UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): October 28, 2015
THE BON-TON STORES, INC.
(Exact name of registrant as specified in its charter)
| Pennsylvania | 0-19517 | 23-2835229 | ||
| (State or Other Jurisdiction Of Incorporation) |
(Commission File |
(IRS Employer Identification No.) |
2801 E. Market Street, York, Pennsylvania 17402
(Address of principal executive offices, zip code)
(717) 757-7660
Registrant’s telephone number, including area code
Not Applicable
(Former Name or Former Address, 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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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 October 28, 2015, The Bon-Ton Stores, Inc. (the “Company”) entered into Amendment No. 1 (the “Amendment”) to the Private Label Credit Card Program Agreement (the “Program Agreement”) with Comenity Bank, a bank subsidiary of Alliance Data Systems Corporation (“ADS”). The Program Agreement, dated December 16, 2011, had an original term of seven years from the program commencement date of July 24, 2012. The Amendment provides that the original term is extended three years to July 24, 2022, with successive two-year renewal terms thereafter, unless otherwise terminated in accordance with the Program Agreement.
The Amendment provides in consideration for the extension of the term, ADS will pay the Company an extension bonus of $6 million, payable $1 million within five business days of July 24, 2017 and $5 million within five business days of July 24, 2019, as well as periodic royalties based on a percentage of credit card sales and outstanding credit balances during the term of the Program Agreement. The Amendment increases the royalty rate payable by ADS to the Company.
The Amendment also provides that ADS will pay the costs, subject to prescribed maximums, for the reissuance of credit cards in 2016 and either 2018 or 2019. In addition, the Amendment provides for an additional annual contribution by ADS, beginning July 24, 2015, for Company costs associated with the marketing and promotion of the private label credit card program.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Amendment No. 1 to Private Label Credit Card Program Agreement by and between Comenity Bank and The Bon-Ton Stores, Inc. dated October 28, 2015. Some of the schedules to this agreement have been omitted or redacted pursuant to a request for confidential treatment. | |
| 99.1 | Press release dated November 3, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Bon-Ton Stores, Inc. | ||
| By: | /s/ Michael W. Webb | |
| Michael W. Webb | ||
| Senior Vice President—Chief Accounting Officer | ||
| Dated: November 3, 2015 | ||
EXHIBIT 10.1
FIRST AMENDMENT TO PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT
This First Amendment to the Private Label Credit Card Program Agreement ("First Amendment") is entered into as of the 28th day of October, 2015, (the “Amendment Effective Date”) by and between The Bon-Ton Stores, Inc., with its principal office at 2801 East Market Street, York, Pennsylvania 17402 (“Retailer”) and Comenity Bank, a Delaware state bank formerly known as World Financial Network Bank, with its principal office at One Righter Parkway, Suite 100, Wilmington, DE 19803, (“Bank”).
R E C I T A L S :
WHEREAS, Retailer and Bank entered into that certain Private Label Credit Card Program Agreement dated as of December 16, 2011 (the "Agreement");
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Definitions; References. Each term used herein which is not defined herein shall have the meaning assigned to such term in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall from and after the date hereof refer to the Agreement amended hereby.
2. Schedule 3.6.1 Marketing Funds. Schedule 3.6.1 is hereby deleted in its entirety and replaced with a new Schedule 3.6.1, a copy of which is attached to this First Amendment as Attachment 1.
3. Schedule 6.6.6 Payments by Bank. Schedule 6.6.6 is hereby deleted in its entirety and replaced with a new Schedule 6.6.6, a copy of which is attached to this First Amendment as Attachment 2.
4. Schedule 14.1 Term. Schedule 14.1 is hereby deleted in its entirety and replaced with a new Schedule 14.1, a copy of which is attached to this First Amendment as Attachment 3.
5. Order of Precedence. This First Amendment is supplementary to and modifies the Agreement. All terms and conditions of the Agreement shall remain unchanged and in full force and effect except as amended by this First Amendment.
6. Counterparts. This First Amendment may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Additionally, a fully executed PDF of this First Amendment shall be deemed to constitute an original document.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment in manner and form sufficient to bind them as of the date first above written.
| COMENITY BANK | THE BON-TON STORES, INC. |
| By: /s/ John J. Coane | By: /s/ Kathryn Bufano |
| Title: President | Title: President & Chief Executive Officer |
| Date: October 28, 2015 | Date: October 27, 2015 |
1
THIS SCHEDULE HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2.
