Exhibit 10.5
GENERAL MILLS, INC.
2006 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE
     The General Mills, Inc. 2006 Compensation Plan for Non-Employee Directors
(the “Plan”) is hereby amended and restated, effective September 25, 2006, by
General Mills, Inc. The amended and restated Plan incorporates previously
adopted amendments since it was first adopted and adds provisions deemed
necessary or advisable to comply with Code section 409A and the regulations
thereunder. The purpose of the Plan is to provide a compensation program which
will attract and retain qualified individuals not employed by General Mills,
Inc. and its subsidiaries (the “Company”) to serve on the Board of Directors of
the Company (the “Board”) and to further align the interests of non-employee
directors with those of the stockholders by providing that a portion of
compensation will be linked directly to increases in stockholder value.
2. EFFECTIVE DATE, DURATION OF PLAN
     This Plan shall become effective as of September 25, 2006 subject to the
approval of the Plan by the stockholders. The Plan will terminate on
September 30, 2011 or such earlier date as determined by the Board or the
Compensation Committee of the Board (the “Committee”); provided that no such
termination shall affect rights earned or accrued under the Plan prior to the
date of termination.
3. DEFINITIONS
     Wherever used in this Plan, the following terms have the meanings set forth
below:
     “Board” means the Board of Directors of the Company.
     “Change of Control” has the meaning set forth in Section 11.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Committee” has the meaning set forth in Section 2.
     “Common Stock” means Company common stock ($.10 par value).
     “Company” means General Mills, Inc. and its subsidiaries.
     “Deferred Compensation Account” has the meaning set forth in Section 6(d).
     “Election Form” means a written form provided by the Committee pursuant to
which a Participant may elect the form and timing of distributions with respect
to his or her retainer, Stock Units and dividend equivalents under the Plan.
     “Fair Market Value” means the average of the intraday high and low price of
the national market composite price of the Common Stock on the applicable date.
Notwithstanding this definition, effective January 1, 2007, “Fair Market Value”
means the closing price on the New York Stock Exchange of the Common Stock on
the applicable date.
     “Key Employee” means a Participant treated as a “specified employee” as of
his Separation from Service under Code section 409A(a)(2)(B)(i), i.e., a key
employee (as defined in Code section 416(i) without regard to paragraph
(5) thereof) of the Company or its affiliates if the Company’s or its
affiliate’s stock is publicly traded on an established securities market or
otherwise. Key Employees shall be determined in accordance with Code section
409A using a December 31 identification date. A listing of Key Employees as of
an identification date shall be effective for the 12-month period beginning on
the April 1 following the identification date.
     “Option” has the meaning set forth in Section 7(a).
     “Participant” has the meaning set forth in Section 4.
     “Plan” means the General Mills, Inc. 2006 Compensation Plan for
Non-Employee Directors as set forth herein and as amended.
     “Plan Year” has the meaning set forth in Section 6(a).
     “Separation from Service” or “Separate from Service” means a “separation
from service” within the meaning of Code section 409A.

 

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     “Stock Unit Account” has the meaning set forth in Section 8(a).
     “Stock Units” has the meaning set forth in Section 8(a).
4. PARTICIPATION
     Each member of the Board who is not an employee of the Company at the date
compensation is earned or accrued shall be eligible to participate in the Plan
unless prohibited from participating by the terms of their employment (a
“Participant”).
5. COMMON STOCK SUBJECT TO THE PLAN
     (a) General. The Common Stock to be issued under this Plan is to be made
available from the authorized but unissued Common Stock, shares of Common Stock
held in the treasury, or Common Stock purchased on the open market or otherwise.
Subject to the provisions of the next succeeding paragraphs, the maximum
aggregate number of shares authorized to be issued under the Plan shall be
700,000 and the maximum number of shares authorized to be issued under the Plan
in a single Plan Year shall be 160,000.
     Upon forfeiture or termination of Stock Units prior to vesting, the shares
of Common Stock subject thereto shall again be available for awards under the
Plan.
