UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1995
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-1185 41-0274440
(State or other juris- (Commission File (IRS Employer Identification No.)
diction of incorporation) Number)
Number One General Mills Boulevard, Minneapolis, Minnesota 55440
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 540-2311
Item 2. Acquisition or Disposition of Assets.
As of the Distribution Date, May 28, 1995, General Mills,
Inc. (the "Company" or "General Mills"), through its
distribution agent Norwest Bank Minnesota, N.A. (the "Agent"),
caused to be issued to holders of record of General Mills
common stock at the close of business on the Record Date, May
15, 1995, all shares of Darden Restaurants, Inc. ("Darden")
owned by General Mills. On the Distribution Date, Darden was
a wholly-owned subsidiary of General Mills. The shares of
Darden were distributed to holders of record of General Mills
common stock, without any consideration being paid by such
holders, on the basis of one share of Darden Common Stock for
each share of General Mills common stock held on the Record
Date. No certificates or scrip representing fractional shares
of Darden were issued as part of the Distribution. In lieu of
receiving a fractional share, each holder of General Mills
common stock who would otherwise be entitled to receive a
fractional share of Darden Common Stock received cash for such
fractional interest. Such cash was derived from the sale of
fractional interests by the Agent on behalf of stockholders
otherwise entitled to a fractional share.
Certificates representing shares of Darden Common Stock
were mailed by the Agent to holders of General Mills common
stock commencing on or about May 27, 1995.
Prior to the Distribution, Darden entered into commercial
bank loan agreements providing for a $250 million 5-year
revolving credit facility and a $250 million 364-day facility.
Approximately $350 million from the bank credit facilities was
used to repay certain intercompany liabilities to General
Mills. Darden also assumed and/or retained approximately $54
million in long-term debt. The remainder of any investment in
Darden by General Mills was converted to stockholders' equity
of Darden. No equity interest was retained by General Mills.
For the purposes of an orderly transition following the
Distribution, General Mills and Darden entered into an
agreement (the "Distribution Agreement") pursuant to which each
will make available to the other for up to twenty-four months
certain personnel, services and records with each party being
compensated on an arms-length basis and reimbursed for any
costs and expenses incurred in connection therewith. The
Distribution Agreement provides for Darden's continued use of
certain centralized services and systems of General Mills, such
as pension and savings plan administration.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(b) A pro forma consolidated balance sheet as of May 28,
1995 and a pro forma consolidated condensed income
statement for the year ended May 28, 1995 will not be
filed since the disposition transaction described in
Item 2 will be fully reflected in the General
Mills, Inc. consolidated balance sheet and consolidated
income statement as of and for the fiscal year ended
May 28, 1995. At this time, all information necessary
to furnish the General Mills, Inc. financial statements
referred to is not available. General Mills, Inc.
intends to file these financial statements on or
before approximately July 14, 1995.
(c) Exhibits
(2) Distribution Agreement dated as of May 12, 1995 between
General Mills, Inc. and Darden Restaurants, Inc.,
(including the Tax Agreement between the parties),
previously filed with the Securities and Exchange
Commission as Exhibit 2 of the Darden Restaurants,
Inc. Form 10 Registration Statement, File 1-13666.
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
GENERAL MILLS, INC.
Dated: June 9, 1995 By: /s/ Siri S. Marshall
Siri S. Marshall
Senior Vice President, General
Counsel and Secretary
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT dated as of May 12, 1995 by and
between General Mills, Inc. ("GMI"), a Delaware corporation, and
Darden Restaurants, Inc. ("Darden"), a Florida corporation and, as
of the date hereof, a wholly-owned subsidiary of GMI, and GMRI,
Inc. ("GMRI"), formerly known as General Mills Restaurants, Inc.,
a Florida corporation and, as of the date hereof, a wholly-owned
subsidiary of GMI.
WHEREAS, GMI has engaged in the restaurant business through
General Mills Restaurants, Inc. and other subsidiaries and
affiliates of GMI; and
WHEREAS, GMI has decided to consolidate its Restaurant
operations and assets into Darden and its wholly and part-owned
subsidiaries and to distribute the Common Stock of Darden on a one-
for-one basis to the holders of the Common Stock of GMI (the
"Distribution") ; and
WHEREAS, on or before May 28, 1995 (the "Distribution Date"),
GMI will transfer to the Agent for the benefit of the holders of
record of GMI Common Stock on a record date of May 15, 1995 (the
"Record Date"), without any consideration being paid by such
holders, a common share certificate of Darden which represents the
shares of Darden owned by GMI.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the Parties hereto agree as follows:
Section 1. The Distribution. On or prior to the Distribution
Date, GMI will deliver to Norwest Bank Minnesota, N.A. as
distribution agent (the "Agent") for the benefit of holders of
record of GMI Common Stock at the close of business on the Record
Date a share certificate representing the shares of Darden Common
Stock then owned by GMI together with an irrevocable proxy of
voting rights to the Agent. Prior to the Distribution Date, the
parties shall take such action with respect to Darden's Common
Stock as is required to complete the Distribution on the basis of
one share of Darden Common Stock for each share of GMI Common
Stock outstanding on the Record Date. GMI shall instruct the
Agent to distribute such Darden shares to holders of record of GMI
Common Stock as of the Record Date. All of the shares of Darden
so issued shall be fully paid and nonassessable.
Immediately prior to the Distribution Date, Darden shall
adopt a Rights Agreement in substantially the form filed with the
Securities and Exchange Commission (the "SEC") as an exhibit to
the Form 10 of Darden, and the Board of Directors of Darden shall
authorize a distribution of one Right to every share of
outstanding Common Stock, such distribution to occur prior to the
Distribution. Darden shall take all action necessary so that, at
the Distribution Date, the Articles of Incorporation and By-Laws
of Darden and all executive benefit plans shall be substantially
in the forms filed with the SEC as exhibits to the Form 10.
The Distribution shall be effective as of 11:59 p.m. on the
Distribution Date.
Section 2. Books, Records, Services and Access to
Information.
(a) For a period of up to twenty-four months from and after the
Distribution Date, each Party shall make available to the other
during normal business hours and in a manner which will not
unreasonably interfere with such Party's business, its financial,
tax, accounting, legal, employee benefits and such other staff and
services (collectively "Transitional Services") to the extent that the
same may be reasonably required in connection with the preparation
of tax returns, audits, claims, administration of employee benefit
plans and otherwise to assist in effecting an orderly transition
following the Distribution. Details regarding the original terms by
which Transitional Services shall be provided to Darden are found in
Appendix A, attached hereto and made a part hereof. To the extent
needed as to a particular service, the parties may agree to renew such
service prior to the expiration of the twenty-four month period.
(b) From and after the Distribution Date, GMI shall afford
Darden and its authorized accountants, counsel and other designated
representatives reasonable access (including access to persons or firms
possessing information) and, without cost to Darden, duplicating
rights during normal business hours to, or, at GMI's option, copies of,
all records, books, contracts, instruments, data and other information
(collectively, "Information") within GMI's possession relating to Darden,
insofar as such access or copies are required by Darden and Darden
shall afford to GMI and its authorized accountants, counsel and other
designated representatives reasonable access (including access to persons
or firms possessing information) and to GMI without cost, duplicating rights
during normal business hours to, or, at Darden's option, copies of,
Information within Darden's possession relating to GMI insofar as such
access or copies are required by GMI. Each of GMI and Darden shall
provide the other with such indices or descriptions of Information
as it may maintain. It is understood that each Party will bear its own
usual expenses in preparation of the Balance Sheet described in Section
11 hereof. Information may be required under this Section 2, without
limitation, for audit, accounting, claims, litigation and tax purposes,
as well as for purposes of fulfilling disclosure and reporting
obligations. In lieu of retaining any specific Information, either
Party may, in writing, offer to deliver such Information to the other
Party; if such offer is not accepted within ninety (90) days, the
offered Information shall be retained or destroyed in accordance with
the Record Retention Policy of GMI. If such offer is accepted, the
Party accepting delivery shall pay the out-of-pocket costs of the
delivery. Each Party shall maintain the Information in accordance with
the manner it treats similar material relating to its ongoing business.
(c) At all times from and after the Distribution Date, each Party
will use its commercially reasonable best efforts to make available to
the other, upon written request, its officers, directors, employees and
agents as witnesses to the extent that the same may reasonably be required
in connection with any legal, administrative or other proceedings in which
the requesting Party may from time to time be involved.
(d) Except as provided in (b) above, a Party providing Information,
Transitional Services or witnesses to the other hereunder shall be entitled
to receive from the recipient, upon the presentation of invoices therefor,
payments for such amounts relating to supplies, disbursements, salaries or
wages, and such other costs and out-of pocket expenses, as may be incurred
in providing such Information, Transitional Services or witnesses.
Invoices shall be due and payable within thirty (30) days of receipt.
Interest shall accrue on any unpaid amount at the rate of eight percent
(8%) per annum.
(e) GMI shall arrange for the transportation at its cost of
existing corporate records in its possession relating to the restaurant
operations included within the affiliated group of which Darden is the
parent corporation, including original corporate minute books, stock
ledgers and certificates, and corporate seals of each corporation included
in the affiliated group of Darden and all active agreements, deeds
to real property, active litigation files and filings with foreign
governments, if any, to the address set forth in Section 17 hereof.
GMI shall provide Darden, to the extent GMI maintains them, with lists
of trademarks, patents (design and mechanical) and copyrights of Darden
and its subsidiaries.
(f) Each Party agrees to indemnify and hold the other Party harmless
from and against any and all claims, damages, losses, liabilities and
out-of-pocket fees and expenses, including reasonable legal fees
("Losses") incurred or suffered by the other with respect to the
provision of Transitional Services hereunder except for claims
relating to grossly negligent acts or willful misconduct or
actions contrary to written instructions of the other Party.
Section 3. Indemnification.
(a) Effective as from the Distribution Date, Darden agrees to
indemnify and hold harmless GMI, its subsidiaries and each
person, if any, who controls GMI within the meaning of Section
15 of the Securities Act of 1933 or Section 20(a) of the
Securities Exchange Act of 1934 from and against any and all
losses, liabilities, claims, damages, costs and expenses
(including without limitation reasonable attorneys' fees and
any and all expenses reasonably incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim) arising out of or related in any
manner to any item set forth on Schedule A. Similarly, effective
as from the Distribution Date, GMI agrees to indemnify and hold
harmless Darden, its subsidiaries and each person, if any, who
controls Darden within the meaning of Section 15 of the Securities
Act of 1933 or Section 20(a) of the Securities Exchange Act
of 1934 from and against any and all losses, liabilities,
claims, damages, costs and expenses (including without
limitation reasonable attorneys' fees and any and all expenses
reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim)
arising out of or related in any manner to any items set forth on
Schedule B.
(b) If any action is brought or any claim is made against a Party
or controlling person in respect of which indemnity may be sought
("Indemnitee"), the Indemnitee shall, with reasonable promptness after
the receipt of information indicating that an action or claim is likely,
notify the Party from whom indemnification is sought (the
"Indemnitor") in writing of the institution of the action or the
making of the claim and the Indemnitor shall have the right, and
at the request of the Indemnitee, shall have the obligation, to
assume the defense of the action or claim, including the
employment of counsel. If the Indemnitor assumes the defense of
the action or claim, the Indemnitor shall be entitled to settle
the action or claim on behalf of the Indemnitee without the prior
written consent of the Indemnitee unless such settlement would, in
addition to the payment of money, materially affect the ongoing
business of the Indemnitee such as, by way of illustration only, a
consent judgment or injunction, in which event the Indemnitee may
not unreasonably withhold its consent. The Indemnitee shall have
the right to employ its own counsel, but the fees and expenses of
that counsel shall be at the expense of the Indemnitee unless (i)
the employment of that counsel shall have been authorized in
writing by the Indemnitor in connection with the defense of the
action or claim; (ii) the Indemnitor shall not have employed
counsel to have charge of the defense of such action or claim, or
(iii) such Indemnitee shall have reasonably concluded that there
may be defenses available to it which are different from or
additional to those available to the Indemnitor (in which case the
Indemnitor shall not have the right to direct any different
defense of the action or claim on behalf of the Indemnitee) in any
of which events such fees and expenses shall be borne by the
Indemnitor. The Indemnitee shall, in any event, have the right to
employ advisory counsel and other advisors at its own expense, and
shall be kept fully informed of the defense of any such action or
claim. Except as expressly provided above, in the event that the
Indemnitor shall not previously have assumed the defense of an
action or claim, at such time as the Indemnitor does assume the
defense of the action or claim, the Indemnitor shall not
thereafter be liable to any Indemnitee for legal or other expenses
subsequently incurred by Indemnitee in investigating, preparing or
defending against such action or claim. Anything in this Section
3(b) to the contrary notwithstanding, no Indemnitor shall be
liable for any settlement or any claim or action effected without
its written consent; provided, however, that if after due notice
the Indemnitor refuses to defend a claim or action, the Indemnitee
shall have the right to defend and/or settle such action, and the
Indemnitee shall not be precluded from making a claim against the
Indemnitor for such expenses and liabilities resulting from such
defense and/or settlement in accordance with this Section 3.
