Document:

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                                                                   EXHIBIT 10.12

                              M&T BANK CORPORATION
                               DEFERRED BONUS PLAN
                As Amended and Restated Effective January 1, 2005

                                    ARTICLE I
                                     INTENT

         This M&T Bank Corporation Deferred Bonus Plan was established,
effective January 1, 1984, for the benefit of certain employees of certain
affiliates of M&T Bank Corporation. The Plan is intended to qualify as a plan
described in Section 201(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and to comply with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended, ("Code"), and is maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.

                                   ARTICLE II
                                   DEFINITIONS

         When used in this Plan, the following terms shall have the following
meanings:

         2.1 "Account" is the account maintained for a Participant pursuant to
Article IV hereof.

         2.2 "Anniversary Date" is the Deferral Date and each anniversary
thereof.

         2.3 "Beneficiary" is the person or persons designated by a Participant
pursuant to Article VI hereof to receive any benefit payable pursuant to Section
5.1 hereof upon the Participant's death.

         2.4 "Bank" is Manufacturers and Traders Trust Company and its
successors by merger, sale of assets or otherwise.

         2.5 "Board" means the board of directors of M&T Bank Corporation.

         2.6 "Bonus" means an Eligible Employee's award under the Incentive
Plan.

         2.7 "Deemed Earnings" is the income earned or loss incurred with
respect to a Participant's Deemed Investment Portfolio calculated as provided in
Section 4.2.

         2.8 "Deemed Investment Portfolio" is the hypothetical or deemed
portfolio designated by a Participant from as provided in Section 4.3.

         2.9 "Deferral Date" is the date on which the Deferred Bonus would have
been paid to the Participant had it not been deferred pursuant to a Deferred
Bonus Election.

         2.10 "Deferred Bonus Election" is an election made pursuant to Section
3.1(a) hereof.

         2.11 "Deferred Bonus" means that portion of a Bonus the payment of
which is deferred by a Participant under this Plan.

         2.12 "Deferred Bonus Agreement" is the written agreement entered into
between a Participant and his Employer pursuant to which the Participant elects
to defer payment of a specified portion of his Bonus in accordance with the
terms of this Plan and such agreement.

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         2.13 "Eligible Employee" is an individual who is an employee of an
Employer, who is eligible to participate in an Incentive Plan and who is
designated by the Plan Administrator as eligible to participate in this Plan.

         2.14 "Employer" is M&T Bank Corporation and each of its affiliates, any
of whose employees are eligible to participate in an Incentive Plan.

         2.15 "Incentive Plan" means the M&T Bank Corporation Annual Executive
Incentive Plan and such other incentive plans of M&T Bank Corporation or its
subsidiaries as the Plan Administrator may designate.

         2.16 "M&T Bank Corporation Common Stock" is the Common Stock, par value
$5.00 per share, of M&T Bank Corporation.

         2.17 "M&T Bank Corporation Stock Deemed Investment Account" means that
portion of an Account consisting of deemed shares of M&T Bank Corporation Common
Stock.

         2.18 "Participant" is an Eligible Employee who has deferred a portion
of his Bonus pursuant to a Deferred Compensation Agreement and the terms of this
Plan.

         2.19 "Plan" is this M&T Bank Corporation Deferred Bonus Plan, as set
forth herein and amended from time to time.

         2.20 "Plan Administrator" is such person or committee as may be
designated by the Board to serve as such under this Plan.

         2.21 "Post-2004 Deferred Bonus" is a Deferred Bonus that became or
becomes fixed and nonforfeitable after December 31, 2004.

         2.22 "Pre-2005 Deferred Bonus" is a Deferred Bonus that became fixed
and nonforfeitable prior to January 1, 2005.

         2.23 "Retirement" is termination of employment at the Participant's
55th birthday. For Pre-2005 Deferred Bonuses "Retirement" is the earliest of a
Participant's (a) normal retirement, early retirement or disability retirement
under the M&T Bank Corporation Pension Plan, (b) death or (c) 65th birthday.