     (b) Adjustments for Corporate Transactions. If a corporate transaction has
occurred affecting the Common Stock such that an adjustment to outstanding
awards is required to preserve (or prevent enlargement of) the benefits or
potential benefits intended at the time of grant, then in such manner as the
Committee deems equitable, an appropriate adjustment shall be made to (i) the
number and kind of shares which may be awarded under the Plan; (ii) the number
and kind of shares subject to outstanding awards; (iii) the number of shares
credited to a Stock Unit Account; and (iv) the exercise price of outstanding
Options provided that the number of shares of Common Stock subject to any Option
denominated in Common Stock shall always be a whole number. For this purpose a
corporate transaction includes, but is not limited to, any dividend or other
distribution (whether in the form of cash, Common Stock, securities of a
subsidiary of the Company, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction. Notwithstanding anything in this Section to the contrary,
an adjustment to an Option under this Section 5(b) shall be made in a manner
that will not result in the grant of a new Option under Code Section 409A.
6. RETAINER
     (a) General. Each non-employee director shall be entitled to receive a
retainer with respect to each one-year board term, beginning the day of each
annual stockholders’ meeting and ending the day before the succeeding annual
stockholders’ meeting (the “Plan Year”) in an amount determined from time to
time by the Board. Retainers shall be earned and paid at the end of each of the
Company’s fiscal quarters.
     (b) Normal Payment Terms. The normal payment terms for retainers are cash
in a lump sum. In the absence of an affirmative election to the contrary, the
retainer (or the portion not subject to such elections) shall be paid 10
business days following the last day of each quarterly period described above in
(a).
     (c) Deferral Elections. Each Participant may elect an alternative form
(lump sum vs. installments) in which a retainer may be delivered and the timing
for such delivery, pursuant to the terms of Section 9. Participants shall make
such election by filing an irrevocable Election Form with the Committee before
the calendar year in which a Plan Year begins. The election shall apply to
amounts earned in a quarterly period described in (a) above that begins during
the Plan Year. Notwithstanding the foregoing, in the first year in which a
non-employee director becomes eligible to participate in the Plan, an election
may be made with respect to services to be performed subsequent to the election,
to the extent permitted under Code section 409A. Such an election must be made
on an Election Form within 30 days after the date the non-employee director
becomes eligible to participate in the Plan.
     (d) Deferred Cash Alternative. For each Participant who affirmatively
elects to defer receipt of his or her retainers in the form of deferred cash,
the Company shall establish a separate account (a “Deferred Compensation
Account”) and credit such deferred cash compensation into that Account as of the
date the amounts would otherwise be paid. A separate Deferred Compensation
Account shall be established for each Plan Year a Participant makes such a
deferral election. Earnings, gains and losses shall be credited to each such
Deferred Compensation Account based on the rate earned by the fund or funds
selected by the Participant from among funds or portfolios established under the
General Mills, Inc. 401(k) Savings Plan or any other qualified benefit plan
maintained by the Company which the Minor Amendment Committee, or its delegate,
in its

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discretion, may from time to time establish. Distributions from a Deferred
Compensation Account shall be made in accordance with Section 9.
     The Company has established a Supplemental Benefits Trust with Wells Fargo
Bank Minnesota, N.A. as trustee to hold assets of the Company under certain
circumstances as a reserve for the discharge of the Company’s obligations as to
Deferred Compensation Accounts under the Plan and certain other deferred
compensation plans of the Company. In the event of a Change of Control, the
Company shall be obligated to immediately contribute such amounts to the trust
as may be necessary to fully fund all Deferred Compensation Accounts payable
under the Plan. Any Participant in the Plan shall have the right to demand and
secure specific performance of this provision. All assets held in the trust
remain subject only to the claims of the Company’s general creditors whose
claims against the Company are not satisfied because of the Company’s bankruptcy
or insolvency (as those terms are defined in the trust agreement). No
Participant has any preferred claim on, or beneficial ownership interest in, any
assets of the trust before the assets are paid to the Participant and all rights
created under the trust, as under the Plan, are unsecured contractual claims of
the Participant against the Company.
     (e) Common Stock Alternative. Each Participant may affirmatively elect to
receive all or a specified percentage of his or her retainers for a Plan Year in
shares of Common Stock, which, if elected, will be issued 10 business days
following the last day of each quarterly period during the Plan Year described
above in (a). Only whole numbers of shares will be issued, with any fractional
share amounts paid in cash. For purposes of computing the number of shares
earned each quarter during the Plan Year, the value of each share shall be equal
to the Fair Market Value on the third Business Day preceding the last day of
each quarter described above in (a) during the Plan Year. For the purposes of
this Plan, “Business Day” shall mean a day on which the New York Stock Exchange
is open for trading.
