Exhibit
10.1


 


$1,000,000,000 AGGREGATE PRINCIPAL
AMOUNT


GENERAL MILLS, INC.


FLOATING RATE CONVERTIBLE
SENIOR NOTES


DUE 2037


Purchase Agreement


dated April 4, 2007















April 4, 2007


MORGAN
STANLEY & CO. INCORPORATED

1585 Broadway

New York, New York  10036


Ladies
and Gentlemen:


General Mills, Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to you (the “Initial Purchaser”) $1,000,000,000 in aggregate
principal amount of its Floating Rate Convertible Senior Notes due 2037 (the
“Firm Notes”).  In addition, the Company
has granted to the Initial Purchaser an option to purchase up to an additional
$150,000,000 in aggregate principal amount of its Floating Rate Convertible
Senior Notes due 2037 (the “Optional Notes” and, together with the Firm Notes,
the “Notes”).  The Notes are to be issued
pursuant to an Indenture to be dated as of April 11, 2007 (the “Indenture”)
between the Company and The Bank of New York Trust Company, N.A., as Trustee.


The Notes will be convertible on the terms, and subject to the
conditions, set forth in the Indenture into cash and, if applicable, shares of
common stock, par value $0.10 per share, of the Company (the “Common Stock”).
As used herein, “Conversion Shares” means the Common Stock to be received by
the holders of the Notes upon conversion of the Notes pursuant to the terms of
the Indenture.


The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the “Securities
Act”), and the rules and regulations (the “Rules and Regulations”) of the
Securities and Exchange Commission (the “Commission”) thereunder, in reliance
upon an exemption therefrom.


Holders of the Notes (including the Initial Purchaser and its direct
and indirect transferees) will be entitled to the benefits of a Resale
Registration Rights Agreement, dated the Closing Date (as defined in Section
2(b)), between the Company and the Initial Purchaser (the “Registration Rights
Agreement”), pursuant to which the Company will agree to file or have on file
with the Commission a shelf registration statement pursuant to Rule 415 under
the Securities Act (the “Registration Statement”) covering the resale of the
Notes and the Conversion Shares, and to use its reasonable best efforts to
cause the Registration Statement to be declared effective, if such shelf
registration statement is not an “automatic shelf registration statement” (as
defined in Rule 405 under the Securities Act), within the time period specified
in the Registration Rights Agreement. 
This Agreement, the Indenture, the Notes and the Registration Rights
Agreement are referred to herein collectively as the “Operative Documents.”


The Company understands that the Initial Purchaser proposes to make an
offering of the Notes on the terms and in the manner set forth herein and in
the Disclosure Package (as defined below) and the Final Offering Memorandum (as
defined below) and agrees that the Initial Purchaser may resell, subject to the
conditions set forth herein, all or a portion of the Notes to purchasers at any
time after the date of this Agreement. 
The Notes are to be offered and sold to or through the Initial Purchaser
without being registered with the Commission under the Securities Act in
reliance upon exemptions therefrom.  The
terms of the Notes and the Indenture











will
require that investors that acquire Notes expressly agree that Notes (and any
Conversion Shares) may only be resold or otherwise transferred, after the date
hereof, if such Notes (or Conversion Shares) are registered for sale under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemption afforded by Rule 144A
(“Rule 144A”) thereunder).


The Company has prepared a Preliminary Offering Memorandum dated April
4, 2007 and a Final Offering Memorandum dated the date hereof setting forth
information concerning the Company, the Notes, the Registration Rights Agreement
and the Common Stock, in form and substance reasonably satisfactory to the
Initial Purchaser.  As used in this
Agreement, the term “Preliminary Offering Memorandum” means the Preliminary
Offering Memorandum dated April 4, 2007 and the term “Final Offering
Memorandum” means the Final Offering Memorandum dated the date hereof, each as
then amended or supplemented by the Company. 
As used herein, each of the terms “Preliminary Offering Memorandum” and
“Final Offering Memorandum” shall include in each case the documents filed with
the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) and incorporated or deemed to be incorporated by reference
therein.


The Company hereby confirms its agreements with the Initial Purchaser
as follows:


Section 1. 
Representations and Warranties of the Company.


The Company hereby represents, warrants and covenants to the Initial
Purchaser as follows:


(a)  No Registration.  Assuming the accuracy of the representations
and warranties of the Initial Purchaser contained in Section 6 and its
compliance with the agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Notes to the Initial Purchaser,
the offer, resale and delivery of the Notes by the Initial Purchaser and the
conversion of the Notes into cash and Conversion Shares, if any, in each case
in the manner contemplated by this Agreement, the Indenture, the Disclosure
Package (as defined below) and the Final Offering Memorandum, to register the Notes
or the Conversion Shares under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).


(b)  No Integration.  None of the Company or any of its
subsidiaries has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any “security”
(as defined in the Securities Act) that is or will be integrated with the sale
of the Notes or the Conversion Shares in a manner that would require
registration under the Securities Act of the Notes or the Conversion Shares.


(c)  Rule 144A. 
No securities of the same class (within the meaning of Rule 144A(d)(3)
under the Securities Act) as the Notes are listed on any national securities
exchange registered under Section 6 of the Exchange Act, or quoted on an
automated inter-dealer quotation system.


(d)  Exclusive Agreement.  The Company has not paid or agreed to pay to
any person any compensation for soliciting another person to purchase any Notes
or Conversion Shares, or securities similar to the Notes of the Company (except
as permitted in this Agreement).


(e)  Offering Memoranda.  The Company hereby confirms that it has
authorized the use of the Disclosure Package, including the Preliminary Offering
Memorandum, and the Final



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Offering Memorandum in connection with the offer and sale of the Notes
by the Initial Purchaser.  Each document,
if any, filed or to be filed pursuant to the Exchange Act and incorporated by
reference in the Disclosure Package or the Final Offering Memorandum complied
or will comply when it is filed in all material respects with the Exchange Act
and the rules and regulations of the Commission thereunder.  The Preliminary Offering Memorandum, at the
date thereof, did not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.  At the date of this Agreement, on the Closing
Date and the Option Closing Date (as defined below), if applicable, the Final
Offering Memorandum did not and will not (and any amendment or supplement
thereto, at the date thereof, at the Closing Date and the Option Closing Date,
if applicable, will not) contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that the
Company makes no representation or warranty as to information contained in or
omitted from the Preliminary Offering Memorandum or the Final Offering
Memorandum in reliance upon and in conformity with written information
furnished to the Company by or on the behalf of the Initial Purchaser
specifically for inclusion therein, it being understood and agreed that the
only such information furnished by or on the behalf of the Initial Purchaser
consists of the information described as such in Section 8 hereof.


(f)  Disclosure Package.  The term “Disclosure Package” shall mean (i)
the Preliminary Offering Memorandum, as amended and supplemented as of the
Applicable Time (as defined below), (ii) a term sheet substantially in the form
attached as Schedule A hereto indicating the aggregate principal amount of
Notes being sold, the price at which the Notes will be sold, the conversion
ratio of the Notes and any other material terms (the “Final Term Sheet”) and
(iii) any other writings that the parties expressly agree in writing to treat
as part of the Disclosure Package (“Issuer Written Information”).  The Disclosure Package as of 9 pm (Eastern
time) on the date hereof (the “Applicable Time”) did not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. 
The preceding sentence does not apply to statements in or omissions from
the Disclosure Package in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchaser specifically for use therein,
it being understood and agreed that the only such information furnished by the
Initial Purchaser consists of the information described as such in Section 8
hereof.


(g)  Offering Materials Furnished to Initial Purchaser.  The Company has delivered to the Initial
Purchaser copies of the materials contained in the Disclosure Package and will
deliver the Final Offering Memorandum, each as amended or supplemented, in such
quantities and at such places as the Initial Purchaser has reasonably
requested.


(h)  Authorization of the Purchase Agreement.  This Agreement has been duly authorized,
executed and delivered by the Company.


(i)  Authorization of the Indenture.  The Indenture has been duly authorized by the
Company and, upon the effectiveness of the Registration Statement, will be
qualified under the Trust Indenture Act; on the Closing Date, the Indenture
will have been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery of the Indenture by the Trustee, will
constitute a legally valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws



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relating to or affecting the rights and remedies of creditors or by
general equitable principles; and the Indenture conforms in all material
respects to the description thereof contained in the Disclosure Package and the
Final Offering Memorandum.


(j)  Authorization of the Notes.  The Notes have been duly authorized by the
Company; when the Notes are executed, authenticated and issued in accordance
with the terms of the Indenture and delivered to and paid for by the Initial
Purchaser pursuant to this Agreement on the Closing Date (assuming due
authentication of the Notes by the Trustee), such Notes will constitute legally
valid and binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles; and the
Notes will conform in all material respects to the description thereof
contained in the Disclosure Package and the Final Offering Memorandum.


(k)  Authorization of the Conversion Shares  The shares of Common Stock initially issuable
upon conversion of the Notes have been duly authorized and reserved and, when
issued upon conversion of the Notes in accordance with the terms of the Notes
and the Indenture, will be validly issued, fully paid and non-assessable, free
and clear of all liens, encumbrances, equities or claims, will conform to the
description thereof in the Disclosure Package and the Final Offering
Memorandum, and the issuance of such shares will not be subject to any
preemptive or similar rights.


(l)  Authorization of the Registration Rights Agreement.  The Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable against the Company in accordance with
its terms, except as rights to indemnification thereunder may be limited by
public policy and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.


(m)  No Material Adverse Change.  Except as otherwise disclosed in the
Disclosure Package and the Final Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
subsequent to the respective dates as of which information is given in the
Disclosure Package (i) there has been no material adverse change, or, to
the knowledge of the Company, any development involving a prospective change,
in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a “Material Adverse Change”); and (ii)
there has been no dividend or distribution of any kind declared, paid or made
by the Company, other than regular quarterly cash dividends, or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.


(n)  Independent Accountants.  To the best of the Company’s knowledge, KPMG
LLP, who have expressed their opinion with respect to the financial statements
(which term as used in this Agreement includes the related notes thereto) and
supporting schedules included in the Disclosure Package and the Final Offering
Memorandum, are independent registered public accountants as required by the
Securities Act and the Exchange Act.



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(o)  Preparation of the Financial Statements.  The consolidated historical financial
statements and schedules of the Company and its consolidated subsidiaries
included in Company’s Annual Report on Form 10-K for the year ended May 28,
2006, as amended by Amendment No. 1 on Form 10-K/A filed with the Commission on
January 8, 2007 and the Company’s Current Report on Form 8-K filed with the
Commission on January 16, 2007 and incorporated by reference in the Disclosure
Package and the Final Offering Memorandum present fairly in all material
respects the financial condition, results of operations and cash flows of the
Company as of the dates and for the periods indicated, comply as to form with
the applicable accounting requirements of the Exchange Act and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as otherwise noted
therein).  The Company’s ratios of
earnings to fixed charges set forth in the Disclosure Package and the Final
Offering Memorandum have been calculated in compliance with Item 503(d) of
Regulation S-K under the Securities Act.


(p)  Incorporation and Good Standing of the Company and
its Subsidiaries.  Each of the
Company and its significant subsidiaries (as such term is defined in Rule
1-02(w) of Regulation S-X), as promulgated by the Commission (“Significant
Subsidiaries”), has been duly incorporated or organized, as the case may be, and
is validly existing as a corporation or limited liability company in good
standing (as applicable) under the laws of the jurisdiction in which it is
chartered or organized with corporate (or limited liability company) power and
authority to own or lease, as the case may be, and to operate its properties
and conduct its business as described in the Disclosure Package and the Final
Offering Memorandum and, in the case of the Company, to enter into and perform
its obligations under this Agreement. 
Each of the Company and each Significant Subsidiary is duly qualified as
a foreign corporation or limited liability company to transact business and is
in good standing (as applicable) under the laws of each jurisdiction which
requires such qualification or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction.  All of the issued and
outstanding shares of capital stock or limited liability company interests, as
applicable, of each Significant Subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and, except as set forth in
the Disclosure Package, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim.


(q)  Capitalization and Other Capital Stock Matters.  The authorized, issued and outstanding
capital stock of the Company is as set forth in the Disclosure Package and the
Final Offering Memorandum (other than for subsequent issuances, if any,
pursuant to employee benefit plans described in the Disclosure Package and the
Final Offering Memorandum or upon exercise of outstanding options described in
the Disclosure Package and the Final Offering Memorandum, as the case may be).  The Common Stock (including the Conversion
Shares) conforms in all material respects to the description thereof contained
in the Disclosure Package and the Final Offering Memorandum.  All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable.  None of the outstanding
shares of Common Stock were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase
securities of the Company.


(r)  Non-Contravention of Charter and By-Laws; No Further
Authorizations or Approvals Required.  Neither the Company nor any of its
Significant Subsidiaries is in violation of its charter or by-laws.  The Company’s execution, delivery and
performance of the Operative Documents and consummation of the transactions
contemplated thereby, by the Disclosure Package and the Final Offering
Memorandum (i) have been duly authorized by all necessary corporate action
and will not result in any violation of the provisions of the charter, by-laws
or other organizational documents of the Company or any Significant Subsidiary,
(ii) will not



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conflict with or constitute a breach of, or default or event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its Significant Subsidiaries (a
“Repayment Event”), under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
Significant Subsidiaries pursuant to, any material contract, indenture,
mortgage, deed of trust, loan or credit agreement, note lease or other
agreement or instrument to which the Company or any of its Significant
Subsidiaries is subject and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any Significant Subsidiary. 
No consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental or regulatory authority or
agency, is required for the Company’s execution, delivery and performance of
the Operative Documents and consummation of the transactions contemplated
thereby, by the Disclosure Package and the Final Offering Memorandum, except
(i) with respect to the transactions contemplated by the Registration Rights
Agreement, as may be required under the Securities Act, the Trust Indenture Act
and the Rules and Regulations promulgated thereunder and (ii) such as have been
obtained or made by the Company and are in full force and effect under the
Securities Act, applicable state securities or blue sky laws and from the NASD.


(s)  No Material Actions or Proceedings.  Except as set forth in or contemplated in the
Disclosure Package and the Final Offering Memorandum, no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its Significant Subsidiaries or
its or their property is pending or, to the best knowledge of the Company,
threatened that (i) could reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation of any
of the transactions contemplated hereby or (ii) could reasonably be
expected to have a material adverse effect on the consolidated financial
position, stockholders’ equity or results of operations, prospects, business or
properties of the Company and its subsidiaries, taken as a whole (a “Material
Adverse Effect”), whether or not arising from transactions in the ordinary
course of business. Except as set forth in or contemplated in the Disclosure
Package, no labor dispute with the employees of the Company or any of its
Significant Subsidiaries exists or, to the best of the Company’s knowledge, is
threatened that could reasonably be expected to have a Material Adverse Effect.


(t)  Company Not an “Investment Company”.  The Company is not, and, after receipt of
payment for the Notes and application of the proceeds thereof as contemplated
under the caption “Use of Proceeds” in each of the Disclosure Package and the
Final Offering Memorandum will not be, required to register as an “investment
company” within the meaning of the Investment Company Act of 1940, as amended
(the “Investment Company Act”).


(u)  No Price Stabilization or Manipulation.  The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably
expected to (i) cause or result in stabilization or manipulation of the price
of the Notes or the Conversion Shares to facilitate the sale or resale of the
Notes (provided, however, that
this paragraph shall not apply to any stabilization activities conducted by the
Initial Purchaser, who shall remain solely responsible for such activities), or
(ii) violate Regulation M under the Exchange Act.


(v)  Related Party Transactions.  There are no material related-party
transactions involving the Company or any Significant Subsidiary or any other
person that are not described in the Disclosure Package or the Final Offering
Memorandum.



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(w)  No General Solicitation.  None of the Company or any of its affiliates
(as defined in Rule 501(b) of Regulation D under the Securities Act
(“Regulation D”)), has, directly or through an agent, engaged in any form of
general solicitation or general advertising in connection with the offering of
the Notes or the Conversion Shares (as those terms are used in Regulation D)
under the Securities Act or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act; the Company has not entered
into any contractual arrangement with respect to the distribution of the Notes
or the Conversion Shares except for this Agreement, and the Company will not
enter into any such arrangement except for the Registration Rights Agreement
and as may be contemplated thereby.  


(x)  Sarbanes-Oxley Compliance.  The Company and, to the knowledge of the
Company, its directors and officers in their capacities as such, are in
material compliance with the applicable provisions of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”).


(y)  Internal Controls and Procedures.  The Company maintains (i) effective internal
control over financial reporting as defined in Rule 13a-15 under the Exchange
Act and (ii) a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management’s general or specific authorizations; (B) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(C) access to assets is permitted only in accordance with management’s general
or specific authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.


(z)  No Material Weakness in Internal Controls.  Except as disclosed in the Disclosure
Package, since the end of the Company’s most recent audited fiscal year, there
has been no material weakness in the Company’s internal control over financial
reporting (whether or not remediated).


(aa)  Taxes. 
The Company and its Significant Subsidiaries have paid all federal,
state, local and foreign taxes, except for any taxes as may be contested by the
Company in good faith and by appropriate proceedings, and filed all tax returns
required to be paid or filed through the date hereof; and except as otherwise
disclosed in each of the Disclosure Package and the Final Offering Memorandum,
there is no material tax deficiency that has been, or could reasonably be
expected to be, sustained against the Company or any of its subsidiaries or any
of their respective properties or assets.


(bb)  Disclosure Controls.  The Company and its subsidiaries maintain an
effective system of “disclosure controls and procedures” (as defined in Rule
13a-15 of the Exchange Act) that is designed to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. 
The Company and its subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as required by Rule
13a-15 of the Exchange Act.


Any certificate signed by an officer of the Company and delivered to
the Initial Purchaser or its counsel shall be deemed to be a representation and
warranty by the Company to the Initial Purchaser as to the matters set forth
therein.



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Section 2. 
Purchase, Sale and Delivery of the Notes.(a)  The Firm
Notes.  The Company agrees to
issue and sell to the Initial Purchaser the Firm Notes upon the terms herein
set forth.  On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Initial Purchaser agrees to
purchase from the Company the principal amount of Firm Notes at a purchase
price of 100% of the aggregate principal amount thereof.


(b)  The Closing Date.  Delivery of the Firm Notes to be purchased by
the Initial Purchaser and payment therefor shall be made at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York (or such
other place as may be agreed to by the Company and the Initial Purchaser) at
10:00 a.m. New York time, on April 11, 2007, which date and time may be
postponed by agreement between the Initial Purchaser and the Company (the time
and date of such closing are called the “Closing Date”).


(c)  The Optional Notes; the Option Closing Date.  In addition, on the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Company hereby grants an
option to the Initial Purchaser to purchase up to $150,000,000 in aggregate
principal amount of Optional Notes from the Company at the same price as the
purchase price to be paid by the Initial Purchaser for the Firm Notes.  The option granted hereunder may be exercised
at any time (but not more than once) upon notice by the Initial Purchaser to
the Company.  Such notice shall set forth
(i) the amount (which shall be an integral multiple of $1,000 in aggregate
principal amount) of Optional Notes as to which the Initial Purchaser is
exercising the option, (ii) the names and denominations in which the
Optional Notes are to be registered and (iii) the time, date and place at
which such Notes will be delivered (which time and date may be simultaneous
with, but not earlier than, the Closing Date; and in such case the term
“Closing Date” shall refer to the time and date of delivery of the Firm Notes
and the Optional Notes).  Such time and
date of delivery, if subsequent to the Closing Date, is called the “Option
Closing Date” and shall be determined by the Initial Purchaser.  Such date may be the same as the Closing Date
but not earlier than the Closing Date nor earlier than three or later than 10
business days after the date of such notice and in no case later than the end
of the 13-day period commencing on and including the date of original issuance
of the Notes.  The Initial Purchaser may
cancel the option at any time prior to its expiration by giving written notice
of such cancellation to the Company.


(d)  Payment for the Notes.  Payment for the Notes shall be made at the
Closing Date (and, if applicable, at the Option Closing Date) by wire transfer
of immediately available funds to the order of the Company.


(e)  Delivery of the Notes.  The Company shall deliver, or cause to be
delivered, to the Initial Purchaser the Firm Notes at the Closing Date, against
the irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. 
The Company shall also deliver, or cause to be delivered, to the Initial
Purchaser the Optional Notes the Initial Purchaser has agreed to purchase at
the Closing Date or the Option Closing Date, as the case may be, against the
irrevocable release of a wire transfer of immediately available funds for the
amount of the purchase price therefor. 
The Notes shall be registered in such names and denominations as the Initial
Purchaser shall have requested at least two full business days prior to the
Closing Date (or Option Closing Date, if applicable, as the case may be) and
shall be made available for inspection on the business day preceding the
Closing Date (or the Option Closing Date, if applicable, as the case may be) at
a location in New York City as the Initial Purchaser



 8
 








may designate.  Delivery of the
Notes shall be made through the facilities of The Depository Trust Company
unless the Initial Purchaser shall otherwise instruct.  Time shall be of the essence, and delivery at
the time and place specified in this Agreement is a further condition to the
obligations of the Initial Purchaser.


Section
3.  Additional Covenants of the Company.  The Company further covenants and agrees with
the Initial Purchaser as follows:


(a)  Initial Purchaser’s Review of Proposed Amendments and
Supplements.  During such
period beginning on the Applicable Time and ending on the date which is the
earlier of nine months after Applicable Time or the completion of the resale of
the Notes by the Initial Purchaser (as notified by the Initial Purchaser to the
Company), prior to amending or supplementing the Disclosure Package or the
Final Offering Memorandum, the Company shall furnish to the Initial Purchaser
for review a copy of each such proposed amendment or supplement, and the
Company shall not print or distribute such proposed amendment or supplement to
which the Initial Purchaser reasonably objects.


(b)  Amendments and Supplements to the Offering Documents
and Other Securities Act Matters. 
If, at any time prior to the earlier of nine months after the Applicable
Time or the completion of the resale of the Notes by the Initial Purchaser (as
notified by the Initial Purchaser to the Company), any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Disclosure Package or the Final Offering Memorandum in order that the
Disclosure Package or the Final Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, or if in
the opinion of the Initial Purchaser or counsel for the Initial Purchaser it is
otherwise necessary to amend or supplement the Disclosure Package or the Final
Offering Memorandum to comply with law, the Company shall promptly notify the
Initial Purchaser and prepare, subject to Section 3(a) hereof, such amendment
or supplement as may be necessary to correct such untrue statement or omission.


