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THE BON-TON STORES, INC.
2000 PERFORMANCE-BASED COMPENSATION PLAN
FOR HEYWOOD WILANSKY
1. PURPOSE. The purpose of this Plan is to provide, subject to
shareholder approval, certain additional benefits to Heywood L. Wilansky to
encourage the retention of shares of the Company's stock owned by him and to
assist the Company in motivating and retaining him as a key executive of the
Company as part of the Company's overall compensation program for its executive
employees.
2. DEFINITIONS. The following words and phrases as used herein shall
have the following meanings, unless a different meaning is plainly required by
the context:
(a) "Board of Directors" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall mean the Compensation Committee of the Board
of Directors, provided such committee consists exclusively of two or more
Outside Directors, or such other committee, consisting exclusively of two or
more Outside Directors, as may be appointed by the Board of Directors to act as
the Committee with respect to the Plan.
(d) "Company" shall mean the Bon-Ton Stores, Inc., a Pennsylvania
corporation, and any successor thereto.
(e) "Employment Agreement" shall mean the Employment Agreement of
the Participant with the Company dated February 27, 1998, and as amended from
time to time.
(f) "Maximum Benefit Amount" means the maximum benefit to which
the Participant is entitled under the Plan.
(g) "Outside Director" shall mean a member of the Board of
Directors who is treated as an "outside director" for purposes of Code Section
162(m).
(h) "Participant" shall mean Heywood L. Wilansky and such other
key executives as may be designated by the Committee to participate in the Plan
from time to time.
(i) "Plan" shall mean the 2000 Performance-based Compensation Plan
for Heywood Wilansky.
3. PARTICIPATION. Heywood L. Wilansky shall be the sole participant
in the Plan.
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4. Term of Plan. Subject to approval of the Plan by the shareholders of the
Company, the Plan shall be in effect commencing as of April 25, 2000 (the
"Effective Date") and shall continue through April 1, 2003 unless terminated
sooner by the Board of Directors.
5. Benefit Entitlements.
(a) Forgiveness of Principal. Effective as of February 1, 2003, subject
to reduction under Section 8 of the Plan, and subject further to the maximum
benefit permitted under Section 5(c), below, the outstanding principal amount
of certain loans (the "Tax Loans") made to the Participant under the terms of
the Participant's Employment Agreement in connection with certain tax
liabilities attributable to Company stock awards made to the Participant shall
be forgiven, and an additional cash payment shall be made to the Participant as
soon as practicable thereafter equal to the tax liability attributable to such
debt forgiveness by the Company, provided the performance goals described in
Section 6 and established by the Committee pursuant to the terms of the Plan
have been achieved and such achievement has been certified in writing by the
Committee.
(b) Forgiveness of Interest. Effective as of the Effective Date,
payment of interest otherwise payable to the Company with respect to the Tax
Loans shall be deferred pursuant to the provisions of the Employment Agreement,
and shall be payable in the amount and at the time or times required under the
terms of the Tax Loans, as modified by the Employment Agreement; provided,
however, that such obligation to pay the interest outstanding as of February 1,
2003 shall be forgiven and an additional cash payment shall be made to the
Participant as soon as practicable thereafter equal to the tax liability
attributable to such interest forgiveness by the Company, provided the
applicable performance target established by the Committee has been achieved
and such achievement has been certified in writing by the Committee.
(c) Notwithstanding the foregoing, participant shall not be entitled to
any benefits under the Plan if all of the other requirements for benefit
eligibility set forth in Section 7 of the Plan are not met.
(d) In no event shall the benefit to the Participant under the Plan
exceed the Maximum Benefit Amount, which is equal to $4,000,000, subject to
reduction by reason of certain other payments. The reduction of the Maximum
Benefit Amount adjustment shall be made to the extent necessary so that the
aggregate benefit, including forgiveness of interest with respect to certain
tax loans and the cash payments to compensate the Participant for the tax
liability attributable to such forgiveness of interest (as provided for under
the terms of the Employment Agreement), and all benefits (both debt forgiveness
and cash payments) under this Plan, shall not, in the aggregate, exceed
$4,000,000.
6. Performance Goals.
(a) The performance goals referred to in Section 5, above, are
satisfied if the Company's net after tax income, or earnings per share, as the
case may be, 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
Committee with respect to each such fiscal year, as such targets may be
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amended from time to time by the Committee; provided, however, that such
amendments shall, with respect to each fiscal year, not be made after the 90th
day of each such fiscal year unless, at the discretion of the Committee, other
performance periods and targets, based on net after tax income or earnings per
share, are established by the Committee for purposes of the Plan in order to
take into account changes in circumstances that the Committee determines are
likely to make changed targets and or changed performance periods a more
appropriate measure of performance. In the event any performance periods are
used other than the fiscal year of the Company, the Committee shall establish
the performance targets for such periods within the first 25% of such
performance period, and in no event later than the 90th day of such performance
period.
