EARTHGRAINS CO /DE/
1996 STOCK INCENTIVE PLAN AS AMENDED
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>1996 STOCK INCENTIVE PLAN AS AMENDED
<TEXT>

                        THE EARTHGRAINS COMPANY
                         STOCK INCENTIVE PLAN
        (As Amended April 11, 1996, March 21, 1997, May 30, 1997,
             April 29, 1999 and July 14, 2000; Restated to
     reflect 2-for-1 Stock Splits on July 28, 1997 and July 20, 1998)

Section 1.   Purpose.

The purpose of the Plan is to attract, retain, motivate and reward employees of
the Company and its Subsidiaries and Affiliates with stock-related compensation
arrangements.

Section 2.   Maximum Number of Shares.

      (a)   The maximum number of shares of Stock which may be issued pursuant
to Awards under the Plan, and the maximum number of shares for which ISOs may be
granted under the Plan, shall be 7,834,850 shares, subject to adjustment as
provided in Section 11.  For this purpose:

            (i)   The number of shares underlying an Award shall be counted
      against the Plan maximum ("used") at the time of grant; shares
      underlying alternative Awards shall be counted only once.

            (ii)  When an Award is payable in cash and the amount of such
      cash is based on the value of a number of shares of Stock which is
      determinable at the time of grant, that determinable number of shares
      shall be deemed to underlie that Award for purposes of the Plan.  If
      the amount of such cash, including any cash provided pursuant to
      Section 15 below, in effect is calculated by applying a percentage
      to the Fair Market Value of a certain number of shares of Stock, if
      such percentage is determinable at the date of grant, and if
      such determinable percentage in effect exceeds 100%, the Committee
      shall determine at the time of grant the number of shares which is
      deemed to underlie such Award.

            (iii) If the number of shares underlying an Award is not
      determinable at the time of grant, the Committee shall determine at
      the time of grant a number of shares which is deemed to underlie
      such Award; that number may be adjusted after grant as the
      Committee deems appropriate.

            (iv)  Shares which underlie Awards that (in whole or part)
      expire, terminate, are forfeited, or otherwise become non-payable,
      or which are recaptured by the Company in connection with a
      forfeiture event, may be re-used in new grants to the extent of
      such expiration, termination, forfeiture, non-payability, or
      recapture.

      (b)   Notwithstanding any other provisions of the Plan, the maximum number
of shares underlying Awards that may be granted to any Eligible Employee during
any calendar year shall be 1,300,000, subject to adjustment as provided in
Section 11.

      (c)   No more than 911,524 shares of Restricted Stock shall be granted
under the Plan (not counting, for this purpose, Restricted Stock issuable upon
exercise of Options or SARs), subject to adjustment as provided in Section 11.

      (d)  In its discretion, the Company may issue treasury shares or
authorized but previously unissued shares.

Section 3.   Eligibility.

      Officers and management employees of the Company, Subsidiaries or
Affiliates shall be eligible to receive Awards under the Plan.  A Director of
the Company or a Subsidiary or an Affiliate shall be eligible only if he or she
also is an officer or employee of the Company, a Subsidiary or an Affiliate.
Notwithstanding the foregoing, persons employed only by Affiliates shall not be
eligible to receive ISOs.


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Section 4.  General Provisions Relating to Awards.

      (a)   Subject to the limitations in the Plan, the Committee may cause the
Company to grant Awards to such Eligible Employees, at such times, of such
types, in such amounts, for such periods, becoming exercisable at such times,
with such features, with such option prices, purchase prices or base prices, and
subject to such other terms, conditions, and restrictions as the Committee deems
appropriate.  Each Award shall be evidenced by a written Award Agreement between
the Company and the Recipient.  In granting an Award, the Committee may take
into account any factor it deems appropriate and consistent with the purpose of
the Plan.

      (b)   Except as otherwise provided in the Plan, one or more Awards may be
granted separately or as alternatives to each other.  If Awards are alternatives
to each other:

            (i)    the exercise of all or part of one automatically shall
      cause an immediate equal and corresponding termination of the other;
      and

            (ii)   unless the Award Agreement or the Committee expressly
      permit otherwise, alternative Awards which are transferable may be
      transferred only as a unit, and alternative Awards which are
      exercisable must be exercisable by the same person or persons.