(c)  Copies of Offering Documents.  The Company agrees to furnish to the Initial
Purchaser, without charge, until the earlier of nine months after the Applicable
Time or the completion of the resale of the Notes by the Initial Purchaser (as
notified by the Initial Purchaser to the Company) as many copies of the
Preliminary Offering Memorandum, the Disclosure Package or the Final Offering
Memorandum and any amendments and supplements thereto as the Initial Purchaser
may reasonably request.


(d)  Blue Sky Compliance.  The Company shall cooperate with the Initial
Purchaser and counsel for the Initial Purchaser, as the Initial Purchaser may
reasonably request from time to time, to qualify or register the Notes for sale
under (or obtain exemptions from the application of) the state securities or
blue sky laws or Canadian provincial securities laws or other foreign laws of
those jurisdictions designated by the Initial Purchaser, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Notes.  The Company shall not be required to qualify
as a foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign corporation.  The Company will advise the Initial Purchaser
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Notes for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption,



 9
 








the Company shall use its reasonable best efforts to obtain the
withdrawal thereof at the earliest possible moment.


(e)  Rule 144A Information.  For so long as any of the Notes are “restricted
securities” within the meaning of Rule 144(a)(3) under the Securities Act, the
Company shall provide to any holder of the Notes or to any prospective
purchaser of the Notes designated by any holder, upon request of such holder or
prospective purchaser, information required to be provided by Rule 144A(d)(4)
of the Securities Act if, at the time of such request, the Company is not
subject to the reporting requirements under Section 13 or 15(d) of the Exchange
Act.


(f)  Compliance with Securities Law.  During the period beginning on the Applicable
Time and ending on the date which is the earlier of nine months after the
Applicable Time or the completion of the resale of the Notes by the Initial
Purchaser (as notified by the Initial Purchaser to the Company), the Company
will comply with all applicable securities and other laws, rules and
regulations in all material respects, including, without limitation, the
Sarbanes-Oxley Act, and use its reasonable best efforts to cause the Company’s
directors and officers, in their capacities as such, to comply with such laws,
rules and regulations, including, without limitation, the provisions of the
Sarbanes-Oxley Act.


(g)  Legends. 
Each of the Notes will bear, to the extent applicable, the legend
contained in “Notice to Investors” in the Disclosure Package for the time
period and upon the other terms stated therein.


(h)  Written Information Concerning the Offering.  Without the prior written consent of the
Initial Purchaser, the Company will not give to any prospective purchaser of
the Notes or any other person not in its employ any written information
concerning the offering of the Notes other than the Disclosure Package, the
Final Offering Memorandum or any other offering materials prepared by or with
the prior consent of the Initial Purchaser; provided,
that the prior written consent of the Initial Purchaser shall be deemed to have
been given in respect of the term sheet described in Section 1(f)(ii) hereof.


(i)  No General Solicitation.  Except following the effectiveness of the
Registration Statement (as defined in the Registration Rights Agreement), the
Company will not, and will cause its subsidiaries not to, solicit any offer to
buy or offer to sell the Notes by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act.


(j)  No Integration.  The Company will not, and will cause its
subsidiaries not to, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any “security” (as defined in the Securities Act) in a
transaction that could be integrated with the sale of the Notes in a manner
that would require the registration under the Securities Act of the Notes.


(k)  Information to Publishers.  Any information provided by the Company to
publishers of publicly available databases about the terms of the Notes shall
include a statement that the Notes have not been registered under the Act and
are subject to restrictions under Rule 144A of the Act.


(l)  DTC. 
The Company will cooperate with the Initial Purchaser and use its best
efforts to permit the Notes to be eligible for clearance and settlement through
The Depository Trust Company.



 10
 








(m)  Rule 144 Tolling.  During the period of two years after the last
Closing Date, the Company will not, and will not permit any of its “affiliates”
(as defined in Rule 144 under the Securities Act) to, resell any of the Notes
which constitute “restricted securities” under Rule 144 that have been
reacquired by any of them.


(n)  Use of Proceeds.  The Company shall apply the net proceeds from
the sale of the Notes sold by it in the manner described under the caption “Use
of Proceeds” in the Disclosure Package and the Final Offering Memorandum.


(o)  Transfer Agent.  The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.


(p)  Available Conversion Shares.  The Company will reserve and keep available
at all times, free of pre-emptive rights, the full number of Conversion Shares.


(q)  Conversion Price.  Between the date hereof and the Closing Date,
the Company will not do or authorize any act or thing that would result in an
adjustment of the conversion price of the Notes.


(r)  Investment Limitation.  The Company shall not invest or otherwise use
the proceeds received by the Company from its sale of the Notes in such a
manner as would require the Company or any of its subsidiaries to register as
an investment company under the Investment Company Act.


(s)  No Manipulation of Price.  Until the date of the completion of the
resale of the Notes by the Initial Purchaser (as notified by the Initial
Purchaser to the Company), the Company will not take, directly or indirectly,
any action (i) designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company or (ii) that would violate Regulation M under
the Exchange Act.


(t)  Inclusion of Conversion Shares.  To the extent that any Conversion Shares do
not come from the Company’s treasury shares, prior to any issuance of any
Conversion Shares, the Company will list, subject to notice of issuance, such
Conversion Shares, on the New York Stock Exchange.


