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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment is made this 27th day of April, 2000 ("Effective Date")
to an Employment Agreement by and between The Bon-Ton Stores, Inc., a
Pennsylvania Corporation (the "Company") and Heywood Wilansky (the "Executive").
WHEREAS, the Company and the Executive entered into an Employment
Agreement ("Employment Agreement") dated February 27, 1998; and
WHEREAS, paragraph 7(b) of the Employment Agreement provides for tax
loans to the Executive which he is required to repay to the Company on the terms
stated therein; and
WHEREAS, the Company desires to offer the Executive the opportunity by
achieving certain performance objectives to reduce or eliminate Executive's
repayment obligation without having to sell shares in the Company;
NOW THEREFORE, in consideration of the provisions contained herein and
intending to be legally bound hereby, the Company and the Executive agree as
follows:
1. Executive agrees that at all times between the Effective Date of this
Amendment and February 1, 2003, he shall own at least the total number
of the shares of the Company's stock granted to him pursuant to
paragraph 3(e) of his Employment Agreement dated August 18, 1995 and
the shares of the Company stock granted to him pursuant to paragraph
3(c) of the Employment Agreement. Notwithstanding the foregoing, the
number of shares which Executive shall be required to own on February
1, 2003 shall be reduced by 83,333 in the event of the Company's share
price reaches $14 per share between the Effective Date and February 1,
2003, and by an additional 83,333 shares at such time as the share
price reaches $15, $16, $17 and $18 per share respectively. In the
event Executive sells any shares, he shall be required to repay the
interest and principal
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attributable to the tax loan relating to such shares as required by
paragraph 7(b) of the Employment Agreement.
2. Paragraph 7(b) of the Employment Agreement is amended, and Executive
shall not be obligated to pay to the Company annually, the interest
which has accumulated or which will accumulate in connection with all
tax loans. Interest on the loans will continue to accrue at the rate
set forth in the Employment Agreement. The Executive's obligation to
pay such interest shall be deferred until the earliest of (a) the
termination of the Executive's employment for any reason (b) sale of
the shares as permitted by paragraph 1 above, or (c) February 1, 2003.
On February 1, 2003, provided that the Executive is still in the employ
of the Company and has not breached the Employment Agreement in any
material respect and further provided that the net after tax income of
the Company in its fiscal year ending on or about February 1, 2001 is
at least $3,000,000, the interest payment otherwise then due to the
Company from Executive shall be forgiven and Executive shall have no
obligation to repay the interest. The Company will also, no later than
April 1, 2003, make a cash payment to Executive to compensate him for
any tax liability attributable to the Company's forgiveness of
Executive's obligation to repay the interest on the tax loans, subject
only to the "cap" contained in paragraph 5 below.
3. In the event that the Company's net after tax income for its fiscal
years ending on or about February 1, 2001, February 1, 2002, and
February 1, 2003 meet or exceed the targets established by the
Compensation Committee as set forth in Exhibit A in every year, the
Executive's obligation to repay the principal of all tax loans made
pursuant to paragraph 7(b) of the Employment Agreement shall be
forgiven effective February 1, 2003. The Company will also no later
than April 1, 2003 make a cash payment as a performance
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bonus equal to the tax liability attributable to the Company's
forgiveness of the loans, provided that the stock of the Company has
not at any time between the Effective Date of this Amendment and
February 1, 2003 reached $14 per share in value, and subject to the
"cap" set forth in paragraph 5 below. In the event that the Executive's
employment terminates for any reason prior to February 1, 2003, the
loan principal shall be immediately repayable.
Should the company fail to meet or exceed each of the targets in the
fiscal years ending February 1, 2001 and/or February 1, 2002 set forth in
Exhibit A by less than 5%, Executive may earn forgiveness of the loan principal
and his performance bonus for the tax liability provided that the Company's net
after tax earnings in its fiscal year ending on or about February 1, 2003 exceed
the target for that year by the amount of the cumulative shortfall in the
earlier two fiscal years. Additionally, in the event of a significant
acquisition or disposition of assets or an extraordinary one time gain or charge
affecting the Company's earnings goals, the above targets will be adjusted by
the Compensation Committee to reflect the effect of the acquisition, disposition
or extraordinary one time gain or charge.
4. Twenty percent (20%) of the principal otherwise to be forgiven based
upon the Company's satisfaction of the earnings targets set forth in
paragraphs 3(a), (b) and (c) above shall nevertheless be due and owing
by Executive to the Company on February 1, 2003 should the share price
of the Company reach $14 per share at any time between the Effective
Date of this Amendment and February 1, 2003. The amount of principal
otherwise repayable to the Company shall increase to 40% in the event
that the Company's share price between the Effective Date and February
1, 2003 reaches $15 per share, 60% in the event the share price reach
$16 per share at any time between the
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Effective Date and February 1, 2003, 80% in the event the share price
reach $17 per share at any time between the Effective Date and February
1, 2003, and 100% in the event the share price reaches $18 per share at
any time between the Effective Date and February 1, 2003. The
percentage of the Executive's obligation to repay the loan which is
preserved by this paragraph 4 shall be computed prior to application of
the payment cap set forth in paragraph 5 below.
5. The sum of (a) all interest to be forgiven pursuant to paragraph 2
above, (b) all principal to be forgiven pursuant to paragraph 3 above,
and (c) all payments made to Executive pursuant to paragraphs 2 and 3
above to compensate him for the tax liability attributable to
forgiveness of the interest and principal shall be subject to a total
overall cap of $4 million. In the event that the sum exceeds $4
million, the Executive shall be required to repay such amount of
principal as the Company may determine is required in order to avoid
the payment cap of $4 million from being exceeded.
6. In measuring Executive's achievement of the net income targets set
forth in paragraphs 2 and Exhibit A, the Company will disregard the
effect on the Company's income of accounting charges attributable
solely to this Amendment.
7. This Amendment may be executed in any number of counterparts, each of
which shall be deemed to be an original, and all of which together
shall constitute one in the same instrument.
8. This Amendment and the performance objectives set forth in paragraph 3
hereof shall be subject to approval by the Compensation Committee and
the shareholders of the Company.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed and delivered, in Pennsylvania this Amendment as of the date
first above written.
THE BON-TON STORES, INC.
By: /s/ M. Thomas Grumbacher
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M. Thomas Grumbacher, Chairman
/s/ Heywood Wilansky
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Heywood Wilansky
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