SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 8, 2005
The Bon-Ton Stores, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-19517 23-2835229
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(State or other jurisdiction of (Commission I.R.S. Employer
incorporation or organization) File Number) Identification No.)
2801 E. Market Street
York, PA 17402
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(Address of principal executive offices) (Zip Code)
(717) 757-7660
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(Registrant's telephone number, including area code)
None
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(Former name, former address and former fiscal year,
if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 8, 2005, the Board of Directors approved the Company entering into an
Executive Transition Agreement (the "Agreement") with its former chief executive
officer, Mr. M. Thomas Grumbacher (the "Executive"). Pursuant to the Agreement,
which is effective as of February 1, 2005 and will run through the first day of
the Company's fiscal year commencing on or about February 1, 2010, the Executive
will serve as the Company's executive chairman of the board of directors (the
"Board") and a member of the Executive Committee of the Board for a three-year
period. For the remaining term of the Agreement, the Executive will serve as
non-executive chairman and in such other capacity as the Board and Executive may
agree.
During the initial three-year period, the Executive will receive an annual base
salary of $650,000 and will be eligible to earn an annual cash bonus under the
Company's bonus plan for senior executives with target bonuses of 75%, 50% and
40% of base salary for Company's 2005, 2006 and 2007 fiscal years, respectively.
The maximum bonus payable for such years will be 150%, 100% and 80% of base
salary, respectively.
Under the Agreement, the Executive was granted 365,205 restricted shares of the
Company's common stock pursuant to the terms of the Company's 2000 Stock
Incentive Plan. The shares will vest at the end of the term of the Agreement,
subject to accelerated vesting upon a change in control (as defined in the
Agreement) of the Company, upon the Executive ceasing to serve the Company as a
result of his death or disability (as defined in the Agreement) or if prior to
the end of the term, the Executive and Board mutually agree that the Executive
shall cease to serve as chairman of the Board. The Executive will forfeit the
restricted shares if, prior to the end of the term, the executive ceases to
serve as chairman of the Board and such cessation of service is not the result
of a breach of the Agreement by the Company. The Executive will not be entitled
to any other long-term incentive awards.
During the period in which the Executive serves as executive chairman, he will
be entitled to participate in each of the Company's various employee benefit
plans (except for any nonqualified excess or supplemental retirement plan or any
severance plan) and will be entitled to perquisites comparable to those provided
to the Company's chief executive officer. The Company will also provide the
Executive and his wife with medical insurance for the duration of each of their
lives. In addition, for the duration of his life, the Company will provide the
Executive with secretarial support and office space and allow him to participate
in the Company's discount program that allows executives to make "at-cost"
purchases from the Company.
If during the initial three-year period, the Executive shall cease to serve as
executive chairman by reason of the occurrence of a change in control of the
Company, then the Executive shall be entitled to receive a lump sum cash
payment, as soon as practicable following the cessation of such service (subject
to delay if necessary to comply with Section 409A of the Internal Revenue Code),
equal to the sum of (i) any accrued but unpaid compensation and reimbursement
for any business expenses, (ii) the remainder of his base salary for the initial
three-year period and (iii) the amount of any target bonus in respect of any
fiscal year not commenced or completed prior to the change in control.
In the event that any amounts payable under the Agreement or any other plan or
agreement would constitute "excess parachute payments" that exceed ten percent
of the Executive's "safe harbor" (as each term is defined in Section 280G of the
Internal Revenue Code and the regulations promulgated thereunder), the Company
will provide a gross-up payment to the Executive to compensate him fully for the
imposition of excise taxes under Code Section 280G. If the amounts payable
exceed the "safe harbor" limit, but not by more than ten percent, then the
amounts payable to the Executive shall be reduced so that no payments are deemed
to be "excess parachute payments."
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
See Exhibit Index below.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BON-TON STORES, INC.
Dated: March 11, 2005 By: /s/ Keith E. Plowman
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Name: Keith E. Plowman
Title: Senior Vice President, Finance and
Principal Accounting Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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10.1 Executive Transition Agreement