Document:

<PAGE>   1
                                                                    Exhibit 10.1

                    SEVENTH AMENDMENT TO THE CREDIT AGREEMENT

                  SEVENTH AMENDMENT, dated as of July 31, 2000 (this
"Amendment"), among THE BON-TON DEPARTMENT STORES, INC. and THE BON-TON STORES
OF LANCASTER, INC. (collectively, the "Borrowers"), the other Credit Parties
party to the Credit Agreement referred to below, the Lenders party to such
Credit Agreement and GENERAL ELECTRIC CAPITAL CORPORATION, as Administrative
Agent (in such capacity, the "Agent"), Collateral Agent (in such capacity, the
"Collateral Agent") and Lender.

                              W I T N E S S E T H :

                  WHEREAS, the parties hereto have entered into that certain
Credit Agreement, dated as of April 15, 1997 (such Agreement, as amended,
supplemented or otherwise modified from time to time, being hereinafter referred
to as the "Credit Agreement," and capitalized terms defined therein and not
otherwise defined herein are used herein as therein defined); and

                  WHEREAS, the Borrowers desire to have the Lenders amend
certain provisions of the Credit Agreement; and

                  WHEREAS, the Lenders have agreed to such amendments upon the
terms and subject to the conditions provided herein;

                  NOW, THEREFORE, in consideration of the premises, covenants
and agreements contained herein, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

         Section 1. Amendment. The Lenders, the Agent, the Borrowers and the
other Credit Parties hereby agree to the following amendment to the Credit
Agreement:

         (a) (i) the word "and" immediately preceding the first clause (iii) of
the definition of "Fixed Asset Availability" in Annex A to the Credit Agreement
is hereby deleted and a comma inserted in lieu thereof and (ii) the first clause
(iii) of such definition is hereby amended by deleting it in its entirety and
inserting in lieu thereof the following:

         "(iii) from March 1, 1999 through and including July 31, 2000, up to 33
         1/3% of Maximum Fixed Asset Availability and (iv) from August 1, 2000
         and thereafter, up to 50% of Maximum Fixed Asset Availability".

<PAGE>   2

         (b) Section 6.8 of the Credit Agreement is hereby amended by inserting
the following phrase at the end of clause (g) thereof: ", or any sales permitted
under Section 6.12".

         (c) Section 6.12 of the Credit Agreement is hereby amended by (i)
adding "(a)" immediately after the phrase "other than" and (ii) adding at the
end thereof the phrase "(b) the Real Estate located at 8 Galleria Mall, York,
Pennsylvania and 600 Mt. Zion Road, York, Pennsylvania, up to a maximum of
$15,000,000 in the aggregate and (c) up to an additional $15,000,000 in the
aggregate of other assets of the Credit Parties not covered under clauses (a)
and (b) hereof."

         (d) Section 6.18 of the Credit Agreement is hereby amended by deleting
the phrase "would exceed $25,000,000" and replacing it with the phrase "would
exceed $30,000,000".

  Section 2. Consent. The Requisite Lenders hereby consent to Bon-Ton's
creation of a wholly-owned Subsidiary (the "Insurance Subsidiary") to act as a
captive reinsurance company for the sole purpose of providing an insurance
program to the holders of its Bon-Ton branded credit cards (the "Insurance
Program"). None of the Credit Parties may transfer any assets to the Insurance
Subsidiary other than for organizational capital and expenses not to exceed
$1,000,000 in the aggregate. The Insurance Subsidiary may not engage in any
business (other than providing the Insurance Program) or incur any Indebtedness
(other than in connection with the Insurance Program).

  Section 3. Conditions to Effectiveness. This Amendment shall become effective
as of the date hereof when the Agent shall have received counterparts of this
Amendment executed by each Borrower, each Credit Party, the Agent and the
Requisite Lenders or, as to the Requisite Lenders, advice satisfactory to the
Agent that the Requisite Lenders have executed this Amendment.

