has previously and appropriately
elected not to have such settlement upon such a termination); |
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(vii) |
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continued
participation in all medical, health and life insurance plans at the same benefit level
at which he was participating on the date of the termination of his employment until the
earlier of: |
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(B) |
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the date, or dates, he
receives equivalent coverage and benefits under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis); provided that (1) if
Executive is precluded from continuing his participation in any employee benefit
plan or program as provided in this clause (vii) of this Section 10(c), he shall
receive cash payments equal on an after-tax basis to the cost to her of
obtaining the benefits provided under the plan or program in which he is unable
to participate for the period specified in this clause (vii) of this Section
10(c), (2) such cost shall be deemed to be the lowest reasonable cost that would
be incurred by Executive in obtaining such benefit herself on an individual
basis, and (3) payment of such amounts shall be made quarterly in advance; |
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(viii) |
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24
months additional age and service credit for purposes of determining the amount Executive’s
accrued benefits under any supplemental retirement benefit plan (“SERP”)
maintained by the Company, and immediate vesting of any such benefits; and |
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(ix) |
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other
or additional benefits then due or earned in accordance with applicable plans and
programs of the Company. |
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A
termination without “Cause” shall mean Executive’s employment is terminated
by the Company for any reason other than Cause (as defined in Section 10(b)) or due to
death. |
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“Constructive
Termination Without Cause” shall mean a termination of Executive’s employment at
his initiative as provided in this Section 10(c) following the occurrence, without
Executive’s written consent, of one or more of the following events (except as a
result of a prior termination): |
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(A) |
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an assignment of any duties to
Executive which are inconsistent with his status as a senior executive of the Company;
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(B) |
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a decrease in annual Base
Salary or target annual incentive award opportunity below 40% of Base Salary;
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(C) |
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any other failure by the
Company to perform any material obligation under, or breach by the Company of
any material provision of, this Agreement that is not cured within 30 days; or |
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(D) |
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any failure to secure the
agreement of any successor corporation or other entity to the Company to fully
assume the Company’s obligations under this Agreement. |
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In addition,
following a Change in Control, “Constructive Termination Without Cause” shall
also mean a termination of Executive’s employment at his initiative as provided in
this Section 10(c) following the occurrence, without Executive’s written consent, of
a relocation of his principal place of employment outside a 35-mile radius of his
principal place of employment as in effect immediately prior to such Change in Control. |
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A “Change
in Control” shall be deemed to have occurred if: |
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(i) |
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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; |
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(ii) |
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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; |
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(iii) |
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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; |
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(iv) |
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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 reasonably and in good faith determine the
effective date of the Change in Control resulting therefrom; or |
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(v) |
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any
other event occurs which the Board determines, in its discretion, would materially alter
the structure of the Company or its ownership. |
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For purposes
of this definition: |
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(A) |
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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). |
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(B) |
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The term “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto. |
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(C) |
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The term “Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, including “group” as
defined in Section 14(d) thereof. |
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(d) |
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Voluntary
Termination. In the event of a termination of employment by Executive on his own
initiative after delivery of 10 business days advance written notice, other than a
termination due to death, a Constructive Termination Without Cause, or a Retirement
pursuant to Section 10(f) below, Executive shall have the same entitlements as provided
in Section 10(b)(iii) above for a termination for Cause, provided that at the Company’s
election, furnished in writing to Executive within 15 days following such notice of
termination, the Company shall in addition pay Executive 140% of his Base Salary for a
period of 12 months following such termination in exchange for Executive not engaging in
Competition with the Company or any Subsidiary as set forth in Section 13(a) below.
Notwithstanding any implication to the contrary, Executive shall not have the right to
terminate his employment with the Company during the Term of Employment except in the
event of a Constructive Termination Without Cause or Retirement, and any voluntary
termination of employment during the Term of Employment in violation of this Agreement
shall be considered a material breach; provided however, if the Company elects to pay
Executive 140% of his Base Salary in accordance with this Section 10(d), the Company
shall waive any and all claims it may have against Executive for any breach of this
Agreement relating to his voluntary termination of employment unless Executive is found
by a court of competent jurisdiction not to be in compliance with Section 13(a) below;
provided further, however, that notwithstanding anything contained in the foregoing to
the contrary, it is not the intention of the Company to waive any claims it may have
against any third parties relating to a voluntary termination by Executive in violation
of this Agreement. |
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(e) |
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Termination
Without Cause; Constructive Termination Without Cause or Voluntary Termination Following
a Change in Control. In the event Executive’s employment with the Company is
terminated by the Company without Cause (which termination shall be effective as of the
date specified by the Company in a written notice to Executive), other than due to death,
or in the event there is a Constructive Termination Without Cause (as defined above), in
either case within two years following a Change in Control (as defined above), Executive
shall be entitled to and his sole remedies under this Agreement shall be: |
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(i) |
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Base
Salary through the date of termination of Executive’s employment, which shall be
paid in a single lump sum not later than 15 days following Executive’s termination
of employment; |
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(ii) |
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an
amount equal to two times Executive’s Base Salary, at the annualized rate in effect
on the date of termination of Executive’s employment (or in the event a reduction in
Base Salary is a basis for a Constructive Termination Without Cause, then the Base Salary
in effect immediately prior to such reduction), payable in a cash lump sum promptly (but
in no event later than 15 days) following Executive’s termination of employment; |
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(iii) |
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pro
rata annual incentive award for the year in which termination occurs assuming that
Executive would have received an award equal to 40% of Base Salary (determined in
accordance with Section 10(e)(ii) above) for such year, payable in a cash lump sum
promptly (but in no event later than 15 days) following Executive’s termination of
employment; |
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(iv) |
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an
amount equal to 40% of such Base Salary (determined in accordance with Section 10(e)(ii)
above) multiplied by two, payable in a cash lump sum promptly (but in no event later than
15 days) following Executive’s termination of employment; |
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(v) |
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elimination
of all restrictions on any restricted stock or deferred stock awards outstanding at the
time of termination of employment; |
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(vi) |
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immediate
vesting of all outstanding stock options and the right to exercise vested stock options
granted prior to the Effective Date during the Severance Period or for the remainder of
the exercise period, if less; options granted after the Effective Date shall be
exercisable for the remainder of the exercise period; |
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(vii) |
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immediate
vesting of all outstanding long-term incentive awards and a pro rata payment of such
awards based on Target Performance, payable in a lump sum in cash or stock promptly (but
in no event later than 15 days) following Executive’s termination of employment; |
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(viii) |
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the
balance of any incentive awards earned as of December 31 of the prior year (but not yet
paid), which shall be paid in a single lump sum not later than 15 days following Executive’s
termination of employment; |
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(ix) |
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settlement
of all deferred compensation arrangements in accordance with Executive’s duly
executed Deferral Election Forms (unless Executive has previously and appropriately
elected not to have such settlement upon such a termination); |
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(x) |
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continued
participation in all medical, health and life insurance plans at the same benefit level
at which he was participating on the date of termination of his employment until the
earlier of: |
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(A) |
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the end of the Severance Period; or
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(B) |
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the date, or dates, he
receives equivalent coverage and benefits under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis); provided that (1) if
Executive is precluded from continuing his participation in any employee benefit
plan or program as provided in this clause (x) of this Section 10(e), he shall
receive cash payments equal on an after-tax basis to the cost to her of
obtaining the benefits provided under the plan or program in which he is unable
to participate for the period specified in this clause (ix) of this Section
10(e), (2) such cost shall be deemed to be the lowest reasonable cost that would
be incurred by Executive in obtaining such benefit herself on an individual
basis, and (3) payment of such amounts shall be made quarterly in advance; |
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(xi) |
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24
months additional age and service credit for purposes of determining the amount of
Executive’s accrued benefits under any SERP maintained by the Company, and immediate
vesting of any such benefits; and |
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(xii) |
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other
or additional benefits then due or earned in accordance with applicable plans and
programs of the Company. |
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For purposes
of any termination pursuant to this Section 10(e), the term “Severance Period” shall
mean the period of 24 months following the termination of Executive’s employment. |
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(f) |
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Retirement.
