Change of Control and Material Transaction Severance Plan for Certain Employees of Acquired Employers (The Bon-Ton Stores, Inc.)

Contract Categories: Human Resources › Change of Control Agreements
Summary

This agreement, adopted by The Bon-Ton Stores, Inc., provides severance benefits to certain former Saks Incorporated employees who became Bon-Ton employees after an acquisition. Eligible employees receive severance pay if their employment is terminated without cause or if they resign for good reason within two years following the acquisition. The amount of severance is based on their previous position at Saks and years of service. The plan is designed to protect these employees as required by the purchase agreement between Saks and Bon-Ton.

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EX-10.16 4 w32716exv10w16.txt CHANGE OF CONTROL AND MATERIAL TRANSACTION SEVERANCE PLAN EXHIBIT 10.16 CHANGE OF CONTROL AND MATERIAL TRANSACTION SEVERANCE PLAN FOR CERTAIN EMPLOYEES OF ACQUIRED EMPLOYERS On April 3, 2006, the Human Resources and Compensation Committee (the "HRCC") of the Board of Directors (the "Board") of The Bon-Ton Stores, Inc. (the "Company") adopted a Change of Control and Material Transaction Severance Plan for Certain Employees of Acquired Employers (the "Severance Plan"), to protect certain former participants in the Saks Incorporated Change of Control and Material Transaction Severance Plan (the "Saks Plan") as required under the terms of the Purchase Agreement between Saks Incorporated and the Company dated October 24, 2005 and amended on February 16, 2006 (the "Purchase Agreement"). The Severance Plan was effective as of 12:01 a.m., Chicago time, on March 5, 2006. The new employees of the Company who are former employees of Saks Incorporated and were participants under the Saks Plan are eligible to participate in the Severance Plan if they became an employee of the Company on or shortly after the date the Severance Plan became effective. The Severance Plan provides for severance benefits if (1) a participant's employment is terminated by the Company without Cause (as defined in the Severance Plan) and as a result of, and within two years after, a Change of Control or (2) a participant terminates his or her employment with the Company for Good Reason (as defined in the Severance Plan) within two years after a Change of Control. For purposes of the Severance Plan, "Change of Control" means consummation of the transactions contemplated by the Purchase Agreement. The severance benefit is calculated based on the title a participant held with Saks Incorporated immediately prior to the effective date of the Severance Plan, as indicated in the following chart: SCHEDULE OF BENEFITS UNDER THE SEVERANCE PLAN
POSITION OF EMPLOYMENT IMMEDIATELY PRIOR TO EFFECTIVE DATE OF THE SEVERANCE PLAN SEVERANCE PAYMENT IN ACCORDANCE WITH (GROUP OF DESIGNATED EXECUTIVES) SECTION 3.C OF THE SEVERANCE PLAN - ---------------------------------------- ------------------------------------ Division Presidents and Corporate Executive Vice 104 weeks Presidents and Senior Vice Presidents Division Executive Vice Presidents and Senior Vice 78 weeks Presidents Corporate Vice Presidents and Division DMMs 52 weeks Director-level associates and Buyers 26 weeks Other exempt associates (1) 2 weeks plus (2) 1 week per completed year of service measured from employment anniversary date to employment anniversary date up to a maximum of 12 weeks. For example, the total severance payment for associates with 5 completed years of service would be 7 weeks of base salary and the total severance payment for associates with 12 or more completed years of service would be 14 weeks of base salary.
The Severance Plan is intended to qualify as an unfunded welfare plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended.