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Second Amendment To Merger

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SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER


THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "AMENDMENT") is made as of October 31, 2001 by and among General Mills, Inc., a Delaware corporation ("GENERAL MILLS"), General Mills North American Businesses, Inc., a Delaware corporation and wholly owned subsidiary of General Mills ("MERGER SUB"), Diageo plc, a public limited company incorporated under the laws of England and Wales ("DIAGEO"), and The Pillsbury Company, a Delaware corporation and indirect wholly owned subsidiary of Diageo ("PILLSBURY"). Unless otherwise specified, capitalized terms used herein shall have the meaning ascribed to them in the Merger Agreement (as herein defined).


RECITALS


WHEREAS, General Mills, Merger Sub, Diageo and Pillsbury are the parties to that certain Agreement and Plan of Merger, dated as of July 16, 2000, as amended by the First Amendment to Agreement and Plan of Merger, dated as of April 12, 2001 (the "MERGER AGREEMENT"); and


WHEREAS, the parties to the Merger Agreement desire to further amend the Merger Agreement as set forth in this Amendment and to provide for such other agreements among the parties as set forth herein.


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained in this Amendment, and intending to be legally bound hereby, the parties hereto agree as follows:


1. EXHIBITS.


(a) Exhibit C to the Merger Agreement is hereby replaced in its entirety with Exhibit C hereto.


(b) The Merger Agreement (including the list of Exhibits contained therein) is hereby amended by adding new Exhibit F (Subsidiary Purchase Price Allocation), new Exhibit G (Form of Purchase Agreement), new Exhibit H (Form of Lease) and new Exhibit I (2001 Business Financial Statements) to the Merger Agreement, such new Exhibits to the Merger Agreement attached as Exhibits F, G, H and I, respectively, hereto.


2. RECITALS.


(a) The fifth recital following the preamble in the Merger Agreement is hereby replaced in its entirety with the following:


"WHEREAS, in connection with the closing of the transactions
contemplated by this Agreement, it is contemplated that General
Mills, Diageo and the Pillsbury Stockholder will enter into a
Stockholders Agreement (the "STOCKHOLDERS AGREEMENT" and collectively
with the Subsidiary Purchase Agreements, the "ANCILLARY AGREEMENTS")
in the form set forth as EXHIBIT C to this Agreement."


(b) The third recital following the preamble in the Merger Agreement is hereby deleted.


3. ARTICLE I. Article I of the Merger Agreement is hereby amended as follows:


(a) The definition of "Additional Shares" is hereby deleted.


(b) The definition of "Anniversary Date" is hereby deleted.


(c) The following definitions are hereby inserted following the definition of "Business Intellectual Property Rights":


' "CVR MEASUREMENT DATE" means the eighteen-month anniversary of the
Effective Time (or if such date is not a Business Day, the next
Business Day).'


' "CLOSING DATE THIRD PARTY DEBT" shall mean the amount of aggregate
outstanding indebtedness (excluding off balance sheet financing and
operating and capitalized finance leases that are reflected in the
profits and losses statement of the Business Entities in the ordinary
course consistent with past practice) of the Business Entities as of
the Closing Date (other than intercompany indebtedness owing to
Diageo or one or more Continuing Affiliates, all of which
intercompany indebtedness will be contributed to capital pursuant to
Section 5.6(a)).'


(d) The words "Anniversary Date" in the definition of "Contingent Share Value" are hereby replaced with the words "CVR Measurement Date".


(e) The definition of "General Mills Shares Held" is replaced in its entirety with the following:


' "GENERAL MILLS SHARES HELD" means the number of shares of General
Mills Common Stock issued to the Pillsbury Stockholder pursuant to
Section 2.8(a) of this Agreement and continued to be held by the
Pillsbury Stockholder or its Permitted Transferees as of the CVR
Measurement Date or the Disposition, as the case may be.'


(f) The definition of "Maximum Contingent Share Value" is replaced in its entirety with the following:


' "MAXIMUM CONTINGENT SHARE VALUE" means $5.00.'


(g) The following definition is hereby inserted following the definition of "Pillsbury Common Stock":


' "PILLSBURY PURCHASE PRICE CASH AMOUNT" shall mean (i)
$3,019,672,996.00 less (ii) the Closing Date Third Party Debt.'


(h) The definition of "Pillsbury Purchase Price Shares" is replaced in its entirety with the following:


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'"PILLSBURY PURCHASE PRICE SHARES" shall mean 134 million shares of
General Mills Common Stock.'


(i) The definition of "Purchase Price Shares" is hereby deleted.


(j) The definition of "Subsidiary Purchase Price Shares" is replaced in its entirety with the following:


' "SUBSIDIARY PURCHASE PRICE CASH AMOUNT" shall mean
$810,327,004.00.'


(k) The definition of "Target Price" is replaced in its entirety with the following:


' "TARGET PRICE" means $49.00.'


(l) The following terms are hereby deleted from the chart contained in Article I paragraph (b):


Adjustment Payment Date
Escrow Agent
Escrow Agreement
Escrow Fund
Joint Instruction


(m) The following terms are hereby inserted into the chart contained in Article I paragraph (b):


2001 Business Financial Statements . . . . . . . . . . . . 3.3(c)
2001 Business Balance Sheet. . . . . . . . . . . . . . . . 3.3(c)
Closing Date Cash. . . . . . . . . . . . . . . . . . . . . 5.4(d)
Estimated Closing Date Third Party Debt. . . . . . . . . . 5.15


4. ARTICLE II. Article II of the Merger Agreement is hereby amended as follows:


(a) Section 2.8(a) is hereby replaced in its entirety with the following:


"(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Diageo or the Pillsbury Stockholder, all of the
shares of Pillsbury Common Stock issued and outstanding immediately
prior to the Effective Time, and all rights in respect thereof, shall
forthwith cease to exist and shall collectively be converted into the
right to receive the Pillsbury Purchase Price Shares and the
Pillsbury Purchase Price Cash Amount."