     (f) Death. Notwithstanding any other provision of the Plan, if a
Participant dies during a Plan Year, the balance of the amount due for the full
quarter in which death occurs shall be payable in full to the person(s)
designated under the terms of Section 11(e) of this Plan or if none designated
then to the Participant’s estate, in cash, 60 days following the date of death.
7. NON-QUALIFIED STOCK OPTIONS
     (a) Grant of Options. Each non-employee director on the effective date of
the Plan (or, if first elected after the effective date of the Plan, on the date
the non-employee director first attends a Board meeting) shall be awarded an
option (an “Option”) to purchase shares of Common Stock, in an amount determined
from time to time by the Board, or its delegate. As of the close of business on
each successive annual stockholders’ meeting after the date of the original
award, each Participant who is re-elected to the Board shall be granted an
additional Option to purchase shares of Common Stock. All Options granted under
the Plan shall be non-statutory options not entitled to special tax treatment
under Code section 422.
     (b) Option Exercise Price. The per share price to be paid by the
Participant at the time an Option is exercised shall be 100% of the Fair Market
Value on the date of grant, or on the last date preceding the date of grant on
which the Common Stock was traded.
     (c) Term of Option. Each Option shall expire ten (10) years from the date
of grant.
     (d) Exercise and Vesting of Option. Each Option will vest on the date of
the annual stockholders’ meeting next following the date the Option is granted.
Upon vesting, a Participant shall be given the full ten (10) year term to
exercise the Option without regard to whether he or she continues to serve on
the Board. If, for any reason, a Participant ceases to serve on the Board prior
to the date an Option vests, such Option shall be forfeited and all further
rights of the Participant to or with respect to such Option shall terminate.
Notwithstanding the foregoing, if a participant should die during his or her
term of service on the Board, any vested Option may be exercised by the
person(s) designated under the terms of Section 11(e) of this Plan, and any
unvested Options shall fully vest and become exercisable upon death for the
remainder of the Option’s full term.
     (e) Method of Exercise. A Participant exercising an Option shall give
notice to the Company of such exercise and of the number of shares elected to be
purchased prior to 4:30 P.M. CST/CDT on the day of exercise, which must be a
business day, at the executive offices of the Company. The exercise price shall
be paid to the Company at the time of such exercise, subject to any applicable
rule or regulation adopted by the Committee:
          (i) in cash (including check, draft, money order or wire transfer made
payable to the order of the Company);
          (ii) through the tender of shares of Common Stock owned by the
Participant (by either actual delivery or attestation); or
          (iii) by a combination of (i) and (ii) above.

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To determine the amount of the payment, Common Stock delivered pursuant to
(ii) or (iii) shall have a value equal to the Fair Market Value of the Common
Stock on the date of exercise.
     (f) Non-transferability. Except as provided by rule adopted by the
Committee, an Option shall be non-assignable and non-transferable by a
Participant other than by will or the laws of descent and distribution. A
Participant shall forfeit any Option assigned or transferred, voluntarily or
involuntarily, other than as permitted under this subsection.
8. STOCK UNITS
     (a) Awards. On the effective date of the Plan (or, if a Participant is
first elected after the effective date of the Plan, on the date the Participant
first attends a Board meeting) and at the close of business on each successive
annual stockholders’ meeting, each Participant shall be awarded the right to
receive shares of Common Stock (“Stock Units”), subject to vesting as provided
in Section 8(b). Only a Participant who is re-elected to the Board shall be
entitled to a grant under this Section 8(a) of Stock Units awarded at the close
of business on an annual meeting date after the date of the original grant to
Participants. A separate Stock Unit Account will be established for the
Participant each time an award of Stock Units is made.
     The maximum aggregate number of shares authorized to be issued under the
Plan upon vesting of Stock Unit awards shall be 175,000. Participants receiving
Stock Units will have no rights as stockholders of the Company with respect to
allocations made to their Stock Unit Account(s), except the right to receive
dividend equivalent allocations under Section 8(d).
     Stock Units may not be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of until such time as share certificates for Common Stock
are issued to the Participants.
     (b) Vesting of Stock Units. A Participant’s interest in the Stock Units
shall vest on the date of the annual stockholders’ meeting next following the
date of the award of the Stock Units. If, for any reason, a Participant ceases
to serve on the Board prior to the date the Participant’s interest in a grant of
Stock Units vests, such Stock Units shall be forfeited and all further rights of
the Participant to or with respect to such Stock Units shall terminate.
