Exhibit 10.1
THE BON-TON STORES, INC. AMENDED AND RESTATED
2000 STOCK INCENTIVE AND PERFORMANCE-BASED AWARD PLAN
(Amended and Restated as of June 20, 2006)
          1.     Purpose. The Bon-Ton Stores, Inc. (the “Company”) hereby adopts
The Bon-Ton Stores, Inc. Amended and Restated 2000 Stock Incentive and
Performance-Based Award Plan (the “Plan”), effective as of June 20, 2006. The
Plan, as herein amended and restated, is intended to recognize the contributions
made to the Company by employees (including employees who are members of the
Board of Directors), directors, consultants and advisors of the Company or any
Affiliate, to provide such persons with additional incentive to devote
themselves to the future success of the Company or an Affiliate, to improve the
ability of the Company or an Affiliate to attract, retain, and motivate
individuals upon whom the Company’s sustained growth and financial success
depend, by providing such persons with an opportunity to acquire or increase
their proprietary interest in the Company through receipt of rights to acquire
the Company’s Common Stock, par value $.01 per share (the “Common Stock”), and
to permit Awards of Restricted Stock that may be characterized as
“performance-based” compensation for purposes of Section 162(m) of the Code. No
Performance-Based Award shall become vested unless the Plan, as herein amended
and restated, including the provisions of Section 16, has been disclosed to and
approved by the Company’s shareholders.
          2.     Definitions. Unless the context clearly indicates otherwise,
the following terms shall have the following meanings:

            A. “Affiliate” means a corporation that is a parent corporation or a
subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code.               B. “Award” means an award of
Restricted Stock, granted under the Plan, designated by the Committee at the
time of such grant as an Award, and containing the terms specified herein for
Awards.               C. “Award Document” means the document described in
Section 9 that sets forth the terms and conditions of each grant of an Award.  
            D. “Board of Directors” means the Board of Directors of the Company.

            E. “Change of Control” shall have the meaning as set forth in
Section 10.               F. “Code” means the Internal Revenue Code of 1986, as
amended.

            G. “Committee” shall have the meaning set forth in Section 3.A.

            H. “Company” means The Bon-Ton Stores, Inc., a Pennsylvania
corporation.

            I. “Disability” shall have the meaning set forth in Section 22(e)(3)
of the Code.

            J. “Fair Market Value” shall have the meaning set forth in
Section 8.B.

            K. “Grantee” means a person who is granted Restricted Stock.

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            L. “ISO” means an Option granted under the Plan that is intended to
qualify as an “incentive stock option” within the meaning of Section 422(b) of
the Code.

            M. “Non-qualified Stock Option” means an Option granted under the
Plan that is not intended to qualify, or otherwise does not qualify, as an
“incentive stock option” within the meaning of Section 422(b) of the Code.

            N. “Option” means either an ISO or a Non-qualified Stock Option
granted under the Plan.               O. “Optionee” means a person to whom an
Option has been granted under the Plan, which Option has not been exercised and
has not expired or terminated.

            P. “Option Document” means the document described in Section 8 that
sets forth the terms and conditions of each grant of Options.

            Q. “Option Price” means the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to Section 8.B.

            R. “Performance-Based Award” means an Award granted pursuant to
Section 16.               S. “Performance-Based Award Limitation” means the
limitation on the number of Shares that may be granted pursuant to
Performance-Based Awards to any one Participant, as set forth in Section 16.F.

            T. “Performance Period” means any period designated by the Committee
as a period of time during which a Performance Target must be met for purposes
of Section 16.

            U. “Performance Target” means the performance target established by
the Committee for a particular Performance Period, as described in Section 16.B.