(c) Notwithstanding the foregoing provisions of this Section 3,
there may be particular actions or claims which reasonably could result
in both Parties being liable to the other under indemnification
provisions of this Agreement. In any of such events, the Parties
shall endeavor, acting reasonably and in good faith, to agree upon
a manner of conducting the defense of and any settling of the
action or claim with a view to minimizing the legal expenses and
associated costs that might otherwise be incurred by the Parties,
such as, by way of illustration only, agreeing to use the same
legal counsel.
(d) The indemnification provided for in this Section 3 shall
be subject, in addition to the other provisions of this Agreement,
to the following provisions:
(i) Any amount payable from GMI to Darden, and vice
versa, shall be offset against each other.
(ii) The indemnification provisions shall survive the
Distribution Date.
(iii) The indemnification provisions shall not,
except to the extent expressly stated otherwise in this
Section, inure to the benefit of any third party or parties.
By way of illustration only, an insurer who would otherwise
be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of
the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood
and agreed that no insurer or any other third party shall be
entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions.
Section 4. Tax Agreement. GMI and Darden have entered into
a Tax Agreement (attached as Attachment I hereto) regarding their
respective rights and obligations with respect to taxes of
Darden and its subsidiaries for all periods through the
Distribution Date and certain other tax-related matters. In the
event of a conflict between the terms of the Tax Agreement and the
terms of this Agreement, the terms of the Tax Agreement shall
govern, except as to the provisions of Section 1 hereof.
Section 5. Transfer of Corporations and Assets. Prior to
the Distribution Date, GMI and Darden shall use reasonable efforts
to cause the operations and assets (with corresponding
liabilities) of the Restaurant business of GMI and its affiliates,
including General Mills Canada, Inc., to be included as part of
Darden or its subsidiaries, other than Red Lobster Japan or
entities affiliated therewith; provided that the franchise
agreement between GMRI and Red Lobster Japan Partners shall remain
an asset of GMRI. Both Parties agree to take such action as may
be necessary, subsequent to the Distribution Date, to cause all
Restaurant-related assets and related liabilities, except as
provided above, to be properly conveyed to Darden or the
appropriate affiliate of Darden.
In the event that the transfer of all such assets (and
related liabilities) is not accomplished by the Distribution Date,
the parties agree as between GMI and Darden, that Darden shall
have de facto control and equitable ownership of the entities,
operations and assets intended to be transferred to Darden,
provided, however, that if any uncompleted steps financially
affect either GMI or Darden, the parties agree to equitably
resolve any such financial impact.
Except as expressly provided herein, Darden agrees to assume
and pay all contracts, obligations and liabilities associated with
the Restaurant operations and Restaurant entities included in
Darden and its subsidiaries (the "Darden Group"), whether accrued,
absolute, contingent or otherwise, and whether due or to become
due, including, without limitation, all obligations of GMI acting
as a guarantor of the obligations of the Darden Group, or employee
benefit plans sponsored by Darden or its subsidiaries, and all
obligations under leases and other executory contracts and
liabilities whether arising as a result of the transactions
contemplated hereby, existing on the date hereof or based on facts
or actions arising on or prior to the date hereof and the
Distribution Date, whether or not such obligations shall have been
disclosed herein, and whether or not reflected on the Combined
Balance Sheet of Darden as of May 29, 1994 or the Balance Sheet
prepared pursuant to Section 11 hereof. This Section 5 shall not
inure to the benefit of any third party or parties.
Section 6. Letters of Credit and Guaranties.
(a) Darden shall use its commercially reasonable best efforts to
cause the beneficiaries of GMI's letters of credit or other guaranties
related to the Restaurant operations or activities identified in
Schedule C (other than lease guaranties) which have not expired on
or prior to the Distribution Date, to accept, as soon as
practicable after the Distribution Date, substitute letters of
credit or guaranties issued for the account of Darden and to
release GMI's letters of credit or guaranties. If prior to such
substitution and after the Distribution Date hereof or in the
event no substitution of guarantors can be accomplished after the
Distribution Date, a draw is made on any or all of General Mills'
letters of credit or guaranties, Darden shall upon demand,
promptly (within 10 days) reimburse GMI for the amount actually
paid by GMI.
(b) Schedule C indicates those leases for real property of Darden
which have been guaranteed by GMI (the "Leases"). Darden agrees that
after the Distribution Date neither it nor its affiliates shall modify,
amend or extend any of the Leases so as to increase the
obligations or liabilities of GMI pursuant to those guaranties
without first obtaining the prior written approval of GMI, which
approval is subject to the provisions of this sub-section (b).
Darden further agrees that after the Distribution Date neither it
nor its affiliates shall default under or breach any of the Leases
so as to cause or give rise to any claims, actions, suits or
proceedings against GMI arising out of such guaranties and hereby
indemnifies and holds GMI harmless from and against all such
liabilities, costs and expenses, including attorney's fees,
associated therewith in accordance with Section 3 hereof. Darden
shall immediately notify GMI, in writing, of any allegation or
claims asserted in writing by any party which might give rise to
any liability or obligation of GMI under such guaranties.
(i) Darden agrees that with respect to those Leases set forth
on Schedule C whose current term does not expire until on
or after June 1, 2000, Darden shall, in the twelve month
period following the Distribution Date, use commercially
reasonable best efforts to cause a termination of the
related GMI guaranties. To the extent Darden is
unsuccessful, as of June 1, 1996, Darden shall cause to
be issued to GMI a Qualified Letter of Credit (as defined
below) with a maximum drawing amount equal to the full
amount of all remaining obligations under such Leases
where the GMI guaranty remains, and assuming exercise of
all renewal rights thereunder. Prior to the renewal of
any other Lease set forth on Schedule C, Darden shall use
commercially reasonable best efforts to cause a
termination of the GMI guaranty as of the date of
renewal. In the event any such individual GMI lease
guaranty is not cancelled, Darden agrees to notify GMI
within 30 days of the renewal of each such lease and
cause to be issued to GMI within 30 days thereafter a
Qualified Letter of Credit (as defined below) providing
credit support for all of its remaining obligations under
such Lease, assuming exercise of all renewal rights
thereunder.
(ii) The term "Qualified Letter of Credit" means an irrevocable,
transferable letter of credit issued to GMI by a bank
that is a AA Credit (as defined below), having terms
substantially identical to the terms described in
Schedule D hereto, with a term extending to the last
possible expiration date of the relevant Lease and with a
maximum drawing amount that shall equal the full amount
of all remaining obligations under such Lease, assuming
exercise of all renewal rights thereunder. In the event
of any change in the law affecting letters of credit
generally that affect the language in a Qualified Letter
of Credit, Darden shall, at the request of GMI, provide a
new Qualified Letter of Credit containing modifying
language as approved by GMI, which approval shall not be
unreasonably withheld. The language contained in the
letter of credit described in Schedule D hereto shall be
deemed to be approved by GMI.
(iii) The term "AA Credit" means a corporation or banking
association whose long-term debt obligations are rated AA- or
Aa3 or better by Standard & Poor's or by Moody's, respectively, or
their successors in interest that are "nationally
recognized statistical rating organizations".
(c) Within 30 days after a Change of Control of Darden (as
defined below), Darden agrees to cause to be issued to GMI a Qualified
Letter of Credit with a term extending to the last expiration date of the
Lease with the longest remaining term (assuming exercise of all
renewal terms thereof) and with a maximum drawing amount equal to
the aggregate amount of all obligations remaining under the
unexpired Leases (assuming exercise of all renewal terms thereof).
A "Change of Control" means
(i) if any person (including a group as defined in Section
13(d)(3) of the 1934 Act) becomes, directly or
indirectly, the beneficial owner of 15% or more of the
shares of Darden entitled to vote for the election of
directors;
(ii) as a result of or in connection with any cash tender offer,
exchange offer, merger or other business combination,
sale of assets or contested election, or combination of the
foregoing, the persons who were directors of Darden just
prior to such event cease to constitute a majority of
Darden's Board of Directors; or
(iii) the stockholders of Darden approve an agreement providing
for a transaction in which Darden will cease to be an
independent publicly-owned corporation or a sale or other
disposition of all or substantially all of the assets of
Darden occurs.
Section 7. Qualified Retirement Plans.
(a) Darden Qualified Plans. On or prior to the Distribution Date,
GMI shall adopt the appropriate amendments to the Pension Plan for Salaried
Employees of General Mills Restaurants, Inc. (the "Salaried Plan")
and the Pension Plan for Hourly Employees of General Mills
Restaurants, Inc. (the "Hourly Plan") to (i) effect a merger of
the Hourly Plan into the Salaried Plan as of May 31, 1995, (ii)
adopt the provisions relating to calculation of lump sum benefits
contained in the Retirement Protection Act of 1994, (iii) provide
for the continuation of such plan by Darden (or its designated
Affiliate) as contemplated herein and (iv) as necessary, provide
for the segregation and transfer of assets as contemplated herein.
On or prior to the Distribution Date, GMI shall adopt the
appropriate amendments to the Profit Sharing & Savings Plan of
General Mills Restaurants, Inc. (the "PSSP") to (i) provide for
the continuation of the PSSP by Darden (or its designated
Affiliate), (ii) eliminate the GMI Company Stock Fund as an
investment fund alternative on a prospective basis, (iii) provide
for a Darden Company Stock Fund as an investment fund alternative
on a prospective basis; and (iv) as necessary, provide for the
segregation and transfer of assets as contemplated herein.
Darden (or its designated Affiliate) shall adopt trust
entities with respect to the Salaried Plan, the Hourly Plan and
the PSSP (the "Darden Trust Entities"). Darden (or its designated
Affiliate) shall use its best efforts to take all necessary action
to maintain the qualified status of the Salaried Plan, the Hourly
Plan and the PSSP (the "Qualified Retirement Plans") under the
applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
On or before the Distribution Date, GMI shall cause the
trustee of the GMI Master Trust to transfer to the Darden Trust
Entities, assets equal to the fair market value of the assets of
the Qualified Retirement Plans.
(b) Transferred GMI Employees. With respect to Transferred GMI
Employees, the following shall apply:
(i) With respect to participation by Transferred GMI
Employees with accrued benefits under the Retirement Income
Plan of General Mills, Inc. (the "RIP"), no additional
benefit service shall be credited under the terms of the RIP
after the later of (i) the Distribution Date or (ii) the date
of transfer to Darden. GMI shall cause the RIP to be amended
to continue to credit Transferred GMI Employees with
eligibility service from the Distribution Date (or the date
of transfer to Darden) until the date a Transferred GMI
Employee is separated from service with Darden (or its
Affiliates). Such eligibility service shall be credited only
for purposes of vesting or satisfaction of any age and/or
service requirement for treatment as a vested deferred or
retired participant under the terms of the RIP. GMI shall
also cause the RIP to be amended on or before the
Distribution Date to provide that the Distribution shall be
treated as a termination of employment for purposes of
permitting distributions from the RIP on and after the
Distribution Date with respect to Transferred GMI Employees.
(ii) With respect to participation by Transferred GMI
Employees with account balances under the Voluntary
Investment Plan of General Mills, Inc. (the "VIP"), GMI shall
cause the VIP to be amended on or before the Distribution
Date to credit Transferred GMI Employees with eligibility
service from the Distribution Date (or the date of transfer
to Darden) until the date a Transferred GMI Employee is
separated from service with Darden (or its Affiliates). Such
eligibility service shall be credited only for purposes of
vesting or satisfaction of any age and/or service requirement
for treatment as a vested deferred or retired participant
under the terms of the VIP. GMI shall also cause the VIP to
be amended to provide that the Distribution shall be treated
as a termination of employment for purposes of permitting
distributions from the VIP on and after the Distribution Date
with respect to Transferred GMI Employees.
(c) Transferred Darden Employees. With respect to Transferred
Darden Employees, the following shall apply:
(i) With respect to participation by Transferred Darden
Employees in the Salaried Plan and the Hourly Plan, no
additional benefit service shall be credited on or after the
Distribution Date. Except as permitted by the Internal
Revenue Service pursuant to a Private Letter Ruling Request,
Transferred Darden Employees shall not be considered
terminated from service for purposes of such plans, however,
until the date of termination of employment from GMI (and its
Affiliates) and such plans shall continue to credit
eligibility service only for purposes of satisfaction of any
age and/or service requirement for treatment as a vested
deferred or retired participant under the terms of the plans.
(ii) With respect to participation by Transferred Darden
Employees in the PSSP, additional eligibility or vesting
service shall be credited on or after the Distribution Date
only for purposes of vesting or satisfaction of any age
and/or service requirement for treatment as a vested deferred
or retired participant under the terms of the PSSP. Except
as permitted by the Internal Revenue Service pursuant to a
Private Letter Ruling Request, Transferred Darden Employees
shall not be considered terminated from service under the
PSSP, however, until the date of termination from GMI (and
its Affiliates).
For purposes of this Section:
"Affiliate" means any entity which, directly or indirectly,
controls, is controlled by, or is under common control with, such
entity.
"Transferred GMI Employees" means all employees of Darden on
the Distribution Date who had formerly been employed directly by
GMI, and those employees of GMI who transfer to Darden within one
year immediately following the Distribution Date.
"Transferred Darden Employees" means all employees of GMI on
the Distribution Date who had formerly been employed directly by
Darden and those who transfer to GMI within one year immediately
following the Distribution Date.
