THE BON-TON STORES, INC. RESTRICTED STOCK AGREEMENT
EXHIBIT 10.3
THE BON-TON STORES, INC.
This is a Restricted Stock Agreement dated as of July 19, 2007 (“Agreement”), between The
Bon-Ton Stores, Inc. (the “Company”) and the undersigned (“Grantee”). This Agreement is entered
into pursuant to the provisions of the Plan (as defined below) and in connection with a certain
employment agreement entered into by and between the Grantee and the Company on August 24, 2004,
and as such has been amended from time to time (including the Third Amendment to Employment
Agreement, entered into in July, 2007 (the employment agreement, including all amendments thereto
being referred to herein as the “Employment Agreement”). This Agreement is intended to be
consistent with the Employment Agreement and specifically those provisions of the Employment
Agreement regarding the Fiscal Year 2007 “Performance-Based Restricted Share Grant” to be made as
soon as practicable after the effective date of the Third Amendment to the Employment Agreement,
and shall be so interpreted. To the extent any provision hereof is inconsistent with the
provisions of the Employment Agreement, the provisions of the Employment Agreement shall be given
effect. To the extent the definition of any terms defined in the Employment Agreement is modified
from time to time by amendments made to the Employment Agreement, the definition as in effect at
the relevant time shall apply for purposes of this Agreement. All determinations regarding the
vesting of Restricted Stock hereunder shall be made by the Committee (as that term is defined in
the Plan) consistent with the Plan’s provisions regarding performance-based compensation.
Definitions. As used herein:
“Date of Grant” means July 19, 2007, the date on which the Company awarded the
Restricted Stock.
“Forfeiture Date” means any date as of which Grantee’s rights to all or any portion of
the Restricted Stock are forfeited pursuant to applicable provisions of this Agreement.
“Plan” means The Bon-Ton Stores, Inc. Amended and Restated 2000 Stock Incentive and
Performance-Based Award Plan.
“Restricted Period” with respect to any shares of Restricted Stock means the period
beginning on the Date of Grant and ending on the Vesting Date applicable to such shares.
“Vesting Date” with respect to any shares of Restricted stock means the date set as a
vesting date pursuant to Paragraph 2 hereof.
All other capitalized terms used herein shall have the meaning set forth in the Employment
Agreement or in the Plan, as applicable. In the event of any inconsistency in the definition
contained in the Employment Agreement and that contained in the Plan, the definition in the
Employment Agreement shall control.
Grant of Restricted Stock. Subject to the terms and conditions set forth herein and
in the Plan, the Company grants to Grantee 41,297 shares of the Company’s Common Stock, par value
$.01 (the “Restricted Stock”). Of the Restricted Stock subject to this Agreement, fifty percent
(50%) is subject to vesting (or forfeiture) on the basis of the achievement of certain performance
goals established for the Company’s 2007 fiscal year (i.e., the fiscal year ending on or about
January 31, 2008), and the remaining fifty percent (50%) is subject to vesting (or forfeiture) on
the basis of the achievement of performance goals to be established for the Company’s 2008 fiscal
year (i.e., the fiscal year ending on or about January 31, 2009). The two portions of the
Restricted Stock are referred to herein as the “2007 Performance Shares Based Upon Company
Performance For Fiscal Year 2007” and the “2007 Performance Shares Based Upon Company Performance
for Fiscal Year 2008,” respectively. Except as otherwise provided herein, the Restricted Stock
shall vest (or be forfeited) as follows:
2007 Performance Shares Based Upon Company Performance For Fiscal Year 2007:
One hundred percent (100%) of the 2007 Performance Shares Based Upon Company Performance
For Fiscal Year 2007 shall become vested in the event that the Company achieves the Net Income
required for the target bonus as specified on the CEO 2007 Bonus Metrics Table (Net Income for
these purposes shall be determined in a manner consistent with the determination of Net Income
applicable to Grantee’s bonus under Paragraph 5(a)(ii) of the Third Amendment to the Employment
Agreement.)