REDACTED MATERIAL IS MARKED WITH [***] AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ATTACHMENT 1
Schedule 3.6.1
Marketing Fund
A. The Joint Marketing Plan shall be funded by Bank, or as otherwise may be set forth in the applicable Joint Marketing Plan, or as determined by the Management Committee. With respect to Bank’s contribution, beginning with the first anniversary of the Program Commencement Date, Bank shall allocate to the Marketing Fund annually an amount equal to [ *** ] of the total amount of Net Credit Sales over the twelve (12) Retailer Fiscal Months immediately prior to such anniversary date, to be used in any month. All unused funds in the Marketing Fund [ *** ]. Bank’s contribution to the Marketing Fund shall be utilized solely to promote the Private Label Credit Card Marketing Program, including, but not limited to the following services, to be performed by Retailer or Bank, as appropriate.
[ *** ]
Consistent with current practices, Retailer shall continue to fund and perform the following:
[ *** ]
The Marketing Fund shall not be used towards the following items, [ *** ]:
New Account discounts and rewards liabilities, including rewards bonus points, shall be funded by Retailer.
B. Subject to Section 3.6, beginning with the third anniversary of the Program Commencement Date (for clarity, the third anniversary being July 24, 2015) and each anniversary date thereafter, Bank will make available to Retailer an additional amount equal to [ *** ] of the total amount of Net Credit Sales over the twelve (12) Retailer Fiscal Months immediately prior to such Program Commencement anniversary date to be used for costs associated with marketing and promotion of the Program as mutually agreed upon by the Management Committee.
[***] REPRESENTS CONFIDENTIAL MATERIAL WHICH HAS BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IN ACCORDANCE WITH RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ACOMPLETE VERSION OF THIS SCHEDULE HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2
THIS SCHEDULE HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24b-2.
REDACTED MATERIAL IS MARKED WITH [***] AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ATTACHMENT 2
Schedule 6.6.6
Payments by Bank
Bank shall make the following payments to Retailer:
| 1. | Each Business Day, Bank shall wire Retailer an amount equal to [ *** ]. | |
| 2. | As of the Amendment Effective Date, in addition to the amount set forth in paragraph 1, above, each Business Day, Bank shall wire Retailer an amount equal to [ *** ]. | |
| 3. | On the Closing Date, Bank shall pay to Retailer a signing bonus (“Signing Bonus”) in the amount of fifty million dollars ($50,000,000). In the event of any termination of this Agreement pursuant to Section 14.2.2 Retailer shall reimburse Bank for [ *** ]. | |
| 4. | As of the Amendment Effective Date, for and in consideration of the extension of the Agreement for an additional three (3) year period, Bank shall pay to Retailer a one-time payment (“Extension Bonus”) in the amount of Six Million Dollars ($6,000,000) of which One Million Dollars ($1,000,000) shall be paid within five (5) Business Days after the fifth anniversary of the Program Commencement Date (for clarity, the fifth anniversary being July 24, 2017) and the remaining Five Million Dollars ($5,000,000) to be paid within five (5) Business Days after the seventh anniversary of the Program Commencement Date (for clarity, the seventh anniversary being July 24, 2019). Bank shall make such payments if and only if the Agreement is in full force and effect and neither party has provided notice of termination of the Agreement. Furthermore, in the event of any termination of this Agreement pursuant to Section 14.2.2, Retailer shall reimburse Bank for [ *** ]. | |
| 5. | By the fifteenth (15th) day of each month, Bank shall post into settlement an amount equal to [ *** ]. | |
| 6. | On or before fifteenth (15th) day following the end of each Program Year, Bank shall wire to Retailer an amount equal to [ *** ] . | |
| 7. | Beginning in calendar year 2016, Bank shall make available up to [ *** ] for payment of agreed-upon costs associated with a reissue of Credit Cards, including the cost of the design, development and production of the Credit Card, as well as the postage of mailing the reissued Credit Cards (“2016 Reissue Fund”). The 2016 Reissue Fund shall be available for use during calendar years 2016 and 2017 only, however notwithstanding the foregoing, any 2016 Reissue Funds not used for reissue costs during calendar years 2016 and 2017 may be repurposed for use to otherwise support the Program as agreed upon by the Management Committee. | |