Upon Executive's Retirement (as defined below), Executive shall be entitled to and his
sole remedies under this Agreement shall be: |
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(i) |
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Base
Salary through the date of termination of Executive’s employment, which shall be
paid in a single lump sum not later than 15 days following Executive’s termination
of employment; |
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(ii) |
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pro
rata annual incentive award for the year in which termination occurs, based on
performance valuation at the end of such year and payable in a cash lump sum promptly
(but in no event later than 15 days) thereafter; |
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(iii) |
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continued
vesting (as if Executive remained employed by the Company) of any restricted stock or
deferred stock awards outstanding at the time of his termination of employment; |
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(iv) |
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continued
vesting (as if Executive remained employed by the Company) of all outstanding stock
options granted after the Effective Date and the right to exercise such stock options for
the remainder of the exercise period; and continued vesting of all outstanding options
granted prior to the Effective Date and the right to exercise such stock options for a
period of one year following the later of the date the options are fully vested or
Executive’s termination of employment (or such longer period as may be provided in
stock options granted to other similarly situated executive officers of the Company), or
for the remainder of the exercise period, if less; |
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(v) |
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continued
vesting (as if Executive remained employed by the Company) of all outstanding long-term
incentive awards and payment of such awards based on valuation at the end of the
applicable performance periods, payable in a lump sum in cash or the Company’s
common stock (with or without restrictions) promptly (but in no event later than 15 days)
thereafter; |
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(vi) |
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the
balance of any incentive awards earned as of December 31 of the prior year (but not yet
paid), which shall be paid in a single lump sum not later than 15 days following Executive’s
termination of employment; |
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(vii) |
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settlement
of all deferred compensation arrangements in accordance with Executive’s duly
executed Deferral Election Forms (unless Executive has previously and appropriately
elected not to have such settlement at such time); |
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(viii) |
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continued
participation in all medical, health and life insurance plans at the same benefit level
at which he was participating on the date of the termination of his employment until the
earlier of: |
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(A) |
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the date upon which Executive
attains 65 years of age, provided that the Company shall bear the
cost of such insurance until Executive’s 60th birthday only;
thereafter Executive shall reimburse the Company for the cost of such insurance;
or |
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(B) |
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the date, or dates, he
receives substantially equivalent coverage and benefits under the plans and
programs of a subsequent employer (such coverage and benefits to be determined
on a coverage-by-coverage, or benefit-by-benefit, basis); provided that
(1) if Executive is precluded from continuing his participation in any employee
benefit plan or program as provided in this clause (viii) of this Section 10(f),
he shall receive cash payments equal on an after-tax basis to the cost to her of
obtaining the benefits provided under the plan or program in which he is unable
to participate for the period specified in this clause (viii) of this Section
10(f), (2) such cost shall be deemed to be the lowest cost that would be
incurred by Executive in obtaining such benefit herself on an individual basis,
and (3) payment of such amounts shall be made quarterly in advance; and |
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(ix) |
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other
or additional benefits then due or earned in accordance with applicable plans and
programs of the Company. |
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For purposes
of this Agreement, “Retirement” shall mean Executive’s voluntary
termination of employment with the Company at the earlier of (i) at or after attaining
age 55 and 15 years of service with the Company (which shall include all of Executive’s
years of service with Melville Corporation), and (ii) attaining age 60. |
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(g) |
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No Mitigation; No Offset. In the event of any termination of employment, Executive shall
be under no obligation to seek other employment; amounts due Executive under this
Agreement shall not be offset by any remuneration attributable to any subsequent
employment that he may obtain. |
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(h) |
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Nature
of Payments. Any amounts due under this Section 10 are in the nature of severance
payments considered to be reasonable by the Company and are not in the nature of a
penalty. |
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(i) |
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No Further Liability; Release. In the event of Executive’s termination of
employment, payment made and performance by the Company in accordance with this Section
10 shall operate to fully discharge and release the Company and its directors, officers,
employees, subsidiaries, affiliates, stockholders, successors, assigns, agents and
representatives from any further obligation or liability with respect to Executive’s
rights under this Agreement. Other than payment and performance under this Section 10,
the Company and its directors, officers, employees, subsidiaries, affiliates,
