EXHIBIT 10.3
AMENDMENT AND EXTENSION OF
EMPLOYMENT AGREEMENT
THIS AMENDMENT AND EXTENSION OF EMPLOYMENT AGREEMENT ("Amendment") is made
on November 29, 2004, ("Effective Date") by and between THE BON-TON STORES,
INC., a Pennsylvania corporation (the "Company"), and XXXXX X. XXXXXXXXX
("Employee").
W I T N E S S E T H:
WHEREAS, Xxxxx-Xxxxxxx Stores Corp. ("Xxxxx-Xxxxxxx") and the Employee are
parties to an Employment Agreement dated December 30, 1997, as modified June 15,
2001 ("Prior Agreement"); and
WHEREAS, there has been a Change in Ownership of Xxxxx-Xxxxxxx; and
WHEREAS, the Company wishes to fully preserve certain rights of Employee
under the Prior Agreement while at the same time offering Employee a promotion
and continuing employment beyond the term of the Prior Agreement.
NOW THEREFORE, 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. Assumption of Prior Employment Agreement. The Company assumes and
agrees to perform the Prior Agreement pursuant to Section 5.2(a) thereof.
Employee agrees that the Prior Agreement shall inure to the benefit of the
Company. All terms of the Prior Agreement shall remain in effect except as
modified by paragraphs 2 through 10 below.
2. Duties. Section 2.3 of the Prior Agreement is amended to provide as
follows: Employee will serve as the Company's Executive Vice President, Stores.
Employee shall have
all the duties and responsibilities normally attendant to the position of
Executive Vice President, Stores or such other executive duties as may from time
to time reasonably be assigned to Employee and shall report directly to the
Chief Executive Officer of the Company. Employee will be required to perform his
duties at the principal offices of the Company located in York, Pennsylvania. In
lieu of relocation, the Company will make available to Employee upon request an
allowance of $130,000 (based on estimated cost of full relocation, subject to
deductions for taxes) to be used by Employee for expenses associated with
maintaining a temporary residence in York. Employee's acceptance of this
allowance shall make him ineligible for reimbursement of expenses associated
with relocation to York under the Company's relocation policy either now or in
the future; provided, however, that Employee's expenses of reasonable business
travel between either his permanent residence in Ohio or his temporary residence
in York and other Company locations (including locations in Ohio) shall be
reimbursed pursuant to the Company's business expense policy. In the event that
the Employee voluntarily terminates his employment prior to January 28, 2006, he
shall be obligated to repay the allowance on a pro-rated basis, according to the
following formula: the amount of $7142.86 shall be repaid for each full or
partial month from December 2004 through January 2006 that remains in the term
of this Agreement as of the date of the Employee's termination.
3. Term of Agreement; Extension. Section 2.2 of the Prior Agreement is
amended to provide that the Prior Agreement shall be extended to January 28,
2006 ("the Term"), unless sooner terminated in accordance with Section 2.7 of
the Prior Agreement and Paragraph 6 below. Thereafter, the Term shall be
indefinitely extended until either party provides notice of termination to the
other pursuant to Section 2.7 of the Prior Agreement and Paragraph 6 below.
4. Compensation.
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Section 2.4 of the Prior Agreement is amended as follows:
Salary. Employee's base salary shall be increased to $400,000 per
year effective November 21, 2004.
Bonus. Commencing January 30, 2005, Employee shall be eligible to
earn an annual bonus of up to 80% (40% target) of his base salary for each full
fiscal year during which Employee continues to be the Executive Vice President,
in accordance with objectives to be determined by the Company. To the extent
reasonably practicable, 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. Restricted Shares and Options. On the Effective Date, Employee shall
be granted 7,000 restricted shares of the Company's Common Stock ("Restricted
Shares") and an option to purchase 5,000 shares of the Company's Common Stock at
the fair market value on the date of grant ("Options"). The Options and
Restricted Shares will be granted pursuant to the terms of the Company's 2000
Stock Incentive Plan or a similar plan. Employee's ownership of all Restricted
Shares and the Options will both vest on January 28, 2006, provided that
Employee is continuously employed by the Company from the Effective Date through
January 28, 2006, provided that in the event that the Company terminates this
Agreement and the Employee's employment without "Cause" as defined in the Prior
Agreement after October 24, 2005 but prior to January 28, 2006, Employee's
ownership of all Restricted Shares and Options will vest as of the date of
termination.
6. (a) Termination of Employment Prior to Second Anniversary Date.
Section 2.7 of the Prior Employment Agreement shall remain in effect until the
second anniversary of the
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Change of Ownership resulting from the Company's acquisition of the stock of
Xxxxx-Xxxxxxx, October 24, 2005. The Company agrees that "Good Reason" now
exists for Employee to terminate his employment by virtue of the relocation of
his principal executive office, and will exist until January 28, 2006.
(b) Termination of Employment Due to Death or Disability. In the
event of Employee's death at any time during his employment by Company during
the Term of this Agreement, a payment of $1,039,367 will be made to his Estate.
In the event of the termination of Employee's employment by the Company at any
time during the Term of this Agreement due to his disability, a termination
payment of $1,039,367 will be made to Employee.
(c) Termination of Employment On or After Second Anniversary Date.
On or after the second anniversary of the Change of Ownership resulting from the
Company's acquisition of the stock of Xxxxx-Xxxxxxx, Section 2.7(a) of the Prior
Agreement shall be amended to provide in its entirety as follows: In the event
that Employee's employment is terminated by the Company without Cause after the
Second Anniversary of a Change of Ownership or at the end of the Term, or by the
Employee for any reason, or without reason, Employee shall be entitled to a
termination payment equal to $1,039,367. Sections 2.7(b), (c) and (d) of the
Prior Agreement shall remain in effect after the Second Anniversary of the
Change of Ownership.
(d) Release. The Employee's right to commencement and continuation
of payments and continued benefits or a termination payment under paragraph
6(a), 6(b) or 6(c) above shall be contingent upon execution and delivery of a
release pursuant to Section 5.1 of the Prior Agreement by Employee and/or his
Estate.
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7. Notices. Paragraph 5.6 of the Prior Agreement is amended to provide:
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:
If to the Company:
The Bon-Ton Stores, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxx X. Xxxxxx, Esquire
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
0000 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
If to Employee:
Xxxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, 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.
8. Controlling Law. Paragraph 5.3 of the Prior Agreement is amended to
provide in its entirety as follows: This Agreement and all questions relating to
its validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations
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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.
9. Legal Fees. The Company agrees to pay Employee's reasonable legal
expenses and costs in connection with this Agreement up to a maximum of
$7,500.00.
10. Deductions for Taxes. Employee agrees that the Company may withhold
and deduct from any payment due to him under this Agreement such amounts as may
be required to comply with all applicable federal, state and local laws.
11. Execution in Counterparts. This Amendment 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 Amendment 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/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Chief Executive Officer
XXXXX X. XXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxx
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