         2.24 "Retirement Savings Plan" is the M&T Bank Corporation Retirement
Savings Plan.

         2.25 "Unforeseeable Emergency" is a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant's spouse, or a dependent (as defined in Section 152 of the Code) of
the Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

         2.26 "Valuation Date" is each day on which the New York Stock Exchange
is open for business.

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                                   ARTICLE III
                                DEFERRAL OF BONUS

         3.1 Deferred Bonus Elections.

                  (a) An Eligible Employee, by executing a Deferred Bonus
Agreement, may elect to defer all or any portion of his Bonus.

                  (b) All Eligible Employee's Deferred Bonus may not be less
than $10,000.

                  (c) An Eligible Employee must make his Deferral Election for a
Bonus payable with respect to a calendar year at the time and in the matter
prescribed by the Plan Administrator provided, however, that the Plan
Administrator shall not permit such an election to be made later than June 30 of
the calendar year to which the Deferred Election relates. The foregoing
notwithstanding, the Deferred Bonus Election for to the 2004 Deferred Bonus
shall be honored if it was made prior to March 15, 2005.

         3.2 Deferred Bonus Agreements.

                  (a) A Deferred Bonus Election pursuant to this Plan shall be
made pursuant to a written Deferred Bonus Agreement between the Eligible
Employee and his Employer.

                  (b) A Participant's Deferred Bonus Agreement shall specify
whether the Deferred Bonus thereunder (and Deemed Earnings thereon) shall be
paid in a single sum payment or in annual installments payable over five or ten
years.

                  (c) A Participant's Deferred Bonus Agreement shall specify
whether the referred Bonus thereunder (and Deemed Earnings thereon) shall be
paid (or shall commence to be paid) at (i) Retirement or (ii) on a date selected
by the Participant from among any anniversary date between the tenth and
twentieth anniversary of the Deferred Bonus.

                                   ARTICLE IV
                                    ACCOUNTS

         4.1 Maintenance of Accounts. The Plan Administrator shall establish a
bookkeeping account (an "Account") for each Participant. The amount of such
Deferred Bonus shall be credited to such Participant's Account as of the
Deferral Date.

         4.2 Deemed Earnings. Accounts will be credited with Deemed Earnings on
the same basis accounts are credited with investment returns under the
Retirement Savings Plan.

         4.3 Deemed Investment Portfolio.

                  (a) Participant shall designate, at the time and in the manner
prescribed by the Plan Administrator, the Investment Option or Options, in which
his Deferred Bonus shall be deemed to be invested. This election must be made so
that the percentage of the Deferred Bonus invested in any Investment Option is
an integral multiple of one percent.

                  (b) A Participant may elect, at the time and in the manner
prescribed by the Plan Administrator, to transfer some or all of his Account
balance among the Investment Options within his or her Deemed Investment
Portfolio. Each such transfer must be made in an integral multiple of one
percent

                                      -3-
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of the Account balance, at the time of the transfer, in the Investment Option
from which amount is transferred. The foregoing notwithstanding, a Participant
may not change a prior allocation to his M&T Bank Corporation Stock Deemed
Investment Account other than to add to such Account.

                  (c) If the Plan Administrator determines to cease offering an
Investment Option or Options, each Participant shall elect, at the time and in
the manner prescribed by the Plan Administrator, to invest the portion of his
Account and future Contributions, which otherwise would have been invested in
the liquidated Investment Option or Options, in the remaining Investment Option
or Options.

                  (d) Any direction to the Participant pursuant to this section
4.3 is advisory only and the Plan Administrator reserves to itself the right to
refuse any direction given by a Participant.

                  (e) If a Participant fails to give the Plan Administrator a
direction with respect to the investment of his or her Account, the Plan
Administrator shall deem the Participant to have directed investment to a money
market or equivalent fund.

