EXHIBIT 10.1
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
This FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT (“Fourth Amendment”), dated
March 18, 2009, is by and between THE BON-TON STORES, INC., a Pennsylvania
corporation (the “Company”), and BYRON L. BERGREN (“Employee”).
W I T N E S S E T H:
WHEREAS, the Company and Employee entered into an Agreement dated as of
August 24, 2004 (“Agreement”) with respect to the employment of Employee as the
President and Chief Executive Officer of the Company;
WHEREAS, the Company and Employee entered into an amendment to the Agreement as
of May 1, 2005 (“First Amendment”), a second amendment to the Agreement on
May 23, 2006 (“Second Amendment”), and a third amendment to the Agreement on
July 19, 2007 (“Third Amendment”);
WHEREAS, the Human Resources and Compensation Committee (“HRCC”) of the
Company’s Board of Directors (“Board”) has approved the cash bonus opportunities
described below in this Fourth Amendment for which Employee shall be eligible
for Fiscal Year 2009 (defined below) and Fiscal Year 2010 (defined below) and
the grants of restricted shares described below in this Fourth Amendment, and
the Board has approved this Fourth Amendment; and
WHEREAS, capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Agreement (as previously amended by the First Amendment,
the Second Amendment and the Third Amendment).
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. Amendment of Paragraph 1 of Agreement.
Paragraph 1 of the Agreement is amended to set forth the following agreement
between the Company and Employee:
(a) Employee shall be the Company’s President and Chief Executive Officer
through January 31, 2011.
(b) Thereafter, through February 5, 2012, Employee shall serve the Company in an
important role to be determined by the Board based upon its decision as to what
is in the best interests of the Company. Employee shall report to the Board
through February 5, 2012, and the Board agrees to nominate Employee to serve as
a Director of the Board for the period through February 5, 2012. For purposes
hereof, an “important role” with respect to Employee’s employment commencing
February 1, 2011 shall mean a role, as determined by the Board, consisting of
Board-level activities, activities to facilitate the transition of the new Chief
Executive Officer and/or such other activities as would be consistent with
Employee’s position at such time as a Director and former Chief Executive
Officer of the Company.
(c) In all other respects, Paragraph 1 of the Agreement shall remain in effect.

 

 

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2. Term of Agreement; Renewal; Effective Date of this Fourth Amendment.
(a) Amendment of Paragraph 2 of Agreement. The following shall be substituted
for Paragraph 2 of the Agreement:
“Term of Agreement. This Agreement, and Employee’s relationship with the Company
hereunder, shall commence as of the date this Agreement has been executed by
both parties (the “Effective Date”), and shall continue through and terminate on
February 5, 2012 (the “Term”), unless sooner terminated in accordance with
Paragraph 12 below.”
(b) Effective Date of this Fourth Amendment. This Fourth Amendment shall be
effective upon execution by Employee and the Company (“Fourth Amendment
Effective Date”).
3. Bonus. Amendment of Paragraph 4(b) of the Agreement. Paragraph 4(b) of the
Agreement is further amended to set forth the following agreement between the
Company and Employee:
(a) Fiscal Year 2009. For the fiscal year of the Company beginning February 1,
2009 (“Fiscal Year 2009”), Employee shall be eligible for a bonus pursuant to
the terms and conditions previously established by the HRCC under The Bon-Ton
Stores, Inc. Cash Bonus Plan (“Cash Bonus Plan”) with a target bonus of one
hundred percent (100%) of Employee’s Base Salary. The bonus shall be determined
and awarded in accordance with objectives to be determined by the HRCC
consistent with the Cash Bonus Plan and communicated to Employee.
(b) Fiscal Year 2010. For the fiscal year of the Company beginning January 31,
2010 (“Fiscal Year 2010”), Employee shall be eligible for a bonus under the Cash
Bonus Plan with a target bonus of one hundred percent (100%) of Employee’s Base
Salary. The bonus shall be determined and awarded in accordance with objectives
to be determined by the HRCC consistent with the Cash Bonus Plan and
communicated to Employee.
(c) Fiscal Year 2011. For the fiscal year of the Company beginning January 30,
2011 (“Fiscal Year 2011”), Employee’s eligibility for a bonus will be reviewed
and determined by the HRCC based upon the important role assigned to Employee by
the Board in accordance with Section 1(b) of this Fourth Amendment. The
potential amount of such bonus, if any, and the objectives to be achieved in
order for such bonus to become payable shall be determined by the HRCC in its
sole discretion and shall be communicated to Employee.
(d) In all other respects, Paragraph 4(b) of the Agreement shall remain in
effect.

