10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 23, 2008

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

1-13666

Commission File Number

DARDEN RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

Florida	59-3305930
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5900 Lake Ellenor Drive, Orlando, Florida	32809
(Address of principal executive offices)	(Zip Code)

407-245-4000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x   Yes     ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

x  Large accelerated filer	¨  Accelerated filer	¨  Non-accelerated filer	¨  Smaller reporting company
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes     x  No

Number of shares of common stock outstanding as of December 10, 2008: 136,987,851 (excluding 143,370,323 shares held in our treasury).

DARDEN RESTAURANTS, INC.

TABLE OF CONTENTS

		Page
Part I - Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Earnings	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Changes in Stockholders’ Equity and Accumulated Other Comprehensive Income (Loss)	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
Part II - Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		40
Index to Exhibits		41

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(In millions, except per share data)

(Unaudited)

	Quarter Ended						Six Months Ended
	November 23, 2008			November 25, 2007			November 23, 2008			November 25, 2007
Sales	$	1,668.9		$	1,522.0		$	3,443.1		$	2,989.5
Costs and expenses:
Cost of sales:
Food and beverage		516.4			459.1			1,063.2			882.9
Restaurant labor		548.0			505.4			1,106.3			977.0
Restaurant expenses		276.9			245.0			565.0			461.9
Total cost of sales, excluding restaurant depreciation and amortization of $66.6, $56.1, $131.0 and $103.6, respectively	$	1,341.3		$	1,209.5		$	2,734.5		$	2,321.8
Selling, general and administrative		146.7			170.4			317.2			313.4
Depreciation and amortization		70.6			60.3			139.3			110.9
Interest, net		27.8			22.6			55.2			32.3
Total costs and expenses	$	1,586.4		$	1,462.8		$	3,246.2		$	2,778.4
Earnings before income taxes		82.5			59.2			196.9			211.1
Income taxes		(24.0	)		(15.1	)		(56.0	)		(60.4	)
Earnings from continuing operations	$	58.5		$	44.1		$	140.9		$	150.7
Earnings (losses) from discontinued operations, net of tax expense (benefit) of $0.7, ($0.7), $0.5 and ($1.2), respectively		1.2			(0.6	)		0.8			(1.3	)
Net earnings	$	59.7		$	43.5		$	141.7		$	149.4
Basic net earnings per share:
Earnings from continuing operations	$	0.43		$	0.31		$	1.02		$	1.07
Earnings (losses) from discontinued operations		0.01			0.00			0.01			(0.01	)
Net earnings	$	0.44		$	0.31		$	1.03		$	1.06
Diluted net earnings per share:
Earnings from continuing operations	$	0.42		$	0.30		$	1.00		$	1.03
Earnings (losses) from discontinued operations		0.01			0.00			0.00			(0.01	)
Net earnings	$	0.43		$	0.30		$	1.00		$	1.02
Average number of common shares outstanding:
Basic		137.0			142.0			138.0			141.4
Diluted		139.4			146.9			141.1			146.6

See accompanying notes to our unaudited consolidated financial statements.

3

DARDEN RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In millions)

	November 23, 2008			May 25, 2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	51.3		$	43.2
Receivables, net		39.1			69.5
Inventories		324.1			216.7
Prepaid expenses and other current assets		56.1			46.7
Deferred income taxes		94.0			91.8
Total current assets	$	564.6		$	467.9
Land, buildings and equipment, net		3,216.0			3,066.0
Goodwill		519.7			519.9
Trademarks		454.7			455.0
Other assets		211.4			221.8
Total assets	$	4,966.4		$	4,730.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	291.5		$	245.1
Short-term debt		462.2			178.4
Accrued payroll		109.4			129.3
Accrued income taxes		—			2.4
Other accrued taxes		55.3			55.4
Unearned revenues		128.0			160.5
Other current liabilities		333.3			365.1
Total current liabilities	$	1,379.7		$	1,136.2
Long-term debt, less current portion		1,633.4			1,634.3
Deferred income taxes		214.1			197.6
Deferred rent		146.3			139.0
Obligations under capital leases, net of current installments		59.4			59.9
Other liabilities		146.4			154.5
Total liabilities	$	3,579.3		$	3,321.5
Stockholders’ equity:
Common stock and surplus	$	2,103.5		$	2,074.9
Retained earnings		2,182.3			2,096.0
Treasury stock		(2,848.9	)		(2,724.0	)
Accumulated other comprehensive income (loss)		(35.7	)		(20.7	)
Unearned compensation		(14.0	)		(17.0	)
Officer notes receivable		(0.1	)		(0.1	)
Total stockholders’ equity	$	1,387.1		$	1,409.1
Total liabilities and stockholders’ equity	$	4,966.4		$	4,730.6

See accompanying notes to our unaudited consolidated financial statements.

4

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

For the six months ended November 23, 2008 and November 25, 2007

(In millions)

(Unaudited)

	Common Stock And Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Unearned Compensation			Officer Notes Receivable			Total Stockholders’ Equity
Balance at May 25, 2008	$	2,074.9	$	2,096.0		$	(2,724.0	)	$	(20.7	)	$	(17.0	)	$	(0.1	)	$	1,409.1
Comprehensive income:
Net earnings		—		141.7			—			—			—			—			141.7
Other comprehensive income (loss):
Foreign currency adjustment		—		—			—			(6.2	)		—			—			(6.2	)
Change in fair value of derivatives, net of tax of $(3.5)		—		—			—			(10.3	)		—			—			(10.3	)
Amortization of unrecognized net actuarial loss, net of tax of $0.9		—		—			—			1.5			—			—			1.5
Total comprehensive income																			126.7
Cash dividends declared		—		(55.4	)		—			—			—			—			(55.4	)
Stock option exercises (0.4 shares)		7.0		—			0.8			—			—			—			7.8
Stock-based compensation		15.7		—			—			—			—			—			15.7
ESOP note receivable repayments		—		—			—			—			3.0			—			3.0
Income tax benefits credited to equity		3.2		—			—			—			—			—			3.2
Purchases of common stock for treasury (4.4 shares)		—		—			(126.7	)		—			—			—			(126.7	)
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.2 shares)		2.7		—			1.0			—			—			—			3.7
Balance at November 23, 2008	$	2,103.5	$	2,182.3		$	(2,848.9	)	$	(35.7	)	$	(14.0	)	$	(0.1	)	$	1,387.1
	Common Stock And Surplus		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Unearned Compensation			Officer Notes Receivable			Total Stockholders’ Equity
Balance at May 27, 2007	$	1,904.3	$	1,820.4		$	(2,576.5	)	$	(32.8	)	$	(20.6	)	$	(0.3	)	$	1,094.5
Comprehensive income:
Net earnings		—		149.4			—			—			—			—			149.4
Other comprehensive income (loss):
Foreign currency adjustment		—		—			—			3.6			—			—			3.6
Change in fair value of derivatives, net of tax of $1.7		—		—			—			0.7			—			—			0.7
Amortization of unrecognized net actuarial loss, net of tax of $1.5		—		—			—			2.4			—			—			2.4
Total comprehensive income																			156.1
Adjustment related to adoption of FIN 48, net of tax of $0.4		—		(0.7	)		—			—			—			—			(0.7	)
Cash dividends declared		—		(50.8	)		—			—			—			—			(50.8	)
Stock option exercises (2.4 shares)		40.6		—			5.7			—			—			—			46.3
Stock-based compensation expense		26.0		—			—			—			—			—			26.0
Stock-based awards included in cost of RARE acquisition		43.2		—			—			—			—			—			43.2
ESOP note receivable repayments		—		—			—			—			2.2			—			2.2
Income tax benefits credited to equity		25.0		—			—			—			—			—			25.0
Purchases of common stock for treasury (1.0 shares)		—		—			(44.4	)		—			—			—			(44.4	)
Issuance of treasury stock under Employee Stock Purchase Plan and other plans (0.4 shares)		3.7		—			0.6			—			—			—			4.3
Repayment of officer notes		—		—			—			—			—			0.1			0.1
Balance at November 25, 2007	$	2,042.8	$	1,918.3		$	(2,614.6	)	$	(26.1	)	$	(18.4	)	$	(0.2	)	$	1,301.8

See accompanying notes to our unaudited consolidated financial statements.

5

DARDEN RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Quarter Ended						Six Months Ended
	November 23, 2008			November 25, 2007			November 23, 2008			November 25, 2007
Cash flows—operating activities
Net earnings	$	59.7		$	43.5		$	141.7		$	149.4
(Earnings) losses from discontinued operations, net of tax expense (benefit)		(1.2	)		0.6			(0.8	)		1.3
Adjustments to reconcile net earnings to cash flows:
Depreciation and amortization		70.6			60.3			139.3			110.9
Asset impairment		0.4			—			1.1			—
Amortization of loan costs		0.8			0.2			1.9			0.6
Stock-based compensation expense		6.1			20.9			17.1			29.3
Change in current assets and liabilities		(115.4	)		(62.4	)		(126.6	)		(40.9	)
Contributions to postretirement plan		(0.3	)		(0.3	)		(0.5	)		(0.5	)
Loss (gain) on disposal of land, buildings and equipment		0.9			(1.9	)		0.9			(1.1	)
Change in cash surrender value of trust owned life insurance		20.0			0.9			23.8			2.6
Deferred income taxes		5.4			(2.6	)		5.5			(23.9	)
Change in deferred rent		3.7			3.4			7.6			4.8
Change in other liabilities		(1.3	)		10.6			(1.0	)		1.0
Other, net		(1.2	)		1.6			(0.4	)		2.4
Net cash provided by operating activities of continuing operations	$	48.3		$	74.8		$	209.6		$	235.9
Cash flows—investing activities
Purchases of land, buildings and equipment		(162.5	)		(114.8	)		(297.9	)		(201.4	)
Proceeds from disposal of land, buildings and equipment		2.4			0.4			3.0			0.6
Purchases of long-term investments		(25.1	)		—			(25.1	)		—
Cash used in business combination, net of cash acquired		—			(1,200.0	)		—			(1,200.0	)
(Increase) decrease in other assets		(1.5	)		2.9			—			(2.7	)
Net cash used in investing activities of continuing operations	$	(186.7	)	$	(1,311.5	)	$	(320.0	)	$	(1,403.5	)
Cash flows—financing activities
Proceeds from issuance of common stock		2.7			39.5			11.4			49.5
Dividends paid		(27.5	)		(25.5	)		(55.4	)		(50.8	)
Purchases of treasury stock		(58.4	)		(36.8	)		(126.7	)		(44.4	)
Income tax benefits credited to equity		0.3			19.3			3.2			25.0
Proceeds from issuance of Interim Credit Agreement		—			1,150.0			—			1,150.0
Repayment of Interim Credit Agreement		—			(1,150.0	)		—			(1,150.0	)
Proceeds from issuance of New Senior Notes		—			1,135.7			—			1,135.7
Repayment of acquired convertible notes		—			(125.0	)		—			(125.0	)
Proceeds from issuance of short-term debt		224.9			212.5			283.8			180.6
ESOP note receivable repayment		1.0			1.5			3.0			2.2
Principal payments on capital leases		(0.2	)		—			(0.6	)		—
Repayment of long-term debt		(1.0	)		(1.5	)		(3.0	)		(2.2	)
Net cash provided by financing activities of continuing operations	$	141.8		$	1,219.7		$	115.7		$	1,170.6
Cash flows – discontinued operations
Net cash used in operating activities of discontinued operations		(1.6	)		(3.2	)		(1.7	)		(5.9	)
Net cash provided by investing activities of discontinued operations		4.1			2.2			4.5			2.0
Net cash provided by (used in) discontinued operations	$	2.5		$	(1.0	)	$	2.8		$	(3.9	)
Increase (decrease) in cash and cash equivalents		5.8			(18.0	)		8.1			(0.9	)
Cash and cash equivalents - beginning of period		45.5			47.3			43.2			30.2
Cash and cash equivalents - end of period	$	51.3		$	29.3		$	51.3		$	29.3
Cash flows from changes in current assets and liabilities
Receivables, net		(1.6	)		(17.7	)		30.4			(3.1	)
Inventories		(48.3	)		(51.3	)		(107.4	)		(68.1	)
Prepaid expenses and other current assets		(12.4	)		1.7			(11.9	)		1.1
Accounts payable		3.5			36.5			34.0			68.8
Accrued payroll		1.6			(2.6	)		(20.1	)		(15.6	)
Accrued income taxes		1.2			35.3			11.5			(4.1	)
Other accrued taxes		(5.0	)		(4.7	)		0.1			(3.7	)
Unearned revenues		(2.6	)		9.2			(26.6	)		(7.3	)
Other current liabilities		(51.8	)		1.8			(36.6	)		(8.9	)
Change in current assets and liabilities	$	(115.4	)	$	(62.4	)	$	(126.6	)	$	(40.9	)

6

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

Darden Restaurants, Inc. (we, our or the Company) owns and operates full-service dining restaurants in the United States and Canada under the trade names Red Lobster^®, Olive Garden^®, LongHorn Steakhouse^®, The Capital Grille^®, Bahama Breeze^®, Seasons 52^®, Hemenway’s Seafood Grille & Oyster Bar^® and The Old Grist Mill Tavern^®. We have prepared these consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the quarter and six months ended November 23, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2009.

These statements should be read in conjunction with the consolidated financial statements and related notes to consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 25, 2008. The accounting policies used in preparing these consolidated financial statements are the same as those described in our Form 10-K.

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.

During the second quarter of fiscal 2008, we completed the acquisition of RARE Hospitality International, Inc. (RARE) for $1.27 billion in total consideration. The results of operations, financial position and cash flows of RARE are included in our consolidated financial statements as of the date of acquisition and for all periods subsequent. See Note 2 – Acquisition of RARE for additional information.

During the fourth quarter of fiscal 2007, we announced our intent to close or hold for sale all Smokey Bones Barbeque & Grill and Rocky River Grillhouse restaurants and, additionally, we closed nine Bahama Breeze restaurants. These restaurants and their related activities have been classified as discontinued operations. Therefore, for the quarters and six months ended November 23, 2008 and November 25, 2007, all impairment charges and disposal costs, gains and losses on disposition, along with the sales, costs and expenses and income taxes attributable to these restaurants, have been aggregated in a single caption entitled “Earnings (losses) from discontinued operations, net of tax expense (benefit)” on the accompanying consolidated statements of earnings. We have not allocated any general corporate overhead to amounts presented in discontinued operations, nor have we elected to allocate interest costs. See Note 3 – Discontinued Operations for additional information.

Unless otherwise noted, amounts and disclosures throughout the notes to consolidated financial statements relate to our continuing operations.

Note 2. Acquisition of RARE

On October 1, 2007, we completed the acquisition of all of the outstanding common stock of RARE for an aggregate purchase price of $1.27 billion. The acquired operations, which included 288 LongHorn Steakhouse restaurants, 29 The Capital Grille restaurants, one Hemenway’s Seafood Grille & Oyster Bar restaurant, and one The Old Grist Mill Tavern, as well as the rights associated with the four franchised LongHorn Steakhouse restaurants, are included in the results of operations of our consolidated financial statements from the date of acquisition and continue to operate under their trademarked names.

7

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As a result of the RARE acquisition, we accrued $4.7 million in employee termination benefits and $5.2 million in employee relocation benefits, both of which were included in the cost of the acquisition. The following is a reconciliation of accrued employee termination and employee relocation benefit costs from May 25, 2008 to November 23, 2008, which are included in other current liabilities on the accompanying consolidated balance sheets.

(in millions)	Balance at May 25, 2008		Adjustments			Payments			Balance at November 23, 2008
Employee terminations	$	1.4	$	—		$	(0.8	)	$	0.6
Employee relocations		2.4		(0.3	)		(1.1	)		1.0
Total	$	3.8	$	(0.3	)	$	(1.9	)	$	1.6

Note 3. Goodwill and Indefinite-Lived Intangibles

We review our goodwill and other indefinite-lived intangible assets, primarily our trademarks, for impairment annually, as of the first day of our fourth fiscal quarter or more frequently if indicators of impairment exist. Goodwill and other indefinite-lived intangible assets not subject to amortization have been assigned to reporting units for purposes of impairment testing. The reporting units are our restaurant concepts.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.

The goodwill impairment test involves a two-step process. The first step is a comparison of each reporting unit’s fair value to its carrying value. We estimate fair value using the best information available, including market information and discounted cash flow projections also referred to as the income approach. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs and number of units, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. We validate our estimates of fair value under the income approach by comparing the values to fair value estimates using a market approach. A market approach estimates fair value by applying cash flow multiples to the reporting unit’s operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units.

If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. Specifically, we would allocate the fair value to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, we would record an impairment charge for the difference.

At the end of the second quarter of fiscal 2009, due to present uncertainty surrounding the global economy and stock price volatility generally, and volatility in our stock price in particular, we concluded a triggering event had occurred indicating potential impairment and performed an impairment test of our goodwill and other indefinite-lived intangible assets.