      (c)   All or any portion of any payment to a Recipient, whether in cash or
shares of Stock, may be deferred to a later date if and as provided in the Award
Agreement.  Deferrals may be for such periods and upon such terms and conditions
(including the provision of interest, dividend equivalents, or other return on
such amounts) as the Committee may determine.  The Committee may structure Award
Agreements so that the imposition of income and other taxes on Recipients is
deferred in whole or part.

      (d)  Award Agreements may contain any provision approved by the Committee
relating to the period for exercise or vesting after termination of employment.
Except to the extent otherwise expressly provided in the Award Agreement,
termination of employment includes separation from the group of companies
comprised of the Company and its Subsidiaries and Affiliates for any reason,
including death, Disability, retirement, resignation, dismissal, disposition of
a Subsidiary or operation (whether by stock or asset sale or otherwise),
disposition of an interest in an Affiliate, spin-off, shutdown, or any other
event.

      (e)   Award Agreements may, in the discretion of the Committee, contain a
provision permitting a Recipient to designate the person who may exercise or
receive an Award upon the Recipient's death, either by will or by appropriate
notice to the Company.

      (f)   A Recipient shall have none of the rights of a shareholder with
respect to shares of Stock covered by his or her Award until shares are issued
in his or her name.

      (g)  The Committee may provide in Award Agreements that Awards, except for
ISOs and SARs which are alternatives to ISOs, are transferable.  Transferability
may be subject to such conditions and limitations as the Committee deems
appropriate.  Except to the extent otherwise expressly set forth in the Award
Agreement, Awards shall not be transferable other than by will or the laws of
descent and distribution, and (if exercise is required) shall be exercisable
during the Recipient's lifetime only by the Recipient or his or her guardian or
legal representative.  This paragraph shall not apply to Restricted Stock after
it vests.

Section 5.   Options and SARs.

      (a)   Except as provided in Section 11(b), the option price per share of
Options or the base price of SARs shall not be less than Fair Market Value per
share of Stock on the Options' or the SARs' grant date, nor less than the par
value of a share of Stock, except that SARs which are alternatives to Options
but which are granted at a later time may have a base price equal to the option
price even though the base price is less than Fair Market Value on the date the
SARs are granted.

      (b)  The grant of Options and their related Option Agreement must clearly
identify the Options as either ISOs or as NQSOs.


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<PAGE>


      (c)   If Options, SARs, and/or Limited Rights are granted as alternatives
to each other:  (i) the option prices and the base prices (as applicable) shall
be equal, (ii) SARs and/or Limited Rights which are alternatives to ISOs may be
granted only at the same time the ISOs are granted, and (iii) SARs which are
alternatives to Options, and Limited Rights which are alternatives to Options or
SARs, shall expire or terminate at the same time as the Options or SARs to which
they are alternatives.

      (d)   In the case of SARs, the Award Agreement may specify the form of
payment or may provide that the form is to be determined at a later date, and
may require the satisfaction of any rules or conditions in connection with
receiving payment in any particular form.  If the Recipient is a Reporting
Person at the time of grant or during the SARs' term and is given an election to
receive cash in full or partial settlement of SARs, the Committee shall have
sole discretion to approve or disapprove such election at any time after it is
made.

      (e)   Notwithstanding any other provision of the Plan, no Options or SARs
shall contain a so-called "reload" feature under which Options or SARs are
automatically granted to Recipients upon exercise of Options or SARs.

Section 6.   Limited Rights.

      (a)   The Committee shall have authority to grant limited stock
appreciation rights ("Limited Rights") to any Recipient of any Options or SARs
granted under the Plan (the "Related Award") with respect to all or some of the
shares of Stock which underlie such Related Award.  Limited Rights shall not be
granted separately, but shall be granted only as alternatives to their Related
Award.  Limited Rights may be granted either at the time of grant of the Related
Award or (except in the case of ISOs) at any time thereafter during its term.
Limited Rights shall be exercisable or payable at such times, payable in such
amounts, and subject to such other terms, conditions, and restrictions as the
Committee deems appropriate.

      (b)   The Committee shall place on any Limited Rights granted to a
Reporting Person such restrictions as may be required by Rule 16b-3 at the time
of grant, and shall amend the Plan accordingly to the extent required by Rule
16b-3.  The Committee shall place on any Limited Rights for which the Related
Award is ISOs such restrictions as may be required by the Code at the time of
grant, and shall amend the Plan accordingly to the extent required by the Code.

Section 7.   Restricted Stock.