(d) Deferred Compensation. Any liability of GMI (and any related
accrual) for any amounts deferred, pursuant to a cash deferral election
or individual agreement by any active employees of Darden or
Transferred GMI Employees on the Distribution Date under any
deferred compensation plan, including the Executive Incentive Plan
and the Compensation Plus Plan, except for amounts due or owing
under a stock matching or other stock payment provision of such
plans shall be assumed by Darden as of the Distribution Date. GMI
shall provide Darden with a list of such employees. All
liabilities of GMI (and any related accrual) related to deferred
compensation for GMI leave of absence, retired or terminated
employees as of the Distribution Date, together with all
liabilities of GMI for all active, leave of absence, retired and
terminated employees under any stock matching or other stock
payment provision of any deferred compensation or stock option
plan of GMI shall be retained and be paid by GMI.
(e) Health and Welfare Plans. Darden shall be responsible
for all medical, dental, disability and life insurance liabilities
for active, retired or terminated employees of Darden on the
Distribution Date. Any active employee of Darden on the Distribution
Date who, as of the Distribution Date, has an accrued benefit under
the Retirement Income Plan of General Mills, Inc. and is at least age
55 with 5 or more years of service shall continue to be eligible
for retiree medical benefits under GMI's retiree medical plan, and
may enroll in such coverage upon termination from Darden, under
the same terms and conditions as any other GMI employee who
retires at the same time, with similar age and service. Years of
service, for purposes of GMI's retiree medical plan, shall include
service to the date of separation of service from Darden and its
Affiliates. Any other Transferred GMI Employees with an accrued
benefit under the Retirement Income Plan of General Mills, Inc.
shall continue to earn eligibility service until separation from
service with Darden and its Affiliates for purposes of satisfying
any age and service requirements with respect to coverage under
GMI's retiree medical plans, and, if at the time of such
separation from Darden and its Affiliates, meets the then current
requirements for eligibility in GMI's retiree medical plans, such
individual may enroll in such coverage, under the same terms and
conditions as any other GMI employee who retires at the same time,
with similar age and service.
(f) Supplemental Benefits. Any liability of GMI (and related
accruals) for supplemental pension or supplemental savings plan benefits
related to individuals who are employed by Darden on the Distribution
Date, other than Transferred GMI Employees, shall be assumed by
Darden as of the Distribution Date. Liabilities associated with
Transferred GMI Employees who are not at least age 55 with 5 years
of service on the date of transfer to Darden shall also be assumed
by Darden as of the Distribution Date. Liabilities associated
with Transferred GMI Employees who are at least age 55 with at
least 5 years of service on the date of transfer to Darden shall
be retained by GMI, and paid according to the provisions of the
plans, as if retirement from GMI occurred on the date of transfer.
(g) Stock Options, Restricted Stock and Performance Units.
(i) Stock Options. Except as described below, active
employees of Darden who are holders of GMI stock options
shall retain an Adjusted GMI Stock Option subject to the
following adjustments to the exercise price and the number of
shares subject to the option and, in addition, shall receive
an option under the Conversion Plan to purchase Darden Common
Stock (the Adjusted GMI Stock Option and the Darden stock
option are together referred to as an "Actives Split Grant").
The aggregate gain of both options in the Actives Split Grant
will not exceed the aggregate gain that existed in the GMI
stock option prior to the Distribution and such gain will be
allocated between the Adjusted GMI Stock Option and the
Darden stock option on a 2-to-1 basis. The exercise price of
the Adjusted GMI Stock Option shall be determined by
multiplying the GMI option exercise price prior to the
Distribution by the GMI Stock Conversion Ratio. The number
of shares subject to the Adjusted GMI Stock Option shall
equal the number of shares subject to the GMI option prior to
the Distribution multiplied by .67 divided by the GMI Stock
Conversion Ratio. The exercise price of the Darden stock
option shall be determined by multiplying the GMI option
exercise price prior to the Distribution by the Darden Stock
Conversion Ratio. The number of shares of Darden Common
Stock subject to the Darden stock option shall equal the
number of shares subject to the GMI option prior to the
Distribution multiplied by .33 divided by the Darden Stock
Conversion Ratio.
Employees and retirees of Darden who received a GMI stock
option in connection with grants made on June 1, 1994 under
the GMI 1990 SRO Plan and employees of Darden who received a
GMI stock option on September 20, 1993 or September 19, 1994
under the GMI 1993 Plan shall have such GMI stock option
entirely converted into Darden stock options. For these
converted options, the exercise price of the Darden stock
option shall equal the exercise price of the General Mills
option prior to the Distribution, multiplied by the Darden
Stock Conversion Ratio and the number of shares subject to
the Darden stock option shall equal the number of shares
subject to the GMI option prior to the Distribution divided
by the Darden Stock Conversion Ratio.
Holders of GMI stock options who have retired from Darden
on or prior to the Distribution Date, except as to stock
options granted on June 1, 1994 under the GMI 1990 SRO Plan,
shall be entitled to make an election either (1) to retain an
Adjusted GMI Stock Option and receive a Darden stock option
where the aggregate gain on the existing GMI stock option is
split between the GMI stock option and the Darden stock
option in proportion to the market value of the separate
stocks (a "Retiree Split Option"), or (2) to forfeit the
outstanding GMI stock option and receive an option to
purchase Darden Common Stock. If the Retiree Split Option is
elected, the exercise price of the Adjusted GMI Stock Option
shall be determined by multiplying the GMI stock option
exercise price prior to the Distribution by the GMI Stock
Conversion Ratio. The number of shares subject to the
Adjusted GMI Stock Option shall equal the number of shares of
GMI common stock subject to the option prior to the
Distribution multiplied by the factor where the numerator is
the Per Share Pre-Split GMI Stock Price and the denominator
is the sum of (1) the Per Share Post-Split GMI Stock Price
and (2) the Per Share Darden Stock Price. The exercise price
of the Darden stock option shall be determined by multiplying
the General Mills option exercise price prior to the
Distribution by the Darden Stock Conversion Ratio. The
number of shares of Darden Common Stock subject to the Darden
stock option shall equal the number of GMI shares subject to
the Adjusted GMI Stock Option. If the Retiree Split Option
is not elected, the exercise price of the Darden stock option
shall equal the GMI stock option exercise price prior to the
Distribution multiplied by the Darden Stock Conversion Ratio
and the number of shares subject to the Darden stock option
shall equal the number of shares subject to the GMI option
prior to the Distribution divided by the Darden Stock
Conversion Ratio.
(ii) Performance Unit Accounts, Restricted Stock and
Restricted Stock Units. Performance unit accounts that are
currently associated with certain grants of GMI stock options
will be allocated between General Mills and Darden on the
same basis that the corresponding stock option is split or
converted. All unvested GMI restricted stock and RSU's shall
be cancelled on the last trading day on the New York Stock
Exchange prior to the Record Date. Holders of GMI restricted
stock or RSU's who are employed by Darden on the Distribution
Date shall have issued in their name or issued in book-entry
form in lieu of the cancelled restricted stock and RSU's a
number of shares of Darden restricted stock or RSU's equal to
the number of shares of unvested GMI restricted stock or
RSU's issued and outstanding in their name immediately prior
to cancellation divided by the Darden Stock Conversion Ratio
("Darden Converted Restricted Stock"). Holders of unvested
GMI restricted stock or RSU's who have retired from Darden on
or prior to the Distribution Date shall be entitled to make a
choice to have issued in their name or issued in book-entry
form either (1) Darden Converted Restricted Stock or (2) a
Retiree Split Stock Grant. The Retiree Split Stock Grant
shall consist of GMI restricted stock or RSU's and Darden
restricted stock or RSU's each covering the number of shares
which were subject to the GMI restricted stock or RSU's
immediately prior to cancellation.
Under the Conversion Plan, pursuant to which only rights
to Darden Common Stock are granted, the other terms and
conditions of the Darden stock options, restricted stock and
RSU's shall be the same as presently apply to the GMI stock
options, restricted stock and RSU's from which they are
derived, except that where the GMI Compensation Committee has
required the deposit of personally owned shares as a
condition to vesting of stock options, restricted stock or
RSU's, no additional shares shall be required to be placed on
deposit as a result of the adjustment in the number of
unvested options, restricted stock or RSU's held as a result
of the Distribution. Nevertheless, employees and retirees of
Darden may be required, as a condition to continued vesting
of Darden stock options, restricted stock and RSU's, to place
on deposit a number of Darden shares equal to the number of
General Mills shares currently required to be on deposit.
The number of shares of Common Stock which may be issued
under the Conversion Plan shall be determined by application
of the conversion formulas described above.
For purposes of this Section:
"Adjusted GMI Stock Option" means a GMI stock option which,
as a result of the Distribution, has been adjusted by the GMI
Compensation Committee as to its exercise price and/or the number
of shares of GMI common stock it covers, but which retains all
other terms and conditions of the GMI stock option from which it
was derived (except as to termination of employment, which, for
purposes of the Adjusted GMI Stock Option shall be termination of
employment from Darden, not GMI) such adjustment to each GMI stock
option being dependent on the number of corresponding Darden stock
options granted by Darden, if any.
"Actives Split Grant" means an Adjusted GMI stock option
together with a Darden stock option where the aggregate gain of
both options in the Active Split Grant will not exceed the
aggregate gain that existed in the GMI stock option prior to the
Distribution.
"Conversion Plan" means the Darden Stock Option and Long-Term
Incentive Conversion Plan approved by the Board of Directors of
Darden on April 12, 1995, and by GMI, as Darden's sole
shareholder, on February 27, 1995.
"Darden Stock Conversion Ratio" means the factor where the
numerator is the Per Share Darden Stock Price and the denominator
is the Per Share Pre-Split GMI Stock Price.
"GMI 1990 SRO" means the General Mills, Inc. 1990 Salary
Replacement Stock Option Plan.
"GMI 1993 Plan" means the General Mills, Inc. Stock Option
and Long-Term Incentive Plan of 1993.
"GMI Stock Conversion Ratio" means the factor where the
numerator is the Per Share Post-Split GMI Stock Price and the
denominator is the Per Share Pre-Split GMI Stock Price.
"Per Share Darden Stock Price" means the composite volume
weighted average price of the Darden Common Stock for the trading
days during the Pricing Period.
"Per Share Post-Split GMI Stock Price" means the composite
volume weighted average price of GMI common stock trading without
Darden for the trading days during the Pricing Period.
"Per Share Pre-Split GMI Stock Price" means the composite
volume weighted average price of GMI common stock trading with
Darden for the trading days during the Pricing Period.
"Pricing Period" means the period that ends on the
Distribution Date and commences on the later of (i) the second
trading day on which "when-issued" trading in the Darden Common
Stock takes place on the New York Stock Exchange and (ii) the
twentieth trading day prior to the Distribution Date.
"Retiree Split Option" means an Adjusted GMI Stock Option
together with a Darden stock option where the aggregate gain of
the existing GMI stock option is split between the Adjusted GMI
Stock Option and the Darden stock option in proportion to the
market value of the separate stocks.
"Retiree Split Stock Grant" means GMI restricted stock or
RSU's and Darden restricted stock or RSU's each covering the
number of shares which were subject to GMI restricted stock or
RSU's immediately prior to cancellation.
"RSU's" means restricted stock units.
Section 9. Insurance.
(a) All policies of liability, fire, workers' compensation
and other forms of insurance insuring the products, properties,
assets and operations of Darden will be maintained by GMI and shall
continue in full force and effect up to and through the Distribution
Date and shall be terminated effective 12:00 midnight on the Distribution
Date. GMI shall be responsible for obtaining such initial insurance
coverage for Darden from and after the Distribution Date in such
amounts as are agreed upon by the parties. Insurance coverages,
for purposes of this Section, do not include any insurance
coverages for plans described in Section 8, but do include ERISA
fidelity bonds and/or fiduciary insurance.
(b) With respect to public and products liability insurance plans,
Darden shall be liable for payment of all claims arising out of incidents,
known or unknown, reported or unreported, which were incurred prior to
the Distribution Date. Any reserves or similar credit under the
insured programs of public and products liability relating to
Darden for periods ending on or prior to the Distribution Date
shall be owned by and an asset of Darden. Such reserve or credit
shall be included as assets or liabilities of Darden as described
in Section 5 and any variance (charge or credit) to the reserves
shall be Darden 's responsibility.
(c) With respect to insured or self-insured workers' compensation
plans, Darden shall be liable for payment of benefits with respect to Darden
employees arising out of claims, known or unknown, reported or
unreported, which were incurred prior to the Distribution Date.
Any reserves or similar credits under the insured or self-insured
programs of workers' compensation relating to periods ending on or
prior to the Distribution Date shall be owned by and an asset of
Darden. Such reserves or credits shall be included as assets or
liabilities of Darden as described in Section 5, and any variance
(charge or credit) to the reserves shall be Darden 's
responsibility.
(d) With respect to automobile liability insurance plans, GMI shall
be liable for payment of claims arising out of incidents, known or
unknown, reported or unreported, which were incurred prior to the
Distribution Date. Any reserves or similar credit under the
insured program of automobile liability relating to periods ending
on or prior to the Distribution Date shall be GMI's responsibility
and an asset thereof.