  Section 4. Representations and Warranties. The Borrowers and the other Credit
Parties hereby jointly and severally represent and warrant to the Lenders and
the Agent as follows:

         (a) After giving effect to this Amendment, each of the representations
and warranties in Section 3 of the Credit Agreement and in the other Loan
Documents are true and correct in all material respects on and as of the date
hereof as though made on and as of such date, except to the extent that any such
representation or warranty expressly relates to an earlier date and except for
changes therein not prohibited by the Credit Agreement.

         (b) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing as of the date hereof.

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         (c) The execution, delivery and performance by the Credit Parties of
this Amendment have been duly authorized by all necessary or proper corporate
action and do not require the consent or approval of any Person which has not
been obtained.

         (d) This Amendment has been duly executed and delivered by each Credit
Party and each of this Amendment and the Credit Agreement as amended hereby
constitutes the legal, valid and binding obligation of the Credit Parties,
enforceable against them in accordance with its terms.

  Section 5. Reference to and Effect on the Loan Documents. (a) Upon the
effectiveness of this Amendment, on and after the date hereof, each reference in
the Credit Agreement "this Agreement," "hereunder," "hereof," "herein," or words
of like import, shall mean and be a reference to the Credit Agreement as amended
hereby and each reference in the other Loan Documents to "the Credit Agreement"
shall mean and be a reference to the Credit Agreement as amended hereby.

         (b) Except to the extent amended hereby, the provisions of the Credit
Agreement and all of the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.

         (c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lenders or the Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.

  Section 6. Costs and Expenses. The Borrowers agree to pay on demand all costs,
fees and expenses of the Agent in connection with the preparation, execution and
delivery of this Amendment and the other instruments and documents to be
delivered pursuant hereto, including the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto.

  Section 7. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument.

  Section 8. Governing Law. This Amendment shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws.

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         IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the date first above written.

                                           BORROWERS:

                                           THE BON-TON DEPARTMENT STORES, INC.

                                           By: /s/ H. Todd Dissinger
                                           ________________________________
                                           Name:  H. Todd Dissinger
                                           Title: Treasurer

                                           THE BON-TON STORES OF LANCASTER, INC.

                                           By: /s/ Robert E. Stern
                                           ________________________________
                                           Name:  Robert E. Stern
                                           Title: Secretary/Treasurer

                                           OTHER CREDIT PARTIES:

                                           THE BON-TON STORES, INC.

                                           By: /s/ H. Todd Dissinger
                                           ________________________________
                                           Name:  H. Todd Dissinger
                                           Title: Treasurer

                                           THE BON-TON CORP.

                                           By: /s/ Robert E. Stern
                                           ________________________________
                                           Name:  Robert E. Stern
                                           Title: Secretary

                                           THE BON-TON NATIONAL CORP.

                                           By: /s/ Robert E. Stern
                                           ________________________________
                                           Name:  Robert E. Stern
                                           Title: Secretary

                                           THE BON-TON TRADE CORP.

                                           By: /s/ Robert E. Stern
                                           ________________________________
                                           Name:   Robert E. Stern
                                           Title:  Secretary

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AGENT AND LENDERS:

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Charles D. Chiodo
_________________________________
Name:  Charles D. Chiodo
Title: Authorized Signatory

THE CIT GROUP/BUSINESS CREDIT, INC.

By: /s/ Mark J. Long
_________________________________
Name:   Mark J. Long
Title:  Vice President

FIRST UNION NATIONAL BANK

By: /s/ Joan Anderson
_________________________________
Name:  Joan Anderson
Title: Vice President

MANUFACTURERS AND TRADERS TRUST COMPANY

By: /s/ C. Gregory Vogelsang
_________________________________
Name:  C. Gregory Vogelsang
Title: Assistant Vice President

FOOTHILL CAPITAL CORPORATION

By: /s/ Michael P. Baranowski
_________________________________
Name:   Michael P. Baranowski
Title:  Vice President

FLEET BUSINESS CREDIT CORPORATION

By: /s/ John A. O'Kane
_________________________________
Name:  John A. O'Kane
Title: Senior Vice President

UNION BANK OF CALIFORNIA, N.A.

