However, nothing hereincontained shall be deemed to prevent or limit the right of Employee to invest any of his personalfunds in less than one percent of any class or series of the equitysecurities of any entity provided such equity securities are traded on a national securitiesexchange or quoted in an automated inter-dealer quotation system, nor shall this clause beconstrued as preventing Employee from investing his assets in such other form or manner as will notrequire any services on the part of the Employee in, and will not permit the control by theEmployee of any aspect of, the operation or the affairs of entities (or affiliates of suchentities) in which such investments are made. Approval of board memberships and participation inlectures and teaching activities will be at the discretion of the Chief Executive Officer; however,such approval will not be unreasonably withheld, provided that such activities do not significantlyinterfere with Employee’s duties under this Agreement.(c) Employee shall not obtain goods or services or otherwise deal on behalf of the Companywith any business or entity in which Employee or a member of his immediate family has a financialinterest or from which Employee or a member of his immediate family may derive a financial benefitas a result of such transaction, except that this prohibition shall not apply to any entity whoseequity securities are traded on a national securities exchange or quoted in an automatedinter-dealer quotation system provided that neither Employee nor any member of his immediate familyowns one percent or more of any class or series of the outstanding capital stock or othersecurities of such entity.2. Term of Agreement. Employee’s employment hereunder, shall commence immediatelyupon execution by both the Company and Employee (“Effective Date”), and shall continue through andterminate on January 31, 2009, unless sooner terminated in accordance with Paragraph 8 below.3. Place of Performance. Employee shall be based at the office of the Company inMilwaukee, Wisconsin, except for travel required for Company business.
 
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4. Compensation.(a) Salary. Employee shall receive a Base Salary (“Base Salary”) at the annual rateof $425,000. This Base Salary, less taxes and normal deductions, shall be paid to Employee insubstantially equal installments in accordance with the Company’s regular executive payrollpractices in effect from time to time. The Base Salary and Employee’s performance may be reviewedfrom time to time during the term of this Agreement by the Company to ascertain whether, in theCompany’s sole discretion, such Base Salary should be increased, and once increased, such BaseSalary shall not be decreased. The first such salary and performance review shall occur in 2007.(b) Annual Bonus. Employee will participate in The Bon-Ton Stores, Inc. Cash BonusPlan (“Cash Bonus Plan”) in accordance with its terms and conditions as it may be amended inaccordance with its provisions or such other annual bonus plan as may be established by theCompany. For each of the fiscal years of the Company during the Term, Employee shall be eligibleto earn a bonus, with the following parameters: a threshold bonus of 33.75% of Employee’s BaseSalary; a target bonus of 45% of Employee’s Base Salary; and a maximum bonus of 67.5% of Employee’sBase Salary. If earned, one bonus will be paid depending on the level of achievement with respectto performance measures determined for each of the Company’s fiscal years by the Human Resourcesand Compensation Committee (“HRCC”) of the Company’s Board of Directors. The HRCC shall retaindiscretion with respect to this bonus as is provided under the terms of the Cash Bonus Plan. Tothe extent reasonably practicable, the annual bonus shall be computed within 90 days following theclose of the Company’s fiscal year and paid within 30 days of its computation. Employee must beemployed on the last day of the Company’s fiscal year to receive a bonus.
 
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(c) Stock Options. The Company agrees that it has already provided an option oroptions to purchase shares of the Company’s common stock to the Employee, which options remain ineffect without change. The Employee may receive one or more options in the future at thediscretion of the Company.(d) Allowances. The Company shall provide Employee with $6,200 per year, payablemonthly or in accordance with Company’s current payroll practices as may be modified from time totime, as an automobile allowance. The Company shall reimburse Employee on a one-time basis for upto $2,000 in attorney’s fees incurred for the review and negotiation of this Agreement.5. Medical Insurance. Employee and his eligible dependents shall be eligible toparticipate in the Company’s group medical, dental and vision plans in accordance with the terms ofsuch plans and, subject to the restrictions and limitations contained in the applicable insuranceagreement or agreements. The Company shall pay Employee up to $2,300 per year for medical expensesthat are not covered by the Company’s medical plan.6. Other Benefits. Employee shall be eligible to participate in The Bon-TonRetirement Contribution Plan, deferred compensation plan, discount program, vacation plan,long-term disability plan and employee benefit programs generally made available to other similarlysituated employees of the Company who were previously employed in the Northern Department StoreGroup, including the Carson Pirie Scott division (“Northern Department Store Group”) of SaksIncorporated (“Saks”), subject to their respective generally applicable eligibility requirements,terms, conditions and restrictions; provided however, that severance benefits under this Agreementshall be in lieu of any severance benefits otherwise provided by the Company.
 
