EXHIBIT 10.7(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT (“Agreement”) is by and between THE BON-TON STORES, INC., a
Pennsylvania corporation (the “Company”), and BARBARA J. SCHRANTZ (the
“Employee”) as of the 30th day of January, 2011.
W I T N E S S E T H:
     WHEREAS, the Company has offered Employee continued employment and Employee
has accepted the Company’s offer commencing on the Effective Date (as
hereinafter defined).
     NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound hereby, the Company and
Employee agree as follows:
1. Position and Responsibilities.
     (a) The Company hereby employs Employee and Employee hereby accepts
continued employment by the Company as the Company’s Chief Operating Officer.
Employee will perform duties as determined by the President and Chief Executive
Officer of the Company. Employee shall report directly to the President and
Chief Executive Officer or such other senior executive officer of the Company
designated by the President and Chief Executive Officer or the person performing
the duties of the President and Chief Executive Officer. In addition, Employee
shall be a member of the Management Committee and the Operating Committee.
     (b) Throughout the term of this Agreement, Employee shall devote her entire
working time, energy, attention, skill and best efforts to the affairs of the
Company and to the performance of her duties hereunder in a manner that will
faithfully and diligently further the business and interests of the Company.
Approval of board memberships and participation in lectures and teaching
activities will be at the discretion of the President and Chief Executive
Officer; however, such approval will not be unreasonably withheld, provided that
such activities do not significantly interfere with Employee’s duties under this
Agreement. Employee shall comply with the Company’s Code of Ethical Standards
and Business Practices.
2. Term and Renewal. This Agreement shall become effective on January 30, 2011,
provided that this Agreement has been signed by Employee and the Company and
these terms approved by the Human Resources and the Compensation Committee
(“HRCC”) of the Company’s Board of Directors. The initial term shall continue
through January 28, 2012, unless sooner terminated in accordance with paragraph
8 below. Unless terminated by either party upon written notice not later than
sixty (60) calendar days preceding the

 

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termination date of the Agreement, this Agreement shall renew for successive
one-year terms beginning the first day of the Company’s fiscal year.
3. Place of Performance. Employee shall be based at the office of the Company in
the Milwaukee, Wisconsin metropolitan area, except for travel required for
Company business.
4. Compensation.
     (a) Salary. Employee shall receive a base salary (the “Base Salary”) at the
annual rate of $480,000, effective February 1, 2011. This Base Salary, less
taxes and normal deductions, shall be paid to Employee in substantially equal
installments in accordance with the Company’s regular executive payroll
practices in effect from time to time. The Base Salary may be reviewed from time
to time, but no less than annually, during the term of this Agreement by the
Chief Executive Officer (subject to review by the HRCC) to ascertain whether, in
the Company’s sole discretion, such Base Salary should be increased, and once
increased, such Base Salary shall not be decreased. The first such salary review
shall occur for Fiscal Year 2011 consistent with the Company’s practice for such
year for similar senior executives.
     (b) Annual Bonus.
(i) For the Company’s Fiscal Year 2011 and thereafter, Employee shall be
eligible for a bonus under the Cash Bonus Plan (the “Annual Bonus”) with the
following parameters: a target bonus of 75% of Employee’s Base Salary in effect
on the last day of the relevant fiscal year; a threshold bonus and a maximum
bonus shall be as determined from time to time by the Company consistent with
other similar senior executives under the Cash Bonus Plan. The performance
measures and weighting of these performance measures shall be determined by the
HRCC consistent with its determinations for other senior executives under the
Cash Bonus Plan.
(ii) Nothing herein is a guarantee that any Annual Bonus will be paid.
(iii) To the extent reasonably practicable, the Annual Bonus shall be computed
within 90 days following the close of the Company’s fiscal year and paid within
30 days of its computation. Employee must be employed on the last day of the
Company’s fiscal year to receive an Annual Bonus with respect to that fiscal
year.
5. Allowances. The Company will reimburse employee on a one-time basis for
reasonable attorneys fees expended in review and negotiation of this Agreement,
up to a maximum of $5,000.
6. Benefits. During the term of her employment, Employee and her eligible
dependents shall be eligible to participate in the Company’s group medical,
dental and vision plans in

