1994 Performance Sar And Restricted Stock Plan

OF


THE CALDOR CORPORATION
(as amended through October 31, 1996)


1. PURPOSES OF THE PLAN. This performance based stock appreciation rights and restricted stock plan (the "Plan") is designed to provide an incentive to key employees (including officers and directors who are key employees) of The Caldor Corporation, a Delaware corporation (the "Company"), and its present and future subsidiary corporations, as defined in Paragraph 17 (the "Subsidiaries"), and to offer an additional inducement in obtaining the services of such individuals. The Plan provides for the grant of performance-based stock appreciation rights (the "SARs") where value may be based not only on the price of the Company's stock, but also on the Company's earnings and for the grant of stock of the Company which may be subject to restrictions (collectively, the "Awards"). The Awards granted pursuant to this Plan are a matter of separate inducement and are not in lieu of any salary or other compensation for the services of key employees.


2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12, the aggregate number of shares of Common Stock, $.01 par value per share, of the Company ("Common Stock") for which Awards may be granted under the Plan shall not exceed 1,300,000. Subject to the provisions of Paragraph 13, any shares of Common Stock subject to an SAR which for any reason expires, is canceled or is terminated unexercised or which ceases for any reason to be exercisable, and any restricted stock which is forfeited back to the Company, shall again become available for the granting of Awards under the Plan.


3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board of Directors or, to the extent the Board of Directors may determine, a committee of the Board of Directors consisting of not less than two directors (or such greater number as may be required by law), each of whom shall be a "non-employee director" (the "Committee"), all within the meaning of Rule 16b-3 (or any successor rule or regulation) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and an "outside director" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). References in the Plan to determinations or actions by the Committee shall be deemed to include determinations and actions by the Board of Directors. A majority of the members of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, and any acts approved in writing by all members without a meeting, shall be the acts of the Committee.


Subject to the express provisions of the Plan, the Committee shall have the authority, in its sole discretion, to determine the key employees who shall receive Awards; the 2 times when they shall receive Awards; the number of shares of Common Stock to be subject to each Award; whether the Award shall be an SAR or restricted stock; the term of each SAR; the base price of each SAR; the fair market value of the Common Stock; the performance-based formula, if any, for an SAR; the amount payable upon exercise of an SAR; the date each SAR shall become exercisable; whether an SAR shall be exercisable in whole, in part or in installments, and, if in installments, the number of shares of Common Stock to be subject to each installment; whether the installments shall be cumulative; the date each installment shall become exercisable and the term of each installment; the amount, if any, necessary to satisfy the Company's obligation to withhold taxes or other amounts; the contingencies and restrictions with respect to each restricted stock Award, and whether to subject the exercise of all or any portion of an SAR to the fulfillment of contingencies or restrictions, in each case as specified in the Contract (as described in Paragraph 11), including without limitation, contingencies relating to entering into a covenant not to compete with the Company and its Parent (as defined in Paragraph 17) and Subsidiaries, to financial objectives for the Company, a Subsidiary, a division, a product line or other category, and/or to a period of continued employment of the holder of the Award with the Company or its Subsidiaries, and to determine whether such contingencies or restrictions have been met; the amount of any adjustment to an Award in recognition of an unusual or nonrecurring event or change in applicable law, regulation or accounting principle; to construe the respective Contracts and the Plan; with the consent of the holder of the Award, to cancel or modify an Award, provided such Award as modified would be permitted to be granted on such date under the terms of the Plan and Section 162(m) of the Code; to prescribe, amend and rescind rules and regulations relating to the Plan; and to make all other determinations necessary or advisable for administering the Plan. The terms of each Award and Contract need not be identical. The determinations of the Committee on the matters referred to in this Paragraph 3 shall be conclusive.


The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company.


No member or former member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted hereunder. In addition, each member or former member of the Committee shall be indemnified and held harmless from and against any liability, claim for damages and expenses that may be incurred by reason of any action or failure to act under the Plan or in connection with any Award granted hereunder to the fullest extent permitted with respect to directors under the Company's certificate of incorporation, by-laws and applicable law.


4. ELIGIBILITY. The Committee may, consistent with the purposes of the Plan, grant Awards from time to time, to key employees (including officers and directors who are key employees) of the Company or any of its Subsidiaries. Awards granted shall cover such number of shares of Common Stock as the Committee may determine; provided, however, that


-2- 3 the maximum number of shares of Common Stock subject to SARs which may be granted to any person under the Plan in any fiscal year of the Company shall not exceed 100,000.


5. AMOUNT OF AWARD. An SAR shall entitle the holder thereof to be paid, promptly after exercise, in cash or by check, an amount equal to the excess, if any, of the fair market value of the shares of Common Stock with respect to which the SAR is exercised over the base price of such shares. The Contract may (but shall not be required to) provide for such amount to be multiplied by a performance-based factor (which may be more or less than 1), based on the earnings of the Company; provided, however, that such performance-based factor must meet the requirements for qualified performance-based compensation within the meaning of Section 162(m) of the Code. The base price of the shares of Common Stock under each SAR shall be determined by the Committee; provided, however, that the base price shall not be less than the f ...