stockholders, successors, assigns, agents and representatives shall have no further
obligation or liability to Executive or any other person under this Agreement in the
event of Executive’s termination of employment. The Company shall have the right to
condition the payment of any severance or other amounts pursuant to this Section 10 upon
the delivery by Executive to the Company of a release in the form satisfactory to the
Company releasing any and all claims Executive may have against the Company and its
directors, officers, employees, subsidiaries, affiliates, stockholders, successors,
assigns, agents and representatives arising out of this Agreement. |
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11. |
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Forfeiture
Provisions. |
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(a) |
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Forfeiture
of Stock Options and Other Awards and Gains Realized Upon Prior Option Exercises or Award
Settlements. Unless otherwise determined by the Committee, upon a termination of
Executive’s employment for Cause, Executive’s engaging in competition with the
Company or any Subsidiary after a voluntary termination of employment pursuant to Section
10(d), or Executive’s violation of any of the other restrictive covenants contained
in Section 12, 13 or 14 (each a “Forfeiture Event”) during the Term of
Employment and for 24 months thereafter, all of the following forfeitures will result: |
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(i) |
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The
unexercised portion of any stock option, whether or not vested, and any other Award not
then settled (except for an Award that has not been settled solely due to an elective
deferral by Executive and otherwise is not forfeitable in the event of any termination of
Executive’s service) will be immediately forfeited and canceled upon the occurrence
of the Forfeiture Event; and |
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(ii) |
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Executive
will be obligated to repay to the Company, in cash, within five business days after
demand is made therefor by the Company, the total amount of Award Gain (as defined
herein) realized by Executive upon each exercise of a stock option or settlement of an
Award (regardless of any elective deferral) that occurred (A) during the period
commencing with the date that is 24 months prior to the occurrence of the Forfeiture
Event and the date 24 months after the Forfeiture Event, if the Forfeiture Event occurred
while Executive was employed by the Company or a Subsidiary or affiliate, or (B) during
the period commencing 24 months prior to the date Executive’s employment by the
Company terminated and ending 12 months (or, in the event that the Forfeiture Event is a
breach of Section 14, 24 months) after the date of such termination, if the Forfeiture
Event occurred after Executive ceased to be so employed. For purposes of this Section,
the term “Award Gain” shall mean (i), in respect of a given stock option
exercise, the product of (X) the Fair Market Value per share of common stock at the date
of such exercise (without regard to any subsequent change in the market price of shares)
minus the exercise price times (Y) the number of shares as to which the stock option was
exercised at that date, and (ii), in respect of any other settlement of an Award granted
to Executive, the Fair Market Value of the cash or stock paid or payable to Executive
(regardless of any elective deferral) less any cash or the Fair Market Value of any stock
or property (other than an Award or award which would have itself then been forfeitable
hereunder and excluding any payment of tax withholding) paid by Executive to the Company
as a condition of or in connection with such settlement. |
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For purposes
of this Agreement, “Award” shall mean any cash award, stock option, stock
appreciation right, restricted stock, deferred stock, bonus stock, dividend equivalent,
or other stock-based or performance-based award or similar award, together with any
related right or interest, granted to or held by Executive (but excluding any annual cash
incentive award which is payable on an annual basis and is determined based entirely on a
one-year (or less) performance measurement period). |
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(b) |
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Committee
Discretion. The Committee may, in its discretion, waive in whole or in part the
Company’s right to forfeiture under this Section, but no such waiver shall be
effective unless evidenced by a writing signed by a duly authorized officer of the
Company. In addition, the Committee may impose additional conditions on Awards, by
inclusion of appropriate provisions in the document evidencing or governing any such
Award. |
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12. |
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Confidentiality:
Cooperation with Regard to Litigation; Non-Disparagement; Return of Company Materials. |
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(a) |
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During
the Term of Employment and thereafter, Executive shall not, without the prior written
consent of the Company, disclose to anyone (except in good faith in the ordinary course
of business to a person who will be advised by Executive to keep such information
confidential) or make use of any Confidential Information except in the performance of
his duties hereunder or when required to do so by legal process, by any governmental
agency having supervisory authority over the business of the Company or by any
administrative or legislative body (including a committee thereof) that requires her to
divulge, disclose or make accessible such information. In the event that Executive is so
ordered, he shall give prompt written notice to the Company in order to allow the Company
the opportunity to object to or otherwise resist such order. |
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(b) |
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During
the Term of Employment and thereafter, Executive shall not disclose the existence or
contents of this Agreement beyond what is disclosed in the proxy statement or documents
filed with the government unless and to the extent such disclosure is required by law, by
a governmental agency, or in a document required by law to be filed with a governmental