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accordance with the terms of such plans and, subject to the restrictions and
limitations contained in the insurance agreement or agreements. Employee shall
be eligible to participate in the Company’s retirement contribution plan,
deferred compensation plan, discount program, vacation plan, long-term
disability plan and employee benefit programs generally made available to other
employees of the Company, subject to their respective generally applicable
eligibility requirements, terms, conditions and restrictions; provided, however,
that severance payments under this Agreement shall be in lieu of any severance
benefits otherwise provided by the Company. However, nothing in this Agreement
shall preclude the Company from amending or terminating any such insurance,
benefit, program or plan so long as the amendment or termination is applicable
to the Company’s executives participating in such insurance, benefit, program or
plan generally. Moreover, the Company’s obligations under this provision shall
not apply to any insurance, benefit, program or plan made available on an
individual basis to one or more select executive employees by contract if such
insurance, benefit, program or plan is not made available to all executive
employees. With respect to Employee’s participation in the Company’s vacation
plan, Employee shall be eligible for five (5) weeks vacation per calendar year,
or greater if according to Company policy, which vacation entitlement shall be
pro-rated in any calendar year in which Employee does not work the entire
calendar year.
7. Business Expenses. The Company shall pay or reimburse Employee for reasonable
entertainment and other expenses incurred by Employee in connection with the
performance of Employee’s duties under this Agreement upon receipt of vouchers
therefor and in accordance with the Company’s regular reimbursement procedures
and practices in effect from time to time.
8. Termination of Employment. Notwithstanding any other provision of this
Agreement, Employee’s employment and all of the Company’s obligations or
liabilities under this Agreement may be terminated immediately, excluding any
obligations the Company may have under paragraph 9 below, in any of the
following circumstances:
     (a) Termination by the Company. Notwithstanding any other provisions of
this Agreement, the Company may terminate Employee’s employment and all of the
Company’s obligations and liabilities under this Agreement immediately, which
termination shall not affect any obligations the Company may have under
paragraph 9 below, in any of the following circumstances:
(i) Disability or Incapacity. In the event of Employee’s physical or mental
inability to perform her essential duties hereunder, with or without reasonable
accommodation, for a period of 13 consecutive weeks or for a cumulative period
of 26 weeks during any rolling 24-month period during the term of this
Agreement.
(ii) Death of Employee. In the event of Employee’s death.