      (a)   "Restricted Stock" means Stock issued to a Recipient which is
subject to transfer restrictions prior to vesting and is subject to forfeiture
upon the happening of such events or such conditions or upon the failure to
satisfy such rules, requirements and conditions as the Committee specifies in
the Award Agreement.  Stock issued in connection with an Award Agreement is not
Restricted Stock unless so designated in the Award Agreement or in a rule or
resolution of the Committee.  When Restricted Stock vests, it ceases to be
Restricted Stock for purposes of the Plan.

      (b)   The certificate representing the shares of Restricted Stock issued
in the name of the Recipient may be held by the Company and/or may have a legend
placed upon it to the effect that the shares represented by it are subject to,
and may not be transferred except in accordance with the Plan and the Award
Agreement relating to such shares.  Dividends relating to shares of Restricted
Stock may be paid to the Recipient or held by the Company for the Recipient's
benefit, as the Committee may provide in the Award Agreement; if held by the
Company, the Committee may require that the Company pay interest or other return
to the Recipient on any cash dividends at such rate(s) and time(s) as the
Committee provides in the Award Agreement.

      (c)   If the Recipient of Restricted Stock is a Reporting Person on the
grant date, at least one of the following requirements shall be satisfied:

            (i)    the Award is a stock bonus granted for no consideration
      (other than services rendered or to be rendered);


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<PAGE>


            (ii)  the Award is a stock bonus granted for the minimum amount
      of consideration (other then services) required by applicable
      corporate law, which amount in no event exceeds 10% of the Fair Market
      Value of a share of Stock on the payment date, and which amount is
      paid to the Company within 60 days after the grant date:

            (iii) the Award consists of Options which are payable in
      Restricted Stock; or

            (iv)  the Award is an Other Stock Interest which is payable
      in Restricted Stock and which either is granted in conformity with
      (i) or (ii) above, or constitutes an option or similar right
      (including a stock appreciation right) or any other type of
      derivative security for the purposes of Rule 16b-3.

This paragraph (c) shall apply to a grant only when required by Rule 16b-3 at
the time and under the circumstances of the grant.

Section 8.   Other Stock Interests.

"Other Stock Interest" means any compensatory arrangement not inconsistent with
the Plan which is established by the Committee and which might (a) involve the
issuance of Stock to an Eligible Employee or (b) involve or be treated as
involving the acquisition or disposition of an equity security of the Company
for purposes of Section 16 of the Act.  Other Stock Interests are not limited to
any specific form or structure.  Without limiting the above, Other Stock
Interests may include stock bonuses, deferred stock, variable priced stock
options, performance shares, phantom stock, and convertible securities, and may
be granted in connection with or apart from other compensation programs or plans
or other types of Awards under the Plan.  In connection with the grant of Other
Stock Interests, the Committee may provide for payment to the Recipient of
amounts equal to dividends which would have been paid had Stock actually been
issued to the Recipient.  In addition, Other Stock Interests may provide for
payment of cash or other property in lieu of Stock or other securities of the
Company.  The Committee shall place on any Other Stock Interest granted to a
Reporting Person such restrictions as may be required by Rule 16b-3 at the time
of grant, and shall amend the Plan accordingly to the extent required by Rule
16b-3.

Section 9.   Stock Issuance, Payment, and Withholding.

      (a)   If an Award contemplates the payment of a purchase price (including
the option price of Options), the Recipient may pay the purchase price in cash,
Stock (including shares of previously-owned Stock, or Stock issuable in
connection with the Award), or other property, to the extent permitted or
required by the Award Agreement or the Committee from time to time.  The
Committee may permit deemed or constructive transfers of shares in lieu of
actual transfer and physical delivery of certificates.  Except to the extent
prohibited by applicable law, the Committee or its delegate may take any
necessary or appropriate steps in order to facilitate the payment of any such
purchase price.  Without limiting the foregoing, the Committee may allow the
Recipient to defer payment of such purchase price, or may cause the Company to
loan the purchase price to the Recipient or to guaranty that any shares to be
issued will be delivered to a broker or lender in order to allow the Recipient
to borrow the purchase price.  The Committee may require satisfaction of any
rules or conditions in connection with paying the purchase price at any
particular time, in any particular form, or with the Company's assistance.