At November 23, 2008, we had six reporting units; Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. Two reporting units, LongHorn Steakhouse and The Capital Grille, have a significant amount of goodwill. As part of our process for performing the step one impairment test of goodwill, we estimated the fair value of all of our reporting units utilizing the income approach described above to derive an enterprise value of the Company. We reconciled the enterprise value to our overall estimated market capitalization. The estimated market capitalization considers recent trends in our market capitalization and an expected control premium, based on comparable transactional history. Based on the results of the step one impairment test, no impairment charges of goodwill were required.

8

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We also performed sensitivity analyses on our estimated fair value using the income approach of LongHorn Steakhouse and The Capital Grille given the significance of goodwill related to these reporting units. A key assumption in our fair value estimate is the weighted average cost of capital utilized for discounting our cash flow estimates in our income approach. We selected a weighted average cost of capital for LongHorn Steakhouse of 12.0 percent and The Capital Grille of 12.5 percent. We noted that an increase in the weighted average cost of capital of approximately 60 basis points on LongHorn Steakhouse would result in impairment of a portion of its goodwill. We also noted that an increase in the weighted average cost of capital of approximately 15 basis points on The Capital Grille would result in impairment of a portion of its goodwill.

The fair value of other indefinite-lived intangible assets, primarily trademarks, are estimated and compared to the carrying value. We estimate the fair value of these intangible assets using the relief-from-royalty method, which requires assumptions related to projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the trademarks; and a discount rate. We recognize an impairment loss when the estimated fair value of the indefinite-lived intangible asset is less than its carrying value. We completed our impairment test of our indefinite-lived intangibles and concluded there was no impairment of the trademarks for LongHorn Steakhouse and The Capital Grille at November 23, 2008. A key assumption in our fair value estimate is the discount rate utilized in the relief-from-royalty method. We selected a discount rate for LongHorn Steakhouse of 13.0 percent and The Capital Grille of 13.5 percent. We noted that an increase in the discount rate of approximately 50 basis points on LongHorn Steakhouse would result in impairment of a portion of its trademark. We also noted that an increase in the discount rate of approximately 75 basis points on The Capital Grille would result in impairment of a portion of its trademark.

Even though we determined that there was no goodwill or indefinite-lived intangible asset impairment as of November 23, 2008, continued declines in the value of our stock price as well as values of others in the restaurant industry, declines in sales at our restaurants beyond our current forecasts, and significant adverse changes in the operating environment for the restaurant industry may result in a future impairment charge.

It is possible that changes in circumstances, existing at the measurement date or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of our goodwill, could result in an impairment charge of a portion or all of our goodwill or other indefinite-lived intangible assets. If we recorded an impairment charge, our financial position and results of operations would be adversely affected and our leverage ratio for purposes of our credit agreement would increase. If such leverage ratio were to exceed the maximum permitted under our credit agreement, we would be in default under our credit agreement.

At November 23, 2008, a write down of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately $430.0 million, on an after-tax basis, would have been required to cause our leverage ratio to exceed the permitted maximum. Due to the seasonal nature of our business, our leverage ratio as determined on a quarterly basis generally is at its highest point as of the end of our second fiscal quarter. Accordingly, it is expected that an even greater impairment of goodwill would be required to cause our leverage ratio to exceed the permitted maximum as calculated as of the end of our third fiscal quarter.

Note 4. Discontinued Operations

During the fourth quarter of fiscal 2007, we closed nine under-performing Bahama Breeze restaurants and announced the closure of 54 Smokey Bones and two Rocky River Grillhouse restaurants, as well as our intention to offer the remaining 73 operating Smokey Bones restaurants for sale. During the second quarter of fiscal 2008, we entered into a definitive agreement to sell the 73 operating Smokey Bones Barbeque & Grill restaurants to Barbeque Integrated, Inc., an affiliate of Sun Capital Partners, Inc., a worldwide private investment firm, for $82.0 million, net of selling costs of approximately $1.8 million and subsequently closed on the sale of all 73 restaurants.

9

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Losses from discontinued operations, net of tax, on the accompanying consolidated statements of earnings are comprised of the following:

	Quarter Ended						Six Months Ended
(in millions)	November 23, 2008			November 25, 2007			November 23, 2008			November 25, 2007
Sales	$	—		$	47.4		$	—		$	100.3
Earnings (losses) before income taxes		1.9			(1.3	)		1.3			(2.5	)
Income tax (expense) benefits		(0.7	)		0.7			(0.5	)		1.2
Earnings (losses) from discontinued operations, net of tax	$	1.2		$	(0.6	)	$	0.8		$	(1.3	)

As of November 23, 2008 and May 25, 2008, we had $19.3 million and $25.3 million, respectively, of assets associated with the closed restaurants reported as discontinued operations, which are included in land, buildings and equipment, net on the accompanying consolidated balance sheets.

The following is a reconciliation of accrued exit and disposal costs from May 25, 2008 to November 23, 2008, which are included in other current liabilities on the accompanying consolidated balance sheets and are expected to be paid in fiscal 2009.

(in millions)	Balance at May 25, 2008		Payments			Adjustments		Balance at November 23, 2008
Lease termination costs	$	3.3	$	(1.2	)	$	1.0	$	3.1

Note 5. Consolidated Statements of Cash Flows

During the quarter and six months ended November 23, 2008, we paid $40.2 million and $53.6 million, respectively, for interest (net of amounts capitalized) and $31.9 million and $37.6 million, respectively, for income taxes. Interest income of $0.1 million and $0.2 million, respectively, associated with our cash and cash equivalents and short-term investments was recognized in earnings as a component of interest, net, during the quarter and six months ended November 23, 2008. During the quarter and six months ended November 25, 2007, we paid $4.7 million and $17.6 million, respectively, for interest (net of amounts capitalized) and $29.7 million and $58.5 million, respectively, for income taxes. Interest income of $0.3 million and $0.4 million, respectively, associated with our cash and cash equivalents was recognized in earnings as a component of interest, net, during the quarter and six months ended November 25, 2007.

Note 6. Stock-Based Compensation

We grant stock options for a fixed number of shares to certain employees and directors with an exercise price equal to the fair value of the shares at the date of grant. We also grant restricted stock, restricted stock units, and performance stock units with a fair value determined based on our closing stock price on the date of grant and cash-settled stock units which are classified as liabilities and are marked to market as of the end of each fiscal period.

	Stock Options Granted During the Six Months Ended
	November 23, 2008			November 25, 2007
Weighted-average fair value	$	10.65		$	14.84
Risk-free interest rate		3.46	%		4.63	%
Expected volatility of stock		34.4	%		32.6	%
Dividend yield		2.10	%		1.59	%
Expected option life		6.4 years			6.4 years

The following table presents a summary of our stock-based compensation activity for the six months ended November 23, 2008:

(in millions)	Stock Options		Restricted Stock/ Restricted Stock Units		Darden Stock Units		Performance Stock Units
Outstanding beginning of period	16.7		1.4		1.1		0.5
Awards granted	2.1		0.1		0.7		—
Awards exercised	(0.4	)	(0.4	)	(0.2	)	(0.1	)
Awards cancelled	(0.3	)	—		—		—
Outstanding end of period	18.1		1.1		1.6		0.4

10

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the quarters and six months ended November 23, 2008 and November 25, 2007, we recognized expense from stock-based compensation as follows:

	Quarter Ended					Six Months Ended
(in millions)	November 23, 2008			November 25, 2007		November 23, 2008			November 25, 2007
Stock Options	$	4.9		$	12.1	$	9.3		$	15.3
Restricted Stock/Restricted Stock Units		1.7			4.6		5.5			5.7
Darden Stock Units		(1.4	)		1.7		1.1			3.1
Performance Stock Units		(0.5	)		1.1		(0.6	)		3.4
Employee Stock Purchase Plan/Other		1.4			1.4		1.8			1.8
	$	6.1		$	20.9	$	17.1		$	29.3

On June 20, 2008, our Board of Directors adopted an amendment to our Darden Restaurants, Inc. 2002 Stock Incentive Plan (2002 Plan), which was approved by our shareholders at the Annual Meeting of Shareholders on September 12, 2008. The amendment increased the maximum number of shares that are authorized for issuance under the 2002 Plan from 9,550,000 to 12,700,000.

Note 7. Income Taxes

The effective income tax rate for the quarter and six months ended November 23, 2008 was 29.1 percent and 28.4 percent, respectively, compared to an effective income tax rate of 25.5 percent and 28.6 percent for the quarter and six months ended November 25, 2007, respectively. The increase in the effective tax rate during the quarter ended November 23, 2008 is primarily attributable to an increase in current period losses on our trust owned life insurance and Darden equity forward contracts that cannot be deducted for tax purposes.

Included in our remaining balance of unrecognized tax benefits is $3.9 million related to tax positions for which it is reasonably possible that the total amounts could materially change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions.

Note 8. Long-Term Debt

We maintain a $750.0 million revolving credit facility under a Credit Agreement (Revolving Credit Agreement) dated September 20, 2007 with Bank of America, N.A. (BOA), as administrative agent, and the lenders (Revolving Credit Lenders) and other agents party thereto. The Revolving Credit Agreement is a senior unsecured debt obligation of the Company and contains customary representations, affirmative and negative covenants (including limitations on liens and subsidiary debt, and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type. As of November 23, 2008, we were in compliance with all covenants under the Revolving Credit Agreement.

The Revolving Credit Agreement matures on September 20, 2012, and the proceeds may be used for commercial paper back-up, working capital and capital expenditures, the refinancing of certain indebtedness as well as general corporate purposes. The Revolving Credit Agreement also contains a sub-limit of $150.0 million for the issuance of letters of credit. The borrowings and letters of credit obtained under the Revolving Credit Agreement may be denominated in U.S. Dollars, Euro, Sterling, Yen, Canadian Dollars and each other currency approved by the Revolving Credit Lenders. The Company may elect to increase the commitments under the Revolving Credit Agreement by up to $250.0 million (to an aggregate amount of up to $1.0 billion), subject to the Company obtaining commitments from new and existing lenders for the additional amounts.

Loans under the Revolving Credit Agreement bear interest at a rate of LIBOR plus a margin determined by reference to a ratings-based pricing grid, or the base rate (which is defined as the higher of the BOA prime rate and the Federal Funds rate plus 0.500 percent). Assuming a “BBB” equivalent credit rating level, the applicable margin under the Revolving Credit Agreement will be 0.350 percent. We may also request that loans under the Revolving Credit Agreement be made at interest rates offered by one or more of the Revolving Credit Lenders, which may vary

11

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

from the LIBOR or base rate, for up to $100.0 million of borrowings. The Revolving Credit Agreement requires that we pay a facility fee on the total amount of such facility (ranging from 0.070 percent to 0.175 percent, based on our credit ratings) and, in the event that the outstanding amounts under the applicable Revolving Credit Agreement exceeds 50 percent of such Revolving Credit Agreement, a utilization fee on the total amount outstanding under such facility (ranging from 0.050 percent to 0.150 percent, based on our credit ratings). As of November 23, 2008, $437.9 million was outstanding under the Revolving Credit Agreement. In addition, $24.3 million of commercial paper was outstanding as of November 23, 2008, which is backed by this facility.

As of November 23, 2008, Lehman Brothers Holdings Inc. and certain of its subsidiaries (Lehman Brothers) have filed for bankruptcy protection. A subsidiary of Lehman Brothers is one of the Revolving Credit Lenders with a commitment of $50.0 million, and has defaulted on its obligation to fund our request for borrowings under the Revolving Credit Agreement. Accordingly, as of November 23, 2008, we believe that our ability to borrow under the Revolving Credit Agreement is reduced by the amount of Lehman Brothers’ commitment.

The interest rates on our $350.0 million senior notes due October 2012, $500.0 million senior notes due October 2017 and $300.0 million senior notes due October 2037 are subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of November 23, 2008, no adjustments to these interest rates had been made.

Note 9. Net Earnings per Share

Outstanding stock options and restricted stock granted by us represent the only dilutive effect reflected in diluted weighted average shares outstanding. Options and restricted stock do not impact the numerator of the diluted net earnings per share computation. Options to purchase 10.2 million and 3.0 million shares of our common stock were excluded from the calculation of diluted net earnings per share for the quarters ended November 23, 2008 and November 25, 2007, respectively, because the effect would have been anti-dilutive. Options to purchase 7.8 million and 2.8 million shares of our common stock were excluded from the calculation of diluted net earnings per share for the six months ended November 23, 2008 and November 25, 2007, respectively, for the same reason.

Note 10. Stockholders’ Equity

Pursuant to the authorization of our Board of Directors to repurchase up to 162.4 million shares of our common stock in accordance with applicable securities law, we repurchased 2.3 million and 4.4 million shares of our common stock for $58.4 million and $126.7 million during the quarter and six months ended November 23, 2008, respectively, resulting in a cumulative repurchase of 151.4 million shares as of November 23, 2008.

Note 11. Retirement Plans

Components of net periodic benefit cost are as follows:

	Defined Benefit Plans						Postretirement Benefit Plan
	Quarter Ended						Quarter Ended
(in millions)	November 23, 2008			November 25, 2007			November 23, 2008		November 25, 2007
Service cost	$	1.5		$	1.5		$	0.2	$	0.2
Interest cost		2.5			2.4			0.4		0.3
Expected return on plan assets		(4.1	)		(3.7	)		—		—
Amortization of unrecognized prior service cost		0.1			—			—		—
Recognized net actuarial loss		0.1			1.1			0.2		0.1
Net periodic benefit cost	$	0.1		$	1.3		$	0.8	$	0.6

	Defined Benefit Plans						Postretirement Benefit Plan
	Six Months Ended						Six Months Ended
(in millions)	November 23, 2008			November 25, 2007			November 23, 2008		November 25, 2007
Service cost	$	3.0		$	3.1		$	0.4	$	0.4
Interest cost		4.9			4.8			0.8		0.6
Expected return on plan assets		(8.1	)		(7.4	)		—		—
Amortization of unrecognized prior service cost		0.1			0.1			—		—
Recognized net actuarial loss		0.2			2.1			0.3		0.1
Net periodic benefit cost	$	0.1		$	2.7		$	1.5	$	1.1

12

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 12. Derivative Instruments and Hedging Activities

We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under the Financial Accounting Standards Boards (FASB) Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and those utilized as economic hedges. We use interest rate-related derivative instruments to manage our exposure on debt instruments, as well as commodities derivatives to manage our exposure to commodity price fluctuations. We also use equity-related derivative instruments to manage our exposure on cash compensation arrangements indexed to the market price of our common stock.

During the quarter ended August 24, 2008, we entered into interest rate swap agreements with $225.0 million of notional value to limit the risk of changes in fair value of our $150.0 million senior notes due August 2010 and $75.0 million medium-term notes due April 2011 attributable to changes in the benchmark interest rate between now and maturity of the related debt. The swap agreements effectively swap the fixed rate obligations for floating rate obligations, thereby mitigating changes in fair value of the related debt prior to maturity. During the quarter ended November 23, 2008, we terminated these interest rate swap agreements for a gain of $1.9 million. The gain will be recorded as a component of the carrying value of our long-term debt and will be recognized as a reduction to interest expense over the remaining life of the underlying notes.

During the quarter ended November 23, 2008, we entered into interest rate swap agreements with $200.0 million of notional value to hedge a portion of the risk of changes in the benchmark interest rate associated with amounts outstanding under our Revolving Credit Agreements, which expire in April 2009.

Note 13. Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. In February 2008, the FASB issued FASB Staff Position No. 157-2, “Effective Date of FASB Statement No. 157,” which permits a one-year deferral for the implementation of SFAS No. 157 with regard to non-financial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis. We elected to defer adoption of SFAS No. 157 for such items and we do not currently anticipate that full adoption in fiscal 2010 will materially impact our results of operations or financial position.

On May 26, 2008, we adopted the provisions of SFAS No. 157 related to financial assets and liabilities. The following table summarizes the fair values of financial instruments measured at fair value on a recurring basis at November 23, 2008:

Items Measured at Fair Value

(in millions)			Fair Value of assets (liabilities) at November 23, 2008			Quoted prices in active market for identical assets (liabilities) (Level 1)		Significant other observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Long-term investments	(1	)	$	25.2		$	25.2	$	—		$	—
Commodities futures and swaps	(2	)		(2.4	)		—		(2.4	)		—
Equity forwards	(3	)		(1.9	)		—		(1.9	)		—
Interest rate locks and swaps	(4	)		(5.0	)		—		(5.0	)		—
Total			$	15.9		$	25.2	$	(9.3	)	$	—

(1) The fair value of our long-term investments is based on the closing market prices of the investments.

(2) The fair value of our commodities futures and swaps is based on the closing futures market prices of the contracts, inclusive of the risk of nonperformance.

(3) The fair value of our equity forwards is based on the closing market value of Darden stock, inclusive of the risk of nonperformance.