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(iii) Discharge for Cause. The Company may discharge Employee at any time for
“Cause,” which shall be limited to: Employee’s material and serious breach or
neglect of Employee’s responsibilities; willful violation or disregard of
standards of conduct established by law; willful violation or disregard of
standards of conduct established by Company policy as may from time to time be
communicated to Employee; fraud, willful misconduct, misappropriation of funds
or other dishonesty; conviction of a crime of moral turpitude; any
misrepresentation made in this Agreement; or any material breach by Employee of
any provision of this Agreement (including, without limitation, acceptance of
employment with another company or performing work or providing advice to
another company, as an employee, consultant or in any other similar capacity
while still an employee of the Company).
(iv) Discharge without Cause. Notwithstanding any other provision of this
Agreement, Employee’s employment and any and all of the Company’s obligations
under this Agreement (excluding any obligations the Company may have under
paragraph 9 below) may be terminated by the Company at any time without Cause.
     (b) Resignation by Employee. Employee may resign in the following
circumstances:
(i) Resignation for Good Reason. Employee may resign for “Good Reason,” defined
below, upon 30 days’ written notice by Employee to the Company except as set
forth in paragraph 7(c) below. The Company may waive Employee’s obligation to
work during this 30-day notice period and terminate her employment immediately,
but if the Company takes this action, Employee shall receive the salary that
otherwise would be due through the end of the notice period. For purposes of
this Agreement, “Good Reason” shall mean any of the following violations of this
Agreement by the Company: any reduction in Employee’s Base Salary; except as
provided in this Agreement, any reduction in Employee’s potential bonus target
percentage amounts; any required relocation of Employee from the Milwaukee,
Wisconsin metropolitan area; and any substantial breach by the Company of any
material provision of this Agreement (unrelated to a change of position/title,
duties, responsibilities and/or supervisor). Notwithstanding the foregoing, the
acts or omissions described above shall not constitute “Good Reason” unless
Employee: (i) provides the Company with written notice, within ninety (90) days
of learning of such acts or omissions that she asserts constitute “Good Reason,”
detailing the matters she asserts to be “Good Reason” and notifying the Company
of her intention to resign for Good Reason if the Company does not cure them
within thirty (30) days of receiving the written notice; and (ii) actually
resigns thereafter (and within sixty (60) days of the end of the cure period)
assuming the Company has not cured them.
(ii) Resignation Without Good Reason. Notwithstanding any other provision of
this Agreement, Employee’s employment and any and all of the Company’s

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obligations under this Agreement (excluding any obligations the Company may have
under paragraph 9 below) may be terminated by Employee without Good Reason.
     (c) Change of Control. In the event of a Change of Control of the Company,
provided the Company or Surviving Company (as defined below) continues to pay
Employee her Base Salary and provide materially comparable benefits, Employee
shall be prohibited from resigning for Good Reason for a period of six months
following the Change of Control. If, in the event of a Change of Control,
Employee is required to relocate from the Milwaukee, Wisconsin metropolitan
area, Employee may resign for Good Reason at any time. For purposes of this
Agreement, a Change of Control shall be deemed to occur if:
(i) any person who is not an affiliate of the Company on the date hereof becomes
a beneficial owner of a majority of the outstanding voting power of the
Company’s capital stock;
(ii) the shareholders of the Company approve and there is consummated any plan
of liquidation providing for the distribution of all or substantially all of the
Company’s assets;
(iii) there is consummated a merger, consolidation or other form of business
combination involving the Company, or, in one transaction or a series of related
transactions, a sale of all or substantially all of the assets of the Company,
unless, in any such case:
(A) the business of the Company is continued following such transaction by a
resulting entity (which may be, but need not be, the Company) (the “Surviving
Company”); and
(B) persons who were the beneficial owners of a majority of the outstanding
voting power of the Company immediately prior to the completion of such
transaction beneficially own, by reason of such prior beneficial ownership, a
majority of the outstanding voting power of the Surviving Company (or a majority
of the outstanding voting power of the direct or indirect parent of the
Surviving Company, as the case may be) immediately following the completion of
such transaction; or
(iv) any person beneficially owns shares of the Company’s capital stock
possessing a greater voting power than held in the aggregate by M. Thomas
Grumbacher, any member of his family, any trust for the primary benefit of M.
Thomas Grumbacher or any member of his family, and any charitable foundation of
which M. Thomas Grumbacher is a founder or co-founder with his wife
(collectively, the “Grumbacher Affiliates”), or if the Grumbacher Affiliates
control less than twenty percent (20%) of the outstanding voting power of the
Company’s capital stock.
     For purposes of this definition, the terms “person,” “beneficial owner,”
“beneficial ownership,” “affiliate” and “control” shall have the meanings
ascribed to such