Section 10. Banking and Other Arrangements. The
responsibility for bank accounts used by Darden and its Affiliates
shall be transferred from GMI to Darden as of or immediately prior
to the Distribution Date. Normal procedures will be followed for
receipts and disbursements funding prior to the Distribution Date
as set forth on Schedule F.
Section 11. Procedures for Closing and Delivery of Books and
Balance Sheet and Payment of Certain Amounts to GMI. As of the
Distribution Date, financial statements of Darden, which shall be
comprised of the consolidated accounting ledgers of Darden and its
subsidiaries and divisions as of the Distribution Date, will be
prepared jointly by Darden and GMI in accordance with the
timetable set forth on Schedule E hereto. GMI and Darden agree
that the principles for determining the Balance Sheet are as
follows:
(a) Total Assets shall be determined through the normal reporting
process using U.S. generally accepted accounting principles (GAAP) and
standard GMI definitions and accounting practice, consistently applied.
(b) Non-Interest Bearing Liabilities shall be determined
through the normal reporting process using GAAP and standard GMI
definitions and accounting practice. Accrued tax liabilities shall be
treated in accordance with the provisions of the Tax Agreement.
(c) Net Assets is the sum of total assets less non-interest
bearing liabilities. The Net Assets shall be determined in
accordance with the following capitalization procedure:
(i) Short and Long-Term Debt. GMI and GMRI have agreed
that GMRI will issue an amount of short-term debt equal to
20% of GMI's estimated consolidated Adjusted Funded Debt as
of May 26, 1995, plus $6 million, less the sum of the
following debt to be included on GMRI's balance sheet (1) $50
million attributable to the PSSP variable rate loan due
December 31, 2007, (2) $2.9 million attributable to the York
Steak House Systems, Inc. IRB due April 1, 2005, and (3) $.9
million attributable to the Blaine, Minnesota IRB due
February 1, 2005. "Adjusted Funded Debt" is defined as $79
million plus the sum of combined (or consolidated) notes
payable, current portion of long-term debt and long-term
debt, less arbitrage assets. The cash proceeds of the
borrowings, approximately $350 million, will be immediately
remitted by GMRI to GMI as payment of certain intercompany
liabilities prior to the date the stock of GMRI is
contributed by GMI to Darden.
(ii) Stockholders' Equity to be contributed to Darden
will equal the difference between the total Net Assets less
the Short and Long-Term debt on Darden's combined balance
sheet as of the Distribution Date.
Any amount due GMI by Darden and its subsidiaries related to
intercorporate accounts (other than for commercial transactions in
the ordinary course of business) or other promissory notes in
excess of the amount calculated in (i) will be capitalized by GMI.
Section 12. Parties. As used in this Agreement, the term
"Parties" shall include GMI and its successors, Darden and its
successors and their respective subsidiaries. Each of Darden and
GMI agrees that it shall cause each of its Affiliates to comply
fully with the terms of this Agreement. "Affiliate" shall mean
the foreign and domestic operations included in corporations which
will be members of the affiliated group of corporations of which
GMI or Darden, as the case may be, will be the common parent.
Section 13. Expenses. Except as otherwise provided in this
Agreement or agreed to by the Parties, all expenses in connection
with the Distribution shall be borne by GMI. The fees of GMRI in
connection with the GMRI bank credit facility and related
agreements and the commercial paper program will be borne by GMRI
and Darden.
Section 14. Other Provisions. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware, may not be assigned by either Party without the
written consent of the other, and shall bind and inure to the
benefit of the Parties hereto and their respective successors and
permitted assigns. This Agreement may not be modified or amended
except by an agreement in writing signed by the Parties hereto.
Section 15. Arbitration.
(a) Any controversy or claim arising out of or relating to this
Agreement, or the breach hereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") as such rules may be modified
herein.
(b) An award rendered in connection with an arbitration
pursuant to this Section shall, absent manifest error, be final and
binding and judgment upon such an award may be entered and enforced
in any court of competent jurisdiction.
(c) The forum for arbitration under this Section shall be agreed
upon by the Parties or, failing such agreement, shall be Minneapolis,
Minnesota.
(d) Arbitration shall be conducted by a single arbitrator selected
jointly by GMI and Darden. If within thirty (30) days after a
demand for arbitration is made, GMI and Darden are unable to agree
on a single arbitrator, three arbitrators shall be appointed. GMI and
Darden shall each select one arbitrator and those two arbitrators
shall then select within thirty (30) days a third neutral
arbitrator unaffiliated with either Party. In connection with the
selection of the third arbitrator, consideration shall be given to
familiarity with corporate divestiture transactions and experience
in dispute resolution between parties, as a judge or otherwise.
If the arbitrators selected by GMI and Darden cannot agree on the
third arbitrator, they shall discuss the qualifications of such
third arbitrator with the AAA prior to selection of such
arbitrator, which selection shall be in accordance with the
Commercial Arbitration Rules of AAA.
(e) If an arbitrator cannot continue to serve, a successor to
an arbitrator selected by GMI or Darden shall be also selected by
the same party, and a successor to the neutral arbitrator shall be selected
as specified in subsection (d) of this Section. A full rehearing
will be held only if the neutral arbitrator is unable to continue
to serve or if the remaining arbitrators unanimously agree that
such a rehearing is appropriate.
(f) The arbitrator or arbitrators shall be guided, but not
bound, by the Federal Rules of Evidence and by the procedural rules,
including discovery provisions, of the Federal Rules of Civil Procedure.
Any discovery shall be limited to information directly relevant to
the controversy or claim in arbitration.
Section 16. Limitation on Subsequent Activities. GMI agrees
on behalf of itself, its subsidiaries and affiliates, without any
separate bargained for consideration, but rather as an integral
part of the distribution of GMI's ongoing Restaurant business to
Darden and the Distribution provided for in this Agreement, that
it shall not directly, through a subsidiary or affiliate, or
otherwise, through June 1, 1998, open anywhere in the United
States or Canada full-service restaurants similar to the
restaurant concepts operated by Darden on the Distribution Date.
GMI acknowledges that the remedy at law for any breach of the
foregoing covenant would be inadequate and in the event of any
such breach Darden shall be entitled to injunctive relief.
Section 17. Notices. Any notice, demand, claim or other
communication under this Agreement shall be in writing and shall
be deemed to have been given upon the delivery or mailing thereof,
as the case may be, if delivered personally or sent by certified
mail, return receipt requested, postage prepaid, to the Parties at
the following addresses (or at such other address as a Party may
specify by notice to the other):
If to GMI, to: If to Darden
Restaurants, Inc. or GMRI, to:
General Mills, Inc. Darden Restaurants, Inc.
Number One General Mills Boulevard 5900 Lake Ellenor Drive
Minneapolis, MN 55426 Orlando, Florida 32809
Attn: General Counsel Attn: General Counsel
Fax: (612) 540-3302 Fax: (407) 245-5380
IN WITNESS WHEREOF, the Parties hereto have executed and
delivered this Agreement as of the date first above written.
GENERAL MILLS, INC.
By: /s/ Mark H. Willes
Name: Mark H. Willes
Title: Vice Chairman
DARDEN RESTAURANTS, INC.
By: /s/ Joe R. Lee
Name: Joe R. Lee
Title: Chairman and Chief Executive Officer
GMRI, INC.
By: /s/ Jeffrey J. O'Hara
Name: Jeffrey J. O'Hara
Title: Co-President
<PAGE>
APPENDIX A
TRANSITION SERVICES
SERVICES PROVIDED BY GENERAL MILLS, INC. TO DARDEN RESTAURANTS, INC.
Department Services Provided To Expected Date Cost Estimate Or Billing
Providing Darden Restaurants, Service Will Procedure*
Service Inc. Terminate
Risk Premium Allocations 2 Years Hourly Rate--Rule #2
Management for Workers Comp
Ongoing analysis
Tax Prepare and file tax 3/96 for F95 None-unless GMI files
returns return the F96 return
Audit management Through audit of None
F95 return.
Tax Planning and Approx 1/31/96 As defined in Tax
Consulting As requested Service Agreement
thereafter
Property Tax Support Approx 12/31/95 As defined in Tax
As requested Service Agreement
thereafter
Compen- Stock plans/ As requested Hourly Rate--Rule #2
sation Restricted stock
matching
Health Administer DRI self 1/1/96 ~$9.15/Handled Claim or
Claim Svc. insured medical and ~$1830M
dental benefit plans Rule #1 Applies
Payroll Restaurant pension 1/1/96 $19.5M--assuming DRI
payroll processing. handles tax filings and
completes transfer by
1/1/96. (Service
available after this
date at add'l cost.)
Employee Profit Sharing and 6/1/96 PSSP Support: Ongoing
Benefits Savings Plan (PSSP) support @ $160M for
Recordkeeping system, hardware and $27M for
programming, system staff. System
operations, programming support
calculation of provided @ hourly rates
returns, transfer as outlined in Rule # 2
letters, printing of below. DRI is fully
checks, stop responsible for the
payments, bank $187M in system and
account staff costs in F96.
reconciliation, tax (Service beyond 5/31/96
forms,5500 filing and @ add'l cost.)
plan accounting.
Benefit planning and As requested Hourly Rate--Rule #2
consulting
Pension plan 6/1/96 Hourly Rate--Rule #2
accounting, general
ledger, financial
stmts, transfer
letters enroll
retirees on BPA and
file 5500's
Resolve health and Not before $12M covers service
dental claim 1/1/96 through 5/31/96.
eligibility issues
Retiree medical-- Not before Hourly Rate--Rule #2
provide data to 1/1/96
actuary and
coordinate with
accountants
Track benefits for Indefinite None
former DRI EE's at
GMI and former GMI
EE's at DRI
*General Pricing Rules
1) Per unit rates and/or expense assignments to DRI assume
"fully loaded" cost plus 5% to cover general overhead expense.
2) Ad hoc projects/consulting services to be charged at 2X the
salary rate of individuals providing the service plus any out-
of-pocket expense.
<PAGE>
APPENDIX A (CONTINUED)
TRANSITION SERVICES
SERVICES PROVIDED BY GENERAL MILLS, INC. TO DARDEN RESTAURANTS, INC.
Department Services Provided To Expected Estimated Amount After Spin-Off
Providing Darden Restaurants, Date
Service Inc. Service
Will
Terminate
Benefit PSSP ESOP loans 2 years $50M/year
Finance Ongoing analysis
Pension Fund 2 years .15% of Pension Assets
Investment Mgmt/Admin
Savings Plan 2 years US Equity Fund @ .10% of
Investment PSSP Assets in Fund.
Mgmt/Admin(Not International Fund @ .10% of
including ESOP and PSSP Assets in Fund. Fixed
Darden Company Stock Fund @ .15% of PSSP Assets
Fund) in Fund. Treasury Fund @
.15% of PSSP Assets in Fund.
PSSP ESOP Restructure 1 year $35M one time project
Project charge.
Foundation Investment 2 years .15% of Foundation Assets.
Fund Mgmt.
Cash Analyze and implement Approx Hourly Rate-Rule #2
Management short and long term 12/1/95
funding strategies
Develop and assist Approx Hourly Rates-Rule #2
in SEC shelf 9/1/95
registration/filing
for long term debt
Provide foreign Approx Hourly Rates-Rule #2
exchange hedging 12/1/95
advice
Law Trademark legal Approx Actual time @ $130/hr
services 12/1/95
Advertising and menu Approx Actual time @ $130/hr
contract review 12/1/95
Information Electronic Mail Review None
Systems Quarterly
Marketing Nutrition /Menu Up to 2 Hourly Rates-Rule #2
Services Analysis Years
General Pricing Rules
1) Per unit rates and/or expense assignments to DRI assume
"fully loaded" cost plus 5% to cover general overhead expense.
2) Ad hoc projects/consulting services to be charged at 2X the
salary rate of individuals providing the service plus any out-
of-pocket expense.
<PAGE>
Recap of Proposed
Tax Service Agreement
GMI will provide the equivalent of three full-time property
tax employees through October 1, 1995 and the equivalent of one
full-time employee through December 31, 1995 to maintain property
tax support for Darden.
Nick Watz will supervise the Darden Property Tax function
while on GMI's payroll through October 1, 1995.
Bob Faisant will supervise GMI's FY95 consolidated Federal
return preparation and the IRS audit process from May 29 to
January 31, 1996 while on Darden payroll.
Underlying assumption is that both persons will spend 50% of
their time on Darden business and 50% of their time on GMI
business.
The net fee payable to GMI by Darden is $85,000.
Darden will pay all travel, outside professional fees and
similar out of pocket expenses incurred in performance of Darden-
related services specified in the Agreement.
The fee amount would be modified only if there is a material
change in the extent of services provided beyond that specified
in the Agreement.
If Bob Faisant's services and travel are requested after
January 31, 1996 in connection with the FY95 Federal return
filing or audit issues, GMI will reimburse Darden for the travel
costs and Mr. Faisant's time on an hourly basis at a rate to be
negotiated.
Similarly, if Mr. Watz's services and travel are requested
after October 31, 1995 in connection with GMI property tax
appeals or similar issues, GMI will reimburse Darden for the
travel costs and Mr. Watz's time on a hourly basis at a rate to
be negotiated.
