EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this 3rd day of February, 2002, by and
between THE BON-TON STORES, INC., a Pennsylvania corporation (the "Company"),
and XXXXX X. XXXXXXXXXX ("Employee").
W I T N E S S E T H:
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
employment by the Company as the Company's Vice Chairman and Chief
Administrative Officer or in a position of comparable status and responsibility.
Employee shall have all the duties and responsibilities normally attendant to
the position of Vice Chairman and Chief Administrative Officer (or a position of
comparable status and responsibility) and shall report directly to the Chief
Executive Officer of the Company or such other person as the Company's Board of
Directors ("Board") may designate in the absence of the Chief Executive Officer.
(b) Throughout the term of this Agreement, Employee shall devote his
entire working time, energy, attention, skill and best efforts to the affairs of
the Company and to the performance of his duties hereunder in a manner which
will faithfully and diligently further the business and interests of the
Company. Employee may not, directly or indirectly, do any work for or on behalf
of a competitor or any other company while employed by the Company. However,
nothing herein contained shall be deemed to prevent or limit the right of
Employee to invest any of his personal funds in less than one percent of the
capital stock or other securities of any corporation whose stock or securities
are publicly owned or are regularly traded on any public exchange, nor shall
this clause be construed as preventing Employee from investing his assets in
such other form or manner as will not require any services on the part of
Employee in the operation or the affairs of entities in which such investments
are made.
(c) Employee shall not obtain goods or services or otherwise deal on
behalf of the Company with any business or entity in which Employee or a member
of his immediate family has a financial interest or from which Employee or a
member of his immediate family may derive a financial benefit as a result of
such transaction, except that this prohibition shall not
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apply to any public company in which Employee or a member of his immediate
family owns less than one percent of the outstanding stock.
2. Term of Agreement. This Agreement, and Employee's employment
hereunder, shall commence as of February 3, 2002 (the "Effective Date") and
shall continue through and terminate on January 31, 2004, unless sooner
terminated in accordance with Paragraph 10 below.
3. Place of Performance. Employee shall be based at the regular
executive offices of the Company, except for travel required for Company
business. The Company's executive offices currently are located in York,
Pennsylvania, but may be relocated at the sole discretion of the Board.
4. Compensation.
(a) Salary. Employee shall receive a base salary at the annual
rate of $400,000. 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
annual base salary may be reviewed from time to time during the term of this
Agreement by the Compensation Committee of the Board to ascertain whether, in
the sole discretion of the Compensation Committee, such base salary should be
increased or decreased but in no event will the base salary be less than
$400,000 per year.
(b) Bonus. Employee shall be eligible to receive an annual
bonus, not to exceed 75% of annual base salary, in accordance with objectives to
be determined by the Company. To the extent reasonably possible, 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.
5. Car Allowance. The Company shall pay to Employee $791.67 per month,
less taxes and normal deductions, as a car allowance.
6. Insurance.
(a) Life Insurance. Employee shall receive term life insurance
coverage equal to two times his base salary not to exceed $650,000, subject to
the restrictions, limitations and requirements contained in the insurance
agreement(s), provided that he passes the insurance company's required medical
examination and is insurable at standard rates.
(b) Medical Insurance. Employee and his eligible dependents
shall be eligible to participate in the Company's group medical plans in
accordance with the terms of such plans
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and, subject to the restrictions and limitations contained in the insurance
agreement or agreements.
(c) Medical Allowance. The Company shall pay Employee $191.67
per month, less taxes and normal deductions, as a medical allowance. If Employee
pays medical expenses (other than for medical insurance) in excess of $2300.00
in either of the years during the term of this Agreement, the Company shall pay
Employee an amount, less taxes and normal deductions, equal to the medical
expenses (other than for medical insurance) paid by Employee in excess of
$2300.00 up to but not exceeding $8000.00 for such year, upon receipt of proper
receipts therefore.