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Nothing in thisAgreement shall preclude the Company from amending or terminating any suchinsurance, benefit, program or plan so long as the amendment or termination is applicablegenerally to the Company’s executives participating in such insurance, benefit, program or plan.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 bycontract if such insurance, benefit, program or plan is not made available to all executiveemployees. With respect to Employee’s participation in the Company’s vacation plan, Employee shallbe eligible for 3 weeks vacation and 2 personal days per calendar year, which vacation entitlementshall be pro-rated in any calendar year in which the Employee does not work the entire calendaryear.7. Business Expenses. The Company shall pay or reimburse Employee for reasonableentertainment and other expenses incurred by Employee in connection with the performance ofEmployee’s duties under this Agreement upon receipt of vouchers therefore and in accordance withthe Company’s regular reimbursement procedures and practices in effect from time to time.8. Termination of Employment.(a) Termination by the Company. Notwithstanding any other provision of thisAgreement, the Company may terminate Employee’s employment and all of the Company’s obligations orliabilities under this Agreement immediately, excluding any obligations the Company may have underParagraph 9 below, in any of the following circumstances:(i) Disability or Incapacity. In the event of Employee’s physical or mental inabilityto perform his essential duties hereunder, with or without reasonable accommodation, for a periodof 13 consecutive weeks or for a cumulative period of 26 weeks 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. Company may discharge Employee at any time for “Cause,”which shall be limited to: Employee’s material and serious breach or neglect of Employee’sresponsibilities; 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 fromtime to time be communicated to Employee; fraud, willful misconduct, misappropriation of funds orother dishonesty; conviction of a crime of moral turpitude; any misrepresentation made by Employeein 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 orproviding advice to another company, as an employee, consultant or in any other similar capacitywhile 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 (excludingany obligations the Company may have under Paragraph 9 below) may be terminated by the Company atany time without Cause.(b) Resignation.(i) Resignation for Good Reason. Employee may resign for “Good Reason,” definedbelow, upon 30 days’ written notice by Employee to the Company except as set forth in Paragraph8(c) below. The Company may waive Employee’s obligation to work during this 30 day notice periodand terminate his employment immediately, but if the Company takes this action in the absence ofagreement by Employee, Employee shall receive the salary that otherwise would be due through theend of the notice period. For purposes of this Agreement, “Good Reason” shall mean any of thefollowing violations of this Agreement by the Company: causing Employee, without Employee’sconsent to cease to have duties and responsibilitiescommensurate with those of Executive Vice President, CPS Stores; any reduction in theEmployee’s Base Salary;
 
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any reduction in the Employee’s potential bonus eligibility amount; anyrequired relocation from the Milwaukee, Wisconsin area; and any substantial breach of any materialprovision of this Agreement. Notwithstanding the foregoing, the acts or omissions described aboveshall not constitute “Good Reason” unless the Employee provides the Company with written noticedetailing the matters he asserts to be “Good Reason” that the Company does not cure within thirty(30) days of receiving the written notice.(ii) Resignation Without Good Reason. Notwithstanding any other provision of thisAgreement, 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 byEmployee without Good Reason.(c) Change of Control. In the event of a Change of Control of the Company, theEmployee shall be prohibited from resigning for Good Reason for a period of six months followingthe Change of Control (unless Employee is required during this six (6) month period to relocatefrom the Milwaukee, Wisconsin area). For purposes of this Agreement, a Change of Control shall bedeemed to occur if:(i) any “person,” as such term is defined under Sections 3(a)(9) and 13(d) of the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”), who is not an affiliate of Company on thedate hereof, becomes a “beneficial owner,” as such term is used in Rule 13d-3 under the ExchangeAct, of a majority of the outstanding voting power of the Company’s capital stock;(ii) the Company adopts any plan of liquidation providing for the distribution of all orsubstantially all of its assets;
 