(4) The fair value of our interest rate lock and swap agreements is based on the present value of expected future cash flows, inclusive of the risk of nonperformance, using a discount rate appropriate for the duration.

13

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 14. Commitments and Contingencies

As collateral for performance on contracts and as credit guarantees to banks and insurers, we are contingently liable for guarantees of subsidiary obligations under standby letters of credit. As of November 23, 2008 and May 25, 2008, we had $104.5 million and $64.4 million, respectively, of standby letters of credit related to workers’ compensation and general liabilities in our consolidated financial statements. As of November 23, 2008 and May 25, 2008, $20.4 million and $10.0 million, respectively, of standby letters of credit related to contractual operating lease obligations and other payments were outstanding. All standby letters of credit are renewable annually.

At November 23, 2008 and May 25, 2008, we had $6.9 million and $5.8 million, respectively, of guarantees associated with leased properties that have been assigned to third parties. These amounts represent the maximum potential amount of future payments under the guarantees. The fair value of these potential payments discounted at our pre-tax cost of capital at November 23, 2008 and May 25, 2008, amounted to $5.7 million and $4.2 million, respectively. We did not accrue for the guarantees, as the likelihood of the third parties defaulting on the assignment agreements was deemed to be less than probable. In the event of default by a third party, the indemnity and default clauses in our assignment agreements govern our ability to recover from and pursue the third party for damages incurred as a result of its default. We do not hold any third-party assets as collateral related to these assignment agreements, except to the extent that the assignment allows us to repossess the building and personal property. These guarantees expire over their respective lease terms, which range from fiscal 2009 through fiscal 2021.

We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity. The following is a brief description of the more significant of these matters. In view of the inherent uncertainties of litigation, the outcome of any unresolved matter described below cannot be predicted at this time, nor can the amount of any potential loss be reasonably estimated.

Like other restaurant companies and retail employers, in a few states we have been faced with allegations of purported class-wide wage and hour violations. In January 2004, a former food server filed a purported class action in California state court alleging that Red Lobster’s “server banking” policies and practices (under which servers settle guest checks directly with customers throughout their shifts, and turn in collected monies at the shift’s end) improperly required her and other food servers and bartenders to make up cash shortages and walkouts in violation of California law. The case was ordered to arbitration. As a procedural matter, the arbitrator ruled that class-wide arbitration is permissible under our dispute resolution program. In January 2007, plaintiffs’ counsel filed in California state court a second purported class action lawsuit on behalf of servers and bartenders alleging that Olive Garden’s server banking policy and its alleged failure to pay split shift premiums violated California law. Although we believed that our policies and practices were lawful and that we had strong defenses to both cases, following mediation with the plaintiffs, we reached a tentative resolution of the matters during the third quarter of fiscal 2008. As a result, we accrued approximately $4.0 million in legal settlement costs during fiscal 2008, which we expect to be paid in fiscal 2009. No additional reserves have been taken in connection with this settlement.

In August 2007, an action was filed in California state court by a former Olive Garden server alleging that Olive Garden’s scheduling practices resulted in failure to properly pay reporting time (minimum shift) pay as well as to pay minimum wage, to provide itemized wage statements, and to timely pay employees upon the termination of their employment. The complaint sought to have the suit certified as a class action. Although we believed that our policies and practices were lawful and we had strong defenses, following mediation with the plaintiffs during the fourth quarter of fiscal 2008, we reached a preliminary settlement of this matter under which we would pay approximately $0.7 million. The settlement was paid during the second quarter of fiscal 2009. In August 2008, an action was filed in California state court by a former Red Lobster server related to employment practices at Red Lobster similar to those in the Olive Garden matter described above. The complaint sought to have the suit certified

14

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

as a class action. Although we believed that our policies and practices were lawful, we reached a preliminary settlement of this matter under which we would pay approximately $0.5 million. We expect to pay the settlement amount during fiscal 2009 at the completion of the settlement process.

In July 2008, an action was filed in California state court by a group of former Red Lobster managers alleging that the salaried general managers of the restaurants were not paid minimum wage for all hours worked because they were not paid for time spent attending various seminars and conferences. In addition, the managers claim that they were not provided with rest and meal breaks pursuant to California law. The complaint seeks to have the suit certified as a class action. We believe that our policies and practices were lawful, and we intend to vigorously defend our position in this action.

On September 18, 2008, the Equal Employment Opportunity Commission filed suit in the United States District Court for the Northern District of Ohio alleging that African-American employees of the Bahama Breeze restaurant in Beachwood, Ohio were subjected to discriminatory employment practices in violation of Title VII of the Civil Rights Act of 1964 and Title I of the Civil Rights Act of 1991. The complaint seeks to enjoin the alleged discriminatory practices and seeks compensatory damages for the employees. We believe that our practices were lawful, and we intend to vigorously defend our position in this action.

On March 13, 2008, a purported class action complaint alleging violation of the federal securities laws was filed by an institutional shareholder against Darden and certain of our current officers, one of whom is also a director, in the United States District Court for the Middle District of Florida. The complaint was filed on behalf of all purchasers of Darden’s common stock between June 19, 2007 and December 18, 2007 (the Class). The complaint alleges that during that period, the defendants issued false and misleading statements in press releases and public filings that misrepresented and failed to disclose certain information, and that as a result, had no reasonable basis for statements about Darden’s prospects and guidance for fiscal 2008. The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The plaintiff seeks to recover unspecified damages on behalf of the Class. We intend to vigorously defend our position in this action.

By letter dated May 9, 2008, a putative shareholder demanded that our Board of Directors take action to remedy alleged breaches of fiduciary duty to Darden by certain officers and directors. The letter contains similar allegations to those in the purported class action described above regarding the alleged issuance of false and misleading statements and omissions regarding Darden’s financial results and sales growth. The Board has formed a special litigation committee to evaluate the claims in the letter. On September 10, 2008, this same putative shareholder on behalf of nominal defendant Darden filed a shareholder derivative civil action in the Circuit Court of the Ninth Judicial Circuit of Orange County, Florida against Darden, our Board of Directors, and several of our senior executives, including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. The allegations in the complaint arise out of the same facts alleged in the purported class action complaint referenced above. In particular, the complaint alleges that during the period June 19, 2007 and December 18, 2007, certain of the defendants issued false and misleading statements in press releases and public filings that misrepresented and failed to disclose certain information about Darden’s prospects and earnings guidance for fiscal 2008, and that certain defendants benefited from these false and misleading statements in selling Darden stock at an inflated price. The complaint seeks to recover in favor of Darden, damages sustained by Darden as a result of the defendants’ alleged breaches of fiduciary duty, and the imposition of a constructive trust in favor of Darden for the amount of proceeds realized by certain defendants from the sale of Darden stock. Fees and costs, as well as equitable relief, are also sought. We intend to vigorously defend our position in this action.

Note 15. Application of New Accounting Standards

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (an amendment of FASB Statements No. 87, 88, 106 and 132R).” Effective May 27, 2007, we implemented the recognition and measurement provision of SFAS No. 158. The purpose of SFAS No. 158 is to improve the overall financial statement presentation of pension and other postretirement plans, but SFAS No. 158 does not impact the determination of net periodic benefit cost or measurement of plan assets or obligations. SFAS No. 158 requires companies to recognize the over or under funded status of the plan as an asset or liability as measured by the difference between the fair value of the plan assets and the benefit obligation and requires any unrecognized prior service costs and actuarial gains and losses to be recognized as a component of accumulated

15

DARDEN RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

other comprehensive income (loss). Additionally, SFAS No. 158 requires measurement of the funded status of pension and postretirement plans as of the date of a company’s fiscal year ending after December 15, 2008, the year ended May 31, 2009 for Darden. Certain of our plans currently have measurement dates that do not coincide with our fiscal year end and thus we will be required to change their measurement dates in fiscal 2009. As permitted by SFAS No. 158, we will use the measurements performed in fiscal 2008 to estimate the effects of our changes to fiscal year end measurement dates. The impact of the transition to fiscal year end measurement dates, which will be recorded as an adjustment to retained earnings in the fourth quarter of fiscal 2009, is expected to be immaterial to our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 provides companies with an option to report selected financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, which required that we adopt these provisions in the first quarter of fiscal 2009. The adoption of SFAS No. 159 did not have an impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” SFAS No. 141R provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS No. 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS No. 141R is effective for business combinations occurring in fiscal years beginning after December 15, 2008, which will require us to adopt these provisions for business combinations occurring in fiscal 2010 and thereafter. Early adoption of SFAS No. 141R is not permitted. We are currently evaluating the impact SFAS No. 141R will have on any future business combinations we enter into.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 provides companies with requirements for enhanced disclosures about derivative instruments and hedging activities to enable investors to better understand their effects on a company’s financial position, financial performance and cash flows. These requirements include the disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS No. 161 will be effective for our third quarter of fiscal 2009, although early adoption is permitted. We are currently evaluating the impact SFAS No. 161 will have on our consolidated financial statements.

In June 2008, the FASB issued FASB Staff Position (FSP) EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP EITF 03-6-1 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The two-class method is an earnings allocation method for computing earnings per share when an entity’s capital structure includes either two or more classes of common stock or common stock and participating securities. It determines earnings per share based on dividends declared on common stock and participating securities (i.e., distributed earnings) and participation rights of participating securities in any undistributed earnings. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, which will require us to adopt these provisions in fiscal 2010. We do not believe the adoption of FSP EITF 03-6-1 will have a significant impact on our consolidated financial statements.

Note 16. Subsequent Event

On December 18, 2008, the Board of Directors declared a cash dividend of twenty cents per share to be paid February 2, 2009 to all shareholders of record as of the close of business on January 9, 2009.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis below for the Company should be read in conjunction with the unaudited financial statements and the notes to such financial statements included elsewhere in this Form 10-Q. The discussion below contains forward looking statements which should be read in conjunction with “Forward-Looking Statements” included elsewhere in this Form 10-Q. The following table sets forth selected operating data as a percent of sales for the periods indicated. All information is derived from the consolidated statements of earnings for the quarters and six months ended November 23, 2008 and November 25, 2007.

	Quarter Ended				Six Months Ended
	November 23, 2008		November 25, 2007		November 23, 2008		November 25, 2007
Sales	100.0	%	100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of sales:
Food and beverage	30.9		30.2		30.9		29.5
Restaurant labor	32.9		33.2		32.1		32.7
Restaurant expenses	16.6		16.1		16.4		15.5
Total cost of sales, excluding restaurant depreciation and amortization of 4.0%, 3.7%, 3.8% and 3.5%, respectively	80.4	%	79.5	%	79.4	%	77.7	%
Selling, general and administrative	8.8		11.2		9.2		10.5
Depreciation and amortization	4.2		4.0		4.1		3.7
Interest, net	1.7		1.4		1.6		1.1
Total costs and expenses	95.1	%	96.1	%	94.3	%	93.0	%
Earnings before income taxes	4.9		3.9		5.7		7.0
Income taxes	(1.4	)	(1.0	)	(1.6	)	(2.0	)
Earnings from continuing operations	3.5		2.9		4.1		5.0
Earnings (losses) from discontinued operations	0.1		—		—		—
Net earnings	3.6	%	2.9	%	4.1	%	5.0	%

OVERVIEW OF OPERATIONS

Our sales from continuing operations were $1.67 billion and $3.44 billion for the second quarter and first six months of fiscal 2009, respectively, compared to $1.52 billion and $2.99 billion for the second quarter and first six months of fiscal 2008, respectively. The 9.6 percent and 15.2 percent increase in sales for the second quarter and first six months of fiscal 2009, respectively, were driven primarily by the acquisition of RARE Hospitality International, Inc. (RARE), a net increase of 42 Olive Garden restaurants and 19 LongHorn Steakhouse restaurants since the second quarter of fiscal 2008 and increased U.S. same-restaurant sales at Olive Garden and Red Lobster. For the second quarter of fiscal 2009, our net earnings from continuing operations were $58.5 million compared to $44.1 million for the second quarter of fiscal 2008, a 32.7 percent increase, and our diluted net earnings per share from continuing operations were $0.42 for the second quarter of fiscal 2009 compared to $0.30 for the second quarter of fiscal 2008, a 40.0 percent increase. The increases in net earnings from continuing operations and diluted net earnings per share from continuing operations for the second quarter of fiscal 2009 compared to the same periods in the prior year were primarily due to integration costs recorded in the second quarter of 2008 which unfavorably impacted diluted net earnings per share from continuing operations by approximately nine cents, compared to only two cents in the second quarter of fiscal 2009, as well as a reduction in market and performance related employee benefit costs in the second quarter of fiscal 2009. For the first six months of fiscal 2009, our net earnings from continuing operations were $140.9 million compared to $150.7 million for the first six months of fiscal 2008, a 6.5 percent decrease, and our diluted net earnings per share from continuing operations were $1.00 for the first six months of fiscal 2009 compared to $1.03 for the first six months of fiscal 2008, a 2.9 percent decrease. The

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decreases in net earnings from continuing operations and diluted net earnings per share from continuing operations for the six months ended November 23, 2008 compared to the same period in the prior year were primarily due to an approximately 0.7 percent decline of blended same-restaurant sales results for Olive Garden, Red Lobster and LongHorn Steakhouse and increased food and beverage costs, wage rates and interest costs, which were only partially offset by reduced integration costs related to the RARE acquisition as compared with the prior year period, as well as a reduction in market and performance related employee benefit costs in the first six months of fiscal 2009.

During the second quarter of fiscal 2008, we completed the acquisition of RARE for approximately $1.27 billion in total purchase price. RARE owned two principal restaurant concepts, LongHorn Steakhouse and The Capital Grille, of which 288 and 29 locations, respectively, were in operation as of the date of acquisition. The acquisition was completed on October 1, 2007 and the acquired operations are included in our consolidated financial statements from the date of acquisition.

During fiscal 2007 and 2008 we closed or sold all Smokey Bones Barbeque & Grill and Rocky River Grillhouse restaurants and we closed nine Bahama Breeze restaurants. These restaurants and their related activities have been classified as discontinued operations. Therefore, for the quarters and six months ended November 23, 2008 and November 25, 2007, all impairment charges and disposal costs, gains and losses on disposition, along with the sales, costs and expenses and income taxes attributable to these restaurants have been aggregated in a single caption entitled “Earnings (losses) from discontinued operations, net of tax expense (benefit)” on the accompanying consolidated statements of earnings.

SALES

Sales from continuing operations were $1.67 billion and $1.52 billion for the quarters ended November 23, 2008 and November 25, 2007, respectively. The 9.6 percent increase in sales for the second quarter of fiscal 2009 was primarily due to a net increase of 42 Olive Garden restaurants and 19 LongHorn Steakhouse restaurants since the second quarter of fiscal 2008 and increased U.S. same-restaurant sales at Olive Garden and Red Lobster. Olive Garden’s sales of $761.1 million were 6.2 percent above last year’s second quarter, driven primarily by a 0.8 percent increase in U.S. same-restaurant sales and its 42 net new restaurants in operation since the second quarter of last year. Olive Garden achieved its 57th consecutive quarter of U.S. same-restaurant sales growth as a result of a 2.6 percent increase in average check, partially offset by a 1.8 percent decrease in same-restaurant guest counts. Red Lobster’s sales of $601.5 million were 0.2 percent above last year’s second quarter, which resulted primarily from a 0.3 percent increase in U.S. same-restaurant sales. The increase in U.S. same-restaurant sales resulted from a 3.5 percent increase in average check, partially offset by a 3.2 percent decrease in same-restaurant guest counts. LongHorn Steakhouse’s sales of $206.2 million were 2.4 percent above the comparable prior year period (which were partially included in RARE’s separately reported results of operations), driven by sales from 19 net new restaurants, partially offset by a decrease in same-restaurant sales of 5.7 percent. The Capital Grille’s sales of $60.7 million were 3.0 percent above the comparable prior year period (which were partially included in RARE’s separately reported results of operations), driven by the addition of four new restaurants, partially offset by a same-restaurant sales decrease of 8.7 percent. Bahama Breeze sales of $27.9 million were 8.0 percent below last year’s second quarter, driven by an 8.0 percent decrease in same-restaurant sales. The shift of the Thanksgiving holiday week into the fiscal third quarter of this year favorably affected same-restaurant sales results by approximately 0.7 percentage points for the quarter ended November 23, 2008.