<PAGE>
SCHEDULE A
Items with respect to which Darden will indemnify GMI and its
affiliates and subsidiaries in accordance with Section 3 of this
Distribution Agreement:
(1) All claims and liabilities arising out of or connected
with the Restaurant business and activities conducted by Darden
and its predecessors and affiliates conducting the Restaurant business
of GMI and its affiliates and subsidiaries, as such business has been
conducted in the past, is currently conducted or may in the future
be conducted, whether or not such claims are asserted prior to the
Distribution. For purposes of this item, the Restaurant business
and activities conducted by Darden shall include the Restaurant
business and activities conducted by Darden, its subsidiaries, and
its affiliates who will not be affiliates of GMI after the
Distribution, excluding Red Lobster Japan.
(2) Any liability arising out of GMI's guaranties of Darden
obligations, obligations of Darden's subsidiaries, or obligations
of employee benefit plans sponsored by Darden or its subsidiaries,
or obligations of General Mills Canada, Inc. as they relate to the
Canadian restaurant business or activities.
<PAGE>
SCHEDULE B
Items with respect to which GMI will indemnify Darden in
accordance with Section 3 of the Distribution Agreement:
All claims and liabilities arising out of or connected with
the business conducted by GMI, except the Restaurant business
previously conducted by GMI and its affiliates and subsidiaries
including Darden, and to be conducted by Darden and its affiliates
and subsidiaries, as such business has been conducted in the past,
is currently conducted or may in the future be conducted, whether
or not such claims and liabilities are asserted prior to the
Distribution; provided however that the indemnification shall not
apply insofar as any such claims and liabilities are based upon
acts or omissions of Darden or its subsidiaries sufficient to give
rise to an action directly against Darden or its subsidiaries and
not indirectly against Darden or its subsidiaries by reason of
Darden's status (or the status of its subsidiaries) as a
subsidiary of GMI.
<PAGE>
SCHEDULE C
Obligations of Darden Group Guarantied by GMI
$900,000 City of Blaine, Minnesota Industrial Development
Revenue Bond (General Mills Restaurants, Inc.)
$2,950,000 Franklin County, Ohio Industrial Revenue Bonds
(York Steak House Systems, Inc.)
$50,000,000 Remarketed ESOP Notes due December 31, 2007
Profit Sharing & Savings Plan of General Mills
Restaurants, Inc.
$540,000 (approximately) Loan by Sun Bank N.A. to Roseville
Good Earth Properties
Letters of Credit
Citibank, N.A. (GMRI)
Canadian Standby LCs (see attached)
<PAGE>
CANADIAN STANDBY L/C'S
By Bank and Expiry Date
Issue Expiry Value
Store L/C # Date Bank Date (CAD)
RL #168 P69171TO4092 R 94/05/11 Royal 95/06/09 $10,000
OG #343 P69190TO4092 R 94/05/11 Royal 95/06/09 $10,000
SEE END P70902TO4092 R 94/06/21 Royal 95/06/20 $60,000
OG #308 P70903TO4092 R 94/06/21 Royal 95/06/20 $11,000
RL #170 P77740TO4092 R 94/12/14 Royal 95/12/13 $10,000
OG #309 T-352401 R 93/04/29 CIBC 95/04/28 $10,000
OG #316 T-345778 R 92/05/20 CIBC 95/05/19 $9,200
RL #174 T-325833 AC 90/05/25 CIBC 95/05/25 $10,000
OG #313 T-334310 R 91/01/21 CIBC 96/01/20 $2,015
RL #119 T-310481 EV 86/03/04 CIBC 98/12/31 $1,300
RL #105 T-310467 EV 85/09/17 CIBC 98/12/31 $6,500
RL #114 T-310474 EV 86/01/27 CIBC 98/12/31 $3,500
RL #123 T-310482 EV 86/03/27 CIBC 98/12/31 $4,000
RL #121 T-310478 EV 86/03/04 CIBC 98/12/31 $5,300
RL #118 T-310475 EV 86/03/04 CIBC 98/12/31 $3,550
RL #120 T-310479 EV 86/03/04 CIBC 98/12/31 $3,000
RL #101 T-310498 EV 86/01/30 CIBC 98/12/31 $3,000
OG #305 T-328173 EV 90/07/16 CIBC 99/12/31 $3,000
RL #116 T-337145 EV 91/05/27 CIBC 99/12/31 $3,300
RL #115 T-321686 EV 90/01/26 CIBC 99/12/31 $1,000
RL #103 T-337159 EV 91/05/29 CIBC 99/12/31 $4,000
OG #313 T-336673 EV 91/05/02 CIBC 99/12/31 $15,000
RL #129 T-337161 EV 91/05/29 CIBC 99/12/31 $3,000
RL #129 T-337025 EV 91/05/22 CIBC 99/12/31 $3,065
RL #126 T-337024 EV 91/05/05 CIBC 99/12/31 $2,300
RL #113 T-321684 EV 90/01/26 CIBC 99/12/31 $2,000
RL #136 T-337265 EV 91/06/03 CIBC 99/12/31 $2,000
RL #134 T-337352 EV 91/06/06 CIBC 99/12/31 $1,400
Total Active Canadian L/C $202,430
<PAGE>
<TABLE>
Restaurant Lease Guaranties by GMI
<CAPTION>
STORE LOCATION LEASE CURRENT RENT CURRENT TERM EXPIRE
<S> <C> <C> <C> <C>
0062 Topeka, KS LAND 18,240.00 4/16/97 (3rd option, (4) (5) Yr. Remains)
0063 Springfield, MO GSUB 58,681.20 7/13/97 Final Option
0067 Memphis, TN LAND 60,000.00 6/30/97 Initial term, No Options
0069 Overland Park, KS GBLD 59,199.00 10/22/98 (2nd option, (1) (5) Yr. Op Remains)
0084 Dallas, TX LAND 74,447.52 6/4/98 (1st option, (1) (5) Yr. Op Remains)
0091 Tucker, GA LAND 62,522.28 8/31/98 (1st Option, (3) (5) Yr. Op Remains)
0093 Cincinnati, OH LAND 33,936.00 11/16/98 (1st Option (2) (5) Yr. Op Remains)
0181 St. Charles, MO LAND 24,000.00 6/30/96 (Initial term, (3) (5) Yr. Op Available)
0218 Wyomissing, PA LAND 24,000.00 12/31/98 (Initial Term, No Options)
0236 Lincoln, NE LAND 27,900.00 4/5/97 (Initial Term, (3) (5) Yr. Op Available)
0241 Philadelphia, PA LAND 30,000.00 4/25/97 (Initial Term, (3) (5) Yr. Op Available)
0247 Syracuse, NY LAND 22,761.01 w/% 2/27/96 (1st Option, (4) (5) Yr. Op Remains)
0249 Bloomington, MN GBLD File Missing - Mail Message Sent - No Responses -
0265 Lanham, MD LAND 44,000.00 5/21/99 (Initial Term (3) (5) Yr. Op Available)
0267 Iselin, NJ (Woodbridge) GSUB 71,947.40 12/30/03 (In Option, None Remain)
0268 Baldwin, NY LINE 94,714.99 w/% 3/19/99 (In Option, None Remain)
0269 Roanoke, VA LAND 40,000.00 12/17/98 (Initial Term, (3) (5) Yr. Options Available)
0279 Columbia, SC LAND 26,400.00 w/% 7/26/99 (Initial Term, (2) (5) Yr. Options Available)
0313 Hicksville, NY LAND 66,000.00 6/30/01 (Initial Term, No Options Available)
0324 Akron, OH LAND 31,640.00 7/26/96 (Initial Term, (4) (5) Yr. Op Available)
0339 Las Vegas, NV GSUB 86,250.00 2/11/97 (1st Option, (1) (5) Yr. Op Remains)
0366 Niles, OH LAND 22,585.00 7/4/99 (1st Option, (3) (5) Yr. Op Remains)
0369# Tucson, AZ PAD 59,376.56 9/30/97 (Initial Term, (2) (5) Yr. Op Available)
0374* Valley Stream, NY LAND 53,813.50 6/20/04 (Initial Term, (2) (5) Yr. Op Remains)
0379 South Plainfield, NJ SBLD 97,682.85 5/31/03 (Initial Term, Option to 4/29/09 Available)
0382 San Jose, CA LAND 48,000.00 3/24/98 (Initial Term, (3) (5) Yr. Op Available)
0396 Harrisburg, PA LAND 50,000.00 4/5/97 (Initial Term, (1) (6) & 2 (5) Yr. Op Available)
0398 Annapolis, MD LAND 79,343.37 10/31/99 (Initial Term (3) (5) Yr. Op Available)
0414 Omaha, NE LAND 40,000.00 3/4/2000 (Initial Term (3) (5) Yr. Op Available)
0415 Charleston, WV LINE 110,068.00 2/3/96 (Initial Term, (3) (5) Yr. Op Available)
0420 York, PA LINE 72,091.34 3/17/96 (Initial Term, (2) (5) Yr. Op Available)
0429 Pittsburgh, PA SPACE 122,667.17 8/25/2001 (Initial Term, (2) (5) Yr. Op Available
1002 Orlando, FL(PARKING) PARKI 16,000.00 10/31/2003 No options
1004 Daytona Beach, FL LAND 60,100.36 2/7/2008 (1) (5) Yr. Option Available
1016 City of Industry, CA LAND 52,500.00 2/28/2008 (2) (5) Yr. Options Available
1017 Manhattan Beach, CA LAND 96,000.00 10/31/2001 (2) (5) Yr. Options Available
1018 Torrance, CA SPACE 150,000.00 3/31/2002 No Options
1031 Columbus, OH LAND 30,000.00 2/28/2000 (2) (5) Yr. Options Available
</TABLE>
<PAGE>
SCHEDULE D
[Bank Letterhead]
[date]
Irrevocable Standby Letter of Credit Number ____
General Mills, Inc.
Number One General Mills Boulevard
Minneapolis, MN 55426
Attn: General Counsel
Ladies and Gentlemen:
For the account of Darden Restaurants, Inc., a Florida corporation
("Darden"), we hereby establish in your favor our Irrevocable
Letter of Credit No. ___, whereby we hereby irrevocably authorize
you to draw on us a sum up to but not exceeding U.S.
$_________________________________________ (___________________
Dollars) (as said amount may be reduced from time to time as
provided below), available by one or more drawings hereunder made
at any time during the period after the date hereof to and
including the close of business on _____, against the following
documents presented at our Letter of Credit Department at the
address set forth above. Documents required:
1. A Drawing Certificate in the form of Exhibit A attached; and
2. A Sight Draft: (a) drawn by and payable to you on us; (b)
bearing the same Letter of Credit number as the number of this
Letter of Credit; and (c) dated the same date as the Drawing
Certificate referred to in (1) above.
Any drawing under this Letter of Credit shall reduce the
maximum amount set forth above on a dollar for dollar basis.
This Letter of Credit has been issued in connection with the
Distribution Agreement dated May 12, 1995 between General Mills,
Inc. and Darden Restaurants, Inc.
This Letter of Credit and the Exhibits and Schedules attached
hereto set forth in full the terms or our undertaking, and such
undertaking shall not in any way be modified, amended or amplified
by reference to any other document whatsoever.
This letter shall be governed by, and construed in accordance
with, the terms of the Uniform Customs and Practice for
Documentary Credits (1983 Revisions), International Chamber of
Commerce Publication No. 290.
Communications with respect to this Letter of Credit shall be
addressed to us at the address set forth above, specifically
referring to the number of this Letter of Credit.
We hereby engage with you that all drafts drawn under and in
compliance with the terms of this Letter of Credit will be duly
honored if drawn and presented for payment at this office on or
before the expiration date of this Letter of Credit. */
Very truly yours,
[Bank]
By
Vice President
___________________________
*/ The letter of credit shall not contain (i) any statement or
provision permitting the issuing bank to pay any amount to
General Mills other than upon demand of General Mills, or (ii)
any other provisions or terms which would vary substantially
from the terms of this Schedule D to the Agreement. Any
letter of credit which contains any such statement, provisions
or terms shall not be considered in the form of Schedule D to
the Agreement and may not be used as a replacement letter of
credit except with the consent of General Mills, which consent
may be withheld at General Mills' sole discretion.
<PAGE>
EXHIBIT A to Letter of Credit
Drawing Certificate
The undersigned individual, a duly authorized Vice President or
other duly authorized officer of General Mills, Inc., a Delaware
corporation ("GMI"), hereby certifies on behalf of GMI as follows
with respect to that certain Letter of Credit No. ____ dated
______________, ____ (the "Letter of Credit") issued by
_____________ (the "Bank") in favor of GMI in connection with the
Distribution Agreement dated May 12, 1995, as it may be amended
from time to time (the "Agreement") between GMI and Darden
Restaurants, Inc., a Florida corporation ("Darden"). All
capitalized terms used but not defined herein are used with the
meanings specified in the Agreement.
1. An event has occurred which requires Darden to make a cash
payment under Section 6 of the Agreement and the date on which
such payment was due has passed.
2. The amount of the Draft presented with this Certificate does
not exceed either (i) the Maximum Amount available to be drawn
under the Letter of Credit as the same may have been increased or
reduced from time to time or (ii) the aggregate unpaid amount due
and owing to GMI pursuant to the Agreement.