Notwithstanding the foregoing, a Participant who dies while serving on the Board
prior to the vesting of Stock Units shall fully vest in such Stock Units,
effective as of the date of death and shall be paid to the person(s) designated
under the terms of Section 11(e) of this Plan.
     (c) Election Concerning Receipt of Common Stock. Each Participant receiving
an award of Stock Units under Section 8(a) may elect the time and form (lump sum
vs. installments) of distribution of Common Stock attributable to such Stock
Units, pursuant to the terms of Section 9. If no affirmative election is made,
all Stock Units shall be paid in shares of Common Stock 10 days following
vesting.
     (d) Dividend Equivalents. The Participant may also elect to have dividend
equivalents payable on Stock Units paid currently in cash or reinvested in Stock
Units. If the amounts are reinvested, on each dividend payment date for the
Common Stock, the Company will credit each Stock Unit Account with an amount
equal to the dividends that would have been paid had the Stock Units been actual
shares of Common Stock, which shall be used to “purchase” additional Stock Units
at a price equal to the Fair Market Value on the dividend date. Such additional
Stock Units shall be distributed at the same time and in the same form as the
rest of the Stock Unit Account balance. If the Participant fails to make an
election, the dividend equivalent amounts shall be paid in cash currently.
     (e) Timing of Elections. In order to make an election under Sections 8(c)
and/or 8(d) with respect to Stock Units awarded for a Plan Year, a Participant
shall file an irrevocable Election Form with the Committee before the calendar
year in which the Plan Year begins. Notwithstanding the foregoing, in the first
year in which a non-employee director becomes eligible to participate in the
Plan, a deferral election may be made with respect to services to be performed
subsequent to the election, to the extent permitted under Code section 409A.
Such an election must be made on an Election Form within 30 days after the date
the non-employee director becomes eligible to participate in the Plan.
9. DISTRIBUTION PROVISIONS FOR DEFERRED CASH AND STOCK UNITS
     The following distribution provisions shall apply to Deferred Compensation
Accounts and Stock Unit Accounts:
     (a) Timing. Distributions from Deferred Compensation Accounts shall
normally commence at Separation from Service, however, a Participant may
affirmatively elect a specified date for commencement, provided said date is not
later than age 75. The same rule applies to Stock Units which have been deferred
beyond the vesting period described in Section 8(b). Elections as to the timing
of benefit commencement shall be made in accordance with Sections 6 and 8, as
appropriate.
     Notwithstanding the above or any other provision of this Plan,
distributions may not be made to a Key Employee upon a Separation from Service
before the date which is six months after the date of the Key Employee’s
Separation from Service (or, if earlier, the date of death of the Key Employee).
Any payments that would otherwise be made during this period of delay shall

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be accumulated and paid on the first day of the seventh month following the
Participant’s Separation from Service (or, if earlier, the first day of the
month after the Participant’s death).
     (b) Form of Distribution. Distributions shall normally be made in a lump
sum. However, a Participant may affirmatively elect to receive substantially
equal annual installments over a period of up to 10 years. Such elections shall
be made in accordance with Sections 6 and 8, as appropriate.
     (c) Manner of Distribution. Amounts credited to Deferred Compensation
Accounts shall be paid in cash. Amounts credited to Stock Unit Accounts shall be
paid in Common Stock based on the number of Stock Units credited to the Stock
Unit Account and paid in cash equal to any dividend equivalent amounts which had
not been used to “purchase” additional Stock Units.
     (d) Distribution Upon Death. Notwithstanding any elections by a Participant
or provisions of the Plan to the contrary, if a Participant dies before full
distribution of a Deferred Compensation Account or Stock Unit Account, such
accounts shall be distributed to the person(s) designated under the terms of
Section 11(e) of this Plan or if none designated then to the Participant’s
estate in a lump sum 60 days following the date of death.
     (e) Permitted Payment Delay To Avoid Violations of Law. Notwithstanding any
provision of this Plan to the contrary, any distribution to a Participant under
the Plan shall be delayed upon the Committee’s reasonable anticipation that the
making of the payment would violate Federal securities laws or other applicable
law; provided, that any payment delayed pursuant to this Section 9(e) shall
ultimately be paid in accordance with Code section 409A.
     (f) Payment Acceleration. If amounts deferred under the Plan must be
included in a Participant’s income under Code section 409A prior to the
scheduled distribution of such amounts, distribution of such amount shall be
made immediately to the Participant.