Sales were $3.44 billion and $2.99 billion for the six months ended November 23, 2008 and November 25, 2007, respectively. The 15.1 percent increase in sales for the first six months of fiscal 2009 was primarily due to sales resulting from the acquisition of RARE, a net increase of 42 Olive Garden restaurants and 19 LongHorn Steakhouse restaurants since the second quarter of fiscal 2008 and increased U.S. same-restaurant sales at Olive Garden. Olive Garden’s sales of $1.57 billion were 7.2 percent above last year, driven primarily by a 1.7 percent increase in U.S. same-restaurant sales and its 42 net new restaurants in operation since the second quarter of last year. The increase in U.S. same-restaurant sales resulted primarily from a 2.4 percent increase in average check, partially offset by a 0.7 percent decrease in same-restaurant guest counts. Red Lobster sales of $1.25 billion were 1.8 percent below last year, which resulted primarily from a 1.8 percent decrease in U.S. same-restaurant sales. The decrease in U.S. same-restaurant sales resulted primarily from a 4.5 percent decrease in same-restaurant guest counts, partially offset by a 2.7 percent increase in average check. LongHorn Steakhouse’s sales of $421.9 million were 3.3 percent above the comparable prior year period (which were partially included in RARE’s separately reported results

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of operations), driven by sales from 19 net new restaurants, partially offset by a decrease in same-restaurant sales of 5.3 percent. The Capital Grille’s sales of $115.1 million were 4.7 percent above the comparable prior year period (which were partially included in RARE’s separately reported results of operations), driven by the addition of four new restaurants, partially offset by a same-restaurant sales decrease of 9.0 percent. Bahama Breeze sales of $63.7 million were 5.6 percent below last year.

Same-restaurant sales is a year-over-year comparison of each period’s sales volumes and is limited to restaurants open at least 16 months, including acquired restaurants, absent consideration of the date we acquired the restaurants.

COSTS AND EXPENSES

Quarter Ended November 23, 2008 Compared to Quarter Ended November 25, 2007

Total costs and expenses were $1.59 billion and $1.46 billion for the quarters ended November 23, 2008 and November 25, 2007, respectively. As a percent of sales, total costs and expenses decreased to 95.1 percent in the second quarter of fiscal 2009 as compared to 96.1 percent in the second quarter of fiscal 2008.

Food and beverage costs were $516.4 million during the second quarter of fiscal 2009, an increase of $57.3 million, or 12.5 percent, from food and beverage costs of $459.1 million during the second quarter of fiscal 2008. Food and beverage costs, as a percent of sales, increased primarily as a result of an increase in food costs, such as proteins and commodities, and the acquisition of RARE, whose concepts have historically had higher food and beverage costs, as a percent of sales, compared to our consolidated average. These increases were only partially offset by increases in pricing. Restaurant labor costs were $548.0 million during the second quarter of fiscal 2009, an increase of $42.6 million, or 8.4 percent, from restaurant labor costs of $505.4 million during the second quarter of fiscal 2008. Restaurant labor costs, as a percent of sales, decreased primarily as a result of the acquisition of RARE, whose concepts have historically had lower restaurant labor, as a percent of sales, compared to our consolidated average and as well as increased sales leveraging, which were partially offset by an increase in wage rates and employee insurance costs. Restaurant expenses (which include utility, lease, property tax, maintenance, credit card, workers’ compensation, insurance, new restaurant pre-opening and other restaurant-level operating expenses) were $276.9 million during the second quarter of fiscal 2009, an increase of $31.9 million, or 13.0 percent, from restaurant expenses of $245.0 million during the second quarter of fiscal 2008. As a percent of sales, restaurant expenses increased in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008 primarily as a result of higher utility expenses, RARE’s higher restaurant expenses as a percentage of sales compared to our consolidated average, and higher workers’ compensation and public liability expenses as compared with the prior year.

Selling, general and administrative expenses were $146.7 million during the second quarter of fiscal 2009, a decrease of $23.7 million, or 13.9 percent, from selling, general and administrative expenses of $170.4 million during the second quarter of fiscal 2008. As a percent of sales, selling, general and administrative expenses decreased in the second quarter of fiscal 2009 primarily as a result of integration costs incurred during the second quarter of fiscal 2008 as a result of the RARE acquisition, market driven fair value adjustments related to our non-qualified deferred compensation plans, a reduction in performance based incentive compensation and a reduction in litigation expenses, partially offset by increased marketing expenses.

Depreciation and amortization expense was $70.6 million during the second quarter of fiscal 2009, an increase of $10.3 million, or 17.1 percent, from depreciation and amortization expense of $60.3 million during the second quarter of fiscal 2008. As a percent of sales, depreciation and amortization expense increased between the second quarter of fiscal 2009 and the second quarter of fiscal 2008 as a result of new restaurant activity.

Net interest expense was $27.8 million during the second quarter of fiscal 2009, an increase of $5.2 million, or 23.0 percent, from net interest expense of $22.6 million during the second quarter of fiscal 2008. As a percent of sales, net interest expense increased between the second quarter of fiscal 2009 and the second quarter of fiscal 2008 due to an increase in average debt balances, primarily as a result of the RARE acquisition.

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Six Months Ended November 23, 2008 Compared to Six Months Ended November 25, 2007

Total costs and expenses were $3.25 billion and $2.78 billion for the six months ended November 23, 2008 and November 25, 2007, respectively. As a percent of sales, total costs and expenses increased to 94.3 percent in the first six months of fiscal 2009 as compared with 93.0 percent in the first six months of fiscal 2008.

Food and beverage costs were $1.06 billion during the first six months of fiscal 2009, an increase of $180.3 million, or 20.4 percent, from food and beverage costs of $882.9 million during the first six months of fiscal 2008. As a percent of sales, food and beverage costs increased in the first six months of fiscal 2009 primarily as a result of an increase in commodity costs and menu mix changes related to the timing of Olive Garden and Red Lobster promotions. Food and beverage costs, as a percent of sales, also increased as a result of the acquisition of RARE, whose concepts have historically had higher food and beverage costs, as a percent of sales, compared to our consolidated average. These increases were only partially offset by increases in pricing. Restaurant labor costs were $1.11 billion during the first six months of fiscal 2009, an increase of $129.3 million, or 13.2 percent, from restaurant labor costs of $977.0 million during the first six months of fiscal 2008. Restaurant labor costs, as a percent of sales, decreased primarily as a result of the acquisition of RARE, whose concepts have historically had lower restaurant labor, as a percent of sales, compared to our consolidated average and an increase in sales leveraging, which were partially offset by an increase in wage rates. Restaurant expenses (which include lease, property tax, maintenance, credit card, utility, workers’ compensation, insurance, new restaurant pre-opening and other restaurant-level operating expenses) were $565.0 million during the first six months of fiscal 2009, an increase of $103.1 million, or 22.3 percent, from restaurant expenses of $461.9 million during the first six months of fiscal 2008. As a percent of sales, restaurant expenses increased in the first six months of fiscal 2009 primarily as a result of higher utility expenses, integration costs related to the RARE acquisition and higher workers compensation and public liability expenses as compared with the prior year.

Selling, general and administrative expenses were $317.2 million during the first six months of fiscal 2009, an increase of $3.8 million, or 1.2 percent, from selling, general and administrative expenses of $313.4 million during the first six months of fiscal 2008. As a percent of sales, selling, general and administrative expenses decreased in the first six months of fiscal 2009 primarily as a result of integration costs incurred during the second quarter of fiscal 2008 as a result of the RARE acquisition, market driven fair value adjustments related to our non-qualified deferred compensation plans, a reduction in performance based incentive compensation and a reduction in litigation expenses, partially offset by increased marketing expenses.

Depreciation and amortization expense was $139.3 million during the first six months of fiscal 2009, an increase of $28.4 million, or 25.6 percent, from depreciation and amortization expense of $110.9 million during the first six months of fiscal 2008. As a percent of sales, depreciation and amortization expense increased in the first six months of fiscal 2009 due to the acquisition of RARE during the quarter ended November 25, 2007 and new restaurant activity.

Net interest expense was $55.2 million during the first six months of fiscal 2009, an increase of $22.9 million, or 70.9 percent, from interest expense of $32.3 million during the first six months of fiscal 2008. As a percent of sales, net interest expense increased in the first six months of fiscal 2009 due to an increase in average debt balances, primarily as a result of the RARE acquisition.

INCOME TAXES

The effective income tax rate for the quarter and six months ended November 23, 2008 was 29.1 percent and 28.4 percent, respectively, compared to an effective income tax rate of 25.5 percent and 28.6 percent for the quarter and six months ended November 25, 2007, respectively. The increase in the effective tax rate during the quarter ended November 23, 2008 is primarily attributable to an increase in losses on our trust owned life insurance and Darden equity forward contracts that cannot be deducted for tax purposes.

NET EARNINGS AND NET EARNINGS PER SHARE FROM CONTINUING OPERATIONS

For the second quarter of fiscal 2009, our net earnings from continuing operations were $58.5 million compared to $44.1 million in the second quarter of fiscal 2008, a 32.7 percent increase, and our diluted net earnings per share from continuing operations were $0.42 compared to $0.30 in the second quarter of fiscal 2008, a 40.0

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percent increase. At Olive Garden, increased sales and lower restaurant labor costs and selling general and administrative expense as a percent of sales only partially offset increased food and beverage costs, restaurant expenses and depreciation expenses as a percent of sales. As a result, operating profit, as a percent of sales, decreased for Olive Garden in the second quarter of fiscal 2009, compared to the second quarter of fiscal 2008. At Red Lobster, increased sales, lower food and beverage costs and selling, general and administrative expenses as a percent of sales, were only partially offset by increased restaurant labor costs, restaurant expenses and depreciation expenses as a percent of sales. As a result, operating profit, as a percent of sales, increased for Red Lobster in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. The increase in our net earnings from continuing operations and diluted net earnings per share from continuing operations for the second quarter of fiscal 2009 as compared with the second quarter of fiscal 2008 was primarily due to integration costs recorded in the second quarter of 2008, an increase in sales from new restaurants, lower restaurant labor costs and selling, general and administrative expenses as a percent of sales, partially offset by a decrease in blended same-restaurant sales results for Olive Garden, Red Lobster and LongHorn Steakhouse and increased food and beverage costs, restaurant expenses, depreciation expenses and interest expense as a percent of sales.

For the first six months of fiscal 2009, our net earnings from continuing operations were $140.9 million compared to $150.7 million in the first six months of fiscal 2008, a 6.5 percent decrease, and our diluted net earnings per share from continuing operations were $1.00 compared to $1.03 in the first six months of fiscal 2008, a 2.9 percent decrease. At Olive Garden, increased sales and lower restaurant labor costs and selling, general and administrative expenses as a percent of sales only partially offset increased food and beverage costs, restaurant expenses and depreciation expenses as a percent of sales. As a result, operating profit, as a percent of sales, decreased for Olive Garden in the first six months of fiscal 2009 from the first six months of fiscal 2008. At Red Lobster, decreased sales, higher restaurant labor costs, restaurant expenses and depreciation expenses as a percent of sales more than offset lower food and beverage costs and selling, general and administrative expenses as a percent of sales. As a result, operating profit, as a percent of sales, decreased for Red Lobster in the first six months of fiscal 2009 compared to the first six months of fiscal 2008. The decrease in our net earnings from continuing operations and diluted net earnings per share from continuing operations for the first six months of fiscal 2009 as compared with the first six months of fiscal 2008 was primarily due to a decrease in blended same-restaurant sales results for Olive Garden, Red Lobster and LongHorn Steakhouse and increased food and beverage costs, restaurant expenses, depreciation expenses and interest expense as a percent of sales, which were only partially offset by an increase in sales from new restaurants, lower restaurant labor costs and selling, general and administrative expenses as a percent of sales.

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSET IMPAIRMENT TESTING

We review our goodwill and other indefinite-lived intangible assets, primarily our trademarks, for impairment annually, as of the first day of our fourth fiscal quarter or more frequently if indicators of impairment exist. Goodwill and other indefinite-lived intangible assets not subject to amortization have been assigned to reporting units for purposes of impairment testing. The reporting units are our restaurant concepts.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.

The goodwill impairment test involves a two-step process. The first step is a comparison of each reporting unit’s fair value to its carrying value. We estimate fair value using the best information available, including market information and discounted cash flow projections also referred to as the income approach. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs and number of units, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. We validate our estimates of fair value under the income approach by comparing the

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values to fair value estimates using a market approach. A market approach estimates fair value by applying cash flow multiples to the reporting unit’s operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics of the reporting units.

If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. Specifically, we would allocate the fair value to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, we would record an impairment charge for the difference.

At the end of the second quarter of fiscal 2009, due to present uncertainty surrounding the global economy and stock price volatility generally, and volatility in our stock price in particular, we concluded a triggering event had occurred indicating potential impairment and performed an impairment test of our goodwill and other indefinite-lived intangible assets.

At November 23, 2008, we had six reporting units; Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. Two reporting units, LongHorn Steakhouse and The Capital Grille, have a significant amount of goodwill. As part of our process for performing the step one impairment test of goodwill, we estimated the fair value of all of our reporting units utilizing the income approach described above to derive an enterprise value of the Company. We reconciled the enterprise value to our overall estimated market capitalization. The estimated market capitalization considers recent trends in our market capitalization and an expected control premium, based on comparable transactional history. Based on the results of the step one impairment test, no impairment charges of goodwill were required

We also performed sensitivity analyses on our estimated fair value using the income approach of LongHorn Steakhouse and The Capital Grille given the significance of goodwill related to these reporting units. A key assumption in our fair value estimate is the weighted average cost of capital utilized for discounting our cash flow estimates in our income approach. We selected a weighted average cost of capital for LongHorn Steakhouse of 12.0 percent and The Capital Grille of 12.5 percent. We noted that an increase in the weighted average cost of capital of approximately 60 basis points on LongHorn Steakhouse would result in impairment of a portion of its goodwill. We also noted that an increase in the weighted average cost of capital of approximately 15 basis points on The Capital Grille would result in impairment of a portion of its goodwill.

The fair value of other indefinite-lived intangible assets, primarily trademarks, are estimated and compared to the carrying value. We estimate the fair value of these intangible assets using the relief-from-royalty method, which requires assumptions related to projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the trademarks; and a discount rate. We recognize an impairment loss when the estimated fair value of the indefinite-lived intangible asset is less than its carrying value. We completed our impairment test of our indefinite-lived intangibles and concluded there was no impairment of the trademarks for LongHorn Steakhouse and The Capital Grille at November 23, 2008. A key assumption in our fair value estimate is the discount rate utilized in the relief-from-royalty method. We selected a discount rate for LongHorn Steakhouse of 13.0 percent and The Capital Grille of 13.5 percent. We noted that an increase in the discount rate of approximately 50 basis points on LongHorn Steakhouse would result in impairment of a portion of its trademark. We also noted that an increase in the discount rate of approximately 75 basis points on The Capital Grille would result in impairment of a portion of its trademark.

Even though we determined that there was no goodwill or indefinite-lived intangible asset impairment as of November 23, 2008, continued declines in the value of our stock price as well as values of others in the restaurant industry, declines in sales at our restaurants beyond our current forecasts, and significant adverse changes in the operating environment for the restaurant industry may result in a future impairment charge.

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SEASONALITY

Our sales volumes fluctuate seasonally. During fiscal 2008, 2007 and 2006, our average sales per restaurant were highest in the spring and winter, followed by the summer, and lowest in the fall. Holidays, severe weather and similar conditions may impact sales volumes seasonally in some operating regions. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

NUMBER OF RESTAURANTS

The following table details the number of restaurants currently reported in continuing operations that were open at the end of the second quarter of fiscal 2009, compared with the number open at the end of fiscal 2008 and the end of the second quarter of fiscal 2008.

	November 23, 2008	May 25, 2008	November 25, 2007
Red Lobster – USA	655	651	651
Red Lobster – Canada	29	29	29
Total	684	680	680
Olive Garden – USA	664	647	622
Olive Garden – Canada	6	6	6
Total	670	653	628
LongHorn Steakhouse	314	305	295
The Capital Grille	34	32	30
Bahama Breeze	23	23	23
Seasons 52	7	7	7
Other	2	2	2
Total	1,734	1,702	1,665

LIQUIDITY AND CAPITAL RESOURCES

Cash flows generated from operating activities provide us with a significant source of liquidity, which we use to finance the purchases of land, buildings and equipment, to pay dividends and to repurchase shares of our common stock. Since substantially all of our sales are for cash and cash equivalents and accounts payable are generally due in five to 30 days, we are able to carry current liabilities in excess of current assets. In addition to cash flows from operations, we use a combination of long-term and short-term borrowings to fund our capital needs.

We currently manage our business and financial ratios to maintain an investment grade bond rating, which has historically allowed flexible access to financing at reasonable costs. Currently, our publicly issued long-term debt carries “Baa3” (Moody’s Investors Service), “BBB” (Standard & Poor’s) and “BBB” (Fitch) ratings. Our commercial paper has ratings of “P-3” (Moody’s Investors Service), “A-2” (Standard & Poor’s) and “F-2” (Fitch). These ratings are as of the date of the filing of this Form 10-Q and have been obtained with the understanding that Moody’s Investors Service, Standard & Poor’s and Fitch will continue to monitor our credit and make future adjustments to these ratings to the extent warranted. The ratings are not a recommendation to buy, sell or hold our securities, may be changed, superseded or withdrawn at any time and should be evaluated independently of any other rating.

