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THE EARTHGRAINS COMPANY
EXCEPTIONAL PERFORMANCE PLAN
EFFECTIVE MARCH 26, 1997
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TABLE OF CONTENTS
SECTION 1. ESTABLISHMENT OF PLAN. . . . . . . . . . . . . . . 1
SECTION 2. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
2.1. Affiliate. . . . . . . . . . . . . . . . 1
2.2. Board. . . . . . . . . . . . . . . . . . 1
2.3. Bonus. . . . . . . . . . . . . . . . . . 1
2.4. Change in Control. . . . . . . . . . . . 1
2.5. Code . . . . . . . . . . . . . . . . . . 1
2.6. Committee. . . . . . . . . . . . . . . . 1
2.7. Company. . . . . . . . . . . . . . . . . 1
2.8. Covered Employee . . . . . . . . . . . . 1
2.9. Eligible Employee. . . . . . . . . . . . 1
2.10. Exchange Act . . . . . . . . . . . . . . 1
2.11. Participant. . . . . . . . . . . . . . . 1
2.12. Performance Goal . . . . . . . . . . . . 1
2.13. Performance Period . . . . . . . . . . . 2
2.14. Plan . . . . . . . . . . . . . . . . . . 2
2.15. Program. . . . . . . . . . . . . . . . . 2
SECTION 3. BONUS PROGRAMS . . . . . . . . . . . . . . . . . . 2
SECTION 4. PERFORMANCE PERIODS. . . . . . . . . . . . . . . . 2
SECTION 5. ELIGIBILITY, PARTICIPATION AND COVERED
EMPLOYEES . . . . . . . . . . . . . . . . . . . 2
SECTION 6. PERFORMANCE CRITERIA AND GOALS . . . . . . . . . . 2
SECTION 7. AMOUNTS OF BONUSES . . . . . . . . . . . . . . . . 3
SECTION 8. PAYMENT OF BONUSES . . . . . . . . . . . . . . . . 3
SECTION 9. ADMINISTRATION BY COMMITTEE. . . . . . . . . . . . 3
SECTION 10. CHANGE IN CONTROL . . . . . . . . . . . . . . . . 4
10.1. Change in Control Defined. . . . . . . . 4
10.2. Adjustments Upon Change in Control . . . 5
SECTION 11. AMENDMENT AND TERMINATION . . . . . . . . . . . . 5
SECTION 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 5
12.1. Effective Date . . . . . . . . . . . . . 5
12.2. No Guarantee of Employment or
Compensation . . . . . . . . . . . . . . 5
12.3. Claims . . . . . . . . . . . . . . . . . 5
12.4. No Alienation. . . . . . . . . . . . . . 5
12.5. Other Incentive Plans. . . . . . . . . . 6
12.6. Governing Law. . . . . . . . . . . . . . 6
12.7. Severability . . . . . . . . . . . . . . 6
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THE EARTHGRAINS COMPANY
EXCEPTIONAL PERFORMANCE PLAN
SECTION 1. ESTABLISHMENT OF PLAN.
The Earthgrains Company does hereby adopt The Earthgrains
Company Exceptional Performance Plan set forth herein for the
purpose of attracting, motivating and rewarding certain employees
of the Company with qualified performance-based compensation.
SECTION 2. DEFINITIONS.
2.1. Affiliate: Any entity in which the Company has a
substantial direct or indirect equity interest.
2.2. Board: The Board of Directors of the Company.
2.3. Bonus: The amount payable to any Participant with
respect to a Program.
2.4. Change in Control: Change in Control shall have the
meaning ascribed thereto in Section 10.1.
2.5. Code: The Internal Revenue Code of 1986, as
amended, and the regulations and interpretations promulgated
thereunder.
2.6. Committee: The Committee described in Section 9.
2.7. Company: The Earthgrains Company.
2.8. Covered Employee: Covered Employee shall have the
meaning ascribed thereto in Section 5.
2.9. Eligible Employee: A person who is eligible to
participate in the Plan in accordance with Section 5.
2.10. Exchange Act: The Securities Exchange Act of 1934,
as amended, and the regulations and interpretations promulgated
thereunder.