      (b)   If shares used to pay any such purchase price are subject to any
prior restrictions imposed in connection with any plan of the Company (including
the Plan), an equal number of the shares of Stock purchased shall be made
subject to such prior restrictions in addition to any further restrictions
imposed on such purchased shares by the terms of the Award Agreement or Plan.

      (c)   When the obligation arises to collect and pay Required Withholding
Taxes, the Recipient shall promptly reimburse the Company or Employer (as
required by the Committee or Company) for the amount of such Required
Withholding Taxes in cash, unless the Award Agreement or the Committee permits
or requires payment in another form.  In the discretion of the Committee or its
delegate and at the Recipient's request, the Committee or its delegate may cause
the Company or Employer to pay to the appropriate taxing authority Withholding
Taxes in excess of Required Withholding Taxes on behalf of a


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<PAGE>


Recipient, which shall be reimbursed by the Recipient.  In the Award Agreement
or otherwise, the Committee may allow a Recipient to reimburse the Company or
Employer for payment of Withholding Taxes with shares of Stock or other
property.  The Committee may require the satisfaction of any rules or conditions
in connection with any non-cash payment of Withholding Taxes.  If a Recipient is
a Reporting Person at the time of grant or during the Award's term and is given
an election to pay any Withholding Taxes with Stock, the Committee shall have
sole discretion to approve or disapprove such election at any time after the
election is made.

      (d)   If provided in the Award Agreement relating to an ISO, the Committee
may prohibit the transfer by a Recipient of shares of Stock issued to him or her
upon exercise of an ISO into the name of a nominee, and the Committee may
require the placement of a legend on certificates for such shares reflecting
such prohibition.

Section 10.   Forfeitures.

      (a)   The Committee may include in any Award Agreement any provisions
relating to forfeitures of Awards that it deems appropriate.  Such forfeiture
provisions may include, among others, prohibitions on competing with the Company
and its Subsidiaries and Affiliates and other detrimental conduct.  Forfeiture
provisions for one Award type may differ from those for another type, and also
may differ among Awards of the same type.  As used in the Plan, a "forfeiture"
of an Award includes the recapture of economic benefits derived from an Award,
as well as the forfeiture of an Award itself; however, the Committee may define
the term more narrowly in specific Award Agreements or contexts.

      (b)   Award Agreements may provide for any forfeiture provision to
terminate or be waived upon an Acceleration Date.  In its discretion, the
Committee may provide in any Award Agreement for the termination of any
forfeiture provision upon the happening of any specified event, and may
terminate or waive any forfeiture provision by action taken after grant.

Section 11.   Adjustments and Acquisitions.

      (a)   In the event of (i) any change in the outstanding shares of Stock by
reason of any stock split, combination of shares, stock dividend,
reorganization, merger, consolidation, or other corporate change having a
similar effect, (ii) any separation of the Company including a spin-off or other
distribution of stock or property by the Company, or (iii) any distribution to
shareholders generally other than a normal dividend, the Committee shall make
such equitable adjustments to the Plan and to outstanding Awards as it shall
deem appropriate in order to prevent the dilution or enlargement of (A) the
Awards which may be granted, the shares of Stock which may be issued, or the
shares for which ISOs may be granted under the Plan, (B) the economic value of
outstanding Awards or (C) the limitations imposed by Section 2(b) of the Plan,
provided, however, that the Committee shall not make any adjustment which would
constitute or result in an increase in the aggregate number of Shares available
under the Plan, or the annual limit on the number of Awards which may be granted
to an Eligible Employee under Section 2(b) of the Plan, requiring shareholder
approval under Section 422 or Section 162(m) of the Code.  Any such
determination by the Committee shall be conclusive and binding on all concerned.

      (b)   In the event the Company or a Subsidiary enters into a transaction
described in Section 424(a) of the Code with any other corporation, the
Committee may grant Options, SARs or Limited Rights to employees or former
employees of such corporation in substitution of stock awards, stock
appreciation rights or limited stock appreciation rights (respectively)
previously granted to them by such corporation upon such terms and conditions as
shall be necessary to qualify such grant as a substitution described in Section
424(a) of the Code.

Section 12.   Acceleration.