10. CHANGE OF CONTROL
     Notwithstanding any elections by a Participant or provisions of the Plan to
the contrary, upon the occurrence of a Change of Control, all Options and Stock
Units shall fully and immediately vest, and shall be exercisable or paid
pursuant to the terms of the Plan that are otherwise applicable. If the Change
of Control is also a “change in control” as defined under Code section
409A(a)(2)(A)(v) and official guidance thereunder, all Stock Unit Accounts shall
be distributed in a single payment 30 days following such Change of Control.
11. ADMINISTRATION
     The Plan shall be administered by the Committee. The Committee shall have
full power to interpret the Plan, formulate additional details and regulations
for carrying out the Plan and amend, modify or terminate the Plan as from time
to time it deems proper and in the best interests of the Company, provided that
after a Change of Control no amendment, modification of or action to terminate
the Plan may be made which would affect compensation earned or accrued prior to
such amendment, modification or termination without the written consent of a
majority of Participants determined as of the day before a Change of Control.
Any decision or interpretation adopted by the Committee shall be final and
conclusive. A “Change of Control” means:
     (a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”)) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of voting securities of
the Company where such acquisition causes such Person to own 20% or more of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not be deemed to result in a
Change of Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant to
a transaction that complies with clauses (i), (ii) and (iii) of subsection
(3) below; and provided, further, that if any Person’s beneficial ownership of
the Outstanding Company Voting Securities reaches or exceeds 20% as a result of
a transaction described in clause (i) or (ii) above, and such Person
subsequently acquires beneficial ownership of additional voting securities of
the Company, such subsequent acquisition shall be treated as an acquisition that
causes such Person to own 20% or more of the Outstanding Company Voting
Securities; or
     (b) Individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an

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actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
     (c) Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its subsidiaries, (each a “Business Combination”);
excluding, however, such a Business Combination pursuant to which (i) all or
substantially all of the individuals and entities who were the beneficial owners
of the Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business combination of the Outstanding Company Voting
Securities, (ii) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
     (d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
     (e) Designation of Beneficiary. Each Participant who has a Deferred
Compensation Account, a Stock Unit Account, or Option under the Plan may
designate a beneficiary or beneficiaries to exercise any Option or to receive
any payment which under the terms of the Plan may become exercisable or payable
on or after the Participant’s death. At any time, and from time to time, any
such designation may be changed or cancelled by the Participant without the
consent of any such beneficiary. Any such designation, change or cancellation
must be on a form provided for that purpose by the Committee and shall not be
effective until received by the Committee. Such form may establish other rules
as the Committee deems appropriate. If no beneficiary has been properly
designated by a deceased Participant, or if all the designated beneficiaries
have predeceased the Participant, the beneficiary shall be the Participant’s
estate. If the Participant designates more than one beneficiary, any Options
shall be divided among beneficiaries equally, and any payments under the Plan to
such beneficiaries shall be made in equal shares, unless the Participant has
expressly designated otherwise, in which case such Options shall be divided, and
the payments shall be made, in the portions designated by the Participant.
12. GOVERNING LAW
     The validity, construction and effect of the Plan and any such actions
taken under or relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable Federal law.
13. NOTICES
     Unless otherwise notified, all notices under this Plan shall be sent in
writing to the Company, attention Corporate Compensation, P.O. Box 1113,
Minneapolis, Minnesota 55440. All correspondence to the Participants shall be
sent to the address which is their recorded address as listed on the election
forms.
14. PLAN TERMINATION
     Upon termination of the Plan, distribution of Deferred Compensation
Accounts and Stock Unit Accounts shall be made as described in Section 9, unless
the Committee determines in its sole discretion that all such amounts shall be
distributed upon termination in accordance with the requirements under Code
section 409A.Upon termination of the Plan, no further deferrals of retainers,
Stock Units or dividend equivalent amounts shall be permitted; however,
earnings, gains and losses shall continue to be credited to the Deferred
Compensation Account balances in accordance with Section 6 until the Deferred
Compensation Account balances are fully distributed.
15. COMPLIANCE WITH CODE SECTION 409A
     It is intended that this Plan shall comply with the provisions of Code
section 409A and the Treasury regulations relating thereto so as not to subject
the Participants to the payment of additional taxes and interest under Code
section 409A. In furtherance of this intent, this Plan shall be interpreted,
operated and administered in a manner consistent with these intentions.

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