2.11. Participant: An Eligible Employee who is designated
as a Participant in a Program pursuant to Section 5.
2.12. Performance Goal: Performance Goal shall have the
meaning ascribed thereto in Section 6.
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2.13. Performance Period: Any period of time designated
by the Committee in accordance with Section 4 with respect to which
Bonuses may be paid under a Program.
2.14. Plan: The Earthgrains Exceptional Performance Plan,
as amended from time to time.
2.15. Program: A Bonus Program established by the
Committee which designates the Participants, the Covered Employees,
a Performance Period, Performance Goals, and formulas or standards
for determining the amounts of Bonuses payable under the Plan.
SECTION 3. BONUS PROGRAMS.
The Committee shall have the authority to establish one or
more Programs pursuant to which Bonuses may be paid to one or more
Participants.
SECTION 4. PERFORMANCE PERIODS.
For each Program, the Committee shall set forth one or more
Performance Periods over which performance will be measured to
determine whether and in what amounts to pay Bonuses to
Participants. A Performance Period may be a fixed period of time
or a period which terminates upon the occurrence of one or more
pre-established events. Each Program must be established in
writing prior to the expiration of any prescribed time period for
the pre-establishment of Performance Goals under Section 162(m) of
the Code.
SECTION 5. ELIGIBILITY, PARTICIPATION AND COVERED EMPLOYEES.
Management employees of the Company and its Affiliates shall
be Eligible Employees. For each Program, the Committee shall
designate as Participants one or more Eligible Employees. Each
Program shall also set forth those individuals the Committee
believes may be or become covered employees as that term is defined
in Section 162(m) of the Code ("Covered Employees") for any taxable
year in which Bonuses may be payable to Participants under the
Program.
SECTION 6. PERFORMANCE CRITERIA AND GOALS.
All Bonuses shall be based upon one or more of the following
criteria, which may be Company-wide or specific to an Affiliate,
division, product, and/or geographic area: sales, revenues,
earnings (including, without limitation, earnings before interest,
taxes, depreciation and amortization), earnings per share, return
on equity, return on assets, return on capital, cash flow, market
share, stock price, costs and productivity ("Performance
Criteria"). For each
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Program and for each Participant, the Committee shall establish one
or more objective performance goals based upon one or more
Performance Criteria ("Performance Goals"). No Bonus shall be paid
to any Covered Employee if the applicable Performance Goal(s) are
not satisfied during the applicable Performance Periods.
SECTION 7. AMOUNTS OF BONUSES.
For each Program, the Committee shall designate an objective
formula or standard for determining the dollar amount of each
Participant's Bonus (the "Bonus Formula"). In no event shall the
total amount of Bonuses paid to any Covered Employee in any fiscal
year exceed $1 million. Except with respect to Bonuses payable to
Covered Employees, and notwithstanding failure to satisfy the
applicable Performance Goal(s), the Committee shall have the
discretion to increase or reduce the amount of any Participant's
Bonus above or below the standard or formula amount to reflect
individual performance and/or unanticipated factors; the Committee
may only reduce the amount of any Bonuses payable to Covered
Employees below the Bonus Formula amount to reflect individual
performance and/or unanticipated factors.
SECTION 8. PAYMENT OF BONUSES.
After the close of each Performance Period, the Committee
shall certify in writing the achievement of the applicable
Performance Goal(s) and the amount of any Bonuses payable to
Covered Employees under the Bonus Formula. No Bonuses shall be
paid under this Plan to Covered Employees unless and until the Plan
has received shareholder approval as required by Section 162(m) of
the code. Subject to the foregoing, the timing of payment of all
Bonuses to both Covered Employees and Participants who are not
Covered Employees shall be within the sole discretion of the
Committee. The Company shall withhold from any amount payable
under the Plan all taxes required to be withheld by any federal,
state or local government.
SECTION 9. ADMINISTRATION BY COMMITTEE.