      (a)   An "Acceleration Date" occurs when any of the following events
occur:

            (i)   any Person (as defined herein) becomes the beneficial owner
      directly or indirectly (within the meaning of Rule 13d-3 under the Act)
      of more than 30% of the Company's then


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<PAGE>


      outstanding voting securities (measured on the basis of voting power),
      provided, however, that shares issued or distributed by the Company
      in connection with the acquisition of another company or business
      from such Person shall be counted as being outstanding, but otherwise
      shall be ignored in determining the percentage beneficially owned by
      such Person;

            (ii)  the shareholders of the Company approve a definitive
      agreement of merger or consolidation with any other corporation or
      business entity, other than (x) a merger or consolidation which
      would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by
      remaining outstanding or by being converted into voting securities
      of the surviving entity), in combination with the ownership of any
      trustee or other fiduciary holding securities under an employee
      benefit plan of the Company, at least 50% of the combined voting
      power of the voting securities of the Company or such surviving
      entity outstanding immediately after such merger or consolidation,
      or (y) a merger or consolidation effected to implement a
      recapitalization of the Company (or similar transaction) in which
      no Person acquires more than 50% of the combined voting power of
      the Company's then outstanding securities;

            (iii)  a change occurs in the composition of the Board of
      Directors during any period of twenty-four consecutive months such
      that individuals who at the beginning of such period were members
      of the Board of Directors cease for any reason to constitute at
      least a majority thereof, unless the election, or the nomination
      for election by the Company's shareholders, of each new director
      was approved by a vote of at least two-thirds of the directors
      still in office who either were directors at the beginning of the
      period or whose election or nomination for election was previously
      so approved; or

            (iv)  the shareholders of the Company approve a plan of
      complete liquidation or dissolution of the Company or an agreement
      for the sale or disposition by the Company of all or substantially
      all the Company's assets.

For purposes of this paragraph, "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof; however, a Person shall not include (aa) the Company or any of its
subsidiaries, (bb) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (cc) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (dd) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of Stock.

      (b)   If an Acceleration Date occurs while Awards remain outstanding under
the Plan, then all Awards shall "vest," which means:

            (i)   all Options and SARs shall become fully exercisable; and

            (ii)  all shares of Restricted Stock shall become nonforfeitable
      and freely transferable (except for such restrictions as may be
      imposed by the Securities Act of 1933, as amended, or applicable
      state securities laws), and all conditions to unrestricted ownership
      provided in their Award Agreements which have not previously been
      satisfied shall lapse.

In the case of Other Stock Interests, the term "vest" shall have that meaning
given it by the Committee at the time of grant.

      (c)   Except to the extent prohibited by Rule 16b-3 in the case of
Reporting Persons, the Committee may accelerate the date on which any Award or
Stock or property issued pursuant to an Award shall vest and may remove any
restrictions on such Award at any time after grant and for any reason the
Committee deems appropriate.

      (d)   All Awards, and all shares of Stock or property issued pursuant to
an Award, shall automatically vest upon a termination of employment caused by
the death, Disability, or (except for Restricted Stock and Other Stock
Interests) retirement of the Recipient.  The Committee may determine the
circumstances under which a Recipient is deemed to have retired.


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<PAGE>



Section 13.  Administration.

      (a)   The Plan shall be administered by the Compensation and Human
Resources Committee of the Board, or another committee appointed by the Board
from time to time, consisting of three or more persons, each of whom at all
times shall be a member of the Board and none of whom shall be an officer or
employee of the Company or any of its subsidiaries at the time of service.
Committee members shall not be eligible for selection to receive Awards under
the Plan.

      (b)   During any time when one or more Committee members may not be
qualified to serve under Rule 16b-3 or Section 162(m) of the Code, the Committee
may form a sub-Committee from among its qualifying members to act, in lieu of
the full Committee, with respect to all or any specified category of Awards
granted to all or any specified group of Recipients, and may take other actions
deemed appropriate and convenient to prevent, control, minimize, or eliminate
any adverse effects of such potential disqualification.  At the Committee's
request or on its own motion, the Board may ratify or approve grants, or any
terms of any grants, made by the Committee or a sub-Committee during any time
that any member of the Committee may not be qualified to approve such grants or
terms under Rule 16b-3.

      (c)   A majority of the members of the Committee shall constitute a
quorum.  The acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by a majority of the members of
the Committee, shall be the acts of the Committee.  The Committee may meet in
person, by telephone or television conference, or in any other manner permitted
by applicable law.  From time to time the Committee may adopt, amend, and
rescind such rules and regulations for carrying out the Plan and implementing
Award Agreements, and the Committee may take such action in the administration
of the Plan, as it deems proper.  The interpretation of any provisions of the
Plan by the Committee shall be final and conclusive unless otherwise determined
by the Board.