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(iii) the Company is party to a merger, consolidation, other form of business combination or asale of all or substantially all of its assets, unless the business of the Company is continuedfollowing any such transaction by a resulting entity (which may be, but need not be, the Company)and the shareholders of the Company immediately prior to such transaction hold, directly orindirectly immediately after such transaction, a majority of the voting power of the resultingentity in substantially the same relative percentages as prior to such transaction.9. Payments Upon Termination.(a) Discharge Without Cause, or Resignation for Good Reason. If Employee isDischarged Without Cause or Resigns for Good Reason, Employee shall receive severance pay at histhen current rate of Base Salary as of his termination, less taxes and normal deductions:(i) if Employee is Discharged Without Cause, or Resigns for Good Reason, on or before March 4,2008: seventy-eight (78) weeks in accordance with the Saks Incorporated Amended and Restated 2000Change of Control and Material Transaction Severance Plan; or(ii) if Employee is Discharged Without Cause, or Resigns for Good Reason, on or after March 5,2008: fifty-two (52) weeks;payable in equal installments in accordance with the Company’s regular payroll practices, provided(whether the Discharge Without Cause or Resignation for Good Reason occurs before, on or afterMarch 4, 2008) that Employee signs and does not timely revoke a general release of claims(including, without limitation, contractual, common law and statutory claims) against the Companyand its officers, directors, employees and agents in a form acceptable to the Company.
 
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Theseseverance payments shall be in lieu of any bonus or other Company paid benefits to whichEmployee is or may be entitled after Employee’s termination of employment with the Company for anyreason whatsoever, whether by Employee or the Company, including any other severance payments towhich Employee is or may be entitled by reason of any severance plan sponsored by Saks or theCompany, or any other agreement, policy or practice. Employee will also have the opportunity forcontinued participation in the Company’s group medical plans, at his expense, pursuant to COBRA.The Company’s obligations under this Paragraph 9(a) shall, as applicable:(iii) cease in the event that Employee breaches any of Employee’s obligations under thisAgreement; and/or(iv) be offset by any disability insurance benefits and/or workers compensation benefitsreceived by Employee during the period covered by the severance payments.(b) Death or Disability/Incapacity.(i) On death, Employee’s estate’s sole entitlement will be to his then current rate of BaseSalary for any days worked prior to his death, amounts payable on account of Employee’s death underany insurance or benefit plans or policies maintained by the Company, and any vested benefits towhich 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 thoseplans.(ii) On termination for disability or incapacity, Employee’s sole entitlement will be to histhen current rate of Base Salary for any days worked prior to the date of termination, amountspayable on account of disability or incapacity under any insurance or benefit plans or policiesmaintained by the Company and any vested benefits to which Employeeis entitled under the Company’s employee benefit or other plans in accordance with, to theextent provided in, and subject to the restrictions and payout schedules contained in those plans.
 
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(c) Discharge for Cause or Resignation without Good Reason. If Employee is dischargedfor Cause or resigns without Good Reason, Employee’s sole entitlement will be the receipt of histhen current rate of Base Salary for any days worked through the date of termination and any vestedbenefits to which Employee is entitled under the Company’s employee benefit or other plans inaccordance with, to the extent provided in, and subject to the restrictions and payout schedulescontained in those plans.(d) Change of Control. Notwithstanding any other provision of this Agreement, if theaggregate present value of the “parachute payments” to the Employee, determined under Section280G(b) of the Internal Revenue Code of 1986, as amended (the “Code”), would be at least threetimes the “base amount” determined under Code Section 280G, then the “280G Permitted Payment” shallbe the maximum amount that may be paid as a Change of Control Payment under this Paragraph 9(d)such that the aggregate present value of such “parachute payments” to the Employee is less thanthree times his “base amount.” In addition, in the event the aggregate present value of theparachute payments to the Employee would be at least three times his base amount even after areduction of the Change of Control Payment to $0 (all as determined for purposes of Code Section280G), compensation otherwise payable under this Agreement and any other amount payable hereunderor any other severance plan, program, policy or obligation of the Company or any other affiliatethereof shall be reduced so that the aggregate present value of such parachute payments to theEmployee, as determined under Code Section 280G(b) is less than three times his base amount. Anydecisions regarding therequirement or implementation of such reductions shall be made by such tax counsel as may beselected by the Company and reasonably acceptable to the Employee.
 