By: /s/ Albert R. Joseph
_________________________________
Name:   Albert R. Joseph
Title:  Vice President

                                       5<PAGE>   1
                                                                    Exhibit 10.2
                            THE BON-TON STORES, INC.
                            2000 STOCK INCENTIVE PLAN

                         (EFFECTIVE AS OF MARCH 3, 2000)

         1. Purpose. The Bon-Ton Stores, Inc. (the "Company") hereby adopts The
Bon-Ton Stores, Inc. 2000 Stock Incentive Plan (the "Plan"), effective as of the
date of its adoption by the Board, subject to its approval by the Company's
shareholders within 12 months of such date, as provided for below. The Plan 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, and 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").

         2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:

            A. "Affiliate" means a corporation which 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 which
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 of the Plan.

            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 which 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 which 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 which
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. "Restricted Stock" means Shares issued to a person pursuant to an
Award.

            S. "Shares" means the shares of Common Stock of the Company which
are the subject of Options or Awards.

            T. "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 or more of the members of the Company's 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 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 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

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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 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 of the Company. Each member of the
Committee shall be entitled without further act on his 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 of the Company or its Affiliates), directors, consultants
and advisors of the Company or its Affiliates shall be eligible to receive
Options or Awards hereunder; provided, that directors (other than directors who
are employees of the Company or its Affiliates) shall not be eligible to receive
ISOs. The Committee, in its sole discretion, shall determine whether an
individual qualifies as an employee, consultant or advisor 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 four hundred
thousand (400,000) 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 which 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 for federal income tax purposes.
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 which 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 which are intended to be ISOs and Options
which 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 two hundred thousand (200,000) Shares.

               B. Option Price. Each Option Document shall state the Option
Price which, 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 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 Shares are listed on a national
securities exchange or included in the NASDAQ National Market System, the last
reported sale price thereof on the relevant date, or, if the Shares are not so
listed or included, the mean between the last reported "bid" and "asked" prices
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

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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 are being purchased for investment and not for distribution or resale
(other than a distribution or resale which, 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 which 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 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 the Company's
Common Stock held by the Optionee for at least six months. If payment is made in
whole or in part in shares of the Company's Common Stock, then the Optionee
shall deliver to the Company certificates registered in the name of such
Optionee representing the shares 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 the 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

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Section 424(d) of the Code, shares possessing more than ten percent (10%) of the
total combined voting power of all classes of 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 Affiliates terminates
for any reason other 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 Affiliates 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 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 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.

         F. Transfers. No Option granted under the Plan 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. 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 granted under the Plan 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

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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.

            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 granted
pursuant to the Plan, 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 of the
Plan.

         9. Award Documents and Terms. Awards granted pursuant to the Plan 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 which 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 Shares of Restricted
Stock awarded under the Plan.

            D. Lapse of Restrictions. Subject to the provisions of the Plan and
the Award Document, restrictions upon Shares of Restricted Stock subject to an
Award 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 affiliates 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

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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 the right to vote such Shares,
and the right to receive dividends paid with the respect to such Shares.

                  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 which
is still subject to restrictions 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 of Restricted Stock 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

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<PAGE>   9
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 shareholders of the other constituent corporation (or its
board of directors if shareholder action is not required) have approved a
definitive agreement to merge or consolidate the Company with or into such other
corporation, 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 least
a majority of the ownership of common stock of the surviving corporation (and,
if one class of common stock is not the only class of voting securities entitled
to vote on the election of directors of the surviving corporation, a majority of
the voting power of the surviving corporation's voting securities) immediately
after the merger or consolidation, which common stock (and if applicable voting
securities) is 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 subsidiaries, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries, 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 granted 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 which 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 which 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.

                                       9
<PAGE>   10
         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 by (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 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 pursuant
to the Plan 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.

         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 Securities Exchange Act) to satisfy the conditions of Rule 16b-3
promulgated under the Exchange Act; any provision of the Plan which 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.

                                       10

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