7. Other Benefits. Employee shall be eligible to participate in the
Company's profit sharing plan, discount program, vacation plan, long-term
disability plan and other benefit and policy programs generally made available
to other executives of the Company, subject to their respective eligibility
requirements and other terms, conditions and restrictions, except to the extent
that such benefits and programs (including, without limitation, severance) are
addressed in this Agreement. 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 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 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 four weeks vacation per fiscal year, which vacation
entitlement shall be pro-rated in any fiscal year in which Employee does not
work the entire fiscal year.
8. 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 therefore and in accordance with the Company's regular reimbursement
procedures and practices in effect from time to time.
9. Disability or Incapacity. If Employee becomes physically or mentally
unable to perform his essential duties hereunder, with or without reasonable
accommodations, the Company will continue Employee's benefits provided under
this Agreement to the extent permitted by the applicable plan documents or
insurance agreements and will pay Employee the
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difference between his base salary and any benefits received by him under any
disability insurance policy during the period of the disability or incapacity
for up to the lesser of either 13 weeks following the date Employee is first
unable to perform his duties due to such disability or incapacity or for a
cumulative period of 26 weeks during the term of this Agreement. In addition,
the Company shall continue such benefits and compensation referred to above for
so long as the Company elects not to terminate Employee pursuant to Paragraph 10
below.
10. 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 11 below, in any of the
following circumstances:
(a) Disability of Incapacity. In the event of Employee's
physical or mental inability to perform his essential duties hereunder, with or
without reasonable accommodation, for a period of 13 consecutive weeks or for a
cumulative period of 26 weeks during the term of this Agreement.
(b) Death of Employee. In the event of Employee's death.
(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 10(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 a substantial change in Employee's duties and responsibilities
requiring Employee to work in a non-senior executive capacity.
(d) Change of Control. In the event of a Change of Control,
Employee shall be prohibited from resigning for Good Reason for a period of six
months following the Change of Control. For purposes of this Agreement, a Change
of Control shall be deemed to occur if:
(i) any "person", as such term is defined under
Sections 3(a)(9) and 13(d) of the Exchange Act, who is not an Affiliate of the
Company on the date hereof, becomes a "beneficial owner", as such term is used
in Rule 13d-3 under the Exchange Act, of a majority of the Company's Voting
Stock;
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(ii) the Company adopts any plan of liquidation
providing for the distribution of all or substantially all of its assets; or
(iii) the Company is party to a merger,
consolidation, other form of business combination or a sale of all or
substantially all of its assets, unless the business of the Company is continued
following 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 (the "Prior Shareholders") hold, directly or indirectly, a majority
of the voting power of the resulting entity.
(e) Discharge for Cause. The Company may discharge Employee at
any time for "Cause", which shall include but not be limited to: willful
misconduct; fraud; misappropriation; embezzlement; gross negligence;
self-dealing; dishonesty; misrepresentation; conflict of interest; conviction of
a crime of moral turpitude; material violation of any material Company policy;
or breach 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 capacity,
while still an employee of the Company).
(f) 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 11 below) may be terminated by the Company at
any time without Cause.
(g) General.
(i) Termination of Employee's employment pursuant to
this Paragraph 10 shall release the Company of all of its liabilities and
obligations under this Agreement, except as expressly provided under Paragraph
11 below.
(ii) Termination of Employee's employment pursuant to
this Paragraph 10 shall not release Employee from Employee's obligations and
restrictions under Paragraphs 12 and 13 of this Agreement.
11. Payments Upon Termination.
(a) Discharge Without Cause or Resignation for Good Reason. If
Employee is discharged without Cause or resigns for Good Reason:
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(i) Employee shall receive base salary (paid in
monthly installments) and the medical and term life insurance coverages provided
herein (or equivalent) for the greater of the remaining term of this Agreement
or one year.
(ii) If Employee has been employed for at least three
months in the Company's fiscal year in which the termination of his employment
occurs, Employee will receive a prorated portion (based on the number of days
employed in the fiscal year) of the bonus which would have been earned by
Employee under Paragraph 4(b) above for said fiscal year based on the Company's
full year's performance. The bonus, if any, will be paid as soon as practicable
after the end of the fiscal year in which the termination occurs.