 

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4. Long-Term Incentive Program. Amendment of Paragraph 6 of the Agreement.
Paragraph 6 of the Agreement is further amended to set forth the following
agreement between the Company and Employee:
(a) Fiscal Year 2009 Restricted Share Grants.
(i) Time-Based Restricted Share Grant.
(A) As soon as practicable after the Fourth Amendment Effective Date, Employee
shall receive under The Bon-Ton Stores, Inc. Amended and Restated 2000 Stock
Incentive and Performance-Based Award Plan or any successor plan thereof (“Stock
Incentive Plan”) an additional grant of 200,000 Restricted Shares (the “2009
Time-Based Restricted Shares”).
(B) Employee’s ownership of the 2009 Time-Based Restricted Shares shall vest 50%
on February 1, 2010 and 50% on February 1, 2011, provided that Employee is
continuously employed by the Company through such dates. Notwithstanding the
foregoing, the 2009 Time-Based Restricted Shares shall vest immediately upon
Employee’s discharge without Cause or resignation for Good Reason, provided
that, in either case, Employee executes a general release of claims consistent
with Paragraph 13(b) of the Agreement.
(C) If the Board declares any dividends in respect of the common stock, par
value $0.01 per share, of the Company, then such dividends shall be paid on the
2009 Time-Based Restricted Shares, provided that the 2009 Time-Based Restricted
Shares have not been forfeited as of the record date for the applicable dividend
distribution.
(D) The material terms of the Time-Based Restricted Shares shall be set forth in
a Restricted Stock Agreement in the form set forth as Exhibit A to the Third
Amendment.
(ii) Performance-Based Restricted Share Grant.
(A) As soon as practicable after the Fourth Amendment Effective Date, Employee
shall receive under the Stock Incentive Plan an additional grant of 200,000
Restricted Shares (the “2009 Grant of Restricted Shares Based Upon Company
Performance for Fiscal Year 2009”).
(B) The 2009 Grant of Restricted Shares Based Upon Company Performance for
Fiscal Year 2009 shall become vested based upon achievement of the performance
goals set by the HRCC for Fiscal Year 2009.
(C) With respect to the 2009 Grant of Restricted Shares Based Upon Company
Performance for Company’s 2009 Fiscal Year, performance metrics and numerical
values for the selected performance metrics will be in line with the respective
targets under the Company Plan for Fiscal Year 2009 as well as in line with the
respective targets for the cash bonus under the Cash Bonus Plan for Fiscal Year
2009, as determined by the HRCC in the normal course (i.e., in the first quarter
of Fiscal Year 2009).

 

