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EXHIBIT 10.1
THE BON-TON STORES, INC.
CASH BONUS PLAN
EFFECTIVE AS OF FEBRUARY 1, 2004
1. PURPOSE
The purpose of
the Plan as established by the Committee and adopted by the
Board of Directors, subject to shareholder
approval, is to provide
performance-based cash bonus compensation
for key executives in accordance with
a formula that is related to the financial
success of the Bon-Ton Stores, Inc.,
a Pennsylvania corporation, (the "Company")
as part of an integrated
compensation program which is intended to
assist the Company in motivating and
retaining employees of superior ability,
industry and loyalty. The terms of the
Plan, as herein set forth, are intended to
provide greater flexibility in
furtherance of the purposes of the Plan as
compared with the Company's prior
cash bonus plan.
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) "Bonus Base" shall mean a percentage of a Participant's
base
salary in effect for the Plan Year that may
be any percentage between zero (0%)
and one hundred percent (100%). For these
purposes, the Participant's base
salary for the Plan Year shall be the
Participant's actual annual base salary,
unless otherwise specified by the Committee
when establishing the Earned
Percentage Schedule for the Plan Year.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) "Committee" shall mean the Compensation Committee of the Board
of
Directors, consisting of two or more
Outside Directors, to act as the Committee
with respect to the Plan, or such other
committee as may be appointed by the
Board of Directors to act as the Committee
with respect to the Plan.
(e)
"Company" shall mean the Bon-Ton Stores, Inc., a Pennsylvania
corporation, and any successor thereto.
(f) "Designated Beneficiary" shall mean the person, if any,
specified
in writing by the Participant to receive
any payments due to the Participant in
the event of the Participant's death. In
the event no person is specified by the
Participant, the Participant's estate shall
be deemed to be the Designated
Beneficiary.
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(g) "Earned Percentage" shall mean the percentage determined by
reference to the schedule established for
each Plan Year by the Committee, which
percentage may be up to a maximum of two
hundred percent (200%).
(h) "Earned Percentage Schedule" shall mean the schedule pursuant
to
which a determination of the Participant's
Earned Percentage is determined based
on the extent to which the performance
goals set forth therein have been
achieved during the Plan Year.
(i) "Effective Date" shall mean the first day of the Company's
taxable
year that commenced on or about February 1,
2004.
(j) "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).
(k) "Participant" shall mean those key executives as may be
designated
by the Committee to participate in the Plan
from time to time.
(l) "Performance-Based Bonus" shall mean the cash bonus payable to
a
Participant under Section 6(a).
(m) "Performance Based Compensation Rules" shall mean those
provisions
of Code Section 162(m) and Treasury
Regulations promulgated thereunder that
provide the rules pursuant to which
compensation that is paid to executives on
the basis of performance is exempt from the
limitations on deductibility
applicable to certain compensation paid to
executives in excess of $1,000,000.
(n) "Plan" shall mean The Bon-Ton Stores, Inc. Cash Bonus Plan.
(o) "Plan Year" shall mean the taxable year of the Company.
3.
PARTICIPATION
Those key
executives as may be designated by the Committee to participate
in the Plan from time to time are the
participants in the Plan. Participants
under the Plan for each Plan Year shall be
specified no later than the time the
Earned Percentage Schedule (as described in
Section 6(a) below) is established
by the Committee and may be set forth as
part of that schedule.
4. TERM OF
PLAN
Subject to
approval of the Plan by the shareholders of the Company, the
Plan shall be in effect as of the Effective
Date, and shall continue until
terminated by the Board of Directors.
5. BONUS
ENTITLEMENT
The Participant
shall be entitled to receive a bonus in accordance with the
provisions of Section 6 of the Plan only
after certification in writing by the
Committee that the performance goals set
forth in Section 6 have been satisfied.
The bonus payment with respect to a Plan
Year shall be payable to the
Participant in the next Plan Year on or
before April 15 of such Plan Year.
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Notwithstanding anything to the contrary
contained herein, no bonus shall be
payable under the Plan without the prior
disclosure of the terms of the Plan to
the shareholders of the Company and the
approval of the Plan by such
shareholders.
6. DETERMINATION
OF PERFORMANCE-BASED COMPENSATION BONUS
(a) Performance-Based Bonus. Each Participant, or the
Designated
Beneficiary of a deceased Participant,
shall be entitled to a bonus with respect
to such Plan Year that is equal to the
"Earned Percentage" of the Bonus Base,
determined by reference to the Earned
Percentage Schedule in effect for the Plan
Year.
(b) Performance Goals. The Earned Percentage is the percentage
derived
from the formula and/or schedule
established for each Plan Year by the Committee
and set forth on that Plan Years Earned
Percentage Schedule, which shall be
based on one or more of the following
business criteria (which may be determined
for these purposes either by reference to
the Company as a whole or by reference
to any one or more of its subsidiaries,
operating divisions or other operating
units): stock price, market share, gross
sales, gross revenue, net revenues,
pretax income, operating income, cash flow,
earnings per share, return on
equity, return on invested capital or
assets, cost reductions and savings,
return on revenues or productivity, or any
variation or combination of the
preceding business criteria. In addition,
the Committee may utilize as an
additional performance measure (to the
extent consistent with the Performance
Based Compensation Rules) the attainment by
a Participant of one or more
personal objectives and/or goals that the
Committee deems appropriate,
including, but not limited to,
implementation of Company policies, negotiation
of significant corporate transactions,
development of long-term business goals
or strategic plans for the Company, or the
exercise of specific areas of
managerial responsibility; provided,
however, that the measurement of the
Company's or a participant's achievement of
any of such goals must be
objectively determinable and shall be
determined, to the extent applicable,
according to generally accepted accounting
principles as in existence on the
date on which the Earned Percentage
Schedule for the Plan Year is established.
In all cases, the Committee shall establish
the Earned Percentage Schedule for
each Plan Year no later than 90 days after
the beginning of the Plan Year and
shall endeavor to establish such Earned
Percentage Schedule in a manner that is
consistent with the Performance Based
Compensation Rules. In the event no Earned
Percentage Schedule is established for a
Plan Year, the Earned Percentage
Schedule for the prior Plan Year shall be
treated as the Earned Percentage
Schedule for the current Plan Year.
(c) Maximum Permissible Performance-Based Bonus.
Notwithstanding
anything contained in the Plan to the
contrary, no Participant shall be entitled
to a Performance-Based Bonus with respect
to any Plan Year in excess