Our revolving credit facility and our commercial paper program serve as our primary source of short-term financing. Accordingly, we maintain a $750.0 million revolving credit facility under a Credit Agreement (Revolving Credit Agreement) dated September 20, 2007 with Bank of America, N.A. (BOA), as administrative agent, and the lenders (Revolving Credit Lenders) and other agents party thereto. The Revolving Credit Agreement is a senior unsecured debt obligation of the Company and contains customary representations, affirmative and negative covenants (including limitations on liens and subsidiary debt, and a maximum consolidated lease adjusted total debt to total capitalization ratio of 0.75 to 1.00) and events of default usual for credit facilities of this type. As of November 23, 2008, we were in compliance with all covenants under the Revolving Credit Agreement.

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The Revolving Credit Agreement matures on September 20, 2012, and the proceeds may be used for commercial paper back-up, working capital and capital expenditures, the refinancing of certain indebtedness as well as general corporate purposes. The Revolving Credit Agreement also contains a sub-limit of $150.0 million for the issuance of letters of credit. The borrowings and letters of credit obtained under the Revolving Credit Agreement may be denominated in U.S. Dollars, Euro, Sterling, Yen, Canadian Dollars and each other currency approved by the Revolving Credit Lenders. The Company may elect to increase the commitments under the Revolving Credit Agreement by up to $250.0 million (to an aggregate amount of up to $1.0 billion), subject to the Company obtaining commitments from new and existing lenders for the additional amounts.

Loans under the Revolving Credit Agreement bear interest at a rate of LIBOR plus a margin determined by reference to a ratings-based pricing grid, or the base rate (which is defined as the higher of the BOA prime rate and the Federal Funds rate plus 0.500 percent). Assuming a “BBB” equivalent credit rating level, the applicable margin under the Revolving Credit Agreement will be 0.350 percent. We may also request that loans under the Revolving Credit Agreement be made at interest rates offered by one or more of the Revolving Credit Lenders, which may vary from the LIBOR or base rate, for up to $100.0 million of borrowings. The Revolving Credit Agreement requires that we pay a facility fee on the total amount of such facility (ranging from 0.070 percent to 0.175 percent, based on our credit ratings) and, in the event that the outstanding amounts under the applicable Revolving Credit Agreement exceeds 50 percent of such Revolving Credit Agreement, a utilization fee on the total amount outstanding under such facility (ranging from 0.050 percent to 0.150 percent, based on our credit ratings). As of November 23, 2008, $437.9 million was outstanding under the Revolving Credit Agreement. In addition, $24.3 million of commercial paper was outstanding as of November 23, 2008, which is backed by this facility.

As of November 23, 2008, Lehman Brothers Holdings Inc. and certain of its subsidiaries (Lehman Brothers) have filed for bankruptcy protection. A subsidiary of Lehman Brothers is one of the Revolving Credit Lenders with a commitment of $50.0 million, and has defaulted on its obligation to fund our request for borrowings under the Revolving Credit Agreement. Accordingly, as of November 23, 2008, we believe that our ability to borrow under the Revolving Credit Agreement is reduced by the amount of Lehman Brothers’ commitment.

At November 23, 2008, our long-term debt consisted principally of:

• $150.0 million of unsecured 4.875 percent senior notes due in August 2010;

• $75.0 million of unsecured 7.450 percent medium-term notes due in April 2011;

• $350.0 million of unsecured 5.625 percent senior notes due in October 2012;

• $100.0 million of unsecured 7.125 percent debentures due in February 2016;

• $500.0 million of unsecured 6.200 percent senior notes due in October 2017;

• $150.0 million of unsecured 6.000 percent senior notes due in August 2035;

• $300.0 million of unsecured 6.800 percent senior notes due in October 2037; and

• An unsecured, variable rate $12.6 million commercial bank loan due in December 2018 that is used to support two loans from us to the Employee Stock Ownership Plan portion of the Darden Savings Plan.

The interest rates on our $350.0 million senior notes due October 2012, $500.0 million senior notes due October 2017 and $300.0 million senior notes due October 2037 are subject to adjustment from time to time if the debt rating assigned to such series of notes is downgraded below a certain rating level (or subsequently upgraded). The maximum adjustment is 2.000 percent above the initial interest rate and the interest rate cannot be reduced below the initial interest rate. As of November 23, 2008, no adjustments to these interest rates had been made.

During the quarter ended August 24, 2008, we entered into interest rate swap agreements with $225.0 million of notional value to limit the risk of changes in fair value of our $150 million senior notes due August 2010 and $75 million medium-term notes due April 2011 attributable to changes in the benchmark interest rate between now and maturity of the related debt. The swap agreements effectively swap the fixed rate obligations for floating rate obligations, thereby mitigating changes in fair value of the related debt prior to maturity. During the quarter ended November 23, 2008, we terminated these interest rate swap agreements for a gain of $1.9 million. The gain will be recorded as a component of the carrying value of our long-term debt and will be recognized as a reduction to interest expense over the remaining life of the underlying notes.

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During the quarter ended November 23, 2008, we entered into interest rate swap agreements with $200.0 million of notional value to hedge a portion of the risk of changes in the benchmark interest rate associated with amounts outstanding under our Revolving Credit Agreement, which expire in April 2009.

A summary of our contractual obligations and commercial commitments at November 23, 2008 is as follows:

(in millions) Contractual Obligations	Payments Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Short-term debt	$	462.2	$	462.2	$	—	$	—	$	—
Long-term debt (1)		2,912.7		105.0		423.6		504.7		1,879.4
Operating leases		722.0		120.7		203.4		149.8		248.1
Purchase obligations (2)		788.3		744.6		43.5		0.2		—
Capital lease obligations (3)		112.4		4.9		10.1		10.6		86.8
Benefit obligations (4)		333.3		9.6		68.2		57.9		197.6
Unrecognized income tax benefits (5)		72.7		4.9		61.1		6.7		—
Total contractual obligations	$	5,403.6	$	1,451.9	$	809.9	$	729.9	$	2,411.9
(in millions) Other Commercial Commitments	Amount of Commitment Expiration per Period
	Total Amounts Committed		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Standby letters of credit(6)	$	124.9	$	124.9	$	—	$	—	$	—
Guarantees(7)		6.9		1.5		2.1		1.4		1.9
Total commercial commitments	$	131.8	$	126.4	$	2.1	$	1.4	$	1.9

(1) Includes interest payments associated with existing long-term debt, including the current portion. Variable-rate interest payments associated with the ESOP loan were estimated based on an average interest rate of 4.5 percent. Excludes issuance discount of $5.9 million.

(2) Includes commitments for food and beverage items, supplies, capital projects and other miscellaneous commitments.

(3) Capital lease obligations include imputed interest of $52.0 million over the life of the obligations.

(4) Includes expected payments associated with our defined benefit plans, postretirement benefit plan and our non-qualified deferred compensation plan through fiscal 2018.

(5) Includes interest on unrecognized income tax benefits of $9.6 million, $1.0 million of which relates to contingencies expected to be resolved within one year.

(6) Includes letters of credit for $104.5 million of workers’ compensation and general liabilities accrued in our consolidated financial statements, letters of credit for $2.6 million of lease payments included in the contractual operating lease obligation payments noted above and other letters of credit totaling $17.8 million.

(7) Consists solely of guarantees associated with leased properties that have been assigned to third parties. We are not aware of any non-performance under these arrangements that would result in us having to perform in accordance with the terms of the guarantees.

Our Board of Directors has authorized us to repurchase up to an aggregate of 162.4 million shares of our common stock. During the second quarter and six months ended November 23, 2008, we repurchased 2.3 million and 4.4 million shares of our common stock, respectively, compared to 0.9 million and 1.0 million for the quarter and six months ended November 25, 2007, respectively. As of November 23, 2008, we have repurchased a total of 151.4 million shares of our common stock. The repurchased common stock is reflected as a reduction of stockholders’ equity.

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Net cash flows provided by operating activities from continuing operations were $44.2 million and $205.5 million for the second quarter and first six months of fiscal 2009, respectively, compared to $74.8 million and $235.9 million in the second quarter and first six months of fiscal 2008, respectively. These decreases were primarily as a result of the offsetting impact of the timing of gift card sales and purchases of inventories and restaurant level services.

Net cash flows used in investing activities from continuing operations included capital expenditures incurred principally for building new restaurants and our new Restaurant Support Center, replacing equipment and technology initiatives. Capital expenditures were $162.5 million and $297.9 million in the second quarter and first six months of fiscal 2009, respectively, compared to $114.8 million and $201.4 million in the second quarter and first six months of fiscal 2008, respectively. The increased expenditures in the second quarter and first six months of fiscal 2009 resulted primarily from increased spending associated with new restaurants, our new Restaurant Support Center and the replacement of restaurant assets.

Net cash flows used in financing activities included $27.5 million and $55.4 million in dividends paid in the second quarter and first six months of fiscal 2009, respectively, compared to $25.5 million and $50.8 million in dividends for the same periods in fiscal 2008, respectively. On June 20, 2008, the Board of Directors approved an increase in the quarterly dividend to $0.20 per share, which indicates an annual dividend of $0.80 per share in fiscal 2009. In fiscal 2008, we paid quarterly dividends of $0.18 per share. Purchases of treasury stock were $58.4 million and $126.7 million during the second quarter and first six months of fiscal 2009, respectively, an increase from purchases of $36.8 million and $44.4 million during the second quarter and first six months of fiscal 2008, respectively. Cash flows provided by financing activities for the second quarter and first six months of fiscal 2009 were less than the cash flows provided by financing activities for the second quarter and first six months of fiscal 2008 due primarily to proceeds from the issuance of long-term debt in the second quarter of fiscal 2008, which were utilized to fund the acquisition of RARE.

We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources. We are not aware of any trends or events that would materially affect our capital requirements or liquidity. We believe that our Revolving Credit Agreement and internal cash generating capabilities will be sufficient to finance our ongoing capital expenditures, dividends, stock repurchase program and other operating activities through Fiscal 2009.

It is possible that changes in circumstances, existing as of the end of our second fiscal quarter of 2009 or at other times in the future, or in the numerous estimates associated with management’s judgments, assumptions and estimates made in assessing the fair value of our goodwill and other indefinite-lived intangible assets, could result in an impairment charge of a portion or all of our goodwill or other indefinite-lived intangible assets. If we recorded an impairment charge, our financial position and results of operations would be adversely affected and our leverage ratio for purposes of our credit agreement would increase. If such leverage ratio were to exceed the maximum permitted under our credit agreement, we would be in default under our credit agreement.

At November 23, 2008, a write down of goodwill, other indefinite-lived intangible assets, or any other assets in excess of approximately $430.0 million, on an after-tax basis, would have been required to cause our leverage ratio to exceed the permitted maximum. Due to the seasonal nature of our business, our leverage ratio as determined on a quarterly basis generally is at its highest point as of the end of our second fiscal quarter. Accordingly, it is expected that an even greater impairment of goodwill would be required to cause our leverage ratio to exceed the permitted maximum as calculated as of the end of our third fiscal quarter.

FINANCIAL CONDITION

Our current assets totaled $564.6 million at November 23, 2008, compared to $467.9 million at May 25, 2008. This increase was primarily due to an increase in inventories which were $324.1 million at November 23, 2008 compared to $216.7 million at May 25, 2008, principally due to seasonality and the timing of promotions, which was partially offset by the decrease in receivables, net which were $39.1 million at November 23, 2008 compared to $69.5 million at May 25, 2008.

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Our current liabilities totaled $1.38 billion at November 23, 2008, compared to $1.14 billion at May 25, 2008. Accounts payable and short-term debt totaled $291.5 million and $462.2 million, respectively, at November 23, 2008, compared to $245.1 million and $178.4 million, respectively, at May 25, 2008, principally due to the timing and terms of seasonal inventory purchases, share repurchases, capital expenditures and related payments during the first six months of fiscal 2009 and the use of short-term borrowings to manage to desired debt leverage targets. Accrued payroll of $109.4 million at November 23, 2008 decreased from $129.3 million at May 25, 2008, principally due to payouts of fiscal 2008 accrued bonuses during the first quarter of fiscal 2009. Unearned revenues of $128.0 million at November 23, 2008 decreased from $160.5 million at May 25, 2008 principally due to seasonal fluctuations in sales and redemptions of our gift cards. Other current liabilities of $333.3 million at November 23, 2008 decreased from $365.1 million at May 25, 2008 principally due to a reduction in the fair value of our non-qualified deferred compensation plans.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.

Critical accounting policies are those we believe are both most important to the portrayal of our financial condition and operating results and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. We consider the following policies to be most critical in understanding the judgments that are involved in preparing our consolidated financial statements.

Land, Buildings and Equipment

Land, buildings and equipment are recorded at cost less accumulated depreciation. Building components are depreciated over estimated useful lives ranging from seven to 40 years using the straight-line method. Leasehold improvements, which are reflected on our consolidated balance sheets as a component of buildings, are amortized over the lesser of the expected lease term, including cancelable option periods, or the estimated useful lives of the related assets using the straight-line method. Equipment is depreciated over estimated useful lives ranging from two to 20 years, also using the straight-line method.

Our accounting policies regarding land, buildings and equipment, including leasehold improvements, include our judgments regarding the estimated useful lives of these assets, the residual values to which the assets are depreciated or amortized, the determination of what constitutes expected lease term and the determination as to what constitutes enhancing the value of or increasing the life of existing assets. These judgments and estimates may produce materially different amounts of reported depreciation and amortization expense if different assumptions were used. As discussed further below, these judgments may also impact our need to recognize an impairment charge on the carrying amount of these assets as the cash flows associated with the assets are realized, or as our expectations of estimated future cash flows change.

Leases

We are obligated under various lease agreements for certain restaurants. For operating leases, we recognize rent expense on a straight-line basis over the expected lease term, including option periods as described below. Capital leases are recorded as an asset and an obligation at an amount equal to the present value of the minimum lease payments during the lease term.

Within the provisions of certain of our leases, there are rent holidays and/or escalations in payments over the base lease term, as well as renewal periods. The effects of the holidays and escalations have been reflected in rent expense on a straight-line basis over the expected lease term, which includes option periods we are reasonably assured to exercise because failure to exercise such options would result in an economic penalty to the Company. The lease term commences on the date when we have the right to control the use of the leased property, which is

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typically before rent payments are due under the terms of the lease. The leasehold improvements and property held under capital leases for each restaurant facility are amortized on the straight-line method over the shorter of the estimated life of the asset or the same expected lease term used for lease accounting purposes. Many of our leases have renewal periods totaling five to 20 years, exercisable at our option, and require payment of property taxes, insurance and maintenance costs in addition to the rent payments. The consolidated financial statements reflect the same lease term for amortizing leasehold improvements as we use to determine capital versus operating lease classifications and in calculating straight-line rent expense for each restaurant. Percentage rent expense is generally based upon sales levels and is accrued at the point in time we determine that it is probable that such sales levels will be achieved.

Our judgments related to the probable term for each restaurant affect the classification and accounting for leases as capital versus operating, the rent holidays and escalation in payments that are included in the calculation of straight-line rent and the term over which leasehold improvements for each restaurant facility are amortized. These judgments may produce materially different amounts of depreciation, amortization and rent expense than would be reported if different assumed lease terms were used.

Impairment of Long-Lived Assets

Land, buildings and equipment and certain other assets, including capitalized software costs and liquor licenses, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. If these assets are determined to be impaired, the amount of impairment recognized is the amount by which the carrying amount of the assets exceeds their fair value. Fair value is generally determined by appraisals or sales prices of comparable assets. Restaurant sites and certain other assets to be disposed of are reported at the lower of their carrying amount or fair value, less estimated costs to sell. Restaurant sites and certain other assets to be disposed of are included in assets held for sale when certain criteria are met. These criteria include the requirement that the likelihood of disposing of these assets within one year is probable. For assets that meet the held for sale criteria, we separately evaluate whether those assets also meet the requirements to be reported as discontinued operations. Principally, if we discontinue cash flows and no longer have any significant continuing involvement with respect to the operations of the assets, we classify the assets and related results of operations as discontinued. We consider guest transfer (an increase in guests at another location as a result of the closure of a location) as continuing cash flows and evaluate the significance of expected guest transfer when evaluating a restaurant for discontinued operations reporting. To the extent we dispose of enough assets where classification between continuing operations and discontinued operations would be material to our consolidated financial statements, we utilize the reporting provisions for discontinued operations. Assets whose disposal is not probable within one year remain in land, buildings and equipment until their disposal is probable within one year.

The judgments we make related to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows in excess of the carrying amounts of these assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, changes in usage or operating performance, desirability of the restaurant sites and other factors, such as our ability to sell our assets held for sale. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, significant adverse changes in these factors could cause us to realize a material impairment charge.