The Plan shall be administered by a committee established by
the Board or a subcommittee established by a committee of the Board
(the "Committee"). The Committee shall be comprised of at least
two outside directors of the Company as that term is defined in
Section 162(m) of the Code and the Regulations thereunder. The
members of the Tax Qualified Subcommittee of the Human Resources
and Executive Compensation Committee shall initially serve as the
members of the Committee. The Committee shall have full power and
authority to administer and interpret the Plan and to adopt such
rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as
the Committee deems necessary or advisable.
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SECTION 10. CHANGE IN CONTROL.
10.1. Change in Control Defined. For purposes of this
Plan, a "Change in Control" shall occur if:
(a) Any Person (as defined herein) becomes the
beneficial owner directly or indirectly (within the
meaning of Rule 13d-3 of the Exchange Act) of more
than 30% of the Company's then outstanding voting
securities (measured on the basis of voting power);
(b) The shareholders of the Company approve a
definitive agreement to merge or consolidate the
Company with any other corporation, other than an
agreement providing for (i) 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 (ii) 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;
(c) A change occurs in the composition of the
Board during any period of twenty-four consecutive
months such that individuals who at the beginning
of such period were members of the Board 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 then 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
(d) The shareholders of the Company approve a plan
of complete liquidation of the Company or an
agreement for the sale or disposition by the
Company of all or substantially all of 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 (w) the Company or any of its subsidiaries, (x) a trustee
or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (y) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (z) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same
proportions as their ownership of Company stock.
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10.2. Adjustments Upon Change in Control. On the date a
Change in Control occurs to the extent expressly set forth in the
applicable Program, appropriate adjustments shall be made to the
applicable Performance Goal(s), Performance Periods, and Bonus
Formulas to prevent or limit forfeiture of Bonuses under a Program.
A Program which includes such equitable adjustment provisions may
(i) limit the Committee's ability to exercise Committee Discretion
upon a Change in Control; (ii) prohibit any post-Change in Control
amendment to the Program which would adversely affect any
Participant without the written consent of such Participant; and
(iii) provide for a gross-up of benefits payable under the Program
to compensate Participants for any excise or other special tax
imposed by reason of the equitable adjustment provisions.
SECTION 11. AMENDMENT AND TERMINATION.
The Board reserves the right to amend or terminate the Plan in
whole or in part at any time. Unless otherwise prohibited by
applicable law, any amendment required to conform to Section 162(m)
of the Code may be made by the Committee. No amendment may be made
to the class of individuals constituting Eligible Employees, the
Performance Criteria or the maximum Bonus payable to any Covered
Employee in a year set forth in Section 7 without shareholder
approval unless shareholder approval is not required in order for
Bonuses paid to Covered Employees to constitute qualified
performance-based compensation under Section 162(m) of the Code.
The Committee may amend the Plan in any way if the Committee
determines that such amendment may be made without shareholder
approval and without jeopardizing qualification of Bonuses to
Covered Employees as performance-based compensation under Section
162(m) of the Code.
SECTION 12. MISCELLANEOUS.
12.1. Effective Date. The Plan shall be effective as of
March 26, 1997.
12.2. No Guarantee of Employment or Compensation. The
Plan shall not restrict the Company or any Affiliate from
discharging an Eligible Employee from employment, restrict any
Eligible Employee from resigning from such employment, or restrict
the Company or any Affiliate from increasing or decreasing the
compensation of any Eligible Employee.
12.3. Claims. Except in the case of a Change in Control,
no person shall have any claim to any Bonus. There is no
obligation for uniformity of treatment of Eligible Employees.
12.4. No Alienation. Except as required by law, amounts
payable under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary.
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12.5. Other Incentive Plans. Nothing contained in the
Plan shall prohibit the Company from granting other performance
awards to employees (including Eligible Employees) under such
conditions, and in such form and manner, as it sees fit. The
adoption of the Plan does not preclude the adoption of any other
bonus or incentive plan for employees; nor shall adoption of any
Program preclude the adoption of additional Programs under the
Plan.
12.6. Governing Law. Subject to the provisions of
applicable federal law, the Plan shall be administered, construed
and enforced according to the laws of the State of Missouri.
12.7. Severability. The invalidity of any particular
clause, provision or covenant herein shall not invalidate all or
any part of the remainder of the Plan, but such remainder shall be
and remain valid in all respects as fully as the law will permit.
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