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(D) The performance-based Restricted Shares granted pursuant to this
Paragraph 4(a)(ii) of this Fourth Amendment shall be forfeited to the extent not
vested based upon the performance of the Company in Fiscal Year 2009.
Notwithstanding the foregoing, in the event that Employee is discharged without
Cause or resigns for Good Reason prior to January 31, 2010, the Restricted
Shares granted pursuant to this Paragraph 4(a)(ii) shall become vested to the
extent provided in the performance schedule established with respect to such
Restricted Shares as if Employee had remained employed by the Company through
the date that a determination of vesting of such Restricted Shares is made by
the HRCC, without regard to such prior discharge without Cause or resignation
for Good Reason, provided that, in either case, Employee executes a general
release of claims consistent with Paragraph 13(b) of the Agreement.
(E) Dividends shall not accrue or be paid on the performance based Restricted
Shares granted pursuant to this Paragraph 4(a)(ii) of this Fourth Amendment
until the Restricted Shares vest.
(F) This grant of performance-based Restricted Shares is to be made pursuant to
the performance-based award provisions of the Stock Incentive Plan as amended
and restated.
(G) The material terms of this grant of performance-based Restricted Shares
shall be set forth in a Restricted Stock Agreement in the form set forth as
Exhibit C to the Third Amendment.
(b) Fiscal Year 2010 Restricted Share Grants.
(i) Time-Based Restricted Share Grant.
(A) On or about the first business day of Fiscal Year 2010, assuming Employee is
employed by the Company at that time, Employee shall receive under the Stock
Incentive Plan an additional grant of 200,000 Restricted Shares (the “2010
Time-Based Restricted Shares”).
(B) Employee’s ownership of the 2010 Time-Based Restricted Shares shall vest
100% on February 5, 2012 provided that Employee is continuously employed by the
Company through that date. Notwithstanding the foregoing, the 2010 Time-Based
Restricted Shares shall vest immediately upon Employee’s discharge without Cause
or resignation for Good Reason, provided that, in either case, Employee executes
a general release of claims consistent with Paragraph 13(b) of the Agreement.
(C) If the Board declares any dividends in respect of the common stock, par
value $0.01 per share, of the Company, then such dividends shall be paid on the
2010 Time-Based Restricted Shares, provided that the 2010 Time-Based Restricted
Shares have not been forfeited as of the record date for the applicable dividend
distribution.
(D) The material terms of the grant of 2010 Time-Based Restricted Shares shall
be set forth in a Restricted Stock Agreement in the form set forth as Exhibit A
to the Third Amendment.

 

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(ii) Performance-Based Restricted Share Grant.
(A) On or about the first business day of Fiscal 2010, assuming that Employee is
employed by the Company at that time, Employee shall receive under the Stock
Incentive Plan an additional grant of 200,000 Restricted Shares.
(B) One half of these Restricted Shares (“2010 Grant of Restricted Shares Based
Upon Company Performance for Fiscal Year 2010”) shall become vested based upon
achievement of the performance goals set by the HRCC for Fiscal Year 2010, and
the other one-half of these Restricted Shares (“2010 Grant of Restricted Shares
Based Upon Company Performance for Fiscal Year 2011”) shall become vested based
upon the achievement of the performance goals set by the HRCC for Fiscal Year
2011.
(C) Performance metrics and numerical values for the selected performance
metrics will be in line with the respective targets under the Company Plan for
Fiscal Year 2010 and Fiscal Year 2011, respectively, as well as in line with the
respective targets for the cash bonus under the Cash Bonus Plan for each such
respective fiscal year of the Company, as determined by the HRCC in the normal
course (i.e., in the first quarter of the applicable fiscal year).
(D) The Restricted Shares granted pursuant to this Paragraph 4(b)(ii) of this
Fourth Amendment shall be forfeited to the extent not vested based upon the
performance of the Company in Fiscal Year 2010 or Fiscal Year 2011, as
applicable. Notwithstanding the foregoing, in the event that (1) Employee is
discharged without Cause or resigns for Good Reason prior to January 30, 2011,
the 2010 Grant of Restricted Shares Based Upon Company Performance for Fiscal
Year 2010 shall become vested to the extent provided in the performance schedule
established with respect to such Restricted Shares as if Employee had remained
employed by the Company through the date that a determination of vesting of such
Restricted Shares is made by the HRCC, without regard to such prior discharge
without Cause or resignation for Good Reason, provided that, in either case,
Employee executes a general release of claims consistent with Paragraph 13(b) of
the Agreement, or (2) Employee is discharged without Cause or resigns for Good
Reason on or after January 30, 2011 and prior to January 29, 2012, the 2010
Grant of Restricted Shares Based Upon Company Performance for Fiscal Year 2011
shall become vested to the extent provided in the performance schedule
established with respect to such Restricted Shares as if Employee had remained
employed by the Company through the date that a determination of vesting of such
Restricted Shares is made by the HRCC, without regard to such prior discharge
without Cause or resignation for Good Reason; provided that, in either case,
Employee executes a general release of claims consistent with Paragraph 13(b) of
the Agreement.
(E) Dividends shall not accrue or be paid on the performance-based Restricted
Shares granted pursuant to this Paragraph 4(b)(ii) of this Fourth Amendment
until the Restricted Shares vest.