Valuation and Recoverability of Goodwill and Indefinite Lived Intangible Assets

Intangible assets with indefinite useful lives represented $974.4 million of our $4.97 billion in total assets as of November 23, 2008, comprised of $519.7 million and $454.7 million of goodwill and trademarks, respectively. We have identified LongHorn Steakhouse^® and The Capital Grille^® trademarks as indefinite lived intangible assets, in addition to our goodwill, after considering the expected use of the assets and the regulatory and economic environment within which they are being used. We review our goodwill and other indefinite-lived intangible assets annually, as of the first day of our fourth fiscal quarter, for impairment, or more frequently if indicators of impairment exist. We continually assess whether any indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among

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others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements.

When required, we first test goodwill for impairment by comparing the fair value of the restaurant concepts with their carrying amounts. If the fair value of the concepts exceeds the carrying amount of the concepts, goodwill is not deemed to be impaired, and no further testing would be necessary. If the carrying amount of these concepts were to exceed their fair value, we would perform a second test to measure the amount of impairment loss, if any. To measure the amount of any impairment loss, we would determine the implied fair value of goodwill in the same manner as if these concepts were being acquired in a business combination. Specifically, we would allocate the fair value of each of these concepts to all of the assets and liabilities of each concept, including any unrecognized intangible assets, in a hypothetical calculation that would calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, we would record an impairment charge for the difference.

When required, we test other indefinite-lived intangible assets, primarily trademarks, for impairment by comparing the assets’ respective carrying values to estimates of fair value, determined based on an income valuation model using the relief from royalty method, which requires assumptions related to projected revenues from our annual long-range plan; assumed royalty rates that could be payable if we did not own the trademarks; and a discount rate. Our trademarks are tested separately as a single unit of accounting as prescribed by Emerging Issues Task Force (EITF) Issue No. 02-7, “Unit of Accounting for Testing Impairment of Indefinite-Lived Intangible Assets.”

The accounting estimates related to our goodwill and other indefinite lived intangible assets require us to make significant assumptions about fair values. Our assumptions regarding fair values require significant judgment about economic factors, industry factors and technology considerations, as well as our views regarding the prospects of our concepts. Changes in these judgments may have a significant effect on the estimated fair values.

At the end of the second quarter of fiscal 2009, due to the poor overall economic conditions, declines in the value of our stock price as well as our competitors, declining sales at our restaurants and a challenging environment for the restaurant industry, we conducted an impairment test of our goodwill and indefinite-lived intangible assets. Based on the results of the test, no write downs or impairment charges were required at that time in relation to goodwill. Please refer to Note 3 of the accompanying Consolidated Financial Statements for further discussion.

Insurance Accruals

Through the use of insurance program deductibles and self-insurance, we retain a significant portion of expected losses under our workers’ compensation, employee medical and general liability programs. However, we carry insurance for individual workers’ compensation and general liability claims that generally exceed $0.50 million and $0.25 million, respectively. Accrued liabilities have been recorded based on our estimates of the anticipated ultimate costs to settle all claims, both reported and not yet reported.

Our accounting policies regarding these insurance programs include our judgments and independent actuarial assumptions about economic conditions, the frequency or severity of claims and claim development patterns and claim reserve, management and settlement practices. Unanticipated changes in these factors may produce materially different amounts of reported expense under these programs.

Stock-Based Compensation

Beginning in fiscal 2007, we account for stock-based compensation in accordance with the fair value recognition provisions of SFAS No. 123R, “Share-Based Payment.” We use the Black-Scholes option pricing model, which requires the input of subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (expected term), the volatility of our common stock price over the expected term and the number of options that will ultimately not complete their vesting requirements (forfeitures). From year to year, our determination of these subjective assumptions can materially affect the estimate of fair value of our stock-based compensation and, consequently, the related amount recognized in our consolidated statements of earnings during each period.

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Income Taxes

We estimate certain components of our provision for income taxes. These estimates include, among other items, depreciation and amortization expense allowable for tax purposes, allowable tax credits for items such as taxes paid on reported employee tip income, effective rates for state and local income taxes and the tax deductibility of certain other items. We adjust our annual effective income tax rate as additional information on outcomes or events becomes available.

Effective May 28, 2007, we adopted FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes - - an interpretation of FASB Statement No. 109.” FIN 48 requires that a position taken or expected to be taken in a tax return be recognized (or derecognized) in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

We base our estimates on the best available information at the time we prepare the provision. We generally file our annual income tax returns several months after our fiscal year-end. Income tax returns are subject to audit by federal, state and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws.

The major jurisdictions in which the Company files income tax returns include the U.S. federal jurisdiction, Canada, and most states in the U.S. that have an income tax. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2001.

APPLICATION OF NEW ACCOUNTING STANDARDS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements required under other accounting pronouncements, but does not change existing guidance as to whether or not an instrument is carried at fair value. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157,” which permits a one-year deferral for the implementation of SFAS No. 157 with regard to non-financial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis. We elected to defer adoption of SFAS No. 157 for such items and we do not currently anticipate that full adoption in fiscal 2010 will materially impact our consolidated financial statements. Effective May 24, 2008 and as disclosed in Note 12 – Fair Value Measurements, we have adopted the provisions of SFAS No. 157 for financial assets and liabilities.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (an amendment of FASB Statements No. 87, 88, 106 and 132R).” Effective May 27, 2007, we implemented the recognition and measurement provision of SFAS No. 158. The purpose of SFAS No. 158 is to improve the overall financial statement presentation of pension and other postretirement plans, but SFAS No. 158 does not impact the determination of net periodic benefit cost or measurement of plan assets or obligations. SFAS No. 158 requires companies to recognize the over or under funded status of the plan as an asset or liability as measured by the difference between the fair value of the plan assets and the benefit obligation and requires any unrecognized prior service costs and actuarial gains and losses to be recognized as a component of accumulated other comprehensive income (loss). Additionally, SFAS No. 158 requires measurement of the funded status of pension and postretirement plans as of the date of a company’s fiscal year ending after December 15, 2008, the year ended May 31, 2009 for Darden. Certain of our plans currently have measurement dates that do not coincide with our fiscal year end and thus we will be required to change their measurement dates in fiscal 2009. As permitted by SFAS No. 158, we will use the measurements performed in fiscal 2008 to estimate the effects of our changes to fiscal year end measurement dates. The impact of the transition to fiscal year end measurement dates, which will be recorded as an adjustment to retained earnings in the fourth quarter of fiscal 2009, is expected to be immaterial to our consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 provides companies with an option to report selected financial assets and

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financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, which required that we adopt these provisions in the first quarter of fiscal 2009. The adoption of SFAS No. 159 did not have an impact on our consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” SFAS No. 141R provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS No. 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS No. 141R is effective for business combinations occurring in fiscal years beginning after December 15, 2008, which will require us to adopt these provisions for business combinations occurring in fiscal 2010 and thereafter. Early adoption of SFAS No. 141R is not permitted. We are currently evaluating the impact SFAS No. 141R will have on any future business combinations we enter into.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” SFAS No. 161 provides companies with requirements for enhanced disclosures about derivative instruments and hedging activities to enable investors to better understand their effects on a company’s financial position, financial performance and cash flows. These requirements include the disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. SFAS No. 161 will be effective for our third quarter of fiscal 2009 even though early adoption is permitted. We are currently evaluating the impact SFAS 161 will have on our consolidated financial statements.

In June 2008, the FASB issued FASB Staff Position (FSP) EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities.” FSP EITF 03-6-1 provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The two-class method is an earnings allocation method for computing earnings per share when an entity’s capital structure includes either two or more classes of common stock or common stock and participating securities. It determines earnings per share based on dividends declared on common stock and participating securities (i.e., distributed earnings) and participation rights of participating securities in any undistributed earnings. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, which will require us to adopt these provisions in fiscal 2010. We do not believe the adoption of FSP EITF 03-6-1 will have a significant impact on our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

Certain statements included in this report and other materials filed or to be filed by us with the SEC (as well as information included in oral or written statements made or to be made by us) may contain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words or phrases such as “believe,” “plan,” “will,” “expect,” “intend,” “estimate,” and “project” and similar expressions are intended to identify forward-looking statements. All of these statements, and any other statements in this report that are not historical facts, are forward-looking. We wish to caution investors not to place undue reliance on any such forward-looking statements. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. These forward-looking statements are based on assumptions concerning important factors, risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, could cause the actual results to differ materially from those expressed in the forward-looking statements. These factors, risks and uncertainties include, but are not limited to those discussed below in Part II, Item 1A “Risk Factors’ in this Form 10-Q and in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended May 25, 2008:

• The intensely competitive nature of the restaurant industry, especially pricing, service, location, personnel and type and quality of food;

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• Economic and business factors, both specific to the restaurant industry and generally, that are largely out of our control, including changes in consumer preferences, demographic trends, severe weather conditions including hurricanes, a protracted economic slowdown or worsening economy, unemployment, energy prices, interest rates, industry-wide cost pressures and public safety conditions, including actual or threatened armed conflicts or terrorist attacks;

• The price and availability of food, ingredients and utilities, including the general risk of inflation;

• The impact of shortages or interruptions in the delivery of food and other supplies;

• Labor and insurance costs, including increased labor costs as a result of federal and state-mandated increases in minimum wage rates and increased insurance costs as a result of increases in our current insurance premiums;

• The loss of key personnel or difficulties recruiting and retaining qualified personnel;

• A material information technology interruption or security failure;

• Increased advertising and marketing costs;

• Higher-than-anticipated costs to open, close, relocate or remodel restaurants;

• Litigation by employees, consumers, suppliers, shareholders or others, regardless of whether the allegations made against us are valid or we are ultimately found liable;

• Unfavorable publicity relating to food safety or other concerns;

• A lack of suitable new restaurant locations or a decline in the quality of the locations of our current restaurants;

• Federal, state and local regulation of our business, including laws and regulations relating to our relationships with our employees, zoning, land use, environmental matters and liquor licenses;

• Factors impacting our growth objectives, including lower-than-expected sales and profitability of newly-opened restaurants, our ability to develop or acquire new concepts and our ability to manage risks relating to the opening of new restaurants, including real estate development and construction activities, union activities, the issuance and renewal of licenses and permits and the availability and cost of funds to finance growth;

• Our plans to expand newer concepts like Bahama Breeze and Seasons 52 that have not yet proven their long-term viability may not be successful and could require us to make substantial further investments in these concepts;

• Our ability to combine and integrate the business of RARE into our operations in a successful and timely manner and to achieve synergies following the completion of the acquisition, including the ultimate realization of goodwill;

• The impact of the substantial indebtedness we incurred in connection with the acquisition of RARE;

• A failure of our internal controls over financial reporting;

• The impact of disruptions in the financial markets, including an increase in pension costs;

• The negative effect of a possible change in the assumptions used to value our goodwill or other intangible assets; and

• The impact of volatility in the market value of derivatives we use to hedge commodity prices.

Since it is not possible to foresee all such factors, risks and uncertainties, investors should not consider these factors to be a complete list of all risks or uncertainties.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including fluctuations in interest rates, foreign currency exchange rates, compensation and commodity prices. To manage this exposure, we periodically enter into interest rate, foreign currency exchange rate, equity forward and commodity instruments for other than trading purposes.

We use the variance/covariance method to measure value at risk, over time horizons ranging from one week to one year, at the 95 percent confidence level. As of November 23, 2008, our potential losses in future net earnings resulting from changes in floating rate debt interest rate, foreign currency exchange rate, equity forwards and commodity instrument exposures were approximately $14.0 million over a period of one year. The value at risk from an increase in the fair value of all of our long-term fixed rate debt, over a period of one year, was approximately $157.5 million. The fair value of our long-term fixed rate debt during the first six months of fiscal 2009 averaged $1.54 billion, with a high of $1.60 billion and a low of $1.41 million.

During the quarter ended August 24, 2008, we entered into interest rate swap agreements with $225.0 million of notional value to limit the risk of changes in fair value of our $150 million senior notes due August 2010 and $75 million medium-term notes due April 2011 attributable to changes in the benchmark interest rate between

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now and maturity of the related debt. The swap agreements effectively swap the fixed rate obligations for floating rate obligations, thereby mitigating changes in fair value of the related debt prior to maturity. During the quarter ended November 23, 2008, we terminated these interest rate swap agreements for a gain of $1.9 million. The gain will be recorded as a component of the carrying value of our long-term debt and will be recognized as a reduction to interest expense over the remaining life of the underlying notes.

During the quarter ended November 23, 2008, we entered into interest rate swap agreements with $200.0 million of notional value to hedge a portion of the risk of changes in the benchmark interest rate associated with amounts outstanding under our Revolving Credit Agreement, which expire in April 2009.

Our interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows by targeting an appropriate mix of variable and fixed rate debt.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of November 23, 2008, the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of November 23, 2008.

During the fiscal quarter ended November 23, 2008, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to private lawsuits, administrative proceedings and claims that arise in the ordinary course of our business. A number of these lawsuits, proceedings and claims may exist at any given time. These matters typically involve claims from guests, employees and others related to operational issues common to the restaurant industry, and can also involve infringement of, or challenges to, our trademarks. While the resolution of a lawsuit, proceeding or claim may have an impact on our financial results for the period in which it is resolved, we believe that the final disposition of the lawsuits, proceedings and claims in which we are currently involved, either individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or liquidity. The following is a brief description of the more significant of these matters. In view of the inherent uncertainties of litigation, the outcome of any unresolved matter described below cannot be predicted at this time, nor can the amount of any potential loss be reasonably estimated.

Like other restaurant companies and retail employers, in a few states we have been faced with allegations of purported class-wide wage and hour violations. In January 2004, a former food server filed a purported class action in California state court alleging that Red Lobster’s “server banking” policies and practices (under which servers settle guest checks directly with customers throughout their shifts, and turn in collected monies at the shift’s end) improperly required her and other food servers and bartenders to make up cash shortages and walkouts in violation of California law. The case was ordered to arbitration. As a procedural matter, the arbitrator ruled that class-wide arbitration is permissible under our dispute resolution program. In January 2007, plaintiffs’ counsel filed in California state court a second purported class action lawsuit on behalf of servers and bartenders alleging that Olive Garden’s server banking policy and its alleged failure to pay split shift premiums violated California law. Although we believed that our policies and practices were lawful and that we had strong defenses to both cases, following mediation with the plaintiffs, we reached a tentative resolution of the matters during the third quarter of fiscal 2008. As a result, we accrued approximately $4.0 million in legal settlement costs during fiscal 2008, which we expect to be paid in fiscal 2009. No additional reserves have been taken in connection with this settlement.

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In August 2007, an action was filed in California state court by a former Olive Garden server alleging that Olive Garden’s scheduling practices resulted in failure to properly pay reporting time (minimum shift) pay as well as to pay minimum wage, to provide itemized wage statements, and to timely pay employees upon the termination of their employment. The complaint sought to have the suit certified as a class action. Although we believed that our policies and practices were lawful and we had strong defenses, following mediation with the plaintiffs during the fourth quarter of fiscal 2008, we reached a preliminary settlement of this matter under which we paid approximately $0.7 million. The settlement was paid during the second quarter of fiscal 2009. In August 2008, an action was filed in California state court by a former Red Lobster server related to employment practices at Red Lobster similar to those in the Olive Garden matter described above. The complaint seeks to have the suit certified as a class action. Although we believed that our policies and practices were lawful, we reached a preliminary settlement of this matter under which we would pay approximately $0.5 million, which we expect to pay during fiscal 2009 upon completion of the settlement process.

In July 2008, an action was filed in California state court by a group of former Red Lobster managers alleging that the salaried general managers of the restaurants were not paid minimum wage for all hours worked because they were not paid for time spent attending various seminars and conferences. In addition, the managers claim that they were not provided with rest and meal breaks pursuant to California law. The complaint seeks to have the suit certified as a class action. We believe that our policies and practices were lawful, and we intend to vigorously defend our position in this action.

On September 18, 2008, the Equal Employment Opportunity Commission filed suit in the United States District Court for the Northern District of Ohio alleging that African-American employees of the Bahama Breeze restaurant in Beachwood, Ohio were subjected to discriminatory employment practices in violation of Title VII of the Civil Rights Act of 1964 and Title I of the Civil Rights Act of 1991. The complaint seeks to enjoin the alleged discriminatory practices and seeks compensatory damages for the employees. We believe that our practices were lawful, and we intend to vigorously defend our position in this action.

On March 13, 2008, a purported class action complaint alleging violation of the federal securities laws was filed by an institutional shareholder against Darden and certain of our current officers, one of whom is also a director, in the United States District Court for the Middle District of Florida. The complaint was filed on behalf of all purchasers of Darden’s common stock between June 19, 2007 and December 18, 2007 (the Class). The complaint alleges that during that period, the defendants issued false and misleading statements in press releases and public filings that misrepresented and failed to disclose certain information, and that as a result, had no reasonable basis for statements about Darden’s prospects and guidance for fiscal 2008. The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The plaintiff seeks to recover unspecified damages on behalf of the Class. We intend to vigorously defend our position in this action.