            V. “Restricted Stock” means Shares issued to a person pursuant to an
Award.

            W. “Shares” means the shares of Common Stock that are the subject of
Options or Awards.

            X. “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

          3.     Administration of the Plan.

            A. Committee. The Plan shall be administered by the Board of
Directors, or, in the discretion of the Board of Directors, by a committee
composed of two (2) or more of the members of the Board of Directors. To the
extent possible, and to the extent the Board of Directors deems it necessary or
appropriate, each member of the Committee shall be a “Non- Employee Director”
(as such term is defined in Rule 16b-3 promulgated under the Exchange Act) and
an “Outside Director” (as such term is defined in Treasury Regulations
Section 1.162-27 promulgated under the Code); however, the Board of Directors
may designate two or more committees to operate and administer the Plan in its
stead. Any of such committees designated by the Board of Directors is referred
to as the “Committee,” and, to the extent that the Plan is administered by the
Board of Directors, “Committee” shall also refer to the Board of Directors as
appropriate in the particular context. The Board of Directors may from time to
time remove members from, or add members

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  to, the Committee. Vacancies on the Committee, however caused, shall be filled
by the Board of Directors.               B. Meetings. The Committee shall hold
meetings at such times and places as it may determine. Acts approved at a
meeting by a majority of the members of the Committee or acts approved in
writing by the unanimous consent of the members of the Committee shall be the
valid acts of the Committee.               C. Grants. The Committee shall from
time to time at its discretion direct the Company to grant Options or Awards
pursuant to the terms of the Plan. The Committee shall have plenary authority to
(i) determine the Optionees and Grantees to whom and the times at which Options
and Awards shall be granted, (ii) determine the price at which Options shall be
granted, (iii) determine the type of Option to be granted and the number of
Shares subject thereto, (iv) determine the number of Shares to be granted
pursuant to each Award and (v) approve the form and terms and conditions of the
Option Documents and of each Award; all subject, however, to the express
provisions of the Plan. In making such determinations, the Committee may take
into account the nature of the Optionee’s or Grantee’s services and
responsibilities, the Optionee’s or Grantee’s present and potential contribution
to the Company’s success and such other factors as it may deem relevant. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Option or Award granted under it shall be final, binding and
conclusive.               D. Exculpation. No member of the Committee shall be
personally liable for monetary damages as such for any action taken or any
failure to take any action in connection with the administration of the Plan or
the granting of Options or Awards thereunder unless (i) the member of the
Committee has breached or failed to perform the duties of his or her office
within the meaning of subchapter B of Chapter 17 of the Pennsylvania Business
Corporation Law of 1988, as amended, and (ii) the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness; provided, however,
that the provisions of this Section 3.D shall not apply to the responsibility or
liability of a member of the Committee pursuant to any criminal statute or to
the liability of a member of the Committee for the payment of taxes pursuant to
local, state or federal law.

            E. Indemnification. Service on the Committee shall constitute
service as a member of the Board of Directors. Each member of the Committee
shall be entitled without further act on his or her part to indemnity from the
Company to the fullest extent provided by applicable law and the Company’s
Articles of Incorporation and/or Bylaws in connection with or arising out of any
action, suit or proceeding with respect to the administration of the Plan or the
granting of Options or Awards thereunder in which he or she may be involved by
reason of his or her being or having been a member of the Committee, whether or
not he or she continues to be such member of the Committee at the time of the
action, suit or proceeding.

          4.     Grants of Options under the Plan. Grants of Options under the
Plan may be in the form of a Non-qualified Stock Option, an ISO or a combination
thereof, at the discretion of the Committee.
          5.     Eligibility. All employees (including employees who are members
of the Board of Directors or its Affiliates), directors, consultants and
advisors of the Company or its Affiliates shall be eligible to receive Options
or Awards hereunder; provided, that only employees of the Company or its
Affiliates shall be eligible to receive ISOs. The Committee, in its sole
discretion, shall determine whether an individual qualifies as an employee of
the Company or its Affiliates.