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terms under Sections 13(d) and 3(a)(9) and Rule 13d-3 under the Securities
Exchange Act of 1934 as amended, and Rule 501 under the Securities Act of 1933
as amended, as applicable.
9. Payments Upon Termination.
     (a) Discharge Without Cause or Resignation for Good Reason during the Term.
If, other than during the two (2) year period following a Change of Control
during the Term of this Agreement, Employee is discharged without Cause or
resigns for Good Reason during the term of this Agreement, Employee shall:
(i) receive severance pay at her then current rate of Base Salary at the time of
termination, less taxes and normal deductions, for one and one-half (1 1/2)
years, payable (in either case) in equal installments in accordance with the
Company’s regular payroll practices or, at the Company’s discretion, in a lump
sum; and
(ii) be paid a stipend equal to an amount that represents the amount Employee
would have to pay as a monthly COBRA premium for the insurance coverage for the
group medical and dental plans as would be applicable to Employee at the date of
termination of Employment for one and one-half (1 1/2) years, which stipend
shall be paid in the same time and manner as the severance payments referred to
above. Such severance payment and stipend shall be paid not earlier than is
permitted under Section 409A of the Internal Revenue Code of 1986 as amended
(“Code”).
     (b) Discharge Without Cause or Resignation for Good Reason after the Term.
If, at any time on or prior to February 1, 2014, (i) as of the end of the Term
or as of the end of the Term as extended by one or more automatic renewals
pursuant to paragraph 2 of this Agreement, the Company exercises its right under
paragraph 2 of this Agreement not to renew the Term for an additional one-year
term and (ii) the Company and the Employee do not enter into an employment
agreement replacing this Agreement and (iii) at any time thereafter Employee is
discharged without Cause or resigns for Good Reason, Employee shall receive
severance pay equal to one (1) time her then Base Salary, payable (in either
case) in equal installments in accordance with the Company’s regular payroll
practices or, at the Company’s discretion, in a lump sum.
     (c) Payment. Employee’s right to any payments or benefits provided under
paragraph 9(a) and (b) shall be contingent upon (i) execution by Employee at or
about the time of termination of her employment, within the time period
designated by the Company, of a termination agreement, that a general release of
claims (including, without limitation, contractual, common law and statutory
claims) against the Company and its officers, directors, employees, agents and
other persons and entities designated by the Company, in a form acceptable to
the Company and, in the sole discretion of the Company, non-disparagement and
confidentiality provisions; and (ii) compliance by Employee with all of the
terms of this Agreement, including without limitation paragraphs 10 and 11 of
this Agreement. In the event it is determined that any portion of the severance
payments or stipend referred to in paragraph 9(a) represents a payment of

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nonqualified deferred compensation that is not exempt from the requirements of
Code Section 409A, then no payments shall be made during the 90 day period
measured from Employee’s separation from service and, provided Employee executes
and does not thereafter revoke the general release of claims mentioned above,
all payments that would, but for this sentence, have been paid during such
90 day period, shall be paid in a lump sum on the first business day following
the end of such 90 day period, and the remaining payments shall be made as
described above. These severance payment shall be in lieu of any bonus or other
Company paid benefits to which Employee is or may be entitled after Employee’s
termination of employment with the Company for any reason whatsoever, whether by
Employee of the Company, including any severance plan sponsored by the Company,
or any other agreement, policy or practice. The Company’s obligations under
paragraph 9(a) or (b) shall, as applicable, cease in the event that Employee
breaches any of Employee’s obligations under this Agreement; and/or be offset by
any disability insurance benefits and/or workers compensation benefits received
by Employee during the period covered by the severance payments.
     (d) Death or Disability/Incapacity.
(i) Upon Employee’s death, during the term of this Agreement, Employee’s
estate’s sole entitlement will be to her then current Base Salary for any days
worked prior to her death, amounts payable on account of Employee’s death under
any insurance or benefit plans or policies maintained by the Company, and any
vested benefits to which Employee is entitled under the Company’s employee
benefit or other plans in accordance with, to the extent provided in, and
subject to the restrictions and payout schedules contained in those plans.
(ii) On termination for disability or incapacity, Employee’s sole entitlement
will be to her then current Base Salary for any days worked prior to the date of
termination, amounts payable on account of disability or incapacity under any
insurance or benefit plans or policies maintained and any vested benefits to
which Employee is entitled under the Company’s stock option and employee benefit
plans in accordance with, to the extent provided in, and subject to the
restrictions and payout schedules contained in those plans.
     (e) Discharge for Cause or Resignation without Good Reason. If Employee is
discharged for Cause or resigns without Good Reason, Employee’s sole entitlement
will be the receipt of her then current Base Salary for any days worked through
the date of termination and any vested benefits to which Employee is entitled
under the Company’s stock option and employee benefit plans in accordance with,
to the extent provided in, and subject to the restrictions and payout schedules
contained in those plans.
     (f) Change of Control. In lieu of the foregoing, the provisions of
paragraph 12 below shall be applicable if Employee is discharged with Cause or
resigns for Good Reason within the two (2) year period following a Change of
Control, provided the Change of Control occurs during the term of this
Agreement.