Eighty-seven and one-half percent (87.5%) of the 2007 Performance Shares Based Upon Company
Performance For Fiscal Year 2007 shall become vested in the event that the Company achieves
ninety-five percent (95%) of the Net Income required for the target bonus as specified on the CEO
2007 Bonus Metrics Table, and the remaining 2007 Performance Shares Based Upon Company Performance
For Fiscal Year 2007 shall be forfeited as of the close of the Company’s 2007 fiscal year.
Seventy-five percent (75%) of the 2007 Performance Shares Based Upon Company Performance For
Fiscal Year 2007 shall become vested in the event that the Company achieves ninety percent (90%) of
the Net Income required for the target bonus as specified on the CEO 2007 Bonus Metrics Table, and
the remaining 2007 Performance Shares Based Upon Company Performance For Fiscal Year 2007 shall be
forfeited as of the close of the Company’s 2007 fiscal year.
Achievement of Net Income below the Net Income required for the threshold bonus as specified
on the CEO 2007 Bonus Metrics Table shall result in forfeiture of the 2007 Performance Shares Based
Upon Company Performance For Fiscal Year 2007.
The Vesting Date with respect to the 2007 Performance Shares Based Upon Company Performance
For Fiscal Year 2007 shall be as of February 2, 2008, subject to the Committee’s certification in
writing of its determination of the level of achievement of the performance goals set forth above
(without regard to whether Grantee has remained employed by the Company or an Affiliate of the
Company after the Vesting Date). Any 2007 Performance Shares Based Upon
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Company Performance For
Fiscal Year 2007 not vested as a result of such determination shall be considered as having been
forfeited as of February 2, 2008.
2007 Performance Shares Based Upon Company Performance For Fiscal Year 2008.
The 2007 Performance Shares Based Upon Company Performance For Fiscal Year 2008 shall become vested
or shall be forfeited as a result of the achievement or non-achievement of performance targets for
the selected performance metrics (among Net Income, GMROI Dollars ($); Total Sales, and EBITDA)
established for the Company’s 2008 fiscal year by the Committee. These performance targets shall
be in line with the respective targets under the Company Plan for its 2008 fiscal year as well as
in line with the respective targets established with respect to bonuses payable under the Company’s
Cash Bonus Plan for the Company’s 2008 fiscal year, all as determined by the Committee consistent
with the Plan and in the normal course (i.e., in the first quarter of the Company’s 2008 fiscal
year).
The Vesting Date with respect to the 2007 Performance Shares Based Upon Company Performance For
Fiscal Year 2008 shall be as of January 31, 2009, subject to the Committee’s certification in
writing of its determination of the level of achievement of the performance goals established in
connection with the vesting of such shares of Restricted Stock (without regard to whether Grantee
has remained employed by the Company or an Affiliate of the Company after the Vesting Date). 2007
Performance Shares Based Upon Company Performance For Fiscal Year 2008 not vested as a result of
such determination shall be considered as having been forfeited as of January 31, 2009.
Termination of Employment. Any Restricted Stock that is not earned and vested on the
effective date of the Grantee’s termination of employment for any reason shall be forfeited (if not
already forfeited), subject to the following:
In the event that the Grantee, prior to February 2, 2008, is discharged without Cause or
resigns for Good Reason, the 2007 Performance Shares Based Upon Company Performance For Fiscal Year
2007 shall become vested to the extent provided above based on attainment of the performance goals
for the Company’s 2007 fiscal year to the same extent such Restricted Stock would have become
vested had the Grantee remained employed with the Company or an Affiliate of the Company through
the date that the Committee makes a determination regarding the achievement of the performance
targets described above for the Company’s 2007 fiscal year; provided, however, that no portion of
the 2007 Performance Shares Based Upon Company Performance for Fiscal Year 2007 shall be vested in
such a situation unless the Grantee executes a general release as required under applicable
provisions of the Employment Agreement; and
In the event that the Grantee, on or after February 3, 2008 and prior to January 31, 2009, is
discharged without Cause or resigns for Good Reason, the 2007 Performance Shares Based Upon Company
Performance For Fiscal Year 2008 shall become vested to the same extent such Restricted Stock would
have become vested had the Grantee remained employed with the Company or an Affiliate of the
Company through the date that the Committee makes a determination regarding the achievement of the
performance goals established for the Company’s 2008 fiscal year; provided, however, that no
portion of the 2007 Performance Shares Based Upon Company Performance For Fiscal Year 2008 shall be
vested in
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such a situation unless the Grantee executes a general release of claims consistent with
the release of claims as required under applicable provisions of the Employment Agreement.