Section 14.  Amendment, Termination, Shareholder Approval.

      (a)   The Board may amend or terminate the Plan at any time, except that
without the approval of the Company's shareholders, no amendment shall (i)
increase the maximum number of shares issuable, or the maximum number of shares
for which ISOs may be granted, under the Plan, (ii) change the class of persons
eligible to be Recipients, (iii) change the annual limit on Awards which may be
granted to an Eligible Employee provided in Section 2(b), (iv) withdraw the
authority of the Committee to administer the Plan, or (v) change the provisions
of this Section 14(a).

      (b)   The Committee may amend the Plan from time to time to the extent
necessary to (i) comply with Rule 16b-3 and, to the extent it deems appropriate,
(ii) prevent benefits under the Plan from constituting "applicable employee
remuneration" within the meaning of Section 162(m) of the Code.

      (c)   No Awards may be granted under the Plan after February 21, 2006.

      (d)   The approval by shareholders described in this Section shall consist
of the approving vote of the holders of a majority of the outstanding shares of
Stock present (in person or by proxy) at a meeting of the shareholders at which
a quorum is present, unless a greater vote is required by the Company's charter
or by-laws, by the Board, by the Company's principal stock exchange, or by
applicable law (including Rule 16b-3 or Section 162(m) of the Code).

Section 15. Additional Payments.

The Committee may grant a Recipient the right to receive additional compensation
in cash or other property (in addition to any cash or other property payable
under the terms of the Award itself) upon the exercise of Options, SARs, or
exercisable Other Stock Interests, or the vesting of Restricted Stock or non-
exercisable Other Stock Interests, provided that (i) in the case of ISOs such
compensation is includible in income under Sections 61 and 83 of the Code at the
time of such exercise or vesting and (ii) no such right may be granted in
connection with any SARs or Limited Rights which are alternatives to ISOs.


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Section 16.  Definitions.

      (a)   "Acceleration Date" has the meaning given in Section 12(a).

      (b)   "Act" means the Securities Exchange Act of 1934, as amended from
time to time.

      (c)   "Affiliate" means any entity in which the Company has a substantial
direct or indirect equity interest (other than a Subsidiary), as determined by
the Committee.

      (d)   "Award" means a grant of ISOs, NQSOs, SARs, Limited Rights,
Restricted Stock or Other Stock Interests.

      (e)   "Award Agreement" means the written agreement referred to in Section
4(a) between the Company and the Recipient evidencing an Award.

      (f)   "Board" means the Board of Directors of the Company.

      (g)   Options "cease to qualify as ISOs" when they fail or cease to
qualify for the exclusion from income provided in Section 421 (or any successor
provision) of the Code.

      (h)   "Code" means the U.S. Internal Revenue Code as in effect from time
to time.

      (i)    "Committee" means the Compensation and Human Resources Committee
described in Section 13 hereof.

      (j)    "Company" means The Earthgrains Company and its successors.

      (k)   "Disability" means the condition of being "disabled" within the
meaning of Section 422(c)(6) of the Code or any successor provision.

      (l)    "Eligible Employee" means a person who is eligible to receive an
Award under Section 3 of the Plan.

      (m)  "Employer" means the Company, the Subsidiary, or the Affiliate which
employs the Recipient.

      (n)   "Fair Market Value" of Stock on a given date means (i) the average
of the highest and lowest selling prices per share of Stock reported on the New
York Stock Exchange Composite Tape or similar quotation service for such date,
(ii) if Stock is not listed on the New York Stock Exchange, the average of the
highest and lowest selling prices per share of Stock as reported for such date
on the principal stock exchange or quotation system in the U.S. on which Stock
is listed or quoted (as determined by the Committee), or (iii) if neither of the
preceding clauses is applicable, the value per share determined by the Committee
in a manner consistent with the Treasury Regulations under Section 2031 of the
Internal Revenue Code.  If no sale of Stock occurs on such date, but there were
sales reported within a reasonable period both before and after such date, the
weighted average of the means between the highest and lowest selling prices on
the nearest date before and the nearest date after such date shall be used, with
the average to be weighted inversely by the respective numbers of trading days
between the selling dates and such date.  "Fair Market Value" of Restricted
Stock is the same as the Fair Market Value of any other Stock.

      (o)   "Forfeiture" has the meaning given in Section 10(a).