By letter dated May 9, 2008, a putative shareholder demanded that our Board of Directors take action to remedy alleged breaches of fiduciary duty to Darden by certain officers and directors. The letter contains similar allegations to those in the purported class action described above regarding the alleged issuance of false and misleading statements and omissions regarding Darden’s financial results and sales growth. The Board has formed a special litigation committee to evaluate the claims in the letter. On September 10, 2008, this same putative shareholder on behalf of nominal defendant Darden filed a shareholder derivative civil action in the Circuit Court of the Ninth Judicial Circuit of Orange County, Florida against Darden, our Board of Directors, and several of our senior executives, including the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. The allegations in the complaint arise out of the same facts alleged in the purported class action complaint referenced above. In particular, the complaint alleges that during the period June 19, 2007 and December 18, 2007, certain of the defendants issued false and misleading statements in press releases and public filings that misrepresented and failed to disclose certain information about Darden’s prospects and earnings guidance for fiscal 2008, and that certain defendants benefited from these false and misleading statements in selling Darden stock at an inflated price. The complaint seeks to recover in favor of Darden, damages sustained by Darden as a result of the defendants’ alleged breaches of fiduciary duty, and the imposition of a constructive trust in favor of Darden for the amount of proceeds realized by certain defendants from the sale of Darden stock. Fees and costs, as well as equitable relief, are also sought. We intend to vigorously defend our position in this action.

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Item 1A. Risk Factors

Various risks and uncertainties could affect our business. These risks are described elsewhere in this report or our other filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended May 25, 2008 (Form 10-K) and our Quarterly Report on Form 10-Q for the quarter ended August 24, 2008 (First Quarter Form 10-Q). The risks identified in these reports have not changed in any material respect, except as follows:

The second risk factor under Part 1, Item 1A “Risk Factors” in the Form 10-K is amended to read as follows:

“Certain economic and business factors specific to the restaurant industry and certain general economic factors including unemployment, energy prices and interest rates that are largely out of our control may adversely affect our results of operations.

Our business results depend on a number of industry-specific and general economic factors, many of which are beyond our control. The full service dining sector of the restaurant industry is affected by changes in national, regional and local economic conditions, seasonal fluctuation of sales volumes, consumer spending patterns and consumer preferences, including changes in consumer tastes and dietary habits, the level of consumer acceptance of our restaurant concepts and health concerns. For example, health concerns relating to the consumption of beef or to specific events such as the outbreak of “mad cow disease” may adversely impact sales at LongHorn Steakhouse and The Capital Grille restaurants that offer beef as a primary menu item. In addition, public concern over “avian flu” may cause fear about the consumption of chicken, eggs and other products derived from poultry. The inability to serve beef or poultry-based products would restrict our ability to provide a variety of menu items to our guests. If we change a restaurant concept or menu in response to such concerns, we may lose customers who do not prefer the new concept or menu, and we may not be able to attract a sufficient new customer base to produce the revenue needed to make the restaurant profitable. We also may have different or additional competitors for our intended customers as a result of such a concept change and may not be able to successfully compete against such competitors. The performance of individual restaurants may also be adversely affected by factors such as demographic trends, severe weather including hurricanes, traffic patterns and the type, number and location of competing restaurants.

General economic conditions may also adversely affect our results of operations. Recessionary economic cycles, a protracted economic slowdown, a worsening economy, increased unemployment, increased energy prices, rising interest rates or other industry-wide cost pressures could affect consumer behavior and spending for restaurant dining occasions and lead to a decline in sales and earnings. When gasoline, natural gas, electricity and other energy costs increase, and credit card, home mortgage and other borrowing costs increase with rising interest rates, our guests may have lower disposable income and reduce the frequency with which they dine out, or may choose more inexpensive restaurants when eating outside the home. Furthermore, we cannot predict the effects that actual or threatened armed conflicts, terrorist attacks, efforts to combat terrorism, heightened security requirements, or a failure to protect information systems for critical infrastructure, such as the electrical grid and telecommunications systems, could have on our operations, the economy or consumer confidence generally. Any of these events could affect consumer spending patterns or result in increased costs for us due to security measures.

Unfavorable changes in the above factors or in other business and economic conditions affecting our customers could increase our costs, reduce traffic in some or all of our restaurants or impose practical limits on pricing, any of which could lower our profit margins and have a material adverse affect on our financial condition and results of operations.”

The risk factor added in Part II, Item 1A “Risk Factors” in the First Quarter Form 10-Q concerning disruptions in the financial markets is revised to read as follows:

“Disruptions in the financial markets may adversely impact the availability and cost of credit and consumer spending patterns and may increase pension plan expenses.

Our ability to make scheduled payments or to refinance our debt and to obtain financing for acquisitions or other general corporate and commercial purposes will depend on our operating and financial performance, which in

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turn is subject to prevailing economic conditions and to financial, business and other factors beyond our control. Global credit markets and the financial services industry have been experiencing a period of unprecedented turmoil in recent months, characterized by the bankruptcy, failure or sale of various financial institutions and an unprecedented level of intervention from the United States and other governments. These events may adversely impact the availability of credit already arranged, and the availability and cost of credit in the future. There can be no assurances that we will be able to arrange credit on terms we believe are acceptable or that permit us to finance our business with historical margins. These events have also adversely affected the U.S. and world economy, and any new or continuing disruptions in the financial markets may also adversely affect the U.S. and world economy, which could negatively impact consumer spending patterns. There can be no assurances as to how or when this period of turmoil will be resolved. Changes in the capital markets could also have significant effects on our pension plan. Our pension income or expense is affected by factors including the market performance of the assets in the master pension trust maintained for the pension plans for some of our employees, the weighted average asset allocation and long-term rate of return of our pension plan assets, the discount rate used to determine the service and interest cost components of our net periodic pension cost and assumed rates of increase in our employees’ future compensation. If our pension plan assets do not achieve positive rates of return, or if our estimates and assumed rates are not accurate, our earnings may decrease because net periodic pension costs would rise and we could be required to provide additional funds to cover our obligations to employees under the pension plan. As of November 23, 2008, our defined benefit pension plan assets have declined significantly since May 25, 2008. At this time, we are unable to predict the plan’s asset values and required valuation parameters. We will measure our plan’s asset values and pension benefit obligations and calculate our fiscal 2009 pension benefit expense and 2009 annual plan contribution requirements at May 31, 2009.”

In addition, the following risk factors are added at the end of the list of risk factors under Part 1, Item 1A “Risk Factors” in the Form 10-K to read in their entirety as follows:

“An impairment in the carrying value of our goodwill or other intangible assets could adversely affect our financial condition and consolidated results of operations.

Goodwill represents the difference between the purchase price of acquired companies and the related fair values of net assets acquired. We test goodwill for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. We compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and liabilities associated with the operations of that reporting unit. If the carrying value is less than the fair value, no impairment exists. If the carrying value is higher than the fair value, there is an indication of impairment. A significant amount of judgment is involved in determining if an indication of impairment exists. Factors may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any adverse change in these factors would have a significant impact on the recoverability of these assets and negatively affect our financial condition and consolidated results of operations. We compute the amount of impairment by comparing the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. We are required to record a non-cash impairment charge if the testing performed indicates that goodwill has been impaired.

We evaluate the useful lives of our other intangible assets, primarily the LongHorn Steakhouse^® and The Capital Grille^® trademarks, to determine if they are definite or indefinite-lived. Reaching a determination on useful life requires significant judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment, and expected changes in distribution channels), the level of required maintenance expenditures, and the expected lives of other related groups of assets.

As with goodwill, we test our indefinite-lived intangible assets (primarily tradenames) for impairment annually and whenever events or changes in circumstances indicate that their carrying value may not be recoverable. We estimate the fair value of the trademarks based on an income valuation model using the relief from royalty method, which requires assumptions related to projected revenues from our annual long-range plan, assumed royalty rates that could be payable if we did not own the trademarks and a discount rate.

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We cannot accurately predict the amount and timing of any impairment of assets. Should the value of goodwill or other intangible assets become impaired, there could be an adverse effect on our financial condition and consolidated results of operations.

Volatility in the market value of derivatives we use to hedge exposures to fluctuations in commodity prices may cause volatility in our gross margins and net earnings.

We use or may use derivatives to hedge price risk for some of our principal ingredient and energy costs, including but not limited to coffee, wheat, soybean oil, pork, beef and natural gas. Changes in the values of these derivatives are recorded in earnings currently, resulting in volatility in both gross margin and net earnings. These gains and losses are reported as a component of cost of sales in our Consolidated Statements of Earnings. We may experience volatile earnings as a result of these accounting treatments.”

The above risks and other risks described in this report and our other filings with the Securities and Exchange Commission could have a material impact on our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Therefore, the risks identified are not intended to be a complete discussion of all potential risks or uncertainties.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information concerning our repurchase of shares of our common stock during the quarter ended November 23, 2008. Since commencing repurchases in December 1995, we have repurchased a total of 151.4 million shares through November 23, 2008 under authorizations from our Board of Directors to repurchase an aggregate of 162.4 million shares.

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (2)
August 25, 2008 through September 28, 2008	800,779	$	29.82	800,779	12,506,823
September 29, 2008 through October 26, 2008	843,611	$	23.83	843,611	11,663,212
October 27, 2008 through November 23, 2008	688,648	$	20.89	688,648	10,974,564
Total	2,333,038	$	25.02	2,333,038	10,974,564

(1) All of the shares purchased during the quarter ended November 23, 2008 were purchased as part of our repurchase program, the most recent increased authority for which was announced in a press release issued on June 20, 2006. There is no expiration date for our program. The number of shares purchased includes shares withheld for taxes on vesting of restricted stock, shares delivered or deemed to be delivered to us on tender of stock in payment for the exercise price of options, and shares reacquired pursuant to tax withholding on option exercises. These shares are included as part of our repurchase program and deplete the repurchase authority granted by our Board. The number of shares repurchased excludes shares we reacquired pursuant to forfeiture of restricted stock.

(2) Repurchases are subject to prevailing market prices, may be made in open market or private transactions and may occur or be discontinued at any time. There can be no assurance that we will repurchase any shares.

Item 4. Submission of Matters to a Vote of Security Holders

(a) Our Annual Meeting of Shareholders was held on September 12, 2008.

(b) The name of each director elected at the meeting is provided in Item 4(c) of this report. There are no other directors with a term of office that continued after the Annual Meeting. Subsequent to the Annual Meeting, and as reported in a Form 8-K filed on November 3, 2008, the Board of Directors increased the number of directors of the Company from 11 to 12, and elected Christopher J. (CJ) Fraleigh to serve as a director, all effective November 3, 2008.

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(c) At the Annual Meeting, the shareholders took the following actions:

(i) Elected the following eleven directors:

	For	Withheld
Leonard L. Berry	116,458,506	3,933,080
Odie C. Donald	116,496,679	3,894,907
David H. Hughes	117,647,947	2,743,639
Charles A. Ledsinger, Jr.	116,534,982	3,856,604
William M. Lewis, Jr.	117,589,521	2,802,065
Senator Connie Mack, III	116,578,997	3,812,589
Andrew H. Madsen	114,146,752	6,244,833
Clarence Otis, Jr.	112,079,453	8,312,133
Michael D. Rose	104,060,808	16,330,777
Maria A. Sastre	117,460,919	2,930,666
Jack A. Smith	113,883,738	6,507,848

(Ii) Approved the amended Darden Restaurants, Inc. 2002 Stock Incentive Plan.

For	87,634,952
Against	16,403,907
Abstain	1,362,974
Broker Non-Vote	14,989,753

(ii) Ratified the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending May 31, 2009.

For	114,507,713
Against	4,600,549
Abstain	1,283,323
Broker Non-Vote	0

Item 5. Other Information

The Company provides an annual cash incentive opportunity to its management team of over 300 employees, including its executive officers, under its Management and Professional Incentive Plan (MIP) and an annual bonus to an additional group of approximately 800 employees. A description of the terms and conditions of the MIP and the factors used to determine the annual incentive award is contained under the heading “Compensation Discussion and Analysis – Compensation Decision-Making Process - Annual Cash Incentive” in the Company’s Proxy Statement filed with the SEC on August 4, 2008 (Proxy Statement), which description is incorporated herein by reference. As described in the Proxy Statement, if circumstances warrant, the Compensation Committee may design special incentives under the MIP to retain employees. On January 2, 2009, the Compensation Committee approved a special incentive opportunity, potentially to be awarded in June at the discretion of the Compensation Committee, to recognize continued, competitively superior performance in a challenging economic environment. This award, if made, would be under the MIP and would be available to all MIP participants, including the executive officers named in the Summary Compensation Table in the Proxy Statement (Named Executive Officers). If the special incentive opportunity is awarded at the discretion of the Compensation Committee, it would be a cash bonus and paid to all MIP participants. The Compensation Committee would assess whether competitively superior performance has been achieved based on, among other factors, whether the Company’s sales results for fiscal 2009 compare favorably to the Knapp-Track™ casual dining benchmark for the industry as a whole (excluding the Company’s national brands, Olive Garden and Red Lobster) and other competitive benchmarks as may be appropriate. A positive average spread to Knapp-Track of at least two percentage points is necessary for consideration of the special incentive. The actual special incentive bonus will be calculated like the annual bonus under the MIP, taking into account the participant’s salary, percentage of salary established for bonus potential, individual rating and the special incentive opportunity rating. This special incentive is a one-time opportunity to focus the team on achieving competitively superior results in a difficult economic environment. As a result of this

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calculation, the special incentive opportunity for the named executive officers would range, if paid, from 0% – 36% of their target MIP opportunity. The special incentive opportunity is in addition to the normal annual cash incentive already available under the MIP.

Item 6. Exhibits

Exhibit 10(a)*	Darden Restaurants, Inc. FlexComp Plan as amended.
Exhibit 10(b)*	Darden Restaurants, Inc. Director Compensation Program, as amended.
Exhibit 10(c)*	Darden Restaurants, Inc. Stock Plan for Directors, as amended.
Exhibit 10(d)*	Darden Restaurants, Inc. Compensation Plan for Non-Employee Directors, as amended.
Exhibit 10(e)*	Amendment No. 1 dated December 19, 2008 to Benefits Trust Agreement dated as of October 3, 1995, between us and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association).
Exhibit 10(f)*	RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan, as amended.
Exhibit 12	Computation of Ratio of Consolidated Earnings to Fixed Charges.
Exhibit 31(a)	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31(b)	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32(a)	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32(b)	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Items marked with an asterisk are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DARDEN RESTAURANTS, INC.
Dated: January 2, 2009	By:	/s/ Paula J. Shives
		Paula J. Shives
		Senior Vice President,
		General Counsel and Secretary
Dated: January 2, 2009	By:	/s/ C. Bradford Richmond
		C. Bradford Richmond
		Senior Vice President and Chief Financial Officer
		(Principal financial officer)

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INDEX TO EXHIBITS

Exhibit Number	Exhibit Title
* 10(a)	Darden Restaurants, Inc. FlexComp Plan as amended.
* 10(b)	Darden Restaurants, Inc. Director Compensation Program, as amended.
* 10(c)	Darden Restaurants, Inc. Stock Plan for Directors, as amended.
* 10(d)	Darden Restaurants, Inc. Compensation Plan for Non-Employee Directors, as amended.
* 10(e)	Amendment No. 1 dated December 19, 2008 to Benefits Trust Agreement dated as of October 3, 1995, between us and Wells Fargo Bank, National Association (as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association).
* 10(f)	RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan, as amended.
12	Computation of Ratio of Consolidated Earnings to Fixed Charges.
31(a)	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32(a)	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32(b)	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Items marked with an asterisk are management contracts or compensatory plans or arrangements required to be filed as an exhibit pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K.

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EX-10.A

Exhibit 10(a)

As amended through January 1, 2009

DARDEN RESTAURANTS, INC.

FLEXCOMP PLAN

DARDEN RESTAURANTS, INC.

FLEXCOMP PLAN

ARTICLE I

INTRODUCTION

Section 1.1 Purpose of Plan. Darden Restaurants, Inc. hereby adopts the Darden Restaurants, Inc. FlexComp Plan (the “Plan”) for a select group of the key management and highly compensated employees of the Company as a means of providing for certain automatically deferred income attributable special bonus amounts (referred to herein as “FlexComp Awards”) and a method for voluntarily sheltering a portion of an eligible individual’s income from current taxation by providing (i) deferred FlexComp Awards on an annual basis which are automatically deferred to Separation from Service, and (ii) a means by which an eligible individual may elect to defer the payment of all or a portion of his or her salary and/or applicable bonus for a period of one or more years.

Section 1.2 Effective Date of Plan. This Plan was originally effective May 29, 1995 and has been amended from time to time thereafter. This amendment and restatement includes all amendments through December 31, 2008, including such amendments made to comply with the requirements of Code Section 409A. It is intended that each provision of this Plan shall be interpreted to permit the deferral of compensation in accordance with the requirements of Code Section 409A and any provision that would conflict with such requirements shall not be valid or enforceable.