Restrictions on Restricted Stock. Subject to the terms and conditions set forth
herein and in the Plan, Grantee shall not be permitted to sell, transfer, pledge or assign any
Restricted Stock during such shares’ Restricted Period.
Lapse of Restrictions. Subject to the terms and conditions set forth herein and in
the Plan, the restrictions on Restricted Stock set forth in Paragraph 3 shall lapse on the date
such shares become vested.
Forfeiture Dates and Forfeiture of Restricted Stock. Subject to the terms and
conditions set forth herein and in the Plan;
If Grantee’s employment with the Company or an Affiliate of the Company terminates during the
Restricted Period for any reason, such date shall be the Forfeiture Date, and Grantee shall forfeit
any Restricted Stock still subject to restrictions as of such Forfeiture Date, except as provided
above in Paragraph 2(c).
Any shares that may become vested or forfeited while Grantee remains employed by the Company
or an Affiliate of the Company pursuant to Paragraph 2(a) or 2(b) above shall be forfeited, to the
extent not vested as of the applicable date set forth in Paragraph 2(a) or 2(b), as the case may be
(such date being the applicable Forfeiture Date).
Any shares that may become vested or forfeited after a termination of Grantee’s employment in
accordance with Paragraph 2(c) above shall be forfeited, to the extent not vested, as of the
applicable date set forth in Paragraph 2(a) or 2(b), as the case may be (such date being the
applicable Forfeiture Date).
Upon a forfeiture of any shares of Restricted Stock as provided in this Paragraph 5, the
shares of Restricted Stock so forfeited shall be reacquired by the Company without consideration.
Rights of Grantee. Except for the restrictions set forth in Paragraph 3 and the
provisions respecting dividends on Restricted Stock set forth in Paragraph 7, during the Restricted
Period Grantee shall have all of the rights of a shareholder with respect to the Restricted Stock,
including the right to vote the Restricted Stock to the same extent that such shares could be
voted if they were not subject to the restrictions set forth in this Agreement.
Dividends on Restricted Stock. No dividends shall accrue or be paid to the Grantee
with respect to any shares of Restricted Stock for any period prior to the date such shares become
vested.
Change of Control of Company. In the event of a Change of Control (as defined, from
time to time, in the Employment Agreement) prior to February 3, 2008, the Restricted Stock shall
immediately become fully vested. In the event of a Change of Control on or after February 3, 2008
and on or before January 31, 2009, the 2007 Performance Shares Based Upon Company Performance For
Fiscal Year 2008 shall become vested without regard to the
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achievement of the goals established for
the Company’s 2008 fiscal year on the third month anniversary of the date of the Change of Control,
provided the Grantee remains employed by the Company or an Affiliate of the Company or, if
applicable, a successor company, through such date, or on such earlier date following the Change of
Control if the Grantee is terminated by the Company or an Affiliate of the Company or, if
applicable, a successor company, without Cause.
Notices. Any notice to be given to the Company shall be addressed to the Controller
of the Company at its principal executive office, and any notice to be given to the Grantee shall
be addressed to the Grantee at the address then appearing on the personnel records of the Company
or the Affiliate of the Company by which he or she is employed, or at such other address as either
party hereafter may designate in writing to the other. Any such notice shall be deemed to have
been duly given when personally delivered, by courier service such as Federal Express, or by other
messenger, or when deposited in the United States mail, addressed as aforesaid, registered or
certified mail, and with proper postage and registration or certification fees prepaid.
