AGREEMENT AND PLAN OF MERGER



         This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of

September 15, 2003, is made and entered into by and among The Elder-Beerman

Stores Corp., an Ohio corporation (the "Company"), The Bon-Ton Stores, Inc., a

Pennsylvania corporation ("Parent"), and Elder Acquisition Corp., an Ohio

corporation ("Sub").



         WHEREAS, the Board of Directors of the Company has determined that it

is advisable and in the best interest of the Company and its shareholders to

consummate and has recommended approval by the shareholders of the Company of

the business combination transaction provided for herein in which Sub would

merge with and into the Company and the Company would become an indirect wholly

owned subsidiary of Parent (the "Merger");



         WHEREAS, the Boards of Directors of Parent and Sub have each determined

that it is advisable and in the best interests of their respective companies and

shareholders to consummate, and have approved, the Merger and this Agreement;



         WHEREAS, in furtherance of such business combination transaction and

the Merger, Parent proposes to cause Sub to make a cash tender offer for all of

the issued and outstanding shares of common stock, without par value, of the

Company (the "Company Common Shares"), on the terms specified herein and the

Board of Directors of the Company has approved the tender offer and recommended

that it be accepted by the shareholders of the Company; and



         WHEREAS, Parent, Sub and the Company desire to make certain

representations, warranties, covenants and agreements in connection with the

Offer (as hereinafter defined) and the Merger and also to prescribe various

conditions to the Offer and the Merger.



         NOW, THEREFORE, in consideration of the mutual covenants and agreements

set forth in this Agreement, and for other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the parties hereto

agree as follows:



                                    ARTICLE I



                                    THE OFFER



         Section 1.01      The Offer.



                  (a)      Provided that this Agreement shall not have been

         terminated in accordance with Section 9.01 hereof and so long as none

         of the events or circumstances set forth in Annex A hereto shall have

         occurred and be continuing and shall not have been waived by Parent

         (other than with respect to matters that by their terms are not

         required to be satisfied until expiration or consummation of the

         Offer), Sub shall, and Parent shall cause Sub to, as promptly as

         practicable commence (within the meaning of the applicable rules and

         regulations of the Securities and Exchange Commission (the "SEC")

         promulgated under the Securities Exchange Act of 1934, as amended (the

         "Exchange Act")), but in no event later than fifth business day

         following the initial public announcement of the execution of this

         Agreement, an offer to purchase for cash (the "Offer") all of the

         issued



{PAGE}



         and outstanding Company Common Shares at a price of $8.00 per Company

         Common Share, subject to any required withholding Taxes (as hereinafter

         defined) net to the seller in cash. For purposes of this Agreement, the

         term "Transaction Consideration" shall mean $8.00 per Company Common

         Share in cash or any higher price as shall be paid in respect of the

         Company Common Shares in the Offer. The obligations of Sub to commence

         the Offer and to accept for payment and to pay for any Company Common

         Shares tendered shall be subject to only the conditions set forth in

         Annex A hereto (any or all of which may, subject to the provisions

         hereof, be waived by Parent or Sub, subject to applicable law). The

         initial expiration date of the Offer shall be the 20th business day

         following the commencement of the Offer determined using Rule 14d-2

         under the Exchange Act, unless this Agreement is terminated in

         accordance with Section 9.01, in which case the Offer (whether or not

         previously extended in accordance with the terms hereof) shall expire

         on such date of termination. Without the prior written consent of the

         Company, Sub shall not, and Parent shall cause Sub not to (i) decrease

         the Transaction Consideration, (ii) decrease the number of Company

         Common Shares to be purchased in the Offer, (iii) change the form of

         consideration payable in the Offer, (iv) add to or change the

         conditions to the Offer set forth in Annex A, (v) waive the Minimum

         Tender Condition (as defined in Annex A) or (vi) make any other change

         in the terms or conditions of the Offer in any manner materially

         adverse to the holders of Company Common Shares. Notwithstanding the

         foregoing, Sub may, without the consent of the Company, (i) extend the

         Offer in increments of not more than ten business days each, if at the

         then scheduled expiration date of the Offer any of the conditions to

         Sub's obligation to purchase Company Common Shares are not satisfied,

         until such time as such conditions are satisfied or waived, (ii) extend

         the Offer for any period required by any rule, regulation,

         interpretation or position of the SEC or the staff thereof applicable

         to the Offer and (iii) make available a subsequent offering period

         (within the meaning of Rule 14d-11 under the Exchange Act). Without

         limiting the right of Sub to extend the Offer, provided that this

         Agreement shall not have been terminated in accordance with Section

         9.01 hereof, if the conditions set forth in Annex A are not satisfied

         or, to the extent permitted hereby, waived by Parent or Sub as of the

         date the Offer would otherwise have expired, then, except to the extent

         that such conditions are incapable of being satisfied, at the request

         of the Company, Sub will extend the Offer from time to time until the

         earlier of October 31, 2003 (the "Final Date") or the consummation of

         the Offer. Sub shall, and Parent shall cause Sub to, subject to the

         terms and conditions of the Offer, accept for payment Company Common

         Shares validly tendered and not withdrawn promptly after expiration of

         the Offer in compliance with Rule 14e-1(c) promulgated under the

         Exchange Act.



                  (b)      On the date the Offer is commenced, Parent and Sub

         shall file with the SEC a Tender Offer Statement on Schedule TO with

         respect to the Offer, which shall contain an offer to purchase and a

         related letter of transmittal and summary advertisement (such Schedule

         TO and the documents included therein pursuant to which the Offer will

         be made, together with any amendments or supplements thereto, the

         "Offer Documents"). The Company and its counsel shall be given a

         reasonable opportunity to review and comment on the Offer Documents

         prior to their being filed with the SEC. Each of Parent, Sub and the

         Company shall promptly correct any information provided by it for use

         in the Offer Documents if and to the extent that such information shall

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