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          6.     Shares Subject to Plan. The aggregate maximum number of Shares
for which Options or Awards may be granted pursuant to the Plan is two million
six hundred thousand (2,600,000) adjusted as provided in Section 11. The Shares
shall be issued from authorized and unissued Common Stock or Common Stock held
in or hereafter acquired for the treasury of the Company. If an Option
terminates or expires without having been fully exercised for any reason, or if
Restricted Stock is canceled or forfeited pursuant to the terms of an Award, the
Shares for which the Option was not exercised or that were canceled or forfeited
pursuant to the Award may again be the subject of an Option or Award granted
pursuant to the Plan.
          7.     Term of the Plan. No Option or Award may be granted under the
Plan after March 2, 2010.
          8.     Option Documents and Terms. Each Option granted under the Plan
shall be a Non-qualified Stock Option unless the Option shall be specifically
designated at the time of grant to be an ISO. Options granted pursuant to the
Plan shall be evidenced by the Option Documents in such form as the Committee
shall from time to time approve, which Option Documents shall comply with and be
subject to the following terms and conditions and such other terms and
conditions as the Committee shall from time to time require that are not
inconsistent with the terms of the Plan.

            A. Number of Option Shares. Each Option Document shall state the
number of Shares to which it pertains. An Optionee may receive more than one
Option, which may include Options that are intended to be ISOs and Options that
are not intended to be ISOs, but only on the terms and subject to the conditions
and restrictions of the Plan. The maximum number of Shares for which Options may
be granted to any single Optionee in any fiscal year, adjusted as provided in
Section 11, shall be four hundred thousand (400,000) Shares.               B.
Option Price. Each Option Document shall state the Option Price that, for all
ISOs, shall be at least 100% of the Fair Market Value of the Shares at the time
the Option is granted as determined by the Committee in accordance with this
Section 8.B; provided, however, that if an ISO is granted to an Optionee who
then owns, directly or by attribution under Section 424(d) of the Code, shares
of capital stock of the Company possessing more than 10% of the total combined
voting power of all classes of stock of the Company or an Affiliate, then the
Option Price shall be at least 110% of the Fair Market Value of the Shares at
the time the Option is granted. If the Common Stock is traded in a public
market, then the Fair Market Value per Share shall be, if the Common Stock is
listed on a national securities exchange or included in the NASDAQ National
Market System, the last reported sale price per share thereof on the relevant
date, or, if the Common Stock is not so listed or included, the mean between the
last reported “bid” and “asked” prices per share thereof, as reported on NASDAQ
or, if not so reported, as reported by the National Daily Quotation Bureau,
Inc., or as reported in a customary financial reporting service, as applicable
and as the Committee determines, on the relevant date. If the Common Stock is
not traded in a public market on the relevant date, the Fair Market Value shall
be as determined in good faith by the Committee.               C. Exercise. No
Option shall be deemed to have been exercised prior to the receipt by the
Company of written notice of such exercise and of payment in full of the Option
Price for the Shares to be purchased. Each such notice shall specify the number
of Shares to be purchased and shall (unless the Shares are covered by a then
current registration statement or a Notification under Regulation A under the
Securities Act of 1933, as amended (the “Act”)), contain the Optionee’s
acknowledgment in form and substance satisfactory to the Company that (i) such
Shares

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  are being purchased for investment and not for distribution or resale (other
than a distribution or resale that, in the opinion of counsel satisfactory to
the Company, may be made without violating the registration provisions of the
Act), (ii) the Optionee has been advised and understands that (A) the Shares
have not been registered under the Act and are “restricted securities” within
the meaning of Rule 144 under the Act and are subject to restrictions on
transfer and (B) the Company is under no obligation to register the Shares under
the Act or to take any action that would make available to the Optionee any
exemption from such registration, (iii) such Shares may not be transferred
without compliance with all applicable federal and state securities laws, and
(iv) an appropriate legend referring to the foregoing restrictions on transfer
and any other restrictions imposed under the Option Documents may be endorsed on
the certificates. Notwithstanding the foregoing, if the Company determines that
issuance of Shares should be delayed pending (I) registration under federal or
state securities laws, (II) the receipt of an opinion that an appropriate
exemption from such registration is available, (III) the listing or inclusion of
the Shares on any securities exchange or in an automated quotation system or
(IV) the consent or approval of any governmental regulatory body whose consent
or approval is necessary in connection with the issuance of such Shares, the
Company may defer exercise of any Option granted hereunder until any of the
events described in this Section 8.C has occurred.               D. Medium of
Payment. An Optionee shall pay for Shares (i) in cash, (ii) by certified check
payable to the order of the Company, or (iii) by such other mode of payment as
the Committee may approve, including, without limitation, payment through a
broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board. Furthermore, the Committee may provide in an Option Document that
payment may be made in whole or in part in shares of Common Stock held by the
Optionee for at least six months. If payment is made in whole or in part in
shares of Common Stock, then the Optionee shall deliver to the Company
certificates registered in the name of such Optionee representing the shares of
Common Stock owned by such Optionee, free of all liens, claims and encumbrances
of every kind and having an aggregate Fair Market Value on the date of delivery
that is at least as great as the Option Price of the Shares (or relevant portion
thereof) with respect to which such Option is to be exercised by the payment in
shares of Common Stock, accompanied by stock powers duly endorsed in blank by
the Optionee. Notwithstanding the foregoing, the Committee may impose from time
to time such limitations and prohibitions on the use of shares of Common Stock
to exercise an Option as it deems appropriate.

