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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 of
$1,500,000.

          (d) Termination of Employment During Plan Year. Notwithstanding
anything contained herein to the contrary, in the event a Participant is not an
employee of the Company as of the last day of the Plan Year, the
Performance-Based Bonus payable to such a Participant shall be equal to the
Performance-Based Bonus that would otherwise have been payable under the Plan
(without taking into account this Section 6(d)), multiplied by a fraction, the
numerator of which is equal to the number of days the Participant was employed
by the Company during the Plan Year, and the denominator of which is 365.



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          (e) Committee Discretion. Notwithstanding the determination of a
Participant's bonus or bonuses under the provisions of this Section 6 (without
regard to this Section 6(f)), the Committee may, at its sole discretion, reduce
the amount of or totally eliminate any such bonus or bonuses to the extent the
Committee determines that such reduction or elimination is appropriate under
such facts and circumstances as the Committee deems relevant. In no event shall
the Committee have the authority to increase the amount any Participant's bonus
or bonuses as determined under the provisions of the Plan and taking into
account the Earned Percentage Schedule as initially established for a Plan Year
and the terms and conditions initially established with respect to a Transaction
Bonus.

     7. COMMITTEE

          (a) Powers. The Committee shall have the power and duty to do all
things necessary or convenient to effect the intent and purposes of the Plan and
not inconsistent with any of the provisions hereof, whether or not such powers
and duties are specifically set forth herein, and, by way of amplification and
not limitation of the foregoing, the Committee shall have the power to:

               (i) provide rules and regulations for the management, operation
and administration of the Plan, and, from time to time, to amend or supplement
such rules and regulations;

               (ii) construe the Plan, which construction, as long as made in
good faith, shall be final and conclusive upon all parties hereto; and

               (iii) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as it shall deem
expedient to carry the same into effect, and it shall be the sole and final
judge of when such action shall be appropriate.

The resolution of any questions with respect to payments and entitlements
pursuant to the provisions of the Plan shall be determined by the Committee, and
all such determinations shall be final and conclusive.

          (b) Indemnity. No member of the Committee shall be directly or
indirectly responsible or under any liability by reason of any action or default
by him as a member of the Committee, or the exercise of or failure to exercise
any power or discretion as such member. No member of the Committee shall be
liable in any way for the acts or defaults of any other member of the Committee,
or any of its advisors, agents or representatives. The Company shall indemnify
and save harmless each member of the Committee against any and all expenses and
liabilities arising out of his own membership on the Committee.

          (c) Compensation and Expenses. Members of the Committee shall receive
no separate compensation for services other than compensation for their services
as members of the Board of Directors, which compensation can include
compensation for services at any committee meeting attended in their capacity as
members of the Board of Directors. Members of the Committee shall be entitled to
receive their reasonable expenses incurred in administering the



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Plan. Any such expenses, as well as extraordinary expenses authorized by the
Company, shall be paid by the Company.

          (d) Participant Information. The Company shall furnish to the
Committee in writing all information the Company deems appropriate for the
Committee to exercise its powers and duties in administration of the Plan. Such
information shall be conclusive for all purposes of the Plan and the Committee
shall be entitled to rely thereon without any investigation thereof; provided,
however, that the Committee may correct any errors discovered in any such
information.

          (e) Inspection of Documents. The Committee shall make available to
each Participant and his Designated Beneficiary, for examination at the
principal office of the Company (or at such other location as may be determined
by the Committee), a copy of the Plan and such of its records, or copies
thereof, as may pertain to any benefits of such Participant and beneficiary
under the Plan.

     8. EFFECTIVE DATE, TERMINATION AND AMENDMENT

          (a) Effective Date of Participation in Plan. Subject to shareholder
and Committee approval of the Plan, the Plan shall be effective as of the
Effective Date, and Participants who have been designated by the Committee as
eligible for bonuses with respect to the Plan Year that commenced as of the
Effective Date shall participate in the Plan pursuant to the terms of the Earned
Percentage Schedule as applicable to each such Participant.

          (b) Amendment and Termination of the Plan. The Plan may be terminated
or revoked by the Board at any time and amended by the Board from time to time,
provided that neither the termination, revocation or amendment of the Plan may,
without the written approval of the Participant, reduce the amount of a bonus
payment that has been determined by the Committee to be due and payable, but has
not yet been paid; and provided further that no modification to the Plan that
would increase the amount of any bonus payable hereunder beyond the amount
determined pursuant to Section 6 of the Plan shall be effective without (i)
approval by the Committee, (ii) disclosure to the shareholders of the Company of
such modification, and (iii) approval of such modification by the shareholders
of the Company in a separate vote that takes place prior to the payment of any
bonuses under such modified Plan provisions. The Plan may also be modified or
amended by the Committee, as it deems appropriate, in order to comply with the
Performance Based Compensation Rules.