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10. Company Property. All advertising, sales, manufacturers’ and other materials orarticles or information, including, without limitation, data processing reports, customer salesanalyses, invoices, price lists or information or any other materials or data of any kind furnishedto Employee by the Company or developed by Employee on behalf of the Company or at the Company’sdirection or for the Company’s use or otherwise in connection with Employee’s employment with theCompany, are and shall remain the sole and confidential property of the Company.11. Non-Competition and Confidentiality. To the maximum extent permissible by law:(a) During his employment with the Company and for a period of one year after the terminationof his employment with the Company for any reason whatsoever, whether by Employee or by the Companyand whether during the term of this Agreement or subsequent to the expiration or termination ofthis Agreement, Employee shall not, directly or indirectly:(i) Induce or intentionally influence any customer, employee, consultant, independentcontractor or supplier of the Company to change its business relationship with or terminateemployment with the Company.(ii) Engage in (as a principal, partner, director, officer, agent, employee, consultant,owner, independent contractor or otherwise) or be financially interested in the retail departmentstore business of any Competitor of the Company. For purposes of this Agreement, a Competitormeans each of Federated Department Stores, Dillard’s Inc., Kohl’sCorporation, Belk, Inc., Limited Brands, Inc., Target Corporation, Boscov’s, Inc., SearsHoldings Corporation, J. C. Penney Company, Inc. or the affiliates and successors of each of them.
 
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(b) During his employment with the Company and at all times thereafter, and except as requiredby law, Employee shall not use for his personal benefit, or disclose, communicate or divulge to, oruse for the direct or indirect benefit of, any person, firm, association or company other than theCompany, any Confidential Information (defined below) of the Company that Employee acquires in thecourse of his employment, unless such Confidential Information is lawfully known by and readilyavailable to the general public, was received from a third party who was not under any restrictionto disclose such information, or is independently developed without the use of the Company’sConfidential Information. This Confidential Information includes, but is not limited to: anymaterial 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 ordeveloped by the Company; names and addresses of employees, suppliers or customers (“ConfidentialInformation”). Employee confirms that such information is confidential and constitutes theexclusive property of the Company, and agrees that, immediately upon his termination, whether byEmployee or by the Company and whether during the term of this Agreement or subsequent to theexpiration of this Agreement, Employee shall deliver to Company all correspondence, documents,books, records, lists, computer programs and other writings relating to Company’s business; andEmployee shall retain no copies, regardless of where or by whom said writings were kept orprepared. Confidential Information includes such information of the Northern Department StoreGroup that relates to business assets that were acquired by the Company from Saks.
 
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(c) Both during his employment with the Company and following his termination for any reason,whether by Employee or by the Company and whether during the term of this Agreement or followingthe expiration of the Agreement, Employee shall, upon reasonable notice, furnish to the Companysuch information pertaining to his employment with the Company as may be in his possession. TheCompany shall reimburse Employee for all reasonable expenses incurred by him in fulfilling hisobligations under this subparagraph (c).(d) The provisions of subparagraphs (a), (b) and (c) shall survive the cessation of Employee’semployment for any reason, as well as the expiration of this Agreement at the end of its term or atany time prior thereto.(e) Employee acknowledges that the restrictions contained in this Paragraph 11, in view of thenature of the business in which the Company is engaged and the Employee’s position with theCompany, are reasonable and necessary to protect the legitimate interests of the Company, and thatany violation of those restrictions would result in irreparable injury to the Company. Employeetherefore agrees that, in the event of his violation of any of those restrictions, the Companyshall be entitled to obtain from any court of competent jurisdiction preliminary and permanentinjunctive relief against Employee, in addition to damages from Employee and an equitableaccounting 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 theCompany may be entitled.
 