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10. Company Property. All advertising, sales, manufacturers’ and other materials
or articles or information, including, without limitation, data processing
reports, customer sales analyses, invoices, price lists or information or any
other materials or data of any kind furnished to Employee by the Company or
developed by Employee on behalf of the Company or at the Company’s direction or
for the Company’s use or otherwise in connection with Employee’s employment with
the Company, are and shall remain the sole and confidential property of the
Company. Such Company property shall be returned to the Company (retaining, in
the case of such information, no electronic or hard copies thereof) upon the
earlier of the Company’s request to return such property or the cessation of
Employee’s employment.
11. Non-Competition and Confidentiality. To the maximum extent permissible by
law:
     (a) During her employment with the Company and for a period of one (1) year
after the termination of her employment with the Company for any reason
whatsoever, whether by Employee or by the Company and whether during the term of
this Agreement or subsequent to the expiration of this Agreement, Employee shall
not, directly or indirectly induce or intentionally influence any customer,
employee, consultant, independent contractor or supplier of the Company to
change his, her or its business relationship with or terminate employment with
the Company.
     (b) During her employment with the Company and for a period of nine
(9) months following the termination of her employment with the Company for any
reason whatsoever, whether by Employee or by the Company and whether during the
term of this Agreement or subsequent to the expiration or termination of this
Agreement, Employee shall not engage in (as a principal, partner, director,
officer, agent, employee, consultant, owner, independent contractor or
otherwise) or be financially interested in the retail department store business
of any Competitor of the Company. For purposes of this Agreement, a Competitor
means each of Macy’s, Inc.; Dillard’s Inc.; Kohl’s Corporation; Belk, Inc. and
J.C. Penney, Inc. or the affiliates and successors of each of them.
     (c) During her employment with the Company and at all times thereafter, and
except as required by law, Employee shall not use for her personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of, any person, firm, association or company other than the Company, any
confidential information of the Company that Employee acquires in the course of
her employment, which is not otherwise lawfully known by and readily available
to the general public. This confidential information includes, but is not
limited to: any material referred to in paragraph 10 or any non-public
information regarding the business, marketing, legal or accounting methods,
policies, plans, procedures, strategies or techniques; research or development
projects or results; trade secrets or other knowledge or processes of or
developed by the Company; names and addresses of employees, suppliers or
customers. Employee confirms that such information is confidential and
constitutes the exclusive property of the Company, and agrees that, immediately
upon her termination, whether by Employee or by the Company and whether during
the term of this Agreement or subsequent to the expiration of this Agreement,
Employee shall deliver to the Company