(iii) Except as set forth above in this Paragraph
11(a) and in Paragraph 16, Employee shall not be eligible for any payments or
other benefits upon termination of his employment without Cause or resignation
for Good Reason.
(iv) Notwithstanding any other provision of this
Agreement, if the aggregate present value of the "parachute payments" to
Employee, determined under Section 280G(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), is at least three times the "base amount" determined
under such Section 280G, then the compensation otherwise payable under this
Agreement and any other amount payable hereunder or pursuant to any other
severance plan, program, policy or obligation of the Company or any affiliate
thereof shall be reduced so that the aggregate present value of the parachute
payments to Employee, determined under such Section 280G, does not exceed 2.99
times the base amount. In no event, however, shall any benefit provided
hereunder be reduced to the extent such benefit is specifically excluded by
Section 280G(b) of the Code as a "parachute payment" or as an "excess parachute
payment". 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 Employee.
(v) Employee's right to commencement and continuation
of payments and benefits under Paragraph 11(a)(i)-(ii) shall be contingent upon
(i) execution by Employee at or about the time of termination of his employment
of a general release of claims (including without limitation contractual, common
law and statutory claims) in a form satisfactory to the Company in favor of the
Company and its officers, directors, executives and agents substantially similar
in substance to the release attached as Exhibit "A" which he does not revoke;
and (ii)
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compliance by Employee with all of the terms of this Agreement including without
limitation Paragraphs 12 and 13 hereof.
(b) Death or Disability/Incapacity.
(i) On death, Employee's estate's sole entitlement
will be to base salary for any days worked prior to his death, amounts payable
on account of Employee's death under any insurance or benefit plans or policies
maintained by the Company, and any payouts to which he is entitled under the
bonus plan then in effect, if any, and the Company's stock option 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 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 by the Company, and
any payouts to which he is entitled under the bonus plan then in effect, if any,
and the Company's stock option plans in accordance with, to the extent provided
in, and subject to the restrictions and payout schedules contained in those
plans.
(c) Discharge for Cause. If Employee is discharged for Cause
or resigns without Good Reason, Employee's sole entitlement will be the receipt
of base salary for any days worked through the date of termination and any
payouts to which he is entitled under the bonus plan then in effect, if any, and
the Company's stock option plans in accordance with, to the extent provided in,
and subject to the restrictions and payout schedules contained in those plans
and this Agreement.
12. 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.
13. Non-Competition and Confidentiality. To the maximum extent
permissible by law:
(a) During his employment with the Company and for a period
equal to the greater of (x) one year after the termination of his employment
with the Company for any reason
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whatsoever, whether by Employee or by the Company and whether during the term of
this Agreement or subsequent to the expiration of this Agreement, or (y) the
period during which Employee is entitled to receive any payments under Paragraph
11(a) of this Agreement, Employee shall not, directly or indirectly:
(i) Induce or influence any customer, employee,
consultant, independent contractor or supplier of the Company to cease to do
business with or terminate his or her employment 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 any retail department store business:
(a) that is a direct competitor of the Company (i.e. competitive lines generate
at least 30% of the Company's revenues and at least 30% of the competitor's
revenues); (b) with at least $250 million in gross annual sales; and (c)
operating a store or stores within a 15 mile radius of any Company store which
is in existence or which is under contract to be acquired or constructed by the
Company at the time of Employee's termination of employment, and which competing
store or stores have total gross annual sales in excess of 15% of the Company's
gross annual sales for the prior year, including owned and leased businesses.
(b) During his employment with the Company and at all times
thereafter, Employee shall not use for his 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 which Employee acquires in the course of his
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 12 or any 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 his 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 all
correspondence, documents, books, records, lists, computer programs and other
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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.
(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 following the expiration of the
Agreement, Employee shall, upon reasonable notice, furnish to the Company such
information pertaining to his employment with the Company as may be in his
possession. The Company shall reimburse Employee for all reasonable expenses
incurred by him in fulfilling his obligation under this subparagraph(c).