| 8. | Beginning in calendar year 2018, Bank shall make available up to [ *** ] for agreed-upon costs associated with a reissue of Credit Cards, including the cost of the design, development and production of the Credit Card, as well as the postage of mailing the reissued Credit Cards (“2018 Reissue Fund”). The 2018 Reissue Fund shall be available for use during calendar years 2018 and 2019 only, however notwithstanding the foregoing, any 2018 Reissue Funds not used for reissue costs during calendar years 2018 and 2019 may be repurposed for use to otherwise support the Program as agreed upon by the Management Committee. |
[ *** ]
3
[ *** ] REPRESENTS CONFIDENTIAL MATERIAL WHICH HAS BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT IN ACCORDANCE WITH RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ACOMPLETE VERSION OF THIS SCHEDULE HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
Attachment 3
Schedule 14.1
Term
This Agreement shall become effective as of the Effective Date and shall continue in effect until the tenth (10th) anniversary of the Program Commencement Date (the “Initial Term”), plus successive two (2) year terms thereafter (each a “Renewal Term”), unless (a) the Agreement is otherwise terminated by a party pursuant to the provisions of Section 14, or (b) a party provides the other party with a notice of termination at least one hundred eighty (180) days prior to the end of the Initial Term or the then current Renewal Term.
5
EXHIBIT 99.1
YORK, Pa., Nov. 3, 2015 (GLOBE NEWSWIRE) -- The Bon-Ton Stores, Inc. (NASDAQ:BONT) today announced it has extended its private label credit card program agreement with Alliance Data Systems Corporation's (NYSE:ADS) Ohio-based card services business, a premier provider of branded private label, co-brand, and commercial credit programs. The agreement provides that the original term is extended three years to July 2022.
"We are very pleased to extend our relationship with Alliance Data, an industry leader in the private label credit card business. Their partnership has greatly assisted us in building our customer base and growing customer loyalty, and we look forward to continued growth through our collaboration," said Kathryn Bufano, president and chief executive officer of The Bon-Ton Stores, Inc.
The Bon-Ton Your Rewards Credit Card program has experienced significant growth in recent years, and the new agreement allows for further investment in the marketing and promotion of the loyalty-driven credit card program. Customers in the program are rewarded with exclusive discounts based on use of their Your Rewards Credit Card at all Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers department stores. In addition, customers have the opportunity to double rewards, get free shipping and birthday offers, and gain special access to events.
Bon-Ton uses Alliance Data's advanced suite of digital and mobile solutions to create an engaging, compelling cardmember experience, allowing customers to manage their account and pay with a digital credit card from the convenience of their smartphone. In addition, Alliance Data's Conversant and Epsilon businesses already partner extensively with Bon-Ton, further driving growth through data-driven loyalty and marketing.
"We are pleased to further our relationship with a like-minded partner such as Bon-Ton and to have the opportunity to continue to grow this successful program," said Melisa Miller, president of Alliance Data's card services business. "This extension is a testament to the strong partnership we've built together, and we look forward to working with Bon-Ton to welcome more customers to the brand and driving top-line sales."
About Bon-Ton
The Bon-Ton Stores, Inc., with corporate headquarters in York, Pennsylvania and Milwaukee, Wisconsin, operates 270 stores, which includes nine furniture galleries and four clearance centers, in 26 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's and Younkers nameplates. The stores offer a broad assortment of national and private brand fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings. For further information, please visit the investor relations section of the Company's website at http://investors.bonton.com.
About Alliance Data's card services business
Alliance Data's card services business is a leading provider of tailored marketing and loyalty solutions, delivered through branded credit programs that drive more profitable relationships between our brand partners and their cardmembers. We offer private label, co-brand, and commercial products to many of the world's most recognizable brands across a multitude of channels.
We uphold our Know more. Sell more®. promise by leveraging unmatched customer insights, advanced analytics, and broad-reaching innovative capabilities. It's how we deliver increased sales to our partners, build enduring loyalty to their brands, and provide more value to our cardmembers. Alliance Data's card services business is a proud part of the Alliance Data enterprise. To learn more, visit www.knowmoresellmore.com or follow us on Twitter @ADRetail.