(b) Sections 2.10, 2.11, 2.12 and 2.13 are hereby replaced in their entirety with the following:


"Section 2.10. AGGREGATE CONSIDERATION. The aggregate
consideration paid to the Pillsbury Stockholder pursuant to this
Agreement in connection with the Merger and to the Selling Affiliates
for the Subsidiary Purchases shall consist


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of (a) the Pillsbury Purchase Price Shares, (b) the Pillsbury
Purchase Price Cash Amount and (c) the Subsidiary Purchase Price
Cash Amount (collectively, the "PURCHASE PRICE"), subject to any
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adjustment to the Purchase Price pursuant to Section 2.13, 2.14
or 9.4(d).


Section 2.11. DELIVERIES BY DIAGEO AND THE SELLING AFFILIATES.
At the Closing, Diageo shall, or shall cause the Pillsbury
Stockholder or one or more of the Selling Affiliates to, as the case
may be, deliver the following to General Mills or, in the case of
paragraph (a) below, the applicable Buying Affiliate:


(a) certificates or notarial assignment deed for, or such other
instruments evidencing ownership under applicable law of, the
Purchased Interests, which constitute and will constitute as of the
Closing, 100% of the issued and outstanding shares of capital stock
or other equity interests of the Purchased Entities owned by the
Selling Affiliates, in each case with appropriate stock powers or
other instruments of transfer and requisite tax stamps attached and
properly signed (or in the event any of the Subsidiary Purchases is
in the form of an acquisition of assets and liabilities, such
documentation as may be necessary to reflect the transfer of such
assets and liabilities to the applicable Buying Affiliate);


(b) all Books and Records in the possession of Diageo or any
Continuing Affiliate, except as otherwise provided by Law;


(c) the certificate required to be delivered by Diageo and
Pillsbury pursuant to Section 8.2(d);


(d) counterparts of the Stockholders Agreement duly executed by
Diageo and the Pillsbury Stockholder;


(e) certificates of the Secretary or an Assistant Secretary (or
a person holding an equivalent position, in the case of the Selling
Affiliates) of Diageo, Pillsbury, the Pillsbury Stockholder and the
Selling Affiliates, dated the Closing Date, (i) as to the incumbency
and signatures of the officers or representatives of Diageo and
Pillsbury executing this Agreement and of Diageo and the Pillsbury
Stockholder executing the Stockholders Agreement and of the Selling
Affiliates executing the Subsidiary Purchase Agreements, together
with evidence of incumbency of such Secretary or Assistant Secretary
(or a person holding an equivalent position, in the case of the
Selling Affiliates), and (ii) certifying attached resolutions of the
respective Board of Directors of Diageo, Pillsbury, the Pillsbury
Stockholder and the Selling Affiliates that authorize the execution,
delivery and performance of this Agreement and the Ancillary
Agreements, as the case may be;


(f) resignations, effective as of the Effective Time, of those
directors of the Food Subsidiaries as General Mills may request; and


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(g) such other documents, instruments and certificates as
General Mills may reasonably request in connection with the
transactions contemplated by this Agreement.


Section 2.12. DELIVERIES BY GENERAL MILLS AND THE BUYING
AFFILIATES. At the Closing, General Mills shall deliver to Diageo,
and, in the case of paragraph (b) below, shall cause the Buying
Affiliates to deliver to the Selling Affiliates:


(a) (i) a certificate or certificates for the Pillsbury Purchase
Price Shares (which shares, when delivered, will be duly authorized,
validly issued, fully paid and non-assessable), in definitive form,
registered in the name of the Pillsbury Stockholder, bearing a legend
or legends referencing restrictions under the Securities Act on
transfer of the Pillsbury Purchase Price Shares and any legends
required by the Stockholders Agreement and (ii) the Pillsbury
Purchase Price Cash Amount (the amount of which, for purposes of such
delivery at the Closing, shall be calculated based upon the Estimated
Closing Date Third Party Debt), by wire transfer in immediately
available funds, to the account specified in writing by Diageo at
least one Business Day prior to the Closing Date;


(b) the Subsidiary Purchase Price Cash Amount, by wire transfer
in immediately available funds, to the account specified in writing
by Diageo at least one Business Day prior to the Closing Date;


(c) the certificate required to be delivered by General Mills
pursuant to Section 8.3(c);


(d) a duly executed counterpart of the Stockholders Agreement
executed by General Mills;


(e) certificates of the Secretary or an Assistant Secretary (or
a person holding an equivalent position, in the case of the Buying
Affiliates) of General Mills, Merger Sub and the Buying Affiliates,
dated the Closing Date, (i) as to the incumbency and signatures of
the officers or representatives of General Mills and Merger Sub
executing this Agreement and of General Mills executing the
Stockholders Agreement and of the officers or representatives of
General Mills and the Buying Affiliates executing the Subsidiary
Purchase Agreements, together with evidence of the incumbency of such
Secretary or Assistant Secretary (or a person holding an equivalent
position, in the case of the Buying Affiliates), and (ii) certifying
attached resolutions of the respective Boards of Directors of General
Mills, Merger Sub and the Buying Affiliates, which authorize and
approve t
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