Section
4.  Payment of Expenses.  The Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby,
including without limitation (i) all expenses incident to the issuance and
delivery of the Notes (including all printing and engraving costs),
(ii) all fees and expenses of the Trustee under the Indenture,
(iii) all necessary issue, transfer and other stamp taxes in connection
with the issuance and sale of the Notes to the Initial Purchaser, (iv) all
fees and expenses of the Company’s counsel, independent registered public
accountants and other advisors, (v) all costs and expenses incurred in
connection with the preparation, printing, shipping and distribution of
the  Disclosure Package and the Final
Offering Memorandum, all amendments and supplements thereto and this Agreement,
(vi) all filing fees, attorneys’ fees and expenses incurred by the Company or
the Initial Purchaser in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Notes for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada, and, if requested by the Initial
Purchaser, preparing and printing a “Blue Sky Survey” or memorandum, and any
supplements thereto, advising the Initial Purchaser of such qualifications,
registrations and exemptions, (vii)  the expenses of the Company and the



 11
 








Initial Purchaser in
connection with the marketing and offering of the Notes, (viii) the fees
and expenses associated with including the Conversion Shares on the New York
Stock Exchange, (ix) all expenses and fees in connection with admitting
the Notes for trading in the PORTAL Market and (x) all other cost and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section.  Except as provided in this Section 4,
Section 7 and Section 10 hereof, the Initial Purchaser shall pay its
own expenses, including the fees and disbursements of its counsel.


Section
5.  Conditions of the Obligations of the
Initial Purchaser.  The
obligations of the Initial Purchaser to purchase and pay for the Notes as
provided herein on the Closing Date and, with respect to the Optional Notes,
the Option Closing Date, if applicable, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in
Section 1 hereof as of the date hereof and as of the Closing Date as
though then made and, with respect to the Optional Notes, as of the related
Option Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:


(a)  Accountants’ Comfort Letter.  On the date hereof, the Initial Purchaser
shall have received from KPMG LLP, independent registered public accountants
for the Company, a letter dated the date hereof, each addressed to the Initial
Purchaser, in form and substance satisfactory to the Initial Purchaser,
containing statements and information of the type ordinarily included in
accountants’ “comfort letters” to the Initial Purchaser, delivered according to
Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Disclosure Package and the Final Offering
Memorandum with respect to the Company.


(b)  No Material Adverse Change or Rating Agency Change.  For the period from and after the date of
this Agreement and prior to the Closing Date and, with respect to the Optional
Notes, the Option Closing Date:


(i)            in the sole
judgment of the Initial Purchaser there shall not have occurred any Material
Adverse Change that makes it impractical or inadvisable to proceed with the
offering and delivery of the Notes as contemplated by the Disclosure Package
and the Final Offering Memorandum; and


(ii)           there shall not
have occurred any downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded
any debt securities of the Company by any “nationally recognized statistical
rating organization” as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act.


(c)  Opinion of Counsel for the Company.  On each of the Closing Date and the Option
Closing Date, if applicable, the Initial Purchaser shall have received the
favorable opinion of Siri S. Marshall, General Counsel of the Company, dated as
of such Closing Date, the form of which is attached as Exhibit A.


(d)  Opinion of Counsel for the Initial Purchaser.  On each of the Closing Date and the Option
Closing Date, if applicable, the Initial Purchaser shall have received the
favorable opinion of Davis Polk & Wardwell, counsel for the Initial
Purchaser, dated as of such Closing Date, in form and substance satisfactory
to, and addressed to, the Initial Purchaser, with respect to the



 12
 








issuance and sale of the Notes, the Disclosure Package, the Final
Offering Memorandum and other related matters as the Initial Purchaser may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.


(e)  Officers’ Certificate.  On each of the Closing Date and the Option
Closing Date, if applicable, the Initial Purchaser shall have received a
written certificate executed by the Chairman of the Board or the President or
any Vice President and the principal financial or accounting officer of the
Company, dated as of such Closing Date, to the effect set forth in
subsection (b)(ii) of this Section 5, and further to the effect that:


(i)            for the period from
and after the date of this Agreement and prior to such Closing Date there has
not occurred any Material Adverse Change;


(ii)           the representations,
warranties and covenants of the Company set forth in Section 1 of this
Agreement are true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and


(iii)          the Company has
complied with all the agreements hereunder and satisfied all the conditions on
its part to be performed or satisfied hereunder at or prior to such Closing
Date.


(f)  Bring-down Comfort Letter.  On each of the Closing Date and the Option
Closing Date, if applicable, the Initial Purchaser shall have received from
KPMG LLP, independent registered public accountants for the Company, a letter
dated such date, in form and substance satisfactory to the Initial Purchaser,
to the effect that they reaffirm the statements made in the letter furnished by
them pursuant to subsection (a) of this Section 5, except that the
specified date referred to therein for the carrying out of procedures shall be
no more than three business days prior to the Closing Date or Option Closing
Date, as the case may be.


(g)  Registration Rights Agreement.  The Company and the Initial Purchaser shall
have executed and delivered the Registration Rights Agreement (in form and
substance satisfactory to the Initial Purchaser), and the Registration Rights
Agreement shall be in full force and effect.


(h)  PORTAL Designation.  The Notes shall have been designated
PORTAL-eligible securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.


(i)  Additional Documents.  On or before each of the Closing Date and the
Option Closing Date, if applicable, the Initial Purchaser and counsel for the
Initial Purchaser shall have received such information, documents and opinions
as they may reasonably require for the purposes of enabling them to pass upon
the issuance and sale of the Notes as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.


If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the Initial
Purchaser by notice to the Company at any time on or prior to the Closing Date
and, with respect to the Optional Notes, at any time prior to the Option
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 7
Section 8, Section  9, Section 11 and Section  12 shall at all
times be effective and shall survive such termination.



 13
 








Section
6.  Representations, Warranties and
Agreements of Initial Purchaser.  The Initial Purchaser represents and warrants
that it is a “qualified institutional buyer”, as defined in Rule 144A (a
“QIB”).  The Initial Purchaser agrees with
the Company that:


(a)  The Notes and the Conversion
Shares have not been and will not be registered under the Securities Act in
connection with the initial offering of the Notes.


(b)  The Initial Purchaser is
purchasing the Notes pursuant to a private sale exemption from registration
under the Securities Act.