                    E.     Termination of Options.

            1.     No Option shall be exercisable after the first to occur of
the following:

  (a) Expiration of the Option term specified in the Option Document, which
shall not exceed (i) ten years from the date of grant, or (ii) five years from
the date of grant of an ISO if the Optionee on the date of grant owns, directly
or by attribution under Section 424(d) of the Code, shares of capital stock of
the Company possessing more than ten percent (10%) of the total combined voting
power of all classes of capital stock of the Company or of an Affiliate;     (b)
Expiration of ninety (90) days from the date the Optionee’s employment or
service with the Company or its Affiliate terminates for any reason other

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  than Disability or death or as otherwise specified in Section 8.E.1(d) or
Section 10 below;

  (c) Expiration of one year from the date the Optionee’s employment or service
with the Company or its Affiliate terminates due to the Optionee’s Disability or
death;

  (d) A finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Optionee, that the Optionee has
breached his or her employment or service contract with the Company or an
Affiliate, or has been engaged in any sort of disloyalty to the Company or an
Affiliate, including, without limitation, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his or her employment or
service, or has disclosed trade secrets or confidential information of the
Company or an Affiliate. In such event, in addition to immediate termination of
the Option, the Optionee shall automatically forfeit all Shares for which the
Company has not yet delivered the share certificates upon refund by the Company
of the Option Price of such Shares. Notwithstanding anything herein to the
contrary, the Company may withhold delivery of share certificates pending the
resolution of any inquiry that could lead to a finding resulting in a
forfeiture; or

  (e) The date, if any, set by the Board of Directors as an accelerated
expiration date pursuant to Section 10 hereof.

  2. Notwithstanding the foregoing, the Committee may extend the period during
which an Option may be exercised to a date no later than the date of the
expiration of the Option term specified in the Option Documents, as they may be
amended, provided that any change pursuant to this Section 8.E.2 that would
cause an ISO to become a Non-qualified Stock Option may be made only with the
consent of the Optionee.     3. During the period in which an Option may be
exercised after the termination of the Optionee’s employment or service with the
Company or any Affiliate, such Option shall only be exercisable to the extent it
was exercisable immediately prior to such Optionee’s termination of service or
employment, except to the extent specifically provided to the contrary in the
applicable Option Document.

            F. Transfers. No Option may be transferred except by will or by the
laws of descent and distribution. During the lifetime of the person to whom an
Option is granted, such Option may be exercised only by him or her.
Notwithstanding the foregoing, a Non-qualified Stock Option may be transferred
pursuant to the terms of a “qualified domestic relations order” within the
meaning of Sections 401(a)(13) and 414(p) of the Code or within the meaning of
Title I of the Employee Retirement Income Security Act of 1974, as amended.

            G. Holding Period. No Option may be exercised unless six months, or
such greater period of time as may be specified in the Option Documents, have
elapsed from the date of grant.