About Alliance Data
Alliance Data® (NYSE:ADS) is a leading global provider of data-driven marketing and loyalty solutions serving large, consumer-based industries. The Company creates and deploys customized solutions, enhancing the critical customer marketing experience; the result is measurably changing consumer behavior while driving business growth and profitability for some of today's most recognizable brands. Alliance Data helps its clients create and increase customer loyalty through solutions that engage millions of customers each day across multiple touch points using traditional, digital, mobile and emerging technologies. An S&P 500 and Fortune 500 company headquartered in Plano, Texas, Alliance Data consists of three businesses that together employ more than 15,000 associates at approximately 100 locations worldwide.
Alliance Data's card services business is a leading provider of marketing-driven branded credit card programs. Epsilon® is a leading provider of multichannel, data-driven technologies and marketing services, and also includes Conversant®, the leader in personalized digital marketing. LoyaltyOne® owns and operates the AIR MILES® Reward Program, Canada's premier coalition loyalty program, and holds a majority interest in Netherlands-based BrandLoyalty, a global provider of tailor-made loyalty programs for grocers.
Follow Alliance Data on Twitter, Facebook, Linked In and You Tube.
Cautionary Note Regarding Forward-Looking Statements
Certain information included in this press release contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as "may," "could," "will," "plan," "expect," "anticipate," "estimate," "project," "intend" or other similar expressions and include the Company's fiscal 2015 guidance, involve important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. Factors that could cause such differences include, but are not limited to: risks related to retail businesses generally; a significant and prolonged deterioration of general economic conditions which could negatively impact the Company in a number of ways, including the potential write-down of the current valuation of intangible assets and deferred taxes; risks related to the Company's proprietary credit card program; potential increases in pension obligations; consumer spending patterns, debt levels, and the availability and cost of consumer credit; additional competition from existing and new competitors; inflation; deflation; changes in the costs of fuel and other energy and transportation costs; weather conditions that could negatively impact sales; uncertainties associated with expanding or remodeling existing stores; the ability to attract and retain qualified management; the dependence upon relationships with vendors and their factors; a data security breach or system failure; the ability to reduce or control SG&A expenses, including initiatives to reduce expenses and improve efficiency; operational disruptions; unsuccessful marketing initiatives; the ability to expand our capacity and improve efficiency through our new eCommerce fulfillment center; changes in, or the failure to successfully implement, our key strategies, including initiatives to improve our merchandising, marketing and operations; adverse outcomes in litigation; the incurrence of unplanned capital expenditures; the ability to obtain financing for working capital, capital expenditures and general corporate purposes; the impact of regulatory requirements including the Health Care Reform Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act; the inability or limitations on the Company's ability to favorably adjust the valuation allowance on deferred tax assets; and the financial condition of mall operators. Additional factors that could cause the Company's actual results to differ from those contained in these forward-looking statements are discussed in greater detail under Item 1A of the Company's Form 10-K filed with the Securities and Exchange Commission.
Alliance Data's Safe Harbor Statement/Forward Looking Statements
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may use words such as "anticipate," "believe," "continue, " "could," "estimate," "expect," "intend, " "may, " "predict," "project," "would," and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management's beliefs and assumptions, using information currently available to us. Although we believe that the expectations reflected in the forward-looking statements are reasonable, these forward-looking statements are subject to risks, uncertainties and assumptions, including those discussed in our filings with the Securities and Exchange Commission.
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statements contained in this presentation reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise, except as required by law.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this presentation regarding Alliance Data Systems Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report on Form 10-K for the most recently ended fiscal year. Risk factors may be updated in Item 1A in each of the Company's Quarterly Reports on Form 10-Q for each quarterly period subsequent to the Company's most recent Form 10-K.
CONTACT: Bon-Ton
Kim George
Divisional Vice President
Investor Relations
717.751.3071
kim.george@bonton.com
Alliance Data
Tiffany Louder - Investor Relations
214-494-3048
tiffany.louder@alliancedata.com
Steve Calk
FTI Consulting
212-850-5611
alliancedata@fticonsulting.com
Shelley Whiddon - Media
214-494-3811
shelley.whiddon@alliancedata.com