Securities Laws. The Committee may from time to time impose any conditions on the
Restricted Stock as it deems necessary or advisable to ensure that all rights granted under the
Plan satisfy the conditions of Rule 16b-3 promulgated pursuant to the Securities Exchange Act of
1934, as amended.
Delivery of Shares. Upon the determination that any portion of the Restricted Stock
has become vested, the Company shall notify Grantee (or Grantee’s personal representative, heir or
legatee in the event of Grantee’s death) that the restrictions on an installment of Restricted
Stock have lapsed, and shall, without payment from Grantee for such Restricted Stock, upon such
Grantee’s request deliver a certificate for such Restricted Stock without any legend or
restrictions, except for such restrictions as may be imposed by the Committee, in its sole
judgment, under Paragraph 10, provided that no certificates for shares will be delivered to Grantee
(or to his or her personal representative, heir or legatee) until appropriate arrangements have
been made with the Company for the withholding of any taxes which may be due with respect to such
shares. The Company may condition delivery of certificates for shares upon the prior receipt from
Grantee of any undertakings which it may determine are required to assure that the certificates are
being issued in compliance with federal and state securities laws. The right to payment of any
fractional shares shall be satisfied in cash, measured by the product of the fractional amount
times the Fair Market Value of a share on the Vesting Date.
Status of Restricted Stock. The Restricted Stock is intended to constitute property
that is subject to a substantial risk of forfeiture during the Restricted Period, and subject to
federal income tax in accordance with section 83 of the Internal Revenue Code of 1986, as amended
(the “Code”). Section 83 generally provides that Grantee will recognize compensation income with
respect to each installment of the Restricted Stock on the date such installment ceases to be
subject to a substantial risk of forfeiture in an amount equal to the then fair market value of the
shares for which restrictions have lapsed. Alternatively, Grantee may elect, pursuant to Section
83(b) of the Code, to recognize compensation income for all or any part of the Restricted Stock at
the Date of Grant in an amount equal to the fair market value of the Restricted Stock subject to
the election on the Date of Grant. Such election must be made within 30 days of the Date of Grant
and Grantee shall immediately notify the Company if such an election is made. Grantee
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should consult his or her tax advisors to determine whether a Section 83(b) election is appropriate.
Administration. This Award has been granted pursuant to and is subject to the terms
and provisions of the Plan. All questions of interpretation and application of the Plan and this
Award shall be determined by the Committee. The Committee’s determination shall be final, binding
and conclusive.
Award Not to Affect Employment. Nothing herein contained shall affect the right of
the Company or an Affiliate of the Company to terminate Grantee’s employment, services,
responsibilities, duties, or authority to represent the Company or an Affiliate of the Company at
any time for any reason whatsoever.
Withholding of Taxes. Whenever the Company proposes or is required to deliver or
transfer shares in connection with this Award, the Company shall have the right to (a) require the
Grantee to remit to the Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any certificate or certificates
for such shares or (b) take whatever action it deems necessary to protect its interest with respect
to tax liabilities. In addition, Grantee shall have the right to have such withholding tax
requirements satisfied, either in whole or in part, by means of a relinquishment back to, the
Company of a number of shares as to which Grantee’s interest is fully vested having a Fair Market
Value equal to the amount of such withholding tax requirements as Grantee indicates he wants to
meet by such means.
Governing Law. The validity, performance, construction and effect of this Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania, without giving effect to
principles of conflicts of law.
Entire Agreement. This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter herein. This Agreement
supersedes all prior agreements and understandings between the parties with respect to such subject
matter, except that the Employment Agreement shall control in the event of any inconsistencies
between this Agreement and the Employment Agreement.
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IN WITNESS WHEREOF, the parties, intending to be legally bound, have executed this Agreement
as of the day and year first above written.
| THE BON-TON STORES, INC. | ||||
| By: | /s/ Xxx Xxxxxxxxxx | |||
| Xxx Xxxxxxxxxx, Chairman | ||||
| /s/ Xxxxx Xxxxxxx | ||||
| Xxxxx Xxxxxxx | ||||
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