            H. Limitation on ISO Grants. In no event shall the aggregate Fair
Market Value of the Shares (determined at the time the ISO is granted) with
respect to which an ISO is exercisable for the first time by the Optionee during
any calendar year (under all incentive stock option plans of the Company or its
Affiliates) exceed $100,000.

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            I. Other Provisions. The Option Documents shall contain such other
provisions including, without limitation, provisions authorizing the Committee
to accelerate the exercisability of all or any portion of an Option, additional
restrictions upon the exercise of the Option or additional limitations upon the
term of the Option, as the Committee shall deem advisable.

            J. Amendment. The Committee shall have the right to amend Option
Documents issued to an Optionee, subject to the Optionee’s consent if such
amendment is not favorable to the Optionee, except that the consent of the
Optionee shall not be required for any amendment made under Section 10.

          9.     Award Documents and Terms. Awards shall be evidenced by an
Award Document in such form as the Committee shall from time to time approve,
which Award Document shall comply with and be subject to the following terms and
conditions and such other terms and conditions as the Committee shall from time
to time require that are not inconsistent with the terms of the Plan. A Grantee
shall not have any rights with respect to an Award until and unless such Grantee
shall have executed an Award Document containing the terms and conditions
determined by the Committee.

            A. Number of Shares and Price. Each Award Document shall state the
number of Shares of Restricted Stock to which it pertains. No cash or other
consideration shall be required to be paid by the Grantee for an Award.    
          B. Certificates. Each Grantee shall be issued a certificate in respect
of Shares subject to an Award. Such certificate shall be registered in the name
of the Grantee and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Award. The Company may require
that the certificate evidencing such Shares be held by the Company until all
restrictions on such Shares have lapsed.               C. Restrictions. Subject
to the provisions of the Plan and the Award Documents, during a period set by
the Committee commencing with the date of such Award, which period shall extend
for at least six months from the date of such Award (except as provided by
Section 9.G), the Grantee shall not be permitted to sell, transfer, pledge,
assign, or otherwise dispose of the Restricted Stock awarded under the Plan.    
          D. Lapse of Restrictions. Subject to the provisions of the Plan and
the Award Document, restrictions upon Restricted Stock shall lapse at such time
or times and on such terms and conditions as the Committee may determine and set
forth in the Award Document; provided, however, that the restrictions upon such
Shares shall lapse only if the Grantee on the date of such lapse is, and has
continuously been an employee of the Company or its Affiliate from the date such
Award was granted. The Award Document may provide for the lapse of restrictions
in installments, as determined by the Committee. In the event that a Grantee’s
employment terminates as a result of the Grantee’s death or Disability, all
remaining restrictions with respect to such Grantee’s Restricted Stock shall
immediately lapse, unless otherwise provided in the Award Document.

            E. Rights of the Grantee. Grantees may have such rights with respect
to the Shares subject to an Award as may be determined by the Committee and set
forth in the Award Document, including, without limitation, the right to vote
such Shares and the right to receive dividends paid with the respect to such
Shares.

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            F. Dividends. The Committee may, in its sole discretion, provide in
an Award Document that an amount equivalent to any dividends payable with
respect to the number of Shares of Restricted Stock granted, but not yet
delivered, be invested and reinvested in additional Shares of Restricted Stock,
which shall be subject to the same restrictions as Restricted Stock to which the
dividends relate. Such Shares of Restricted Stock shall be reflected in
accordance with the terms of the Award Document by the credit of additional full
or fractional Shares, calculated to the thousandth of a Share, in an amount
equal to the value of the declared dividend divided by the Fair Market Value of
a Share on the date of payment of the dividend. Any arrangements for the credit
of additional Shares of Restricted Stock shall terminate if, and to the extent
that, under the terms of the Award Document the right to receive the Restricted
Stock to which the dividends relate shall terminate or lapse.

            G. Forfeiture of Restricted Stock. In the event that a Grantee’s
employment with the Company terminates for any reason other than because of
death or Disability, any Restricted Stock held by such Grantee shall be
forfeited by the Grantee and reacquired by the Company. The Company may, in its
sole discretion, waive, in whole or in part, any remaining restrictions with
respect to such Grantee’s Restricted Stock.