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all correspondence, documents, books, records, lists, computer programs and
other writings relating to the Company’s business; and Employee shall retain no
copies, regardless of where or by whom said writings were kept or prepared.
     (d) Both during her employment with the Company and following her
termination for any reason, whether by Employee or by the Company and whether
during the term of this Agreement or following the expiration of the Agreement,
Employee shall, upon reasonable notice, furnish to the Company such information
pertaining to her employment with the Company as may be in her possession. The
Company shall reimburse Employee for all reasonable expenses incurred by her in
fulfilling her obligation under this subparagraph (d).
     (e) The provisions of paragraphs 10 and 11 shall survive the cessation of
Employee’s employment for any reason, as well as the expiration of this
Agreement at the end of its term or at any time prior thereto.
     (f) Employee acknowledges that the restrictions contained in this paragraph
11, in view of the nature of the business in which the Company is engaged and
the Employee’s position with the Company, are reasonable and necessary to
protect the legitimate interests of the Company, and that any violation of those
restrictions would result in irreparable injury to the Company. Employee
therefore agrees that, in the event of her violation of any of those
restrictions, the Company shall be entitled to obtain from any court of
competent jurisdiction preliminary and permanent injunctive relief against
Employee, in addition to damages from Employee and an equitable accounting of
all commissions, earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which the Company may be entitled.
     (g) Employee agrees that if any or any portion of the foregoing covenants,
or the application thereof, is construed to be invalid or unenforceable, the
remainder of such covenant or covenants or the application thereof shall not be
affected and the remaining covenant or covenants will then be given full force
and effect without regard to the invalid or unenforceable portions. If any
covenant is held to be unenforceable because of the area covered, the duration
thereof, or the scope thereof, Employee agrees that the Court making such
determination shall have the power to reduce the area and/or the duration,
and/or limit the scope thereof, and the covenant shall then be enforceable in
its reduced form. If Employee violates any of the restrictions contained in
subparagraphs (a) or (b), the period of such violation (from the commencement of
any such violation until such time as such violation shall be cured by Employee
to the satisfaction of the Company) shall not count toward or be included in the
restrictive period contained in subparagraphs (a) and (b).
     (h) Employee represents and warrants that the knowledge, skill and
abilities she possesses at the time of her execution of this Agreement are
sufficient to permit her to earn a living by working for a non-competitor of the
Company for the restrictive periods set forth in subparagraphs (a) and
(b) above.

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     (i) For purposes of paragraphs 10 and 11 of this Agreement, the term
“Company” shall include not only The Bon-Ton Stores, Inc., but also any of its
successors, assigns, subsidiaries or affiliates.
12. Change of Control. Upon a Change of Control, as defined in paragraph 8(c),
occurring during the Term of this Agreement:
     (a) Options and Restricted Shares. Employee’s options and restricted stock
shall vest in the event that Employee:
(i) is discharged without Cause following and within two (2) years of the Change
of Control; or
(ii) resigns from the Company with Good Reason after the expiration of six (6)
months following the Change of Control and within two (2) years following the
Change of Control (unrelated to a discharge with Cause).
Exception: Employee’s options and restricted shares shall vest immediately upon
a Change of Control in the event that it is contemplated that the Company’s
common stock will not remain in existence or be converted to equity in the
surviving company upon the Change of Control.
     (b) Change of Control Payment. Employee shall receive a “Change of Control
Payment” (defined below), in the form of a single lump sum payment, less taxes
and normal deductions, as soon as practicable following her discharge or
resignation and not earlier than is permitted under Section 409A of the Code in
the event that Employee:
(i) is discharged without Cause following and within two (2) years of the Change
of Control; or
(ii) resigns from the Company with Good Reason after the expiration of six (6)
months following the Change of Control and within two (2) years following the
Change of Control (unrelated to a discharge with Cause).
The Change of Control Payment shall be equal to the lesser of:
(x) One and one-half (1 1/2 ) times the sum of the following: (A) Employee’s
average Base Salary paid over the most recently completed three (3) W-2 tax
years prior to Employee’s termination; plus (B) the average Cash Bonus paid to
Employee over the Employee’s most recently completed three (3) W-2 tax years
prior to Employee’s termination; or
(y) The “280G Permitted Payment” as described in Paragraph 12(e) below.