IN WITNESS WHEREOF, this Certificate has been executed this ___
day of ________________, 19____.
GENERAL MILLS, INC.
By:
<PAGE>
SCHEDULE E
Effective Date for Distribution May 28, 1995
Income Statement and Balance Sheet June 7, 1995
due in Minneapolis for all reporting units
Final Balance Sheet adjustments recorded June 9, 1995
AARs Supporting all 5/28/95 financial statements June 19, 1995
due in Minneapolis
Consolidated Distribution Date Balance Sheet and
Income Statement finalized June 26, 1995
Note: Errors or accrual adjustments discovered after June 7 (for
income statement) and June 9 (for balance sheet) will be
absorbed by the entity associated with the item.
<PAGE>
SCHEDULE F
Cutoff Procedures at the Distribution Date
In general, normal cutoff procedures under generally accepted
accounting principles (GAAP) and standard GMI practices and
procedures shall be followed at the Distribution Date with respect
to cash (including credit card receipts) and inventories (and
related sales, receivables and payables).
Cash and Credit Card Receipts
General Rule: All receipts up to and including the Distribution
Date should be considered old GMI business and
recorded as such. All receipts after the
Distribution Date should be considered new Darden
business and recorded as such.
Cash Disbursements
General Rule: All disbursements made up to and including the
Distribution Date should be considered old GMI
business and recorded as such. All disbursements
made after the Distribution Date should be
considered new Darden business and recorded as
such.
A disbursement should be considered made when the
related check has been "cut" and mailed.
Disbursement Replenishment
(funding): Funds need to replenish disbursement account bank
clearings through the Distribution Date will be
recorded as old GMI business. Funding for checks
clearing the banks after the Distribution Date
should be considered new Darden business and
recorded as such.
Inventory Receipts
General Rule: All inventory items physically received up to and
including the Distribution Date should be
considered as owned inventory and the related
payable recorded as of the Distribution Date.
Inventory items physically received after the
Distribution Date should be considered new Darden
business and recorded as such.
Inventory Shipments
General Rule: All inventory shipped to customers up to and
including the Distribution Date should be
considered as a sale and the inventory removed from
the books and the related sale and receivable
recorded as of the Distribution Date. All
inventory shipped after the Distribution Date
should be considered new Darden business and
recorded as such.
Note: Any exceptions or variance from these cutoff procedures must
be approved in advance by General Mills' Senior Vice President,
Financial Operations.
<PAGE>
TAX AGREEMENT
AGREEMENT made this 12th day of May, 1995, by and
between General Mills, Inc. ("GMI"), a Delaware
corporation, and Darden Restaurants, Inc. ("DARDEN"), a
Florida corporation.
WHEREAS, GMI and DARDEN have entered into a
Distribution Agreement dated as of May 12, 1995 (the
"Distribution Agreement"), providing for the distribution
by GMI of the common stock of DARDEN to the stockholders of
GMI as of the close of the day on the Distribution Date,
and setting forth the terms and conditions which will
govern certain relationships between the parties; and
WHEREAS, the income of DARDEN and its subsidiaries
will, through and including the Distribution Date, be
included in the GMI consolidated federal income tax return
for the GMI fiscal year ending May 28, 1995; and
WHEREAS, GMI and DARDEN desire to set forth their agreement
with respect to the portion of the federal, foreign, state,
and local taxes incurred by the affiliated group or its
members for all taxable periods beginning prior to the
Distribution Date which is attributable to each of them and
their subsidiaries (including the effect on the tax
liability for such prior periods of the carryback of
certain tax attributes of DARDEN and its subsidiaries which
may arise in taxable periods beginning after the
Distribution Date):
NOW, THEREFORE, in consideration of their mutual promises,
the parties hereby agree as follows:
1. Definitions.
(a) This Agreement is the Tax Agreement referred
to in Section 4 of the Distribution Agreement, is the sole
agreement between the parties on the subject matter and all
prior agreements, written or unwritten are hereby
terminated.
(b) As used in this Agreement:
(1) "Affiliated Group" shall mean an
affiliated group of corporations within the meaning of Code
Section 1504(a) for the taxable period in question.
(2) "Code" shall mean the Internal Revenue
Code of 1986, as amended, and successors thereto.
(3) "Deferred Income Taxes" means deferred
Federal, state, and local income taxes and deferred
domestic franchise taxes based on income, computed under
GAAP.
(4) "Distribution" shall mean the
distribution by GMI, pursuant to the Distribution
Agreement, of the ownership of the DARDEN Common Stock to
holders of GMI Common Stock.
(5) "Distribution Date" shall mean the date
on which GMI will distribute the ownership of the DARDEN
Common Stock to holders of GMI Common Stock pursuant to the
Distribution Agreement.
(6) "Final Determination" shall mean the
final resolution of liability for any tax for a taxable
year, including any related interest or penalties, by: (A)
Internal Revenue Service (`IRS") Form 870-AD (or any
successor form thereto), on the date of acceptance thereof
by or on behalf of the IRS Commissioner, or by a comparable
agreement or form under the laws of other jurisdictions;
except that a Form 870-AD or comparable agreement or form
that reserves the right of the taxpayer to file a claim for
refund and/or the right of the taxing authority to assert a
further deficiency shall not constitute a "Final
Determination"; (B) a decision, judgment, decree, or other
order by a court of competent jurisdiction, which has
become final and unappealable; (C) a closing agreement or
offer in compromise under Code Section 7121 or 7122, or a
comparable agreement or form under the law of any other
jurisdictions; (D) any allowance of a refund or credit in
respect of an overpayment of tax, including any related
interest or penalties, but only after the expiration of all
periods during which such refund may be recovered
(including by way of offset) by the governing jurisdiction;
or (E) any other final disposition by reason of the
expiration of the applicable statute of limitations.
(7) "Foreign Affiliate" shall mean any
corporation which, but for the provisions of Code Section
1504(b), would be included in an Affiliated Group, and any
partnership in which such corporation has an ownership
interest.
(8) "Foreign Income Taxes" shall mean any
tax imposed by any country other than the United States or
by any possession of the United States (including all
related interest and penalties), of a character which is
allowable as a credit under Code Section 901 et seq.
(relating to foreign tax credits).
(9) "GAAP" shall mean U.S. generally
accepted accounting principles applied in a manner
consistent with the practices of the GMI Affiliated Group
for the applicable period.
(10) "GMI Affiliated Group" shall mean, for
each taxable year, the affiliated group of corporations,
within the meaning of Code Section 1504(a), of which GMI is
the common parent.
(11) "GMI Group" shall mean, with respect to
any taxable period, the corporations that were members of
the GMI Affiliated Group during such period, exclusive of
the corporations that are included in the Restaurant
Affiliated Group after the Distribution Date.
(12) "Other Taxes" shall mean the liability
for all federal, state and local taxes (such as sales, use,
ad valorem, special assessments, capital stock, automobile
registration, employment, documentary transfer taxes or
reassessments, imposts, duties, occupation, premium, land
value, real property, excise and franchise not based on
income taxes), including any related interest or penalties,
other than (A) the Pre-Distribution Tax Liability, and (B)
Foreign Income Taxes.
(13) "Pre-Distribution Tax Liability" shall
mean the liability (determined by excluding the allocation
of any tax credit carryovers to the Restaurant Affiliated
Group and including, in the case of qualified defined
benefit plans of the Restaurant Group, the tax effect of
all contributions, to the maximum extent allowable as a
deduction under Code Sections 404 and 412 and the
applicable regulations thereunder as determined by GMI,
made on or before February 15, 1996 for plan years
beginning on or before Distribution Date and, in the case
of qualified defined contribution plans of the Restaurant
Group, the tax effect of all contributions attributable to
services performed prior to the Distribution Date) of
members of the GMI Affiliated Group for federal, state, and
local income taxes and domestic franchise taxes based on
income, including any related interest and penalties for
all taxable periods ending on or before the Distribution
Date, whether such liability has been previously assessed
in whole or in part or is assessed in whole or in part
after the date hereof, and whether such liability is or was
imposed on the GMI Affiliated Group collectively or on any
members of such Group separately. In addition, the term
"Pre-Distribution Tax Liability" includes (a) the Ohio tax
liability for 1995 and 1996 using income for taxable
periods ending on or before the Distribution Date, (b) the
Michigan Single Business Tax liability for any taxable
period ending on or before the Distribution Date, (c) the
Illinois Replacement Tax liability for any taxable period
ending on or before the Distribution Date, (d) the Texas
Corporation Franchise Tax liability for any taxable period
ending on or before the Distribution Date, and (e) the
State of California franchise tax which uses income for any
taxable period that ends on or before the Distribution
Date.
(14) "Record Date" shall mean a record date
of May 15, 1995 on which the common share certificates of
DARDEN, representing the shares of DARDEN owned by GMI, are
transferred to an agent for the benefit of the holders of
record of GMI Common Stock without any consideration being
paid by such holders.
(15) "Restaurant Affiliated Group" shall
mean for each taxable year beginning after the Distribution
Date, the affiliated group of corporations, within the
meaning of Code Section 1504(a), of which DARDEN is the
common parent.
(16) "Restaurant Group" shall mean, with
respect to any taxable period, the corporations that were
members of the GMI Affiliated Group and become members of
the Restaurant Affiliated Group.
(17) "United States" shall have the meaning
used in Code Section 7701(a)(9).
(c) Any term used in this Agreement that is not
defined in this Agreement shall, where the context
requires, have the meaning assigned in the Code or in the
applicable Treasury Regulations promulgated thereunder.
2. Liability for Pre-Distribution Tax Liability.
(a) Members of the Restaurant Group have been
included in consolidated Federal income tax returns of the
GMI Affiliated Group and will be included, for the period
up to and including the Distribution Date, in the GMI
Affiliated Group's consolidated Federal income tax return
for the fiscal year ending May 28, 1995. In addition, some
members of the Restaurant Group have been included with one
or more members of the GMI Group in state and local unitary
or combined income tax and franchise tax returns. The
parties acknowledge that there has not yet been a Final
Determination of the consolidated Federal income tax
liability of the GMI Affiliated Group for any taxable
period beginning after May 26, 1991 and for various taxable
periods in the case of state and local income or franchise
tax returns.
(b) Subject to the provisions of this Agreement,
GMI hereby agrees to (1) pay the portion of the Pre-
Distribution Tax Liability not previously paid as of the
Distribution Date, including any portion determined at the
time of the filing of the income and franchise tax returns
based on the income of the members of GMI Affiliated Group
for fiscal 1995, and any portion ultimately determined to
be due as a consequence of future adjustments on audits;
(2) indemnify and hold harmless the Restaurant Group with
respect to any claim for collection of, reimbursement for,
or contribution to all or any part of such unpaid portion
of the Pre-Distribution Tax Liability; and (3) waive or
cause to be waived any and all rights of contribution that
the GMI Group may have against the Restaurant Group with
respect to such unpaid portion of the Pre-Distribution Tax
Liability.
(c) Except as expressly provided in this
Agreement, the Restaurant Group hereby waives any and all
rights with respect to refunds or credits obtained by the
GMI Affiliated Group with respect to any overpayment of Pre-
Distribution Tax Liability. The Restaurant Group also
acknowledges that GMI shall have the exclusive right to
amend returns for periods beginning prior to the
Distribution Date that affect the Pre-Distribution Tax
Liability and to otherwise adjust the Pre-Distribution Tax
Liability. The Restaurant Group will cooperate in the
filing and submission of any return, election or other data
requested by GMI; and specifically agrees to make and not
claim, (in a Restaurant Affiliated Group or Restaurant
Group tax return for a year beginning on or after the
Distribution Date) a deduction for, in the case of defined
benefit plans of the Restaurant Group, all contributions,
to the maximum extent allowable as a deduction under Code
Sections 404 and 412 and the applicable regulations
thereunder as determined by GMI, made on or before February
15, 1996 for plan years beginning on or before the
Distribution Date and, in the case of qualified defined
contribution plans of the Restaurant Group, all
contributions attributable to services performed prior to
the Distribution Date.
(d) In recognition of GMI's assumption of the unpaid
portion of the Pre-Distribution Tax Liability as of the
Distribution Date (as provided for in this Agreement) the
parties agree that the accruals for Pre-Distribution Tax
Liability reflected on the balance sheets of the Restaurant
Group as of the Distribution Date (after adjustment, if
any, for stating Deferred Income Taxes in accordance with
GAAP) shall be reclassified so as to be reflected as
adjustments to the intercorporate accounts between GMI and
the Restaurant Group. As of the Distribution Date, the
books and records of the Restaurant Group shall continue to
reflect adequate accruals for both Deferred Income Taxes
and all other taxes not included in the Pre-Distribution
Tax Liability. The parties shall agree to appropriate
adjustments (using a 35% federal and a 6% state tax rate),
within ninety (90) days after the filing of the income and
franchise tax returns of the members of the GMI Affiliated
Group for fiscal 1995, to Deferred Income Taxes
("Adjustments"). If and only to the extent that any such
adjustments to Deferred Income Taxes would, under GAAP,
result in an increase (decrease) in the accrual for Pre-
Distribution Tax Liability, the amount of such increase
(decrease) shall be deemed to be an accrual to an account
payable to (receivable from) GMI by Restaurant Group. In
addition, a similar adjustment to the intercorporate
accounts shall be made for other timing differences that,
under GAAP are not included in Deferred Income Taxes,
result in an increase (decrease) in the Pre-Distribution
Tax Liability and such similar adjustment shall be deemed
an additional accrual to the account payable to (receivable
from) GMI by Restaurant Group. Payments in respect of such
account payable (receivable) shall be made in accordance
with the provisions of Section 8 of this Agreement.