            H. Delivery of Shares. When the restrictions imposed on Restricted
Stock expire or have been canceled with respect to one or more Shares (whether
issued as an Award or as additional Restricted Stock pursuant to Section 9.F),
the Company shall notify the Grantee that such restrictions no longer apply with
respect to such Shares, and shall deliver to the Grantee (or the person to whom
ownership rights in such Restricted Stock may have passed by will or the laws of
descent and distribution) a certificate for the number of Shares for which
restrictions have been canceled or have expired, without any legend or
restrictions (except those that may be imposed by the Committee in its sole
judgment to ensure compliance with the then existing requirements of the Act and
the Exchange Act). The right to payment for any fractional Shares that may have
accrued shall be satisfied in cash based on the Fair Market Value of a Share on
the date the restriction with respect to such fractional Share lapsed or
terminated.

          10.     Change of Control. In the event of a Change of Control, the
Committee may take whatever action with respect to Options and Awards
outstanding as it deems necessary or desirable, including, without limitation,
accelerating the expiration or termination date or the date of exercisability in
any Option Documents, or removing any restrictions from or imposing any
additional restrictions on any outstanding Awards.
          A “Change of Control” shall be deemed to have occurred upon the
earliest to occur of the following events: (i) the date the shareholders of the
Company (or the Board of Directors, if shareholder action is not required)
approve a plan or other arrangement pursuant to which the Company will be
dissolved or liquidated, or (ii) the date the shareholders of the Company (or
the Board of Directors, if shareholder action is not required) approve a
definitive agreement to sell or otherwise dispose of substantially all of the
assets of the Company, or (iii) the date the shareholders of the Company (or the
Board of Directors, if shareholder action is not required) and the holders of
voting securities of the other constituent entity (or its board of directors or
similar governing body if security holder action is not required) have approved
a definitive agreement to merge or consolidate the Company with or into such
other entity, other than, in either case, a merger or consolidation of the
Company in which holders of shares of the Company’s Common Stock or other common
voting stock immediately prior to the merger or consolidation will hold at

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least 50% of the voting power of the outstanding voting securities of the
surviving entity immediately after the merger or consolidation, which voting
securities are to be held in the same proportion to one another as such holders’
ownership of Common Stock or other common voting stock of the Company
immediately before the merger or consolidation, or (iv) the date any entity,
person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act) other than M. Thomas Grumbacher, members of his family, his
lineal descendants, or entities of which such persons are the beneficial owners
of at least fifty percent (50%) of the voting interests, the Company or any of
its Affiliates, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Affiliates, shall have become the
beneficial owner of, or shall have obtained voting control over, outstanding
shares of the Company’s voting stock representing more than fifty percent (50%)
of the voting power of all of the Company’s outstanding voting stock, or (v) the
first day after the date this Plan is effective when directors constituting a
majority of the Board of Directors shall have been members of the Board of
Directors for less than twelve (12) months, unless the nomination for election
of each new director who was not a director at the beginning of such twelve
(12) month period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such period.
          11.     Adjustments on Changes in Capitalization. The aggregate number
of Shares and class of Shares as to which Options and Awards may be granted
hereunder, the limitation as to grants to individuals set forth in Section 8.A
hereof, the number of Shares covered by each outstanding Option or Award, and
the Option Price for each related outstanding Option, shall be appropriately
adjusted in the event of a stock dividend, stock split, recapitalization or
other change in the number or class of issued and outstanding equity securities
of the Company resulting from a subdivision or consolidation of the Common Stock
and/or, if appropriate, other outstanding equity securities or a
recapitalization or other capital adjustment (not including the issuance of
Common Stock on the conversion of other securities of the Company that are
convertible into Common Stock) affecting the Common Stock which is effected
without receipt of consideration by the Company. The Committee shall have
authority to determine the adjustments to be made under this Section, and any
such determination by the Committee shall be final, binding and conclusive;
provided, however, that no adjustment shall be made that will cause an ISO to
lose its status as such without the consent of the Optionee, except for
adjustments made pursuant to Section 10 hereof.
          12.     Amendment of the Plan. The Board of Directors of the Company
may amend the Plan from time to time in such manner as it may deem advisable.
Nevertheless, the Board of Directors of the Company may not: (i) change the
class of individuals eligible to receive an ISO, (ii) increase the maximum
number of Shares as to which Options or Awards may be granted, or (iii) make any
other change or amendment as to which shareholder approval is required in order
to satisfy the conditions set forth in Rule 16b-3 promulgated under the Exchange
Act, in each case without obtaining approval, within twelve months before or
after such action, by (A) vote of a majority of the votes cast at a duly called
meeting of the shareholders at which a quorum representing a majority of all
outstanding voting stock of the Company is, either in person or by proxy,
present and voting on the matter, or (B) a method and in a degree that would be
treated as adequate under applicable state law for actions requiring shareholder
approval, including, without limitation, by written consent of shareholders
constituting a majority of the voting power of all shares of outstanding voting
stock of the Company entitled to vote. No amendment to the Plan shall adversely
affect any outstanding Option or Award, however, without the consent of the
Optionee or Grantee.
          13.     No Commitment to Retain. The grant of an Option or Award shall
not be construed to imply or to constitute evidence of any agreement, express or
implied, on the part of the Company or any Affiliate to retain the Optionee or
Grantee in the employ of the Company or an Affiliate and/or as a member of the
Company’s Board of Directors or in any other capacity.