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     (c) Medical and Dental Insurance. In the event that Employee is entitled to
a Change of Control Payment under paragraph 12(b) above, Employee shall be paid
a stipend equal to an amount that represents the amount Employee would have to
pay as a monthly COBRA premium for the insurance coverage for the group medical
and dental plans as would be applicable to Employee at the date of termination
of employment for one and one-half (1 1/2) years, which stipend shall be paid in
the same time and manner as the payments referred to above. Such severance
payment and stipend shall be paid not earlier than is permitted under
Section 409A of the Code.
     (d) General Release Requirement. Employee’s right to any vesting of equity
or receipt of payments under paragraphs 12(a), (b) or (c) above shall be
contingent upon: (i) execution by Employee of a termination agreement which
includes a general release of claims and other provisions in conformance with
paragraph 9(a) above; and (ii) compliance by Employee with all of the terms of
this Agreement, including without limitation paragraphs 10 and 11. These
payments and benefits shall be in lieu of any bonus or other Company paid
benefits to which Employee is or may be entitled after Employee’s termination of
employment with the Company for any reason whatsoever, whether by Employee or
the Company, including any severance payments to which Employee is or may be
entitled by reason of any severance plan sponsored by the Company, or any other
agreement, policy or practice.
     (e) Code Section 280(G). Notwithstanding any other provision of this
Agreement, if the aggregate present value of the “parachute payments” to the
Employee, determined under Section 280G(b) of the Code, would be at least three
(3) times the “base amount” determined under Code Section 280G, then the “280G
Permitted Payment” shall be the maximum amount that may be paid as a Change of
Control Payment under this Paragraph 12 such that the aggregate present value of
such “parachute payments” to the Employee is less than three (3) times her “base
amount.” In addition, in the event the aggregate present value of the parachute
payments to the Employee would be at least three (3) times her base amount even
after a reduction of the Change of Control Payment to $0 (all as determined for
purposes of Code Section 280G), compensation otherwise payable under this
Agreement and any other amount payable hereunder or any other severance plan,
program, policy or obligation of the Company or any other affiliate thereof
shall be reduced so that the aggregate present value of such parachute payments
to the Employee, as determined under Code Section 280G(b) is less than three
(3) times her base amount. Any decisions regarding the requirement or
implementation of such reductions shall be made by such tax counsel as may be
selected by the Company and acceptable to the Employee.
13. Tax Matters.
     (a) Employee agrees that she is responsible for paying any and all federal,
state and local income taxes assessed with respect to any money, benefits or
other consideration received from the Company and that the Company is entitled
to withhold

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any tax payments from amounts otherwise due Employee to the extent required by
applicable statutes, rulings or regulations.
     (b) Notwithstanding anything to the contrary herein, no payment otherwise
required to be made hereunder that the Company determines constitutes a payment
of nonqualified deferred compensation for purposes of Section 409A of the Code
shall be paid to Employee at a time or in a manner that will be treated as a
violation of the distribution rules of Code Section 409A(a)(2) and no
alternative form of payment of such amount(s) shall be permitted to be made
hereunder if such alternative benefit form would violate any of the requirements
of Code Section 409A(a)(3) or (4) relating to acceleration of benefits and
changes in time and form of distribution (taking into account any regulations or
other guidance issued by Treasury or the Internal Revenue Service with regard to
these Code provisions as may be in effect from time to time). The intent of this
provision is to ensure that no additional tax liabilities are imposed on any
payments or benefits provided hereunder pursuant to Code Section 409A, and may
require, for example, a delay in commencement of payments until six months after
Employee’s termination of employment with the Company. In the event any payment
is delayed by reason of this paragraph 13, such payment shall, when made, be
increased by an amount representing “interest” from the date payment would
otherwise have been made, through the date payment is actually made, calculated
using the Company’s cost of borrowing as the interest rate, as determined by the
Company at its discretion.
14. Prior Agreements.
     (a) Employee represents that there are no restrictions, agreements or
understandings whatsoever to which Employee is a party that could impact upon
her employment under this Agreement or that would prevent or make unlawful her
execution of this Agreement or her employment hereunder.
     (b) Employee agrees that she will not use or disclose any confidential or
proprietary information of any of her prior employers during the course of her
employment under this Agreement.
15. Indemnification. Employee shall be entitled to indemnification against
claims by third parties arising out of her acts or omissions within the scope of
her employment during the course of her employment under this Agreement.
16. Entire Understanding. This Agreement contains the entire understanding
between the Company and Employee with respect to the subject matter hereof and
supersedes all prior and contemporary agreements and understandings, inducements
or conditions, express or implied, written or oral, between the Company and
Employee except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.