 

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(F) This grant of Restricted Shares is to be made pursuant to the
performance-based award provisions of the Stock Incentive Plan as amended and
restated.
(G) The material terms of this grant of performance-based Restricted Shares
shall be set forth in a Restricted Stock Agreement in the form set forth as
Exhibit C to the Third Amendment.
5. Amendment of Paragraph 12 of the Agreement.
(a) The following shall be substituted for Paragraph 12(c) of the Agreement:
“(c) 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 12(d) below. The Company may waive Employee’s obligation to
work during this 30-day notice period and terminate his employment immediately,
but if the Company takes this action in the absence of agreement by Employee,
Employee shall receive the salary which 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:
(i) causing Employee to cease to be President and Chief Executive Officer prior
to January 30, 2011;
(ii) a diminution in Employee’s responsibilities, duties or authority prior to
January 30, 2011 other than a reassignment of such responsibilities, duties or
authority in connection with the Company’s succession planning (with good faith
and cooperation between the Board and Employee with respect to implementing a
transition plan) in anticipation that Employee shall cease to be President and
Chief Executive Officer on January 30, 2011;
(iii) causing the Employee to cease reporting to the Board as President and
Chief Executive Officer prior to January 30, 2011, or causing the Employee to
cease reporting thereafter to the Board in an important role prior to
February 5, 2012;
(iv) failing to nominate Employee to continue to serve as a Director of the
Company or removing Employee from the Board prior to February 5, 2012;
(v) any reduction, prior to February 5, 2012, in the Employee’s Base Salary
below the amount then in effect;

 

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(vi) any reduction, prior to January 30, 2011, in the Employee’s potential bonus
eligibility amount as specified in this Agreement; or
(vii) any substantial breach of any material provision of this Agreement.
Notwithstanding the foregoing, the acts or omissions described above shall not
constitute “Good Reason” unless Employee provides the Company with written
notice detailing the matters he asserts to be “Good Reason” which the Company
does not cure within thirty (30) days of receiving the notice.”
(b) In all other respects Paragraph 12 of the Agreement shall remain in effect.
6. Amendment of Paragraph 13 of the Agreement. Paragraph 13(a)(ii)(B) of the
Agreement, as amended, is hereby amended and restated to read as follows:
“Continued participation in the Company’s group health benefit plan until
Employee attains age 65 and continued participation in supplemental Pinnacle
health coverage until Employee attains age 65.” Paragraphs 13(a)(ii)(C) and
13(a)(ii)(D) of the Agreement, as amended, are hereby deleted.
7. Legal Fees. The Company agrees to pay Employee’s reasonable legal fees, costs
and expenses in connection with the negotiation of this Fourth Amendment up to
Ten Thousand Dollars ($10,000).
8. Controlling Law. This Fourth Amendment 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.
9. Execution in Counterparts. This Fourth Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original against
any party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Fourth Amendment shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties hereto.
10. Effect of Amendment. Except as may be affected by this Fourth Amendment, all
of the provisions of the Agreement, the First Amendment, the Second Amendment
and Third Amendment, as amended hereby, shall continue in full force and effect.
The provisions of this Fourth Amendment shall not constitute a waiver or
modification of any terms or conditions of the Agreement as modified by the
First Amendment, the Second Amendment and Third Amendment other than as
expressly set forth herein.

 

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have duly
executed and delivered, in Pennsylvania, this Agreement as of the date first
above written.
THE BON-TON STORES, INC.

             
By:
  /s/ Tim Grumbacher       Date: March 18, 2009
 
           
 
  Tim Grumbacher        
 
  Executive Chairman of the Board        
 
           
 
  /s/ Byron L. Bergren       Date: March 16, 2009
 
           
 
  Byron L. Bergren        

 

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