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          14.     Withholding of Taxes. Whenever the Company proposes or is
required to deliver or transfer Shares in connection with an Award or the
exercise of an Option, the Company shall have the right to (a) require the
recipient to remit or otherwise make available to the Company an amount
sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the delivery or transfer of any certificate or
certificates for such Shares or (b) take whatever other action it deems
necessary to protect its interests with respect to tax liabilities. The
Company’s obligation to make any delivery or transfer of Shares shall be
conditioned on the Optionee’s or Grantee’s compliance, to the Company’s
satisfaction, with any withholding requirement.
          15.     Interpretation. The Plan is intended to enable transactions
under the Plan with respect to directors and officers (within the meaning of
Section 16(a) under the Exchange Act) to satisfy the conditions of Rule 16b-3
promulgated under the Exchange Act; any provision of the Plan that would cause a
conflict with such conditions shall be deemed null and void to the extent
permitted by applicable law and in the discretion of the Board of Directors.
          16.     Special Rules for Performance-Based Awards.

              A. Performance-Based Awards. The Committee may grant Awards of
Restricted Stock pursuant to the terms of this Section 16, and consistent with
Section 9, above, which shall include vesting requirements based specifically on
the attainment of one or more Performance Targets applicable to any such Award,
as set forth in this Section 16. In the event a Participant who has been granted
a Performance-Based Award terminates his or her employment with the Company
prior to the date on which the applicable Performance Target or Targets have
been met or prior to the satisfaction of any other applicable conditions or
requirements have been met or satisfied, such Performance-Based Award shall be
immediately forfeited. In addition, the Committee shall have the authority to
cause a Performance-Based Award to be forfeited, in whole or in part, at any
time prior to the Committee’s determination that such Performance-Based Award
has become vested by reason of attainment of one or more of the applicable
Performance Targets, at the Committee’s sole discretion. Such absolute right to
reduce or eliminate a Performance-Based Award shall be exercised by the
Committee in light of the Committee’s review of all facts and circumstances the
Committee deems to be relevant. The Committee shall have no authority to cause
any Performance-Based Award to become vested in the absence of the achievement
of any applicable Performance Target(s).

            B.     Establishment of Performance Targets.

            1. The Committee shall establish one or more Performance Targets for
each Performance Period, which Performance Targets may vary for different
Participants who may be granted Performance-Based Awards.               2. In
all cases, the Performance Target(s) established with respect to any Performance
Period shall be established within the first 90 days of the Performance Period
or, if shorter, within the first twenty five percent (25%) of such Performance
Period.               3. Each Performance Target established under the Plan
shall constitute a goal as to which an objective method or methods is available
for determining whether such Performance Target has been achieved. In addition,
the Committee shall establish in connection with the Performance Targets
applicable to a Performance Period an objective method for computing the

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  portion of a particular Performance-Based Award that may be treated as vested
as a result of attaining such Performance Target(s).