         4.4 M&T Bank Corporation Stock Deemed Investment Account. A
Participant's M&T Bank Corporation Deemed Investment Account shall be credited
with the number of deemed or hypothetical shares of M&T Bank Corporation Common
Stock in the same manner such shares would be determined under the Retirement
Savings Plan. In the event of any change in corporate capital capitalization,
such as a stock split, or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other distribution of stock
or property of the Employer, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Employer, such change or
adjustment shall be made in the number and class of hypothetical shares of M&T
Bank Corporation Common Stock held in a Participant's M&T Bank Corporation Stock
Deemed Investment Account as may be determined under the Retirement Savings
Plan.

         4.5 Separate Accounting. Within a Participant's Account, the Plan
Administrator shall account separately for each of the Participant's Deferred
Bonuses. Such accounting shall conform to regulations and other guidance issued
by the Department of the Treasury with respect to the maintenance of separate
accounts for Pre-2005 Deferred Bonuses and Post-2004 Deferred Bonuses so as to
preclude the application of Section 409A of the Code to Pre-2005 Deferred
Bonuses and Deemed Earnings.

                                    ARTICLE V
                               PAYMENT OF BENEFITS

         5.1 General Rule. Except as provided in the following sentence or in
Section 5.2 hereof or as otherwise provided in this Section 5.1, the amount
standing to the Participant's Account shall be paid to the Participant (or, in
the event of the Participant's death, his beneficiary) on the last day of the
calendar quarter next following the Anniversary Date of the scheduled payment
elected in the Participant's Deferred Bonus Agreement or Agreements. Payments on
account of Retirement shall commence on the last day of the calendar quarter
next following Retirement. Such payments shall be paid in the form or forms
elected in such Agreement or Agreements. If a Participant terminates his
employment with the Employer for any reason other than Retirement, the Plan
Administrator, in its sole discretion, may direct, a single sum payment of the
total amount standing to the Participant's Account that is attributable solely
to Pre-2005 Deferred Bonuses and the accretions thereon. The foregoing
notwithstanding, the Plan Administrator, in its sole discretion, may direct a
single sum payment of the total amount standing to the Participant's Account or
some lesser amount if such payment is permitted under regulations or other
guidance issued by the Secretary of the Treasury.

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         5.2 Withdrawals for Unforeseeable Emergency. If the Participant
experiences an Unforeseeable Emergency, the Participant may request the Plan
Administrator to make a distribution of all or a portion of the Account that is
attributable to both Pre-2005 Deferred Bonuses and Post-2004 Deferred Bonuses
and the accretions thereon. The amount distributed with respect to the
Unforeseeable Emergency shall not exceed the amounts necessary to satisfy the
emergency plus the amount necessary to pay taxes reasonably anticipated as a
result of the distribution, after taking into account the extent to which such
hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise by liquidation of the Participant's assets (to the extent
such liquidation would not itself cause severe financial hardship). Such
withdrawal shall first be made from Pre-2005 Bonus Deferrals and only after such
amounts are exhausted, shall a withdrawal be made from Post-2004 Bonus
Deferrals. The determination of whether a Participant has incurred an
Unforeseeable Emergency shall be made by the Plan Administrator in accordance
with its interpretation of the foregoing rules.

         5.3 Payment. The payment to a Participant with respect to a Deferred
Bonus (and Deemed Earnings thereon) shall be made in cash by the Participant's
last Employer in the year with respect to which the Bonus deferred was payable;
provided, however, that (a) if such Employer is owned directly or indirectly by
a bank, the payment shall be made by such bank and (b) payment from a
Participant's M&T Bank Corporation Stock Deemed Investment Account shall be made
in M&T Bank Corporation Common Stock (except to the extent that payment in M&T
Bank Corporation Common Stock would result in a fractional share, in which case
the amount that would constitute a fractional share shall be paid in cash, based
on the closing price of a share of M&T Bank Corporation Common Stock on the New
York Stock Exchange, or such other principal securities exchange on which the
shares of Common Stock are traded if such shares are no longer traded on the New
York Stock Exchange, on the Valuation Date immediately preceding the date of
payment). Payments of a Participant Account which (x) is not being paid in a
single payment and (y) contains a M&T Bank Corporation Stock Deemed Investment
Account as well as other amounts in the Account, shall be made in both cash and
M&T Bank Corporation Common Stock pro rata in accordance with the values of the
Participant's M&T Bank Corporation Stock Deemed Investment Account and the
balance of the Participant's Account.