agency or in connection with enforcement of his rights under this Agreement. In the event
that disclosure is so required, Executive shall give prompt written notice to the Company
in order to allow the Company the opportunity to object to or otherwise resist such
requirement. This restriction shall not apply to such disclosure by her to members of his
immediate family, his tax, legal or financial advisors, any lender, or tax authorities,
or to potential future employers to the extent necessary, each of whom shall be advised
not to disclose such information. |
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(c) |
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“Confidential
Information” shall mean (i) all information concerning the business of the Company or
any Subsidiary including information relating to any of their products, product
development, trade secrets, customers, suppliers, finances, and business plans and
strategies, and (ii) information regarding the organization structure and the names,
titles, status, compensation, benefits and other proprietary employment-related aspects
of the employees of the Company and the Company’s employment practices. Excluded
from the definition of Confidential Information is information (A) that is or becomes
part of the public domain, other than through the breach of this Agreement by Executive
or (B) regarding the Company’s business or industry properly acquired by Executive
in the course of his career as an executive in the Company’s industry and
independent of Executive’s employment by the Company. For this purpose, information
known or available generally within the trade or industry of the Company or any
Subsidiary shall be deemed to be known or available to the public. |
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(d) |
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"Subsidiary"
shall mean any corporation controlled directly or indirectly by the Company. |
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(e) |
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Executive
agrees to cooperate with the Company, during the Term of Employment and thereafter
(including following Executive’s termination of employment for any reason), by
making herself reasonably available to testify on behalf of the Company or any Subsidiary
in any action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, and to assist the Company, or any Subsidiary, in any such action, suit, or
proceeding, by providing information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the Company, or any
Subsidiary as requested; provided, however that the same does not materially interfere
with his then current professional activities. The Company agrees to reimburse Executive,
on an after-tax basis, for all expenses actually incurred in connection with his
provision of testimony or assistance. |
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(f) |
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Executive
agrees that, during the Term of Employment and thereafter (including following Executive’s
termination of employment for any reason) he will not make statements or representations,
or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or
take any action which may, directly or indirectly, disparage the Company or any
Subsidiary or their respective officers, directors, employees, advisors, businesses or
reputations. The Company agrees that, during the Term of Employment and thereafter
(including following Executive’s termination of employment for any reason) the
Company will not make statements or representations, or otherwise communicate, directly
or indirectly, in writing, orally, or otherwise, or take any action which may directly or
indirectly, disparage Executive or his business or reputation. Notwithstanding the
foregoing, nothing in this Agreement shall preclude either Executive or the Company from
making truthful statements or disclosures that are required by applicable law,
regulation, or legal process. |
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(g) |
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Upon
any termination of employment, Executive agrees to deliver any Company property and any
documents, notes, drawings, specifications, computer software, data and other materials
of any nature pertaining to any Confidential Information that are held by Executive and
will not take any of the foregoing, or any reproduction of any of the foregoing, that is
embodied an any tangible medium of expression, provided that the foregoing shall not
prohibit Executive from retaining his personal phone directories and rolodexes. |
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(a) |
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During
the Restriction Period (as defined in Section 13(b) below), Executive shall not engage in
Competition with the Company or any Subsidiary. “Competition” shall mean
engaging in any activity, except as provided below, for a Competitor of the Company or
any Subsidiary, whether as an employee, consultant, principal, agent, officer, director,
partner, shareholder (except as a less than one percent shareholder of a publicly traded
company) or otherwise. A “Competitor” shall mean (i) Bed Bath & Beyond, Inc.,
Home Place Inc., X.X. Xxxxxx, Federated Department Stores, Xxxx, Target, Sears, Home
Depot and K-Mart (and any successor or successors thereto); (ii) any home textiles or
housewares store, specialty store or other retailer if either $25 million or 40% or more
of its annual gross sales revenues (in either case, based on the most recent quarterly or
annual financial statements available) are derived from the sale of home textiles,
housewares or other goods or merchandise of the types sold in the Company’s (or any
Subsidiary’s) stores; (iii) any corporation or other entity whether independent or
owned, funded or controlled by any other entity, engaged or organized for the purpose of
engaging, in whole or in part, in the sale of home textiles, housewares or other goods or
merchandise of the types sold in the Company’s (or any Subsidiary’s) stores;
(iv) any business that provides buying office services to any business or group of
businesses referred to above, or (v) any business (in the U.S. or any country in which
the Company or any Subsidiary operates a store or stores) which is in material
competition with the Company or any Subsidiary or division thereof and in which Executive’s
functions would be substantially similar to Executive’s functions with the Company.