(b) Notwithstanding the foregoing, the performance targets that have
been established by the Committee may, at any time, be adjusted by the Committee
to reduce or to increase the target level otherwise required to be achieved
under the Plan in the event of a significant acquisition or disposition of
business assets or operations or an extraordinary one time gain or charge
affecting the Company's net after tax earnings or earnings per share, as the
case may be; provided, however, that such adjustments shall be made by the
Committee consistent with the requirements under the Code and applicable
Treasury Regulations for the remuneration provided under the Plan to be treated
for purposes of Code Section 162(m) as performance-based compensation. The
performance targets shall be based on the Company's net after tax income or
earnings per share, but such targets may include adjustments to the manner in
which such measures are to be calculated as are deemed appropriate by the
Committee.
7. Additional Requirements for Benefits Under the Plan.
(a) The Participant must remain employed by the Company at all times
from the Effective Date through the date as of which Participant becomes
eligible for a benefit under the Plan.
(b) The Participant must, at all times between the Effective Date of
the Plan and February 1, 2003, own at least the total number of the shares of
the Company's stock granted to him pursuant to paragraph 1(c) of his Employment
Agreement and the shares of the Company stock granted to him pursuant to
paragraph 3(c) of the Employment Agreement; provided, however, that the number
of shares which the Participant 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 at any time between the Effective Date and February 1, 2003, and
by an additional 83,333 shares in the event the Company's share price reaches
$15, $16, $17 and $18 per share respectively. In the event Participant sells
any shares, he shall be required to repay the interest and principal
attributable to the tax loan relating to such shares as required by paragraph
7(b) of the Employment Agreement.
8. Reduction of Benefits. Notwithstanding the provisions of Section 5,
above, the portion of the outstanding principal, if any, to be forgiven as of
February 1, 2003, shall, if the per share price of the Company's common stock
equals or exceeds $14 at any time during the period commencing as of the
Effective Date, and ending as of February 1, 2003, be determined by applying
the Applicable Percentage set forth in the table below to the amount of
outstanding principal that would be forgiven under the applicable provisions of
the Plan determined without regard to this Section 8.
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<TABLE>
<CAPTION>
Applicable Percentage Share Price
<S> <C>
80% $14
60% $15
40% $16
20% $17
0% $18 or above
</TABLE>
The Applicable Percentage to be used shall be determined by reference to the
highest per share price attained by the Company's common stock at any time
during the period commencing as of the Effective Date, and ending as of
February 1, 2003.
9. COMMITTEE.
(a) Powers. The Committee shall have the power and duty to do all
things necessary or convenient to effect the intent and purposes of the Plan
and not inconsistent with any of the provisions hereof, whether or not such
powers and duties are specifically set forth herein, and, by way of
amplification and not limitation of the foregoing, the Committee shall have the
power to:
(i) provide rules and regulations for the management, operation
and administration of the Plan, and, from time to time, to amend or supplement
such rules and regulations;
(ii) construe the Plan, which construction, as long as made in
good faith, shall be final and conclusive upon all parties hereto; and
(iii) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as it shall deem
expedient to carry the same into effect, and it shall be the sole and final
judge of when such action shall be appropriate.
The resolution of any questions with respect to payments and entitlements
pursuant to the provisions of the Plan shall be determined by the Committee,
and all such determinations shall be final and conclusive.
(b) Indemnity. No member of the Committee shall be directly or
indirectly responsible or under any liability by reason of any action or
default by him as a member of the Committee, or the exercise of or failure to
exercise any power or discretion as such member. No member of the Committee
shall be liable in any way for the acts or defaults of any other member of the
Committee, or any of its advisors, agents or representatives. The Company shall
indemnify and save harmless each member of the Committee against any and all
expenses and liabilities arising out of his own membership on the Committee.
(c) Compensation and Expenses. Members of the Committee shall
receive no separate compensation for services other than compensation for their
services as members of the
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Board of Directors, which compensation can include compensation for services at
any committee meeting attended in their capacity as members of the Board of
Directors. Members of the Committee shall be entitled to receive their
reasonable expenses incurred in administering the Plan. Any such expenses, as
well as extraordinary expenses authorized by the Company, shall be paid by the
Company.
(d) Participant Information. The Company shall furnish to the
Committee in writing all information the Company deems appropriate for the
Committee to exercise its powers and duties in administration of the Plan. Such
information shall be conclusive for all purposes of the Plan and the Committee
shall be entitled to rely thereon without any investigation thereof; provided,
however, that the Committee may correct any errors discovered in any such
information.