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17. Modifications. This Agreement may not be modified orally but only by written
agreement signed by Employee and the Company’s President and Chief Executive
Officer or such other person as the Board may designate specifically for this
purpose.
18. Provisions Separable. The provisions of this Agreement are independent of
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
19. Consolidation, Merger or Sale of Assets. Nothing in this Agreement shall
preclude the Company from consolidating or merging into or with, or transferring
all or substantially all of its assets to, another entity that assumes this
Agreement and all obligations and undertakings of the Company hereunder. Under
such a consolidation, merger or transfer of assets and assumption, the term “the
Company” as used herein, shall mean such other entity and this Agreement shall
continue in full force and effect.
20. Notices. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given, made and received when delivered (personally, by courier
service such as UPS or by messenger) or when deposited in the United States
mails, registered or certified mail, postage pre-paid, return receipt requested,
addressed as set forth below:

  (a)   If to the Company:

The Bon-Ton Stores, Inc.
331 W. Wisconsin Avenue
Milwaukee, WI 53203
Attention: Chief Executive Officer
with a copy to:
The Bon-Ton Stores, Inc.
2801 East Market Street
York, PA 17402
Attention: General Counsel

  (b)   If to Employee:

Barbara J. Schrantz
2120 Carnegie Hills Drive
Delafield, WI 53018
     In addition, notice by mail shall be by air mail or courier if posted
outside of the continental United States. Any party may alter the address to
which communications or

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copies are to be sent by giving notice of such change of address in conformity
with the provisions of this paragraph for the giving of notice.
21. No Attachment. Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
22. Binding Agreement. This Agreement shall be binding upon, and shall inure to
the benefit of the Company and its successors, representatives, and assigns and
shall be binding upon Employee, her heirs, executors and legal representatives.
23. No Assignment by Employee. Employee acknowledges that the services to be
rendered by her are unique and personal. Accordingly, Employee may not assign or
delegate any of her rights or obligations hereunder, except that she may assign
certain rights hereunder if agreed to in writing by the Chief Executive Officer.
24. Assignment by the Company. Employee consents to the assignment of this
Agreement to any purchaser of the Company or a substantial portion of its
assets.
25. Indulgences. Neither the failure nor any delay on the part of either party
to exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.
26. Paragraph Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
27. Controlling Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement (including, without limitation,
provisions concerning limitations of actions), shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any conflict-of-laws doctrines of such state or any other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.
28. President and Chief Executive Officer. In the absence of the President and
Chief Executive Officer, the decisions of the President and Chief Executive
Officer may be made by such other person as designated by the Company’s Board.
29. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original against any party
whose

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signature appears thereon, and all of which shall together constitute one and
the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties hereto.
     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
duly executed and delivered this Agreement as of the date first above written.

            THE BON-TON STORES, INC.
      By:   /s/ Byron L. Bergren         Byron L. Bergren        President and
Chief Executive Officer     

            EMPLOYEE:
      /s/ Barbara J. Schrantz       Barbara J. Schrantz           

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