3. Carrybacks.
(a) If, for any taxable period beginning on or after
the Distribution Date, a member of the Restaurant Affiliated
Group incurs a net operating loss, net capital loss, unused
general business tax credit, or unused foreign tax credit
("Carryback Item") that may be carried back to a prior
taxable year of the GMI Affiliated Group beginning before
the Distribution Date ("Carryback Year"), GMI shall pay to
DARDEN an amount equal to the amount by which the
consolidated federal income tax liability for such
Carryback Year, as finally determined, is reduced by such
Carryback Item. GMI shall cooperate fully in obtaining
such reduction in tax liability, but any expenses, other
than internal expenses, except for out of pocket travel
expenses of GMI, in connection with such efforts by GMI,
shall be borne by DARDEN. GMI shall obtain the written
consent of DARDEN before incurring expenses to be borne by
DARDEN and, if so instructed by DARDEN in writing, shall
not proceed to obtain such reduction in tax liability, in
which event no payment shall be due from GMI to DARDEN. In
lieu of such cooperation where DARDEN requests GMI to
proceed, GMI may elect to pay the amount otherwise
determined or required under this Section, calculated as
the difference between the tax liability without the
carryback and the tax liability with the carryback to the
extent the carryback would have been allowed under the
Code. Such reduction in tax liability shall be paid by GMI
to DARDEN within sixty (60) days after the later of (1) a
Final Determination with respect to the taxable period in
which the Carryback Item shall have arisen, (2) a Final
Determination with respect to the Carryback Year of the GMI
Affiliated Group or (3) the date the calculation, required
if GMI elects to make payment in lieu of cooperation by
DARDEN, is agreed to by both parties; except that in those
instances in which GMI shall receive a refund, such payment
shall not be due later than thirty (30) days after receipt
of the refund. GMI shall also pay interest on such
reduction in tax liability as follows: (1) to the extent
the reduction of tax liability results in a refund of all
or any portion of a tax payment, interest shall be paid in
an amount equal to the sum of (A) the interest received on
the refund, plus (B) interest, computed at the rates
determined pursuant to Code Section 6621, on the total
amount of the tax refund and refund interest received from
the date of receipt of the refund to the date of payment to
DARDEN; (2) to the extent the reduction of tax liability
results in a credit against tax that would otherwise be
due, interest shall be paid, at the rates determined
pursuant to Code Section 6621, from the due date
(determined without extension) of the return for the
taxable period in which the Carryback Item shall have
arisen to the date of payment to DARDEN.
(b) Notwithstanding the foregoing, DARDEN agrees
to elect affirmatively (under Code Section 172(b)(3)) to
relinquish the carryback of a net operating loss to a prior
taxable year of the GMI Affiliated Group, in which event no
payment shall be due from GMI on account of such net
operating loss; DARDEN may, however, request in writing the
permission of GMI not to make such an election. If such
written request for permission is made by DARDEN, it must
be made no later than ninety (90) days prior to the
expiration of the applicable statute of limitation and GMI
shall respond within fifteen (15) days of the receipt of
such request, but such permission may be denied by GMI for
any reason that is not arbitrary and capricious..
4. Tax Return Preparation.
(a) The parties acknowledge that the income and
franchise tax returns of the members of GMI Affiliated Group
for fiscal 1995, which is the responsibility of GMI as provided
for in the Pre-Distribution Tax Liability, have not yet
been prepared. The Restaurant Group shall prepare and
submit to GMI annual accounting reports (AARs), tax data
schedules, and other information as may be required for the
preparation of income and franchise tax returns for the
Restaurant Group for the applicable fiscal 1995 periods
ending on or prior to the Distribution Date. Such reports
and schedules shall be prepared on a basis consistent with
those prepared for prior taxable periods with usual
accruals of income and deduction and shall be submitted to
GMI no later than July 1, 1995 (except that book AARs shall
be submitted by June 19, 1995) or such other date as agreed
to between GMI and DARDEN. After the Distribution Date and
for as long thereafter as is appropriate, the Restaurant
Group shall, to the extent that it does not interrupt
normal business activity, cooperate fully with GMI and
shall make available to GMI, at the request of GMI and
during normal business hours, the personnel and information
necessary to complete such reports and schedules as well as
any and all tax returns that members of the GMI Group and
the Restaurant Group may be required to file after the
Distribution Date. GMI shall consult with such persons as
to the manner of the inclusion of the items of income and
deduction of members of the Restaurant Group in such
reports and schedules and in the returns of the GMI
Affiliated Group for the applicable periods of fiscal 1995.
However all final decisions with respect to the inclusion
of such items in the fiscal 1995 returns shall be made by
GMI.
(b) The Restaurant Group acknowledges that GMI,
as the common parent under Treas. Reg. section 1.1502-77(a),
may generally act as the agent for the Restaurant Group for all
taxable periods ending on or before the Distribution Date,
and agrees to enter into any election or consent requested
by GMI with respect to such taxable periods. GMI agrees,
however, that, at the request of DARDEN, the consolidated
federal income tax returns filed by the GMI Affiliated
Group for fiscal 1995 shall include, with respect to
members of the Restaurant Group designated by DARDEN, any
elections as DARDEN may reasonably request.
Notwithstanding the foregoing, any such election need not
be made if, in GMI's good faith judgment, the election
would adversely affect the GMI Group. Furthermore, GMI may
make any such elections even if not requested to do so by
DARDEN.
(c) GMI shall have the exclusive right to amend
tax returns filed by or on behalf of members of the GMI
Group and the Restaurant Group in respect of Pre-
Distribution Tax Liability or otherwise to adjust the Pre-
Distribution Tax Liability. The Restaurant Group will
cooperate in the filing and submission of any amended
return or other data requested by GMI.
5. Liability for Foreign Income Taxes and Other
Taxes.
(a) The liability for all Foreign Income Taxes
assessed or to be assessed against any member, subsidiary,
or affiliate of the GMI Group or the Restaurant Group,
including any partnership in which such member, subsidiary,
or affiliate has an ownership interest, shall be the sole
liability of such member, subsidiary, or affiliate.
Notwithstanding anything to the contrary in this Agreement,
GMI shall pay any and all Foreign Income Taxes imposed for
any taxable period on any member or Foreign Affiliate of
the Restaurant Group, arising as a consequence of the
distribution or the transfer by any such member or Foreign
Affiliate of assets, or the assumption of liabilities, in
anticipation of the Distribution. For example, and not by
way of limitation:
(1) GMI and General Mills Canada, Inc.
shall be liable for all of their Foreign Income Taxes,
including, with respect to the transfers of their
restaurant businesses to members or a Foreign Affiliate of
the Restaurant Group, (A) all Foreign Income Taxes arising
before the Distribution Date, and (B) all Foreign Income
Taxes arising as a consequence of the transfers. The
transferee members and each Foreign Affiliate of the
Restaurant Group, in turn, shall be liable for all of their
Foreign Income Taxes, including all Foreign Income Taxes
arising in connection with the continued operation of the
transferred restaurant businesses, after the Distribution
Date.
(b) The liability for all Other Taxes, including
those assessed or to be assessed, arising in connection
with the restaurant business conducted or previously
conducted by any member, subsidiary, or affiliate of the
GMI Group or the Restaurant Group, including any
partnership in which such member, subsidiary, or affiliate
has an ownership interest, shall be the sole responsibility
of the Restaurant Group except as otherwise provided for in
(1) or (2) below.
(1) GMI, and not any member of the
Restaurant Group or Restaurant Affiliated Group, shall be
entitled to deduct all amounts applicable to the exercise
of any GMI stock options by any Restaurant Affiliated Group
employee that are outstanding after the Distribution Date;
and the Restaurant Group shall reimburse GMI for the
employer's portion of any employment taxes that GMI must
pay as a result of the exercise of such GMI stock options.
Reimbursement under this Subsection, together with related
interest computed in accordance with the principles of
Section 3(a) of this Agreement, shall be paid within thirty
(30) days of the request for reimbursement by GMI.
(2) The Restaurant Group assumes all
liability for any employment taxes, including those
assessed or to be assessed, with respect to unreported tip
income. In recognition of the Restaurant Group's
assumption of liability, if any, for such taxes, GMI and
DARDEN agree that a portion of the accrual for such
liability for periods prior to the Distribution Date in the
amount of Ten Million and no/100 dollars ($10,000,000.00)
shall be transferred from the GMI balance sheet to the
DARDEN balance sheet immediately prior to the Distribution
Date. In the event the Internal Revenue Service does not
offer the Tip Reporting Alternative Contract (`TRAC") or a
substantially similar agreement to either the Restaurant
Group individually or the restaurant industry generally,
any liability for employment taxes on unreported tip income
for periods prior to the Distribution Date shall be shared
by GMI and DARDEN as follows:
(i) DARDEN shall be liable for the
first Ten Million and no/100 dollars ($10,000,000.00) of
any such liability commencing first with the liability for
the earliest period to which such liability, or any portion
thereof, is attributable and for all subsequent periods in
chronological order;
(ii) GMI and DARDEN shall share equally
any such liability in excess of Ten Million and no/100
dollars ($10,000,000.00) provided, however, that GMI shall
not be liable for any portion of any assessment received
more than five (5) years after the Distribution Date; and
(iii) DARDEN shall reimburse GMI
for any portion of such liability, which was paid by GMI,
that the Restaurant Group receives, or could have received,
and used as a credit against the Restaurant Group's Federal
income tax liability, or any portion thereof.
Reimbursement under this Subsection, together with related
interest computed in accordance with the principles of
Section 3(a) of this Agreement, shall be paid within thirty
(30) days of the date the Federal Income Tax Return is
filed or could have been filed by the Restaurant Group.
(3) As transferee of the assets of the
General Mills Restaurant Division (the "Division") of
General Mills Canada, Inc., GMRI Canada, Inc. (or other
newly organized direct or indirect subsidiary of DARDEN, as
the case may be to which the Division assets are sold)
shall be liable for or reimburse to GMI all Other Taxes
arising in connection with the operation of the transferred
restaurant businesses, including i)any under-accrual by the
Division of such Other Taxes arising in connection with the
operation of the Division prior to the transfer of the
assets and ii)the pro-rata portion of such Other Taxes, if
any, for which the obligation of the Division does not
cease upon transfer of the assets. GMI shall be liable for
or reimburse any i)over accrual of such Other Taxes arising
in connection with the obligation of the Division prior to
the transfer of the assets and ii)Other Taxes arising as a
consequence of such transfer, and that would not have been
paid but for such transfer, (other than any such taxes
arising solely as a result of DARDEN's failure to comply
with Section 6(f) of this Agreement and the employer's
portion of employment taxes paid by any member of the
Restaurant Group as a result of the exercise of DARDEN
options arising as a consequence of the Distribution
Agreement by any Restaurant Affiliated Group employee).
GMRI Canada, Inc. shall be responsible for filing the final
returns regarding the Other Taxes which cease upon the
transfer of assets. Reimbursement under this Subsection,
together with related interest computed in accordance with
the principles of Section 3(a) of this Agreement, shall be
paid within thirty (30) days of the request for
reimbursement by the requesting party.
(c) Notwithstanding Sections 5(a) and 5(b) above, if an
adjustment is made by any jurisdiction to the amount of
Foreign Income Taxes, Other Taxes or any liability, related
to the deduction applicable to the exercise of any GMI
stock option as provided in subsection (b)(1) of this
section, owed by any member, subsidiary, or affiliate of
the Restaurant Group or the GMI Group or any partnership in
which such member, subsidiary or affiliate has an ownership
interest, and such adjustment, in turn, results in a tax
benefit or detriment to a member, subsidiary, or affiliate
of the other group, then the group whose tax liability is
reduced shall pay to the other group an amount equal to the
amount that such Group's tax liability has increase as a
result of the adjustment. DARDEN and GMI shall cooperate
fully with each other in obtaining any such reduction in
taxes, but any expenses in connection with obtaining such
reduction shall be borne by the party who will receive
payment on account of the reduction and offset against such
payment. In lieu of such cooperation, either party may
elect to pay the amount otherwise required by this Section,
calculated as the difference between the tax liability of
the group without the adjustments resulting in the
detriment and the tax liability of the group with the
adjustment resulting in the detriment. Such payment,
together with related interest computed in accordance with
the principles of Section 3(a) of this Agreement, shall be
paid within sixty (60) days after a Final Determination
with respect to the taxable year for which the tax
liability was reduced; except that, in those instances in
which the reduction in tax liability shall result in a
refund, such payment shall be due no later than ten (10)
days after the receipt of the refund or the date the
calculation, required to be made in lieu of cooperation, is
agreed to by both parties.
6. Covenants of DARDEN and GMI Relating to Actions
After the Distribution Date.