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(f) Employee agrees that if any or any portion of the foregoing covenants, or the applicationthereof, is construed to be invalid or unenforceable, the remainder of such covenant or covenantsor the application thereof shall not be affected and the remaining covenant or covenants will thenbe given full force and effect without regard to the invalid orunenforceable portions. If any covenant is held to be unenforceable because of the areacovered, the duration thereof, or the scope thereof, Employee agrees that the Court making suchdetermination shall have the power to reduce the area and/or the duration, and/or limit the scopethereof, and the covenant shall then be enforceable in its reduced form. If Employee violates anyof the restrictions contained in subparagraph (a), the period of such violation (from thecommencement of any such violation until such time as such violation shall be cured by Employee tothe satisfaction of the Company) shall not count toward or be included in the one year (or suchlonger period as may be prescribed by such section) restrictive period contained in subparagraph(a).(g) Employee represents and warrants that the knowledge, skill and abilities he possesses atthe time of his execution of this Agreement are sufficient to permit him to earn a living byworking for a non-competitor of the Company for the restrictive period set forth in subparagraph(a) above.(h) For purposes of Paragraphs 10 and 11 of this Agreement, the term “Company” shall includenot only The Bon-Ton Stores, Inc., but also any of its successors, assigns, subsidiaries oraffiliates.12. Taxes. Employee agrees that he is responsible for paying any and all federal,state and local income taxes assessed with respect to any money, benefits or other considerationreceived from the Company and that the Company is entitled to withhold any tax payments fromamounts otherwise due Employee to the extent required by applicable statutes, rulings orregulations.
 
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13. Prior Agreements.(a) Employee represents that there are no restrictions, agreements or understandingswhatsoever to which Employee is a party that could impact upon his employment under the Agreementor would prevent or make unlawful his execution of this Agreement or his employment hereunder.(b) Employee agrees that he will not use or disclose any confidential or proprietaryinformation of any of his prior employers during the course of his employment under this Agreement.This prohibition does not apply to information of the Northern Department Store Group that relatesto business assets that were acquired by the Company from Saks, which information is subject to therestrictions of Paragraph 11.14. Indemnification. Employee shall be entitled to indemnification against claims bythird parties arising out of his acts and omissions within the scope of his employment pursuant tothe terms of the Company’s by-laws.15. Entire Understanding. This Agreement contains the entire understanding betweenthe Company and Employee with respect to the subject matter hereof and supersedes all prior andcontemporary employment and severance 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 tradeinconsistent with any of the terms hereof.16. Modifications. This Agreement may not be modified orally but only by writtenagreement signed by Employee and the Company’s Chief Executive Officer or such other person as theCompany’s Board of Directors may designate specifically for this purpose.
 
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17. Provisions Separable. The provisions of this Agreement are independent of andseparable from each other, and no provision shall be affected or rendered invalid or unenforceableby virtue of the fact that for any reason any other or others of them may be invalid orunenforceable in whole or in part.18. Compliance With Code Section 409A.(a) Notwithstanding anything to the contrary herein, no payment otherwise required to be madehereunder that the Company determines constitutes a payment of nonqualified deferred compensationfor purposes of Section 409A of the Code shall be paid to Employee at a time or in a manner thatwill be treated as a violation of the distribution rules of Code Section 409A(a)(2) and noalternative form of payment of such amount(s) shall be permitted to be made hereunder if suchalternative 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 intoaccount any regulations or other guidance issued by Treasury or the Internal Revenue Service withregard to these Code provisions as may be in effect from time to time).(b) The intent of this provision is to ensure that no additional tax liabilities are imposedon any payments or benefits provided hereunder pursuant to Code Section 409A, and may require, forexample, a delay in commencement of payments until six months after Employee’s termination ofemployment with the Company. In the event any payment is delayed by reason of this Paragraph 18,such payment shall, when made, be increased by an amount representing “interest” from the datepayment would otherwise have been made, through the date payment is actually made, calculated usingthe Company’s cost of borrowing as the interest rate, as determined by the Company at itsdiscretion.
 
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19. Consolidation, Merger or Sale of Assets. Nothing in this Agreement shall precludethe Company from consolidating or merging into or with, or transferring all or a substantialportion of its assets to, another entity that assumes this Agreement and all obligations andundertakings of the Company hereunder. Under such a consolidation, merger or transfer of assetsand assumption, the term “Company” as used herein, shall mean such other entity and this Agreementshall continue in full force and effect.20. Notices. All notices, requests, demands and other communications required orpermitted 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 Federal Express, or bymessenger) or when deposited in the United States mails, registered or certified mail, postagepre-paid, return receipt requested, addressed as set forth below: (a) If to the Company:    The Bon-Ton Stores, Inc.