If Executive commences employment or becomes a consultant, principal, agent, officer,
director, partner, or shareholder of any entity that is not a Competitor at the time
Executive initially becomes employed or becomes a consultant, principal, agent, officer,
director, partner, or shareholder of the entity, future activities of such entity shall
not result in a violation of this provision unless (x) such activities were contemplated
by Executive at the time Executive initially became employed or becomes a consultant,
principal, agent, officer, director, partner, or shareholder of the entity or (y)
Executive commences directly or indirectly to advise, plan, oversee or manage the
activities of an entity which becomes a Competitor during the Restriction Period, that
activities are competitive with the activities of the Company or any Subsidiary. |
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(b) |
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For
the purposes of this Section 13, “Restriction Period” shall mean the period
beginning with the Effective Date and ending with: |
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(i) |
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in
the case of a termination of Executive’s employment without Cause or a Constructive
Termination Without Cause, the Restriction Period shall terminate immediately upon
Executive’s termination of employment; |
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(ii) |
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in
the case of a termination of Executive's employment for Cause, 24 months from the date of
such termination; |
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(iii) |
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in
the case of a voluntary termination of Executive’s employment pursuant to Section
10(d) above followed by the Company’s election to pay Executive (and subject to the
payment of) 140% of his Base Salary, as provided in Section 10(d) above, the first
anniversary of such termination; |
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(iv) |
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in
the case of a voluntary termination of Executive’s employment pursuant to Section
10(d) above which is not followed by the Company’s election to pay Executive such
140% of Base Salary, the date of such termination; or |
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(v) |
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in
the case of a Retirement pursuant to Section 10(f) above, the remainder of the Term of
Employment. |
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14. |
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Non-solicitation
of Employees. |
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During the
period beginning with the Effective Date and ending 24 months following the termination
or other cessation of Executive’s employment for any reason, Executive shall not
induce employees of the Company or any Subsidiary to terminate their employment;
provided, however, that the foregoing shall not be construed to prevent Executive from
engaging in generic nontargeted advertising for employees generally. During such period,
Executive shall not hire, either directly or through any employee, agent or
representative, any employee of the Company or any Subsidiary or any person who was
employed by the Company or any Subsidiary within 180 days of such hiring. |
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In addition
to whatever other rights and remedies the Company may have at equity or in law, if
Executive breaches any of the provisions contained in Sections 12, 13 or 14 above, the
Company (a) shall have its rights under Section 11 of this Agreement, (b) shall have the
right to immediately terminate all payments and benefits due under this Agreement and (c)
shall have the right to seek injunctive relief. Executive acknowledges that such a breach
of Sections 12, 13 or 14 would cause irreparable injury and that money damages would not
provide an adequate remedy for the Company; provided, however, the foregoing shall not
prevent Executive from contesting the issuance of any such injunction on the ground that
no violation or threatened violation of Sections 12, 13 or 14 has occurred. |
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16. |
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Resolution
of Disputes. |
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Any controversy
or claim arising out of or relating to this Agreement or any breach or asserted breach
hereof or questioning the validity and binding effect hereof arising under or in
connection with this Agreement, other than seeking injunctive relief under Section 15,
shall be resolved by binding arbitration, to be held at an office closest to the Company’s
principal offices in accordance with the rules and procedures of the American Arbitration
Association, except that disputes arising under or in connection with Sections 12, 13 and
14 above shall be submitted to the federal or state courts in the State of New Jersey.
Judgment upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Pending the resolution of any arbitration or court proceeding, the
Company shall continue payment of all amounts and benefits due Executive under this
Agreement. All reasonable costs and expenses (including fees and disbursements of
counsel) incurred by Executive pursuant to this Section 16 shall be paid on behalf of or
reimbursed to Executive promptly by the Company; provided, however, that in the
event the arbitrator(s) determine(s) that any of Executive’s litigation assertions
or defenses are determined to be in bad faith or frivolous, no such reimbursements shall
be due Executive, and any such expenses already paid to Executive shall be immediately
returned by Executive to the Company. |
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(a) |
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Company
Indemnity. The Company agrees that if Executive is made a party, or is threatened to
be made a party, to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a “Proceeding”), by reason of the fact that he
is or was a director, officer or employee of the Company or any Subsidiary or is or was
serving at the request of the Company or any Subsidiary as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether or not the
basis of such Proceeding is Executive’s alleged action in an official capacity while
serving as a director, officer, member, employee or agent, Executive shall be indemnified
and held harmless by the Company to the fullest extent legally permitted or authorized by
the Company’s certificate of incorporation or bylaws or resolutions of the Company’s
Board or, if greater, by the laws of the State of Delaware against all cost, expense,
liability and loss (including, without limitation, attorney’s fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by Executive in connection therewith, and such
indemnification shall continue as to Executive even if he has ceased to be a director,
member, officer, employee or agent of the Company or other entity and shall inure to the
benefit of Executive’s heirs, executors and administrators. The Company shall
advance to Executive all reasonable costs and expenses to be incurred by her in
connection with a Proceeding within 20 days after receipt by the Company of a written
request for such advance. Such request shall include an undertaking by Executive to repay
the amount of such advance if it shall ultimately be determined that he is not entitled
to be indemnified against such costs and expenses. The provisions of this Section 17(a)
