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                            THE EARTHGRAINS COMPANY

                           1996 STOCK INCENTIVE PLAN

                (AS AMENDED APRIL 11, 1996 AND MARCH 21, 1997)



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 1,130,000
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 650,000,
subject to adjustment as provided in Section 11.

   (c)      No more than 166,551 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.


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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.

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.

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   (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.

   (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

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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);

            (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,

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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 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

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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

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    Company's then 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.

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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.

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

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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.

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.

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   (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.

   (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.

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<PAGE> 11
  (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.

   (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

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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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