         5.4 In the case of a Participant who is a "Specified Employee" a
payment of that portion of the Account attributable to Post-2004 Deferred
Bonuses and the accretions thereon made on account of separation from service
may not be made before the date which is six months after the date of separation
from service (or, if earlier, the date of death of the Participant). For
purposes of this Section 5.4 "separation from service" shall be construed
consistent with guidance issued by the Department of the Treasury. For purposes
of this Section 5.4, a "specified employee" is a key employee as defined in
Section 416 (i) of the Code (without regard to paragraph (5) thereof).

         5.5 Tax Withholding. The Plan Administrator may make such provisions
and take such steps as it may deem necessary or appropriate for the reporting
and withholding by the Employers of all Federal, state, local or other taxes
required by law to be withheld or reported with respect to deferrals and
payments under this Plan, including, without limitation, in the discretion of
the Plan Administrator, (a) requiring the Participant (or Beneficiary, as the
case may be) to pay, or provide for payment of, the amount of any such taxes,
(b) deducting any such taxes from any amount otherwise payable to the
Participant or Beneficiary in cash, including amounts payable under this Plan,
or (c) reducing the number of shares of M&T Bank Corporation Common Stock
otherwise payable under this Plan by an amount (based on the closing price of
such shares on the Valuation Date immediately preceding the date the shares
would otherwise have been paid) equal to the amount of any such taxes.

                                      -5-
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                                   ARTICLE VI
                                  BENEFICIARIES

         Each Participant may designate from time to time any person or persons,
natural or otherwise, as his Beneficiary or Beneficiaries to whom benefits under
Section 5.1 are to be paid in the event of his death. Each Beneficiary
designation shall be made in a manner prescribed by the Plan Administrator and
shall be effective only when filed with the Plan Administrator during the
Participant's lifetime. Each Beneficiary designation filed with the Plan
Administrator shall revoke all Beneficiary designations previously made by the
Participant. The revocation of a Beneficiary designation shall not require the
consent of any designated Beneficiary. Payment to a Beneficiary shall be made in
the form or forms elected in the Participant's Deferred Bonus Agreement or
Agreements, provided that such payment shall be made in a single payment if a
request for such a single payment is made by the Beneficiary and approved by the
Plan Administrator.

                                   ARTICLE VII
                                 ADMINISTRATION

         7.1 General. The Plan Administrator shall be charged with the
administration of this Plan. The Plan Administrator shall have all such powers
as may be necessary to discharge its duties relative to the administration of
this Plan, including by way of illustration and not limitation, discretionary
authority to interpret and construe this Plan, to decide any dispute arising
hereunder, to determine the right of any individual with respect to
participation herein, to determine the right of any Participant with respect to
benefits payable under this Plan and to adopt, alter and repeal such
administrative rules, regulations and practices governing the operation of this
Plan as it, in its sole discretion, may from time to time deem advisable. The
Plan Administrator shall not be liable to any person for any action taken or
omitted in connection with the interpretation and administration of this Plan
unless attributable to willful misconduct or lack of good faith. The Plan
Administrator shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the Plan
Administrator or an Employer with respect to this Plan. The Plan Administrator,
if an individual, or the members thereof if the Plan Administrator is a
Committee, shall not participate in any action or determination regarding solely
his or their own benefits payable hereunder. Except as provided in Section 7.3
hereof, decisions of the Plan Administrator made in good faith shall be final,
conclusive and binding upon all parties.