(d) The provisions of subparagraphs (a), (b) and (c) shall
survive the termination of Employee's employment as well as the expiration of
this Agreement at the end of its term or at any time prior thereto.
(e) Employee acknowledges that the restrictions contained in
this Paragraph 13, in view of the nature of the business in which the Company is
engaged and 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 his 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.
(f) 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 subparagraph (a), 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
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satisfaction of the Company) shall not count toward or be included in the one
year (or such longer 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 at the time of his execution of this Agreement are
sufficient to permit him to earn a living by working for a non-competitor of the
Company for the restrictive period set forth in subparagraph (a) above.
(h) For purposes of Paragraphs 12 and 13 of this Agreement, the term
"Company" shall include not only The Bon-Ton Stores, Inc., but also any of its
successors, subsidiaries or affiliates.
15. Prior Agreements. Employee represents to Company that: (a) there are no
restrictions, agreements or understandings whatsoever to which Employee is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (b) his execution of this Agreement and his employment
hereunder shall not constitute a breach of any contract agreement or
understanding, oral or written, to which he is a party or by which he is bound;
and (c) he is free and able to execute this Agreement and to enter into
employment with the Company.
16. Stock Option Grants/Restricted Stock Awards. Employee has
heretofore received options to purchase shares of Common Stock of the Company
("Stock Option Grants") and an award of Common Stock of the Company subject to
restrictions ("Restricted Stock Award"), all as noted below:
Date No. of shares Type Termination Date
---- ------------- ---- ----------------
6-26-96 20,000 Stock Option Grant 6-26-05
2-27-98 10,000 Stock Option Grant 2-26-08
4-17-01 51,000 Restricted Stock Award N.A.
1-25-02 100,000 Stock Option Grant 1-24-12
Notwithstanding anything to the contrary provided in any Stock Option
Grant or Restricted Stock Award, if Employee is discharged without Cause or
resigns for Good Reason, all Stock Option Grants vested as of the date of such
discharge or resignation shall remain exercisable until the Termination Date
noted above with respect to such Stock Option Grant, and further, in the event
of a Change of Control, all Stock Option Grants and the Restricted Stock Award
shall immediately vest.
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17. Entire Understanding. This Agreement and The Bon-Ton Stores, Inc.
Supplemental Executive Retirement Plan contain the entire understanding between
the Company and Employee with respect to the subject matter hereof and supersede
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.
18. Supplemental Executive Retirement Plan. The rights and obligations
of each of Employee and the Company as provided in the Supplemental Executive
Retirement Plan shall not be altered in any respect due to the terms and
provisions of this Agreement.
19. Modifications. This Agreement may not be modified orally but only
by written agreement signed by Employee and the Company's Chief Executive
Officer or such other person as the Board may designate specifically for this
purpose.
20. 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.
21. 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 which
assumes this Agreement and all obligations and undertakings of the Company
hereunder. Under such consolidation, merger or transfer of assets and
assumptions, the term "the Company" as used herein, shall mean such other entity
and this Agreement shall continue in full force and effect.
22. 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 Federal Express, 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.
0000 X. Xxxxxx Xxxxxx
00
Xxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxx X. Xxxxxx, Esquire
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
(b) If to Employee:
Xxxxx X. Xxxxxxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
In addition, notice by mail shall be by air mail if posted outside of the
continental United States. Any party may alter the address to which
communications or 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.
23. 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.
24. 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, his heirs, executors and legal
representatives.
25. No Assignment by Employee. Employee acknowledges that the services
to be rendered by him are unique and personal. Accordingly, Employee may not
assign or delegate any of his rights or obligations hereunder, except that he
may assign certain rights hereunder if agreed to in writing by the Chief
Executive Officer.
26. 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 with respect to any
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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.
27. 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.
28. 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.
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 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, in Pennsylvania, this Agreement as of the date
first above written.
THE BON-TON STORES, INC.
By /s/ Xxx Xxxxxxxxxx
Xxx Xxxxxxxxxx
Chief Executive Officer
XXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxx
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