(e) Inspection of Documents. The Committee shall make available to the
Participant, for examination at the principal office of the Company (or at such
other location as may be determined by the Committee), a copy of the Plan and
such of its records, or copies thereof, as may pertain to any benefits of the
Participant under the Plan.
10. EFFECTIVE DATE, TERMINATION AND AMENDMENT.
(a) Effective Date of Plan. Subject to shareholder and Committee
approval of the Plan, participation in this Plan shall be effective as of the
Effective Date.
(b) Amendment and Termination of the Plan. The Plan may be terminated
or revoked by the Company at any time and amended by the Company from time to
time, provided that neither the termination, revocation or amendment of the Plan
may, without the written approval of the Participant, reduce the benefit to
which the Participant would otherwise be entitled; and provided further that no
changes that would increase the benefit available to the Participant under the
Plan shall be effective without approval by the Committee and without disclosure
to and approval by the shareholders of the Company in a separate vote prior to
the date Participant would become entitled to such increased benefit. In
addition, the Plan may be modified or amended by the Committee, as it deems
appropriate, in order to comply with any rules, regulations or other guidance
promulgated by the Internal Revenue Service with respect to applicable
provisions of the Code, as they relate to the exemption for "performance-based
compensation" under the limitations on the deductibility of compensation imposed
under Code Section 162(m).
11. MISCELLANEOUS PROVISIONS.
(a) Unsecured Creditor Status. A Participant entitled to a bonus
payment hereunder, shall rely solely upon the unsecured promise of the Company,
as set forth herein, for the payment thereof, and nothing herein contained shall
be construed to give to or vest in a Participant or any other person now or at
any time in the future, any right, title, interest, or claim in or to any
specific asset, fund, reserve, account, insurance or annuity policy or contract,
or other property of any kind whatever owned by the Company, or in which the
Company may have any right, title, or interest, now or at any time in the
future.
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(b) Other Company Plans. It is agreed and understood that any benefits
under this Plan are in addition to any and all benefits to which a Participant
may otherwise be entitled under any other contract, arrangement, or voluntary
pension, profit sharing or other compensation plan of the Company, whether
funded or unfunded, and that this Plan shall not affect or impair the rights or
obligations of the Company or a Participant under any other such contract,
arrangement, or voluntary pension, profit sharing or other compensation plan.
(c) Separability. If any term or condition of the Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of the
Plan, with the exception of such invalid or unenforceable provision, shall not
be affected thereby, and shall continue in effect and application to its fullest
extent.
(d) Continued Employment. Neither the establishment of the Plan, any
provisions of the Plan, nor any action of the Committee shall be held or
construed to confer upon any Participant the right to a continuation of
employment by the Company. The Company reserves the right to dismiss any
employee (including a Participant), or otherwise deal with any employee
(including a Participant) to the same extent as though the Plan had not been
adopted.
(e) Jurisdiction. The Plan shall be construed, administered, and enforced
according to the laws of the Commonwealth of Pennsylvania, except to the extent
that such laws are preempted by the Federal laws of the United States of
America.
(f) Claims. If, pursuant to the provisions of the Plan, the Committee
denies the claim of a Participant for benefits under the Plan, the Committee
shall provide written notice, within 60 days after receipt of the claim, setting
forth in a manner calculated to be understood by the claimant:
(i) the specific reasons for such denial;
(ii) the specific reference to the Plan provisions on which the
denial is based;
(iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such material or
information is needed; and
(iv) an explanation of the Plan's claim review procedure and the
time limitations of this subsection applicable thereto.
A Participant whose claim for benefits has been denied may request review by the
Committee of the denied claim by notifying the Committee in writing within 60
days after receipt of the notification of claim denial. As part of said review
procedure, the claimant or his authorized representative may review pertinent
documents and submit issues and comments to the Committee in writing. The
Committee shall render its decision to the claimant in writing in a manner
calculated to be understood by the claimant not later than 60 days after receipt
of the request for review, unless special circumstances require an extension of
time, in which case decision shall be rendered as soon after the sixty-day
period as possible, but not later than 120 days after receipt of
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the request for review. The decision on review shall state the specific reasons
therefor and the specific Plan references on which it is based.
(g) Withholding. The Participant shall make appropriate arrangements
with the Company for satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other tax requirements
applicable to the accrual or payment of benefits under the Plan. If no other
arrangements are made, the Company may provide, at its discretion, for any
withholding and tax payments as may be required.
(h) Interpretation. The Plan is intended to pay compensation only
on the attainment of the performance goals set forth above in a manner that
will exempt such compensation from the limitations on the deduction of certain
compensation payments under Code Section 162(m). To the extent that any
provision of the Plan would cause a conflict with the conditions required for
such an exemption or would cause the administration of the Plan to fail to
satisfy the applicable requirements for the performance-based compensation
exemption under Code Section 162(m), such provision shall be deemed null and
void to the extent permitted by applicable law.
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