shall not be deemed exclusive of any other rights of indemnification to which Executive
may be entitled or which may be granted to her, and it shall be in addition to any rights
of indemnification to which he may be entitled under any policy of insurance. |
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(b) |
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No
Presumption Regarding Standard of Conduct. Neither the failure of the Company
(including its Board, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment of amounts
claimed by Executive under Section 17(a) above that indemnification of Executive is
proper because he has met the applicable standard of conduct, nor a determination by the
Company (including its Board, independent legal counsel or stockholders) that Executive
has not met such applicable standard of conduct, shall create a presumption that
Executive has not met the applicable standard of conduct. |
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(c) |
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Liability
Insurance. The Company agrees to continue and maintain a directors and officers'
liability insurance policy covering Executive to the extent the Company provides such
coverage for its other executive officers. |
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If Executive
becomes entitled to one or more payments (with a “payment” including, without
limitation, the vesting of an option or other non-cash benefit or property), whether
pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with
the Company or any affiliated company (the “Total Payments”), which are or
become subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”) (or any similar tax that may hereafter be imposed) (the
“Excise Tax”), the Company shall pay to Executive at the time specified below
an additional amount (the “Gross-up Payment”) (which shall include, without
limitation, reimbursement for any penalties and interest that may accrue in respect of
such Excise Tax) such that the net amount retained by Executive, after reduction for any
Excise Tax (including any penalties or interest thereon) on the Total Payments and any
federal, state and local income or employment tax and Excise Tax on the Gross-up Payment
provided for by this Section 18, but before reduction for any federal, state, or local
income or employment tax on the Total Payments, shall be equal to the sum of (a) the
Total Payments, and (b) an amount equal to the product of any deductions disallowed for
federal, state, or local income tax purposes because of the inclusion of the Gross-up
Payment in Executive’s adjusted gross income multiplied by the highest applicable
marginal rate of federal, state, or local income taxation, respectively, for the calendar
year in which the Gross-up Payment is to be made. For purposes of determining whether any
of the Total Payments will be subject to the Excise Tax and the amount of such Excise
Tax: |
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(i) |
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The
Total Payments shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code, and all “excess parachute payments” within the
meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless, and except to the extent that, in the written opinion of independent compensation
consultants, counsel or auditors of nationally recognized standing (“Independent
Advisors”) selected by the Company and reasonably acceptable to Executive, the Total
Payments (in whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not
subject to the Excise Tax; |
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(ii) |
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The
amount of the Total Payments which shall be treated as subject to the Excise Tax shall be
equal to the lesser of (A) the total amount of the Total Payments or (B) the total amount
of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above); and |
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(iii) |
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The
value of any non-cash benefits or any deferred payment or benefit shall be determined by
the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code. |
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For purposes
of determining the amount of the Gross-up Payment, Executive shall be deemed (A) to pay
federal income taxes at the highest marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made; (B) to pay any applicable
state and local income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-up Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local taxes if paid
in such year (determined without regard to limitations on deductions based upon the
amount of Executive’s adjusted gross income); and (C) to have otherwise allowable
deductions for federal, state, and local income tax purposes at least equal to those
disallowed because of the inclusion of the Gross-up Payment in Executive’s adjusted
gross income. In the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time the Gross-up Payment is made,
Executive shall repay to the Company at the time that the amount of such reduction in
Excise Tax is finally determined (but, if previously paid to the taxing authorities, not
prior to the time the amount of such reduction is refunded to Executive or otherwise
realized as a benefit by Executive) the portion of the Gross-up Payment that would not
have been paid if such Excise Tax had been applied in initially calculating the Gross-up
Payment, plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time the Gross-up Payment is made (including
by reason of any payment the existence or amount of which cannot be determined at the
time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest and penalties payable with respect to such
excess) at the time that the amount of such excess is finally determined. |
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The Gross-up
Payment provided for above shall be paid on the 30th day (or such earlier date as the
Excise Tax becomes due and payable to the taxing authorities) after it has been
determined that the Total Payments (or any portion thereof) are subject to the Excise
Tax; provided, however, that if the amount of such Gross-up Payment or portion
thereof cannot be finally determined on or before such day, the Company shall pay to
Executive on such day an estimate, as determined by the Independent Advisors, of the
minimum amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as the
amount thereof can be determined. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall constitute
a loan by the Company to Executive, payable on the fifth day after demand by the Company
(together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). If
more than one Gross-up Payment is made, the amount of each Gross-up Payment shall be
computed so as not to duplicate any prior Gross-up Payment. The Company shall have the
right to control all proceedings with the Internal Revenue Service that may arise in
connection with the determination and assessment of any Excise Tax and, at its sole
option, the Company may pursue or forego any and all administrative appeals, proceedings,
hearings, and conferences with any taxing authority in respect of such Excise Tax
(including any interest or penalties thereon); provided, however, that the Company’s
control over any such proceedings shall be limited to issues with respect to which a
Gross-up Payment would be payable hereunder, and Executive shall be entitled to settle or
contest any other issue raised by the Internal Revenue Service or any other taxing
authority. Executive shall cooperate with the Company in any proceedings relating to the