(c)  The Notes have not been and
will not be offered or sold by the Initial Purchaser or its affiliates acting
on its behalf except in accordance with Rule 144A.


(d)  The Initial Purchaser will
not offer or sell the Notes by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or (ii) any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.


(e)  The Initial Purchaser has
not offered or sold, and will not offer or sell, any Notes except to persons
whom it reasonably believes to be QIBs.


Section
7.  Reimbursement of Initial Purchaser’s
Expenses.  If this
Agreement is terminated by the Initial Purchaser pursuant to Section 5 or
Section 10, or if the sale to the Initial Purchaser of the Notes on the Closing
Date is not consummated because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Initial Purchaser upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Initial Purchaser in connection with the proposed purchase and the offering and
sale of the Notes, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.


Section 8. 
Indemnification.


(a)  Indemnification of the Initial Purchaser.  The Company agrees to indemnify and hold
harmless the Initial Purchaser, its directors, officers and employees, agents,
and each person, if any, who controls the Initial Purchaser within the meaning
of the Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which the Initial Purchaser or such
controlling person may become subject, insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Offering Memorandum, the Final
Offering Memorandum, the Final Term Sheet, any Issuer Written Information or
any other written information used by or on behalf of the Company in connection
with the offer or sale of the Notes (or any amendment or supplement to the
foregoing), or the omission or alleged omission therefrom of a material fact,
in each case, necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and to
reimburse the Initial Purchaser, its officers, directors, employees, agents and
each such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by the Initial Purchaser) as such expenses are
reasonably incurred by the Initial Purchaser, its officers, directors,
employees, agents or such controlling person in connection with investigating,
defending, settling, compromising or paying any such



 14
 








loss, claim, damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Initial Purchaser expressly for use in the Preliminary
Offering Memorandum, the Final Offering Memorandum, the Final Term Sheet, any
Issuer Written Information or any other written information used by or on
behalf of the Company in connection with the offer or sale of the Notes (or any
amendment or supplement to the foregoing).


The indemnity agreement set forth in this Section 8(a) shall be in
addition to any liabilities that the Company may otherwise have.


(b)  Indemnification of the Company, its Directors and
Officers.  The Initial
Purchaser agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers, employees, agents and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company, or any such director, officer, employee, agent or
controlling person may become subject, insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum, the Final
Offering Memorandum, the Final Term Sheet, any Issuer Written Information or
any other written information used by or on behalf of the Company in connection
with the offer or sale of the Notes (or any amendment or supplement to the
foregoing) or arises out of or is based upon the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, and only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in the Preliminary Offering Memorandum, the Final Offering Memorandum,
the Final Term Sheet, any Issuer Written Information or any other written
information used by or on behalf of the Company in connection with the offer or
sale of the Notes (or any amendment or supplement to the foregoing), in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchaser expressly for use therein; and to reimburse
the Company, or any such director, officer, employee, agent or controlling
person for any and all expenses (including the fees and disbursements of
counsel) as such expenses are reasonably incurred by the Company, or any such
director, officer, employee, agent or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. 
The Company hereby acknowledges that the only information that the
Initial Purchaser has furnished to the Company expressly for use in the
Preliminary Offering Memorandum, the Final Offering Memorandum, the Final Term
Sheet, any Issuer Written Information or any other written information used by
or on behalf of the Company in connection with the offer or sale of the Notes
(or any amendment or supplement to the foregoing), are the statements set forth
in Schedule B.  The indemnity agreement
set forth in this Section 8(b) shall be in addition to any liabilities
that each Initial Purchaser may otherwise have.


(c)  Notifications and Other Indemnification Procedures.  Promptly after receipt by an indemnified
party under this Section 8 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof, but the failure to
so notify the indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise learn
of such action and such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will



 15
 








not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above.  In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it shall
elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.  Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of more
than one separate counsel (other than local counsel), reasonably approved by
the indemnifying party (or by the Initial Purchaser in the case of
Section 8(b)), representing the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.


(d)  Settlements.  The indemnifying party under this
Section 8 shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.  Notwithstanding the immediately preceding
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, an indemnifying party shall not be liable for any settlement effected
without its consent if such indemnifying party (x) reimburses such indemnified
party in accordance with such request to the extent it considers such request
to be reasonable and (y) provides written notice to the indemnified party
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement.  No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent to the entry of judgment in any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity was or could have



 16
 








been sought hereunder by such indemnified party, unless such
settlement, compromise or consent (1) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding and (2) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.


Section
9.  Contribution.  If the indemnification provided for in
Section 8 is for any reason unavailable to or otherwise insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party,
as incurred, as a result of any losses, claims, damages, liabilities or
expenses referred to therein (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company, on the one hand, and the Initial
Purchaser, on the other hand, from the offering of the Notes pursuant to this
Agreement or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the statements or omissions or
alleged statements or alleged omissions that resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations.  The relative benefits
received by the Company, on the one hand, and the Initial Purchaser, on the
other hand, in connection with the offering of the Notes pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Notes pursuant to this Agreement (before
deducting expenses) received by the Company, and the total discount, if any,
received by the Initial Purchaser bear to the aggregate initial offering price
of the Notes.  The relative fault of the
Company, on the one hand, and the Initial Purchaser, on the other hand, shall
be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, on the one
hand, or the Initial Purchaser, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.


The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. 
The provisions set forth in Section 8(c) with respect to notice of
commencement of any action shall apply if a claim for contribution is to be
made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for
which notice has been given under Section 8(c) for purpose of indemnification.


The Company and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this Section 9.