      (p)   "ISO" or "Incentive Stock Option" means an option to purchase one
share of Stock for a specified option price which is designated by the Committee
as an "Incentive Stock Option" and which qualifies as an "incentive stock
option" under Section 422 (or any successor provision) of the Code.

      (q)   "Limited Right" has the meaning given in Section 6.

      (r)    "NQSO" or "Non-Qualified Stock Option" means an option to purchase
one share of Stock for a specified option price which is designated by the
Committee as a "Non-Qualified Stock Option," or which is designated by the
Committee as an ISO but which ceases to qualify as an ISO.

      (s)   "Option" means an ISO or an NQSO.


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<PAGE>


      (t)    "Option Agreement" means an Award Agreement which evidences a grant
of Options.

      (u)   "Optionee" means a person to whom Options are granted pursuant to
the Plan.

      (v)   "Other Stock Interest" has the meaning given in Section 8.

      (w)   "Plan" means The Earthgrains Company 1996 Stock Incentive Plan, as
amended from time to time.

      (x)   "Recipient" means an Eligible Employee to whom an Award is granted
pursuant to the Plan.

      (y)   "Reporting Person," as of a given date, means a Recipient who would
be required to report a purchase or sale of Stock occurring on such date to the
Securities and Exchange Commission pursuant to Section 16(a) of the Act and the
rules and regulations thereunder.

      (z)   "Restricted Stock" has the meaning given in Section 7.

      (aa)  "Rule 16b-3" means Rule 16b-3 (as amended from time to time)
promulgated by the Securities and Exchange Commission under the Act, and any
successor thereto.

      (bb) "SAR" means a stock appreciation right, which is a right to receive
cash, Stock, or other property having a value on the date the SAR is exercised
equal to (i) the excess of the Fair Market Value of one share of Stock on the
exercise date over (ii) the base price of the SAR.  The term "SAR" does not
include a Limited Right.

      (cc) "Stock" means shares of the common stock of the Company, par value
$0.01 per share, or such other class or kind of shares or other securities as
may be applicable under Section 11.  The term "Stock" shall include shares of
Restricted Stock unless expressly provided otherwise in the Plan or an Award
Agreement.

      (dd) "Subsidiary" means a "subsidiary corporation" of the Company as
defined in Section 424(f) (or any successor provision) of the Code.

      (ee)  "Vest" has the meaning given in Section 12(b).

     (ff)   "Withholding Taxes" means, in connection with an Award, (i) the
total amount of Federal and state income taxes, social security taxes, and other
taxes which the Employer of the Recipient is required to withhold ("Required
Withholding Taxes") plus (ii) any other such taxes which the Employer, in its
sole discretion, withholds at the request of the Recipient.

Section 17.  Miscellaneous.

      (a)   Each provision of the Plan and Option Agreement relating to ISOs
shall be construed so that all ISOs shall be "incentive stock options" as
defined in Section 422 of the Code or any statutory provision that may replace
Section 422, and any provisions thereof which cannot be so construed shall be
disregarded.  Except as provided in Section 10, no discretion granted or allowed
to the Committee under the Plan shall apply to ISOs after their grant except to
the extent the related Option Agreement shall so provide.  Notwithstanding the
foregoing, nothing shall prohibit an amendment to or action regarding
outstanding ISOs which would cause them to cease to qualify as ISOs, so long as
the Company and the Optionee shall consent to such amendment or action.

      (b)   Without amending the Plan, Awards may be granted to Eligible
Employees who are foreign nationals or who are employed outside the United
States or both, on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or desirable to
further the purposes of the Plan.  Such different terms and conditions may be
reflected in Addenda to the Plan.  However, in the case of ISOs, no such
different terms or conditions shall be employed if such term or condition
constitutes, or in effect results in, an increase in the aggregate number of
shares which may be issued under the Plan or a change in the definition of
Eligible Employee.


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      (c)   Notwithstanding any other provision in the Plan, the Committee shall
not act with respect to any Reporting Person in a manner which would contravene
any requirement of Rule 16b-3 as in effect at the time of such action, without
the knowing consent of such Reporting Person.

      (d)   Nothing in the Plan or any Award Agreement shall confer on any
person or expectation to continue in the employ of his or her Employer, or shall
interfere in any manner with the absolute right of the Employer to change or
terminate such person's employment at any time for any reason or for no reason.


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</TEXT>
</DOCUMENT>