         7.2 Claims Procedure. Whenever the Plan Administrator denies, in whole
or in part, a claim for benefits filed by any person (hereinafter referred to as
a "Claimant"), the Plan Administrator shall transmit a written notice setting
forth, in a manner calculated to be understood by the Claimant, a statement of
the specific reasons for the denial of the claim, references to the specific
provisions of this Plan on which the denial is based, a description of any
additional needed material or information and why such material or information
is necessary, and an explanation of the claims review procedure as set forth
herein. In addition, the written notice shall contain the date on which the
notice was sent and a statement advising the Claimant that, within 90 days of
the date on which such notice is received, he may obtain review of the Plan
Administrator's decision.

         7.3 Review Procedure. Within 90 days of the date on which the notice of
denial of claim is received by the Claimant, the Claimant or his authorized
representative may request that the claim denial be reviewed by filing with the
Plan Administrator a written request therefor, which request shall contain the
following information:

                  (a) the date on which the notice of denial of claim was
received by the Claimant;

                                      -6-
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                  (b) the date on which the Claimant's request was filed with
the Plan Administrator; provided, however, that the date on which the Claimant's
request for review was in fact filed with the Plan Administrator shall control
in the event that the date of the actual filing is later than the date stated by
the Claimant pursuant to this clause (b);

                  (c) the specific portions of the denial of his claim which the
Claimant requests the Plan Administrator to review;

                  (d) a statement by the Claimant setting forth the basis upon
which he believes the Plan Administrator should reverse its previous denial of
his claim for benefits and accept his claim as made; and any written material
(included as exhibits) which the Claimant desires the Plan Administrator to
examine in its consideration of his position as stated pursuant to clause (d).
Within 60 days of the date determined pursuant to clause (b) (or, if special
circumstances require an extension of time, within 120 days of such date), the
Plan Administrator shall conduct a full and fair review of the decision denying
the Claimant's claim for benefits and shall deliver, to the Claimant in writing,
its decision. Such written decision shall set forth, in a manner calculated to
be understood by the Claimant, a statement of the specific reasons for the
decision, including references to the specific provisions of this Plan which
were relied upon. The decision will be final and binding on all persons
concerned.

                                  ARTICLE VIII
                            AMENDMENT AND TERMINATION

         8.1 Power to Amend or Terminate. M&T Bank Corporation expects to
continue this Plan indefinitely, but reserves the right to amend or terminate
this Plan at any time, if, in its sole judgment, such amendment or termination
is necessary or desirable. Any such amendment or termination shall be made in
writing by the Board or its designee, if applicable, and shall be effective as
of the date specified in such document. No amendment or termination of this Plan
shall directly or indirectly deprive any Participant or Beneficiary of all or
any portion of the amounts previously credited to the Participant's Account. In
the event of a termination of this Plan, M&T Bank Corporation (or any
transferee, purchaser or successor entity) may elect, in its discretion, either
to have the Employers make a single payment, at the time of such termination, of
the Account balances on such date attributable solely to Pre-2005 Deferred
Bonuses to Participants and Beneficiaries or to have the Employers make payments
to such individuals at such time or times as provided under the terms of this
Plan.

         8.2 Successor. This Plan shall not be automatically terminated by a
transfer or sale of an Employer or by the merger or consolidation of an Employer
into or with any other corporation or other entity, but it shall be continued
with respect to such Employer or its successor after such sale, merger or
consolidation only if and to the extent that the transferee, purchaser or
successor entity agrees to continue this Plan. In the event this Plan is not
continued with respect to such Employer or its successor by the transferee,
purchaser or successor entity, then it shall terminate with respect to such
Employer or its successor subject to the provisions of Section 8.1 hereof.

                                   ARTICLE IX
                                  MISCELLANEOUS

         9.1 No Effect on Employment Rights. Nothing contained herein will
confer upon any Participant the right to be retained in the service of an
Employer nor limit the right of an Employer to discharge or otherwise deal with
Participants without regard to the existence of this Plan.