determination and assessment of any Excise Tax and shall not take any position or action
that would materially increase the amount of any Gross-up Payment hereunder. |
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19. |
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Effect
of Agreement on Other Benefits. |
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Except as specifically provided in this Agreement, the existence of this Agreement shall not be
interpreted to preclude, prohibit or restrict Executive’s participation in any other
employee benefit or other plans or programs in which he currently participates. |
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20. |
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Assignability:
Binding Nature. |
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This Agreement
shall be binding upon and inure to the benefit of the Parties and their respective
successors, heirs (in the case of Executive) and permitted assigns. No rights or
obligations of the Company under this Agreement may be assigned or transferred by the
Company except that such rights or obligations may be assigned or transferred in
connection with the sale or transfer of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee assumes
the liabilities, obligations and duties of the Company, as contained in this Agreement,
either contractually or as a matter of law. The Company further agrees that, in the event
of a sale or transfer of assets as described in the preceding sentence, it shall take
whatever action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of the Company hereunder. No rights or
obligations of Executive under this Agreement may be assigned or transferred by Executive
other than his rights to compensation and benefits, which may be transferred only by will
or operation of law, except as provided in Section 26 below. |
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The Company
represents and warrants that it is fully authorized and empowered to enter into this
Agreement and that the performance of its obligations under this Agreement will not
violate any agreement between it and any other person, firm or organization. |
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This Agreement
contains the entire understanding and agreement between the Parties concerning the
subject matter hereof and, as of the Effective Date, supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or oral,
between the Parties with respect thereto, including, without limitation any prior change
in control agreement between the Parties, except for certain rights regarding Executive’s
stock options granted after October 1996 and prior to the date of this Agreement, which
shall be governed by the terms of Executive’s 1996 employment agreement as if such
1996 employment agreement remained in full force and effect. |
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No provision
in this Agreement may be amended unless such amendment is agreed to in writing and signed
by Executive and an authorized officer of the Company. Except as set forth herein, no
delay or omission to exercise any right, power or remedy accruing to any Party shall
impair any such right, power or remedy or shall be construed to be a waiver of or an
acquiescence to any breach hereof. No waiver by either Party of any breach by the other
Party of any condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. Any waiver must be in writing and signed by
Executive or an authorized officer of the Company, as the case may be. |
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In the
event that any provision or portion of this Agreement shall be determined to be invalid
or unenforceable for any reason, in whole or in part, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect to the
fullest extent permitted by law. |
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The respective
rights and obligations of the Parties hereunder shall survive any termination of Executive’s
employment to the extent necessary to the intended preservation of such rights and
obligations. |
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26. |
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Beneficiaries/References. |
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Executive shall
be entitled, to the extent permitted under any applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit payable hereunder
following Executive’s death by giving the Company written notice thereof. In the
event of Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to Executive shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative. |
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27. |
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Governing
Law/Jurisdiction. |
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This Agreement
shall be governed by and construed and interpreted in accordance with the laws of New
Jersey without reference to principles of conflict of laws. Subject to Section 16, the
Company and Executive hereby consent to the jurisdiction of any or all of the following
courts for purposes of resolving any dispute under this Agreement: (i) the United States
District Court for New Jersey or (ii) any of the courts of the State of New Jersey. The
Company and Executive further agree that any service of process or notice requirements in
any such proceeding shall be satisfied if the rules of such court relating thereto have
been substantially satisfied. The Company and Executive hereby waive, to the fullest
extent permitted by applicable law, any objection which it or he may now or hereafter
have to such jurisdiction and any defense of inconvenient forum. |
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Any notice
given to a Party shall be in writing and shall be deemed to have been given when
delivered personally or sent by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the Party concerned at the address indicated below
or to such changed address as such Party may subsequently give such notice of: |
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If to the Company: |
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Linens ’n Things, Inc.
0 Xxxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Secretary |
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If to Executive: |
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Xx. Xxxxxx Xxxxxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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The headings
of the sections contained in this Agreement are for convenience only and shall not be
deemed to control or affect the meaning or construction of any provision of this
Agreement. |
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This Agreement
may be executed in two or more counterparts. |
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31. |
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Terms
of Initial Employment. |
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In addition
to all the aforementioned terms described in this Employment Agreement, the Executive
will be entitled to all terms of remuneration as described in the attached document,
Addendum A. |
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IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the date first written above. |
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LINENS ’N THINGS, INC.
By: XXXXX XXXXX
——————————————
Name: Xxxxx Xxxxx
Title: Sr. V.P. Human Resources and Corporate Secretary |
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EXECUTIVE
By: XXXXXX XXXXXXXXXX
——————————————
Xxxxxx Xxxxxxxxxx |