  C. Vesting of Performance-Based Awards. Vesting of Performance-Based Awards
shall be determined at the time (or times) and in the manner established by the
Committee for a Performance Period; provided, however, that no portion of a
Performance-Based Award shall become vested unless and until (i) the Plan
(including the provisions of this Section 16 of the Plan) is approved by the
Company’s shareholders (and such shareholder approval is still effective for
purposes of the rules on performance-based compensation applicable in connection
with Code Section 162(m), as required under Section 16.D), and (ii) the
Committee has certified in writing that each Performance Target for the
particular Performance Period for which a Performance-Based Award is granted has
been achieved.     D. Subsequent Shareholder Approval. The Plan (including the
provisions of this Section 16) shall again be disclosed to the Company’s
shareholders for approval at the time or times required under Code
Section 162(m) and/or Treasury Regulations promulgated thereunder in order for
the Performance-Based Awards granted under the Plan to continue to qualify as
performance-based compensation that is exempt from the limitations on
deductibility by the Company of compensation under Code Section 162(m). No
Performance-Based Awards shall become vested if such required shareholder
approval has not been obtained.

  E. Criteria to be Used in Establishing Performance Targets. In establishing
any Performance Target under the Plan, the Committee shall establish an
objective target based upon one or more of the following business criteria
(which may be determined for these purposes by reference to (i) the Company as a
whole, (ii) any of the Company’s subsidiaries, operating divisions, business
segments or other operating units, or (iii) any combination thereof): earnings
before interest, taxes, depreciation, and amortization; profit before taxes;
stock price; market share; gross revenue; net revenue; pretax income; net
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; loss ratio; expense ratio; combined ratio; product spread; or any
variations or combinations of the preceding business criteria, which may also be
modified at the discretion of the Committee, to take into account extraordinary
items or which may be adjusted to reflect such costs or expense as the Committee
deems appropriate.     F. Performance-Based Award Limitation. Notwithstanding
anything to the contrary herein, no Participant shall receive a
Performance-Based Award for Shares having a Fair Market Value, as of the date of
grant, in excess of $3,000,000.

            1. The limitation set forth in this Section 16.F shall be applied
with respect to Performance-Based Awards that relate to a Performance Period
longer than one year by multiplying that limitation by a fraction equal to the
number of full calendar months in the Performance Period divided by twelve (12).
              2. If a Performance Period is less than a full year, the
limitation of this Section 16.F shall apply without adjustment; provided,
however, that any

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  such short Performance Period shall be treated as though it were a Performance
Period that extends until the end of the one year period that starts as of the
first day of the short Performance Period, and any other Performance Periods
that overlap such one year period will be subject to further limitations as
though such Performance Periods were overlapping Performance Periods, as
described in subsection 16.F.3.               3. If Performance-Based Awards
with overlapping Performance Periods are granted to any one employee, the
limitations of this Section 16.F shall be reduced with respect to any such
overlapping Performance Periods so that the aggregate value of such multiple
Performance-Based Awards does not exceed the limitation set forth in the first
sentence of this Section 16.F, multiplied by a fraction, the numerator of which
is the number of full calendar months occurring during the period commencing as
of the first day of the first to start of such overlapping Performance Periods,
and the last day of which is the last day of the last to end of such overlapping
Performance Periods, and the denominator of which is twelve (12).

          The intent of subsections 1 through 3 of this Section 16.F is to cause
each Performance-Based Award to satisfy the limitation of this Section 16.F as
if such Award were the only Performance-Based Award granted, and to cause, in
addition, the aggregate value of Performance-Based Awards granted for
overlapping Performance Periods to comply with the limitation of this
Section 16.F as though such multiple Performance-Based Awards constituted a
single Performance-Based Award.

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