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<PAGE>

         9.2 Plan Unfunded. Notwithstanding any provision herein to the
contrary, the benefits offered hereunder shall constitute nothing more than
unfunded, unsecured promises by each Employer to pay the amounts that such
Employer is obligated to pay under this Plan. No provision shall at any time be
made with respect to segregating any assets of any Employer for payment of any
amounts hereunder. No Participant, Beneficiary or any other person shall have
any interest in any particular assets of the Employers by reason of the right to
receive a benefit under this Plan, and any such Participant, Beneficiary or
other person shall have only the rights of a general unsecured creditor of the
Employer obligated to make payments to the Participant under this Plan. Nothing
contained in this Plan shall constitute a guaranty by the Employers or any other
entity or person that the assets of any Employer will be sufficient to pay any
amount hereunder. All expenses and fees incurred in the administration of this
Plan shall be paid by the Employers.

         9.3 Binding on Employers, Employees and Their Successors. This Plan
shall be binding upon and inure to the benefit of the Employers, their
successors and assigns and each Participant and his heirs, executors,
administrators and legal representatives. In the event of the merger or
consolidation of an Employer with or into any other corporation, or in the event
substantially all of the assets of an Employer shall be transferred to another
corporation, the successor corporation resulting from the merger or
consolidation, or the transferee of such assets, as the case may be, shall, as a
condition to the consummation of the merger, consolidation or sale, assume the
obligations of such Employer hereunder as of the date of such merger,
consolidation or transfer and shall be substituted for such Employer hereunder.

         9.4 Spendthrift Provisions. No amount payable under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge prior to actual receipt thereof by the payee; and
any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge prior to such receipt shall be void; and the Employers shall not be
liable in any manner for or subject to the debts, contracts, liabilities, torts
or engagements of any person entitled to any benefit under this Plan.

         9.5 Disclosure. Each Participant shall receive a copy of this Plan, and
the Plan Administrator will make available for inspection by any Participant a
copy of the rules and regulations used by the Plan Administrator in
administering this Plan.

         9.6 State Law. This Plan is established under and will be construed
according to the laws of the State of New York to the extent that such laws are
not preempted by ERISA.

         9.7 Incapacity of Recipient. In the event a Participant or Beneficiary
is declared incompetent and a guardian, conservator or other person legally
charged with the care of his person or of his estate is appointed, any amounts
to which such Participant or Beneficiary is entitled under this Plan shall be
paid to such guardian, conservator or other person legally charged with the care
of his person or his estate. Except as provided herein, when the Plan
Administrator, in its sole discretion, determines that a Participant or
Beneficiary is unable to manage his financial affairs, the Plan Administrator
may direct the Employer, or Employers responsible for payment to make payments
to any person for the benefit of such Participant or Beneficiary.

         9.8 Unclaimed Benefit. Each Participant shall keep the Plan
Administrator informed of his current address. The Plan Administrator shall not
be obligated to search for the whereabouts of any person. If the location of a
Participant is not made known to the Plan Administrator within three years after
the date on which any payment of the Participant's benefit hereunder may be
made, payment may be made as though the Participant had died at the end of the
three-year period. If, within one additional year after such three-year period
has elapsed, or, within three years after the actual death of a Participant,
whichever occurs first, the Plan Administrator is unable to locate the
Beneficiary of the Participant, the Participant and his Beneficiary shall
forfeit all rights to any payments under this Plan.