(a) GMI and DARDEN shall keep each other advised
from time to time as to the status of all amended tax returns
and the status of all tax audits and litigation relating
to any adjustment to the Pre-Distribution Tax Liability or Other
Taxes that has an effect on the other, including any
adjustments to income, gains, deductions, losses, credits,
or allowances, of the Restaurant Group. Without limiting
the foregoing, GMI and DARDEN, as the case may be, shall
promptly furnish to the other, upon receipt, a copy of any
revenue agent's report or similar report, or notice of
deficiency received by any member of the GMI Group or by
any member of the Restaurant Group, as the case may be,
relating to an adjustment to the Pre-Distribution Tax
Liability or Other Taxes that affects the other.
(b) GMI shall advise and consult with DARDEN
with respect to any proposed tax adjustments relating to
the GMI Affiliated Group that are the subject of an
Internal Revenue Service audit or investigation, or are the
subject of litigation, which may affect any tax attribute
of any member of the Restaurant Group after the
Distribution Date (including, but not limited to, the basis
in an asset or the amount of earnings and profits).
Notwithstanding the foregoing, GMI shall have the sole
right as to any decision concerning any such proposed tax
adjustments.
(c) GMI and DARDEN agree to retain the
appropriate records for all taxable periods to which this
Agreement relates until there is a Final Determination with
respect to their respective tax liabilities for all taxable
periods ending on or before May 28, 1995, or such later
date as either party may reasonably request.
(d) Each party shall fully cooperate with the
other, at its own expense, in the conduct of any tax audit by
making personnel and records available promptly (i.e. within
thirty (30) days), or such other period as may be
reasonable under the circumstances, after a request for
such personnel or records is made by the IRS, comparable
tax authority under the laws of other jurisdictions, or the
other party.
(e) DARDEN shall, and cause each member of the
Restaurant Affiliated Group to, comply with each
representation and statement made, or to be made, in
connection with any opinion of counsel obtained, or to be
obtained, by GMI with respect to any transaction
contemplated by this Agreement. Neither DARDEN nor any
member of the Restaurant Affiliated Group shall for a
period of three years following the Distribution Date
engage in any of the following transactions, unless, in the
sole discretion of GMI, either (1) GMI gives it's written
consent to the transaction, (2) an opinion in form and
substance satisfactory to GMI is obtained from counsel to
DARDEN, the selection of which counsel is agreed to by GMI
or (3) a ruling is obtained from the Internal Revenue
Service, in the case of (2) or (3) to the effect that such
transaction would not adversely affect the tax consequences
of the contributions, transfers, assumptions and
distributions described in the Distribution Agreement, to
(1) GMI or any member of the GMI Affiliated Group, (2)
DARDEN or any member of the Restaurant Affiliated Group, or
(3) the GMI shareholders. The transactions subject to this
provision are: (I) making a material disposition (including
transfers from one member to another member of the
Restaurant Affiliated Group), by means of a sale or
exchange of assets or capital stock, a distribution to
shareholders, or otherwise, of any of its assets (other
than transactions contemplated by the Distribution
Agreement) except in the ordinary course of business; (ii)
repurchasing any DARDEN capital stock, unless such
repurchase satisfies the requirements of Section 4.052 of
Revenue Procedure 86-41, as modified by Revenue Procedure
91-63; (iii) issuing any DARDEN capital stock that in the
aggregate exceeds ten percent (10%) of the issued and
outstanding stock of DARDEN immediately following the
Distribution Date; (iv) liquidating or merging with any
other corporation (including a member of the Restaurant
Affiliated Group); or (v) ceasing to engage in the active
conduct of a trade or business within the meaning of Code
Section 355(b)(2). DARDEN hereby represents that neither
DARDEN nor any member of the Restaurant Affiliated Group
has any present intention to undertake any of the
transactions set forth in (i), (ii), (iii), (iv) or (v)
above. In the event that DARDEN breaches or violates any
covenant made in this subsection (e), DARDEN shall
indemnify and holdharmless all shareholders of DARDEN as of
the Record Date against and in respect of any and all
costs, expenses, deficiencies, litigation, proceedings,
taxes, levies, assessments, attorney's fees, damages or
judgments of any kind or nature whatsoever, related to,
arising from, or associated with such breach or violation.
(f) DARDEN shall file an election under Section
167 of the Excise Tax Act (Canada) along with its first
Goods and Services Tax Return and any similar elections
available under any provincial law which provides that the
sale and purchase of the Canadian restaurant business to
GMRI Canada, Inc. is exempt from Canadian transfer taxes.
7. Tax Examinations and Amended Returns Subsequent
to Closing.
GMI shall have the exclusive and sole right and
responsibility to handle any audits involving the Pre-
Distribution Tax Liability. However, GMI agrees to consult
with DARDEN, as GMI deems appropriate, and DARDEN agrees to
cooperate with GMI in the negotiation and settlement of any
adjustment arising solely from any audit or the filing of
any amended return related to the Pre-Distribution Tax
Liability, including adjustments to income, gains,
deductions, losses, credits, or allowances, of the
Restaurant Group as the consequence of (1) an audit or
other action by any tax authority or (2) the filing by GMI
of any amended tax return. Such negotiation and
settlements, however, shall be solely within GMI's
discretion.
If, solely as a consequence of an audit of any tax
return or the filing of an amended tax return or otherwise,
there is any adjustment to the Pre-Distribution Tax Liability,
which is subject to this Section 7, of a member of the
Restaurant Group as initially reported ("Adjustment"), any
such Adjustment shall initially inure to the benefit or
detriment of GMI. However, where such Adjustment results
in a tax benefit or detriment to a member, subsidiary, or
affiliate of the Restaurant Group (because such adjustment
involves a timing item, a deduction of state or local
income taxes, or otherwise), such member, subsidiary, or
affiliate, shall pay to GMI (or be paid by GMI) an amount
equal to the tax benefit (or detriment) ultimately realized
by the member, subsidiary, or affiliate, together with
related interest computed in accordance with the principles
of Section 3(a) of this Agreement. DARDEN and GMI shall
cooperate fully in obtaining any such benefit but any
expenses, other than internal expenses, in connection with
obtaining such benefit shall be borne by the party who will
receive payment on account of the benefit. The party who
will receive payment on account of the benefit may, after
consultation with the other party, instruct the other party
not to proceed in obtaining the benefit, in which event no
payment shall be due under this Section. In lieu of such
cooperation, where the party entitled to such benefit
requests the other party to proceed, the party not entitled
to the benefit may elect to make such Adjustment and pay
the party entitled to the benefit the amount otherwise
required by this Section, calculated as the difference
between the tax liability without the adjustment resulting
in such benefit and the tax liability with the adjustment
resulting in such benefit.
8. Correlative Adjustments.
Any payment, pursuant to Section 2 or Section 7
hereof, by a member of the Restaurant Group to GMI (or payment
by GMI to a member of the Restaurant Group) shall be made within
ninety (90) days after the earlier of (a) the filing of the
GMI consolidated federal income tax return or (b) after the
later of a Final Determination (1) with respect to the
taxable period in which the Adjustments or Adjustment, as
the case may be, shall have arisen, (2) with respect to the
taxable year for which the tax liability of the member of
the Restaurant Group was reduced (increased) by the
Adjustments or Adjustment, as the case may be; except that,
in those instances in which the party making the payment
shall receive a refund, such payment shall be due not later
than thirty (30) days after the receipt of the refund, or
(3) date the parties agree upon the calculation, required
in lieu of cooperation, in Section 7 hereof. In addition,
in the case of a refund or the crediting of an overpayment
as agreed to between GMI and DARDEN at the time of filing a
return, related to a Pre-Distribution Tax Liability
received or used by a member of the Restaurant Group, of an
amount paid prior to, as of or after the Distribution Date,
the payment due GMI shall be due not later than thirty (30)
days after the receipt of the refund or the crediting of
such overpayment by a member of the Restaurant Group.
9. Liability.
GMI agrees that it shall have liability for all
tax liabilities and indemnity obligations of the GMI Group
and each member, subsidiary, or affiliate of the GMI Group
as provided for in this Agreement. Any reference to GMI in
this Agreement shall subject GMI to full, direct and
primary liability for any sum owing by GMI or a member,
subsidiary, or affiliate of the GMI Group. GMI agrees that
it shall cause each member, subsidiary, or affiliate of the
GMI Group to comply fully with the terms of this Agreement.
DARDEN agrees that it shall have liability for
all tax liabilities and indemnity obligations of the
Restaurant Group and each member, subsidiary, or affiliate
of the Restaurant Group as provided for in this Agreement.
Any reference to DARDEN in this Agreement shall subject
DARDEN to full, direct and primary liability for any sum
owing by DARDEN or a member, subsidiary, or affiliate of
the Restaurant Group. DARDEN agrees that it shall cause
each member, subsidiary, or affiliate of the Restaurant
Group to comply fully with the terms of this Agreement.
10. Payments.
All payments to be made hereunder shall be made
in immediately available funds and shall be made payable as
directed by the recipient. All payments by GMI shall be
treated as increases to or reductions of, as the case may
be, the Pre-Distribution capital contribution from GMI to
DARDEN. All payments by DARDEN shall be treated as
increases to or reductions of, as the case may be, the
dividend from DARDEN to GMI. In the event such payments
are not treated as increases or reductions in Pre-
Distribution capital contribution or dividends, GMI or
DARDEN, as the case may be, shall pay a gross-up amount to
the other party
11. Reporting.
GMI and DARDEN shall upon request provide each
other with copies of actual returns (or pro forma returns
if actual returns do not exist), for the three (3) taxable
years ending on or before the Distribution Date, relating
to all Federal, state and local income taxes, franchise
taxes, Foreign Income Taxes and Other Taxes of the
restaurant business which heretofore has been conducted by
members of the GMI Affiliated Group and their foreign
affiliates within the meaning of Code Section 1504(a).
12. Certification of Compliance.
GMI and DARDEN agree that the Vice President of
Taxes of each shall annually prepare and furnish to the
other a certificate, in respect of all open taxable periods
ending on or before the date of each anniversary of this
Agreement, acknowledging that they have reviewed the terms
and provisions of this Agreement and that, after due
inquiry, to the best of their knowledge, information and
belief, except as otherwise noted in said certificate, all
material disclosures and/or undertakings reasonably
required by this Agreement have been made and/or carried
out by or for the party on whose behalf such certificate is
made.
13. Notices.
Any notice, demand, claim, or other communication
under this Agreement shall be in writing and shall be deemed to
have been given upon the delivery or mailing thereof, as
the case may be delivered personally or by express carrier,
or sent by certified mail, return receipt requested or
postage prepaid, to the parties at the following addresses
(or at such other address as a party may specify by notice
to the other party):
If to GMI, to:
General Mills, Inc.
Number One General Mills Boulevard.
Minneapolis, MN 55426
Attention: General Counsel
If to DARDEN, to:
Darden Restaurants, Inc.
5900 Lake Ellenor Drive
Orlando, Florida 32809
Attention: General Counsel
14. Governing Law and Interpretation.
This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.
15. Arbitration.
(a) Any controversy or claim arising out of or
relating to this Agreement, or the breach hereof, shall be
settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association
(the "AAA") as such rules may be modified herein.
(b) An award rendered in connection with an
arbitration pursuant to this Section shall, absent manifest
error, be final and binding and judgment upon such an award
may be entered and enforced in any court of competent
jurisdiction.
(c) The forum for arbitration under this Section
shall be as agreed upon by the parties or, failing such
agreement, Minneapolis, Minnesota.
(d) Arbitration under this Section shall be
conducted by a single arbitrator selected jointly by GMI and
DARDEN. If GMI and DARDEN are unable to agree on a single
arbitrator, within thirty (30) days after a demand for
arbitration is made three arbitrators shall be appointed.
GMI and DARDEN shall each select one arbitrator and those
two arbitrators shall then select a third neutral arbitrator
within thirty (30) days. In connection with the selection
of the third arbitrator, consideration shall be given to
familiarity with tax matters and experience in dispute
resolution between parties, as a judge or otherwise.
If the arbitrators selected by GMI and DARDEN cannot agree on the
third arbitrator, they shall discuss the qualifications of
such third arbitrator with the AAA prior to selection of
such arbitrator, which selection shall be in accordance
with the Commercial Arbitration Rules of AAA.
(e) If an arbitrator cannot continue to serve, a
successor to an arbitrator selected by GMI or DARDEN shall
be also selected by the same party, and a successor to the
neutral arbitrator shall be selected as specified in
subsection (d) of this Section. A full rehearing will be
held only if the neutral arbitrator is unable to continue
to serve or if the remaining arbitrators unanimously agree
that such a rehearing is appropriate.
(f) The arbitrator or arbitrators shall be
guided, but not bound, by the Federal Rules of Evidence and
by the procedural rules, including discovery provisions, of
the Federal Rules of Civil Procedure. Any discovery shall
be limited to information directly relevant to the
controversy or claim in arbitration.
16. Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same
instrument.
17. Assignments.
This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, the Parties hereto have executed and
delivered this Agreement as of the date first above
written.
GENERAL MILLS, INC.
By: /s/ S. J. Navin
S. J. Navin
(Corporate Seal)
Attest:
/s/ B. L. Rosenberg
DARDEN RESTAURANTS, INC.
By: /s/ C. L. Whitehll
(Corporate Seal)
Attest:
/s/ J. D. Smith