Notwithstanding the provisions of this Section 9, the Initial
Purchaser shall not be required to contribute any amount in excess of the
purchase discount or commission received by the Initial Purchaser in connection
with the Notes purchased by it hereunder. 
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.  For purposes of this Section 9, each
director, officer, employee and agent of the Initial Purchaser and each person,
if any, who controls the Initial Purchaser within the meaning of the Securities



 17
 








Act
and the Exchange Act shall have the same rights to contribution as the Initial
Purchaser, and each director of the Company, each officer of the Company, each
employee or agent of the Company and each person, if any, who controls the
Company within the meaning of the Securities Act and the Exchange Act shall
have the same rights to contribution as the Company.


Section
10.  Termination of this Agreement.  On or prior to the Closing Date this
Agreement may be terminated by the Initial Purchaser by notice given to the
Company if at any time (i) trading or quotation in any of the Company’s
securities shall have been suspended or limited by the Commission or by the New
York Stock Exchange, or trading in securities generally on either the Nasdaq
Stock Market or the New York Stock Exchange shall have been suspended or
limited, or minimum or maximum prices shall have been generally established on
any of such stock exchanges by the Commission or the NASD; (ii) a general
banking moratorium shall have been declared by any federal or New York
authority or a material disruption in commercial banking or securities
settlement or clearance services in the United States has occurred or
(iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the
United States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States or
international political, financial or economic conditions, as in the judgment
of the Initial Purchaser is material and adverse and makes it impracticable or
inadvisable to market the Notes in the manner and on the terms described in the
Disclosure Package and the Final Offering Memorandum or to enforce contracts
for the sale of securities.  Any
termination pursuant to this Section 10 shall be without liability on the
part of (a) the Company to the Initial Purchaser or (b)  the Initial
Purchaser to the Company.


Section
11.  No Advisory or Fiduciary
Responsibility.  The
Company acknowledges and agrees that: (i) the purchase and sale of the Notes
pursuant to this Agreement, including the determination of the offering price
of the Notes and any related discounts and commissions, is an arm’s-length
commercial transaction between the Company, on the one hand, and the Initial
Purchaser, on the other hand, and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of
the transactions contemplated by this Agreement; (ii) in connection with each
transaction contemplated hereby and the process leading to such transaction the
Initial Purchaser is and has been acting solely as a principal and is not the financial
advisor, agent or fiduciary of the Company or its affiliates, stockholders,
creditors or employees or any other party; (iii) the Initial Purchaser has not
assumed and will not assume an advisory, agency or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated
hereby or the process leading thereto (irrespective of whether the Initial
Purchaser has advised or is currently advising the Company on other matters)
and the Initial Purchaser has no obligation to the Company with respect to the
offering contemplated hereby except the obligations expressly set forth in this
Agreement; (iv) the Initial Purchaser and its respective affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Company and that the Initial Purchaser has no obligation to
disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Initial Purchaser has not provided any legal,
accounting, regulatory or tax advice with respect to the offering contemplated
hereby and the Company has consulted its own legal, accounting, regulatory and
tax advisors to the extent it deemed appropriate.


This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Initial Purchaser with
respect to the subject matter hereof.



 18
 








Section
12.  Representations and Indemnities to
Survive Delivery.  The
respective indemnities, contribution, agreements, representations, warranties
and other statements of the Company, of its officers and of the Initial
Purchaser set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, regardless of (i) any investigation, or
statement as to the result hereof, made by or on behalf of the Initial
Purchaser or the Company or any of its or their partners, officers, directors,
employees, agents or any controlling person, as the case may be, (ii)
acceptance of the Notes and payment for them hereunder or (iii) any termination
of this Agreement.


Section
13.  Notices.  All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:


If to the Initial
Purchaser:


Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York  10036

Facsimile:  212-761-0316

Attention:  Ken Pott


with a copy to:

Davis Polk & Wardwell

450 Lexington Ave.

New York, New York 10017

Facsimile:  212-450-4800

Attention:  Winthrop B. Conrad, Jr.


If to the Company:

General Mills, Inc.

Number One General Mills Blvd.

Minneapolis, Minnesota 55426

Facsimile:  763-764-3302

Attention:  General Counsel


with a copy to:

General Mills, Inc.

Treasury Department

Number One General Mills Blvd.

Minneapolis, Minnesota 55426

  Facsimile:  763-764-7384
  Attention:  Treasurer


Any party hereto may change the address for
receipt of communications by giving written notice to the others.


Section
14.  Successors.  This Agreement will inure to the benefit of
and be binding upon the parties hereto and to the benefit of the employees,
agents, officers and directors and controlling persons referred to in
Section 8 and Section 9, and in each case their respective



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successors, and no other
person will have any right or obligation hereunder.  The term “successors” shall not include any
purchaser of the Notes as such from the Initial Purchaser merely by reason of
such purchase.


Section
15.  Partial Unenforceability.  The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof.  If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.


Section
16.  Governing Law Provisions.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws principles thereof.


Section
17.  General Provisions.  This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. 
This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. 
This Agreement may not be amended or modified unless in writing by all
of the parties hereto.  The Section
headings herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this Agreement.


Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions.  Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly
allocate the risks in light of the ability of the parties to investigate the
Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Disclosure Package and the Final Offering
Memorandum (and any amendments and supplements thereto).



 20














If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.


	
  

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL
  MILLS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
  /s/ Donal L.
  Mulligan

  	
   

  
	
   

  	
   

  	
  Name:  Donal L. Mulligan

  	
   

  
	
   

  	
   

  	
  Title:  Vice President, Treasurer

  	
   

  



 


The foregoing Purchase Agreement is hereby confirmed and accepted by
the Initial Purchaser as of the date first above written.


MORGAN
STANLEY & CO. INCORPORATED


	
  By:

  	
  /s/ Kenneth Pott

  	
   

  
	
   

  	
  Name: Ken Pott

  	
   

  
	
   

  	
  Title: Managing Director