                                      -8-

<PAGE>

         9.9 Elections, Applications, Notices. Every direction, revocation or
notice authorized or required hereunder shall be deemed delivered to the
Employers or the Plan Administrator as the case may be: (a) on the date it is
personally delivered to the Plan Administrator (with a copy to the Bank's
General Counsel) at the Bank's executive offices at Buffalo, New York or (b)
three business days after it is sent by registered or certified mail, postage
prepaid, addressed to the Plan Administrator (with a copy to the Bank's General
Counsel) at the offices indicated above, and shall be deemed delivered to a
Participant or Beneficiary: (a) on the date it is personally delivered to such
individual, or (b) three business days after it is sent by registered or
certified mail, postage prepaid, addressed to such individual at the last
address shown for him on the records of the Employers. Any notice required
hereunder may be waived by the person entitled thereto.

         9.10 Severability. In the event any provision of this Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of this Plan. This Plan shall be construed and
enforced as if such illegal or invalid provision had never been contained
herein.

         9.11 American Jobs Creation Act of 2004 Transition Provisions. The
provisions of the Plan shall be construed and enforced so as to maintain
compliance with the transition guidance set forth in IRS Notice 2005-1 and any
amendment of the Plan which materially modifies the Plan within the meaning this
guidance shall be null and void.

         9.12 Headings. The headings of Sections of this Plan are for
convenience of reference only and shall have no substantive effect on the
provisions of this Plan.

                                      -9-<PAGE>

                                                                    EXHIBIT 10.1

                       PERFORMANCE TARGETS FOR FISCAL 2005
BIG LOTS, INC. 1998 KEY ASSOCIATE ANNUAL INCENTIVE COMPENSATION PLAN, AS AMENDED

On February 22, 2005, the Nominating and Compensation Committee (the
"Committee") of the Board of Directors (the "Board") of Big Lots, Inc. (the
"Company") recommended, and the Board approved, performance targets which, if
obtained, will provide a bonus under the Big Lots, Inc. 1998 Key Associate
Annual Incentive Compensation Plan, as amended (the "Bonus Plan") to certain
employees, including the named executive officers and other executive officers.
No right to a minimum bonus exists under the Bonus Plan.

The Committee derived its performance targets and defined the employees' bonus
goals (e.g., floor, target and stretch) from the Company's planned earnings for
fiscal 2005, as established by the Board. The specific criteria upon which any
bonuses may be earned during the year ending January 28, 2006 ("fiscal 2005") is
based on the greater of (i) income from continuing operations, (ii) income
(loss) from continuing operations before extraordinary items and/or the
cumulative effective of a change in accounting principle, (iii) income before
extraordinary items, and (iv) net income, with each such measure being adjusted
to remove the effect of unusual or non-recurring event items. In making
adjustments to remove the effect of unusual or non-recurring event items, the
Committee takes into account: asset impairments under Statement of Financial
Accounting Standards No. 144, as amended or superceded; acquisition-related
charges; accruals for restructuring and/or reorganization program charges;
merger integration costs; merger transaction costs; any loss attributable to the
business operations of any entity or entities acquired during fiscal 2005; tax
settlement charges; any extraordinary, unusual in nature, infrequent in
occurrence, or other non-recurring item charges (not otherwise listed) as
described in Accounting Principles Board Opinion No. 30; any extraordinary,
unusual in nature, infrequent in occurrence, or other non-recurring item charges
(not otherwise listed) in management's discussion and analysis of financial
condition and results of operations, selected financial data, financial
statements and/or in the footnotes to financial statements, each as appearing in
the annual report to stockholders; unrealized losses on investments; charges
related to derivative transactions contemplated by Statement of Financial
Accounting Standards No. 133, as amended or superceded (such as the amendment by
Statement 138, if applicable); and/or compensation charges related to stock
option activity.

Employees' bonus goals are determined as a percentage of salary. The baseline
percentage of salary for the each named executive officer (as is expected to be
determined for the Company's 2005 proxy statement) has been established by their
respective employment agreements. For other executive officers and employees,
the percentage of salary is set by position level and is subjectively
determined.

The establishment of the Company's performance targets remains solely in the
Committee's discretion. The performance targets adopted for fiscal 2005 are
consistent with the Committee's philosophy, policies and procedures applicable
to the Company's executive compensation program.

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