     9. MISCELLANEOUS PROVISIONS

          (a) Unsecured Creditor Status. A Participant entitled to a bonus
payment hereunder, shall rely solely upon the unsecured promise of the Company,
as set forth herein, for the payment thereof, and nothing herein contained shall
be construed to give to or vest in a Participant or any other person now or at
any time in the future, any right, title, interest, or claim in or to any
specific asset, fund, reserve, account, insurance or annuity policy or contract,
or other property of any kind whatever owned by the Company, or in which the
Company may have any right, title, or interest, now or at any time in the
future.



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          (b) Other Company Plans. It is agreed and understood that any benefits
under this Plan are in addition to any and all benefits to which a Participant
may otherwise be entitled under any other contract, arrangement, or voluntary
pension, profit sharing or other compensation plan of the Company, whether
funded or unfunded, and that this Plan shall not affect or impair the rights or
obligations of the Company or a Participant under any other such contract,
arrangement, or voluntary pension, profit sharing or other compensation plan.

          (c) Separability. If any term or condition of the Plan shall be
invalid or unenforceable to any extent or in any application, then the remainder
of the Plan, with the exception of such invalid or unenforceable provision,
shall not be affected thereby, and shall continue in effect and application to
its fullest extent.

          (d) Continued Employment. Neither the establishment of the Plan, any
provisions of the Plan, nor any action of the Committee shall be held or
construed to confer upon any Participant the right to a continuation of
employment by the Company. The Company reserves the right to dismiss any
employee (including a Participant), or otherwise deal with any employee
(including a Participant) to the same extent as though the Plan had not been
adopted.

          (e) Incapacity. If the Committee determines that a Participant or
Beneficiary is unable to care for his affairs because of illness or accident, or
is a minor, any benefit due such Participant or Beneficiary under the Plan may
be paid to his spouse, child, parent, or any other person deemed by the
Committee to have incurred expense for such Participant or Beneficiary
(including a duly appointed guardian, committee, or other legal representative),
and any such payment shall be a complete discharge of the Company's obligation
hereunder.

          (f) Jurisdiction. The Plan shall be construed, administered, and
enforced according to the laws of the Commonwealth of Pennsylvania, except to
the extent that such laws are preempted by the Federal laws of the United States
of America.

          (g) Claims. If, pursuant to the provisions of the Plan, the Committee
denies the claim of a Participant for benefits under the Plan, the Committee
shall provide written notice, within 60 days after receipt of the claim, setting
forth in a manner calculated to be understood by the claimant:

               (i) the specific reasons for such denial;

               (ii) the specific reference to the Plan provisions on which the
denial is based;

               (iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such material or
information is needed; and

               (iv) an explanation of the Plan's claim review procedure and the
time limitations of this subsection applicable thereto.

A Participant whose claim for benefits has been denied may request review by the
Committee of the denied claim by notifying the Committee in writing within 60
days after receipt of the notification of claim denial. As part of said review
procedure, the claimant or his authorized



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representative may review pertinent documents and submit issues and comments to
the Committee in writing. The Committee shall render its decision to the
claimant in writing in a manner calculated to be understood by the claimant not
later than 60 days after receipt of the request for review, unless special
circumstances require an extension of time, in which case decision shall be
rendered as soon after the sixty day period as possible, but not later than 120
days after receipt of the request for review. The decision on review shall state
the specific reasons therefor and the specific Plan references on which it is
based.

          (h) Withholding. The Participant or the Designated Beneficiary shall
make appropriate arrangements with the Company for satisfaction of any federal,
state or local income tax withholding requirements and Social Security or other
tax requirements applicable to the accrual or payment of benefits under the
Plan. If no other arrangements are made, the Company may provide, at its
discretion, for any withholding and tax payments as may be required.

          (i) Interpretation. The Plan is intended to pay compensation only on
the attainment of the performance goals set forth above in a manner that will
exempt such compensation from the limitations on the deduction of certain
compensation payments under Code Section 162(m). To the extent that any
provision of the Plan would cause a conflict with the conditions required for
such an exemption or would cause the administration of the Plan to fail to
satisfy the applicable requirements for the performance-based compensation
exemption under Code Section 162(m), such provision shall be deemed null and
void to the extent permitted by applicable law.



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