ARTICLE II

DEFINITIONS

Section 2.1 Account shall mean the Deferred Account and FlexComp Account as described in Article V. Each Participant Account shall separately reflect the pre-2005 and post-2004 deferrals and hypothetical earnings thereon, and the portion of the post-2004 deferrals and hypothetical earnings thereon (referred to herein as a Participant’s “pre-2005 Account” and “post-2004 Account”). A Participant’s pre-2005 Account shall reflect amounts deferred hereunder before January 1, 2005 (and the earnings credited thereon before, on or after January 1, 2005) for which (i) the Participant had a legally binding right as of December 31, 2004, to be paid the amount, and (ii) such right to the amount was earned and vested as of December 31, 2004 and was credited to the Participant’s Account hereunder. Pre-2005 Accounts are treated as “grandfathered” for the purposes of Code Section 409A, and are governed by the terms of the Plan in effect as of October 3, 2004.

Section 2.2 Benefit Plans Committee shall mean the Benefit Plans Committee of Darden Restaurants, Inc.

Section 2.3 Code shall mean the Internal Revenue Code of 1986, as amended from time to time.

Section 2.4 Committee shall mean the Benefit Plans Committee or its delegate or the Compensation Committee of the Board of Directors with respect to any determination that is made with respect to a Participant who is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Section 2.5 Company shall mean Darden Restaurants, Inc. and any of its subsidiaries or affiliated business entities as shall be authorized to participate in the Plan by the Board, or its delegate.

Section 2.6 Current Compensation shall be determined solely for the period during which the Participant was ineligible to accrue benefits under the Retirement Plan or the Retirement Income Plan of General Mills, Inc. and shall mean the “Earnable Compensation” that would have been recognized under the Retirement Plan for such Participant for such period, without regard to any limitations on compensation imposed under the Code. Notwithstanding the preceding sentence, the following special rules shall apply in determining Current Compensation:

(a) Any annual incentive compensation that is based on fiscal year performance shall be considered Current Compensation for the Plan Year in which it accrues, and any incentive compensation that is not based on fiscal year performance shall be considered Current Compensation for the Plan Year in which paid.

(b) In the case of a Participant who is totally and permanently disabled and who is receiving long-term disability benefits from an LTD Plan, Current Compensation

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shall include “hypothetical earnings” based on the greater of (1) the Participant’s base salary rate at the time the disability occurred, or (2) the Participant’s eligible earnings for the calendar year immediately prior to the onset of the disability, but shall not include “hypothetical earnings” for any period after the earlier of (A) the date the Participant attains age 65, or (B) the date the Participant is no longer eligible to receive benefits under an LTD Plan.

(c) Current Compensation shall not include any amounts paid pursuant to a severance plan or arrangement or a special service allowance.

(d) Any amounts attributable to sign-on bonuses or special project bonuses shall not be considered Current Compensation for purposes of determining the amount of any FlexComp Award (although such amounts shall be included for determining an individual’s compensation for purposes of Section 3.3(c), whether or not deferred).

(e) Current Compensation shall not include amounts paid prior to the date of a Participant’s first anniversary of employment, unless such Participant was hired prior to November 1, 1994.

Section 2.7 Deferred Comp Participant shall mean a Participant who is eligible under Section 3.3 to defer all or a portion of his or her compensation (including salary and/or bonuses) as described in Section 4.4.

Section 2.8 Disabled shall mean that a Participant is totally and permanently disabled due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment.

Section 2.9 DSP shall mean the Darden Savings Plan.

Section 2.10 FlexComp Award Participant shall mean a Participant who is eligible under Section 3.2 for a FlexComp Award under Section 4.1 and deferral of that award under Section 4.2.

Section 2.11 LTD Plan shall mean any of the Company’s long-term disability income plans.

Section 2.12 Management Incentive Plan shall mean the plan adopted by Darden Restaurants, Inc. for key management employees.

Section 2.13 Participant shall mean any employee of the Company who meets the eligibility requirements for a deferral under this Plan as set forth in Article III.

Section 2.14 Plan Year shall mean the twelve-month period ending each May 31.

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Section 2.15 Retirement Eligible shall mean a Participant has attained age 65 and has completed five (5) years of service (as defined for purposes of crediting vesting service in the DSP), or age 55 and completed ten (10) years of service (as defined for purposes of crediting vesting service in the DSP), or whose combined age and years of service (as defined for purposes of crediting vesting service in the DSP) equal at least 70 at the time of his or her Separation from Service.

Section 2.16 Retirement Plan shall mean the Retirement Income Plan of Darden Restaurants, Inc.

Section 2.17 Separation from Service shall mean any termination of the employment relationship from the Company and any affiliates and, with respect to post-2004 Accounts, any separation from service from the Company and its affiliates as determined in a manner consistent with Code Section 409A and the guidelines issued thereunder. In the case of a Participant who is on a leave of absence due to being Disabled, a separation from service for such purpose shall occur after a 29-month period of absence.

Section 2.18 Specified Employee shall mean an individual who is identified as a “Specified Employee” as determined in accordance with the procedures adopted by the Committee that reflects the requirements of Code Section 409A(a)(2)(B)(i).

ARTICLE III

ELIGIBILITY FOR AWARDS AND DEFERRALS

Section 3.1 Participation. An individual shall be a Participant in this Plan only if he or she satisfies any of the eligibility criteria set forth in Section 3.2 or Section 3.3. Upon becoming a Participant under Section 3.2 or Section 3.3, such an individual shall be permitted to participate solely for the deferral and award provisions of this Plan for which he or she has satisfied the eligibility criteria. Notwithstanding the foregoing, in no event may a Participant defer any amounts under this Plan during a period when the individual is receiving any amounts paid pursuant to a severance plan or arrangement or a special service allowance maintained by the Company.

Section 3.2 FlexComp Award Participants. An individual who has completed one year of service with the Company shall be eligible to become a FlexComp Award Participant in the FlexComp Award feature of this Plan for a Plan Year, if such individual:

(a) is designated as eligible to participate hereunder by the Benefit Plans Committee (or its designee) or by the Compensation Committee if such individual is subject to Section 16 of the Exchange Act;

(b) is a highly compensated employee (as defined in Code Section 414(q) and the regulations and other guidance issued thereunder) under the DSP and the Retirement Plan for the DSP and Retirement Plan plan years that occur within the Plan Year or was a highly compensated employee during the preceding two plan

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years of the DSP and the Retirement Plan or is employed at a salary which, on an annual basis, is anticipated to exceed $80,000 (adjusted for increases in the cost of living at the same time and in the same manner permitted under Code Section 415(d));

(c) is either employed by the Company or receiving benefits under an LTD Plan on or after June 1, 1994;

(d) is not an active participant in the Retirement Plan, the DSP, or any other tax-qualified retirement plan sponsored or maintained by the Company; and

(e) would be entitled to accrue benefits under the Retirement Plan and be entitled to have contributions made under the DSP (or, if the individual is receiving benefits from an LTD Plan, would be entitled to accrue benefits under the Retirement Plan) if such plans did not have restrictions on participation by highly compensated employees or employees whose annualized salary as of his date of hire exceeds $80,000 (as adjusted).

Notwithstanding the foregoing provisions of Section 3.2(b), effective May 1, 1999, the rule in the DSP and Retirement Plan automatically excluding an employee from participation therein for two plan years after a plan year in which such employee is a highly compensated employee shall not apply with respect to Qualified Managers as defined in the DSP. Therefore, in lieu of Section 3.2(b), such individuals shall be eligible to become a FlexComp Award Participant in the FlexComp Award feature of this Plan (including the deferral of such Award) for a Plan Year, if such individual otherwise meets the requirements of Section 3.2(a), (c), (d), and (e) and such individual is a highly compensated employee, as defined therein for the current DSP and Retirement Plan plan years or is employed at a salary which, on an annual basis, is anticipated to exceed $80,000 (adjusted for increases in the cost of living at the same time and in the same manner permitted under Code Section 415(d)).

In addition to the foregoing, if a FlexComp Award Participant ceases to meet the eligibility requirements of this Section 3.2 for an upcoming Plan Year, such ineligibility shall be effective beginning with the January 1 of the calendar year following calendar year in which such ineligibility occurs, as provided in Section 4.1.

Effective January 1, 2009, FlexComp Award Participants who are members of the management operations team at The Capital Grille (as reflected in Company records) or who are Managing Partners with LongHorn Steakhouse and have an employment agreement with the Company shall hereinafter be referred to as “RARE FlexComp Award Participants.”

Section 3.3 Deferred Comp Participants. An individual shall be eligible to become a Deferred Comp Participant in the deferred compensation features of this Plan (other than those deferral features applicable to FlexComp Awards) for any Plan Year, if he or she:

(a) is an officer;

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(b) is a highly compensated employee (as defined in Code Section 414(q) and the regulations and other guidance issued thereunder) under the DSP and the Retirement Plan for the DSP and Retirement Plan plan years that occur within the Plan Year or was a highly compensated employee during the preceding two plan years of the DSP and the Retirement Plan or is employed at a salary which, on an annual basis, is anticipated to exceed $80,000 (adjusted for increases in the cost of living at the same time and in the same manner permitted under Code Section 415(d)); or

(c) after having become eligible under (a) or (b) above for a prior Plan Year, the individual would have been a highly compensated employee under the DSP or the Retirement Plan for the DSP or Retirement Plan plan year ending within the Plan’s Plan Year (as defined in Code Section 414(q) and the regulations and other guidance issued thereunder) had the individual’s compensation included all amounts that the individual deferred under this Plan other than deferrals, if any, of the FlexComp Awards.

Notwithstanding the foregoing provisions of Section 3.3(b), effective May 1, 1999, the rule in the DSP and Retirement Plan automatically excluding an employee from participation therein for two plan years after a plan year in which such employee is a highly compensated employee shall not apply with respect to Qualified Managers as defined in the DSP. Therefore, in lieu of Section 3.3(b), such individuals shall be eligible to become a Deferred Comp Participant in the deferred compensation features of this Plan (other than those deferral features applicable to FlexComp Awards) for any Plan Year, if he or she otherwise meets the requirements of Section 3.3(a) or (c) or such individual is a highly compensated employee, as defined therein for the DSP and Retirement Plan plan years that occur within the Plan Year or is employed at a salary which, on an annual basis, is anticipated to exceed $80,000 (adjusted for increases in the cost of living at the same time and in the same manner permitted under Code Section 415(d)).

In addition to the foregoing, if a Deferred Comp Participant ceases to meet the eligibility requirements of this Section 3.3 for an upcoming Plan Year, such ineligibility shall be effective beginning with the January 1 of the calendar year following calendar year in which such ineligibility occurs, as provided in Section 4.3.

ARTICLE IV

FLEXCOMP AWARDS AND PLAN DEFERRALS

Section 4.1 Amount of Annual FlexComp Award. A FlexComp Award Participant shall be entitled to an annual FlexComp Award, the amount of which shall be determined as follows:

(a) The formula for determining the FlexComp Award set forth in (b) or (c) below shall apply to all FlexComp Award Participants other than RARE FlexComp Award Participants, as follows:

(1) FlexComp Award Participants who are hired on or after June 1, 2000 shall have their FlexComp Award amounts determined under (b) below.

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(2) FlexComp Award Participants who were actively employed (including those on an authorized leave of absence) FlexComp Award Participants during the Plan Year beginning June 1, 2000 and who, in accordance with such procedures established by the Committee made a one-time irrevocable election prior to the date established by the Committee, to have their FlexComp Awards determined under the formula set forth in (b) or (c) below for all Plan Years beginning on and after June 1, 2000 shall have their FlexComp Awards determined in accordance with that affirmative election. In the absence of an affirmative election to the contrary, such Participant’s FlexComp Award for all Plan Years beginning on and after June 1, 2000 shall be determined under the formula set forth in (b) below.

(3) FlexComp Award Participants who were actively employed before June 1, 2000, were not eligible for the election as described in (a)(2) above even though they were actively employed at such time, became eligible to participate as a FlexComp Award Participant without having incurred a break in service from the Company (whether or not such participation was for the first time), and participate in the final average pay portion of the Retirement Plan shall have the FlexComp Award determined under (b) below.

(4) FlexComp Award Participants not otherwise described in (1), (2) or (3) above (including, by way of illustration and not limitation, FlexComp Award Participants who terminated employment prior to June 1, 2000 and are re-hired after that date), shall have their FlexComp Awards determined under the formula described in (b) below for all relevant Plan Years beginning on and after June 1, 2000.

(5) In all events, the formula described in (c) below shall apply in determining the amount of all annual FlexComp Awards for periods before June 1, 2000.

(b) If this Section 4.1(b) applies to a FlexComp Award Participant (as determined under (a) above), the amount of a FlexComp Award for any such Participant shall be determined under the following formula: [“X” (a DSP factor) plus “Y” (a fixed factor)] times the Participant’s Current Compensation. The determination of the appropriate factors and the relevant terms are set forth below:

(1) X, the DSP factor, is based on the Participant’s lost DSP matching contributions, and, equals:

(A) a variable amount, determined in the Company’s discretion, but which percentage shall be applied consistently to all such Participants, between 1.5% and 6% for periods on and after June 1, 2000, and before July 1, 2002; and

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(B) a variable amount, determined in the Company’s discretion, but which percentage shall be applied consistently to all such Participants, between 1.5% and 7.2% for periods on and after July 1, 2002.

(2) Y, the fixed factor, is 4%.

(3) In the event a Participant terminates employment with the Company during the Plan Year for any reason other than “retirement” (as defined under the Retirement Plan) or death, the Participant shall be entitled to a FlexComp Award for the portion of the Plan Year in which he or she is employed, based on his or her Current Compensation for the partial Plan Year.

(4) If a FlexComp Award Participant becomes ineligible for a FlexComp Award because he or she no longer meets the eligibility requirements of Section 3.2 for a Plan Year, such ineligibility shall be effective beginning with the January 1 of the calendar year following calendar year in which such ineligibility occurs. Such a FlexComp Award Participant shall be entitled to a FlexComp Award for the portion of the Plan Year beginning in the calendar year of ineligibility, based on his or her Current Compensation for the partial Plan Year.

(c) If this Section 4.1(c) applies to a FlexComp Award Participant (as determined under (a) above), the amount of a FlexComp Award for any such Participant shall be determined under the following formula: [“X” (a DSP factor) plus the product of “Y” (an age-based factor) and “Z” (a service-based factor)] times the Participant’s Current Compensation. The determination of the appropriate factors and the definitions of the relevant terms are set forth below:

(1) X, the DSP factor, is based on the Participant’s lost DSP matching contributions, and, equals:

(A) 3% for periods before October 1, 1997;

(B) a variable amount, determined in the Company’s discretion, but which percentage shall be applied consistently to all such Participants, between 1.5% and 6% for periods on and after October 1, 1997 and before July 1, 2002; and

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(C) a variable amount, determined in the Company’s discretion, but which percentage shall be applied consistently to all such Participants, between 1.5% and 7.2% for periods on and after July 1, 2002.

(2) Y, the age-based factor is 1.085^ (the Participant’s age minus 30), with the Participant’s age being determined as of the last day of the Plan Year, unless the Participant terminates during the Plan Year for any reason other than “retirement” (as defined under the Retirement Plan) or death, in which case the Participant’s age shall be determined as of his or her date of termination.

(3) Z, the service-based factor is equal to 1.8 + (.02 x the Participant’s years of credited service under the Retirement Plan (including years of service credited under the Pension Plan for Hourly Employees of General Mills Restaurants, Inc., if such service would have been included under the portability provisions of the Retirement Plan had the Participant been an active participant in the Retirement Plan at the time of the FlexComp Award) and under the Retirement Income Plan of General Mills, Inc. during periods when the Participant was entitled to accrue benefits thereunder before first becoming eligible to participate in this Plan).

(4) The product of Y and Z shall not be less than 2%, or greater than 20%.

(5) In the event a Participant terminates employment with the Company during the Plan Year for any reason other than “retirement” (as defined under the Retirement Plan) or death, the Participant shall be entitled to a FlexComp Award for the portion of the Plan Year in which he or she is employed, based on his or her Current Compensation for the partial Plan Year.

(6) If a FlexComp Award Participant becomes ineligible for a FlexComp Award because he or she no longer meets the eligibility requirements of Section 3.2 for a Plan Year, such ineligibility shall be effective beginning with the January 1 of the calendar year following calendar year in which such ineligibility occurs. Such a FlexComp Award Participant shall be entitled to a FlexComp Award for the portion of the Plan Year beginning in the calendar year of ineligibility, based on his or her Current Compensation for the partial Plan Year.

(d) The determination of the FlexComp Award for a RARE FlexComp Award Participant shall be as follows:

(1) Except as provided in (2) below, the amount of a FlexComp Award for any RARE FlexComp Award Participant shall be equal to 2.5% of his or her Current Compensation for the Plan Year not in excess of the dollar limit under Code Section 401(a)(17) in effect for the calendar year in which the Plan Year ends.

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(2) With respect to a RARE FlexComp Award Participant who opts out of his or her employment agreement with the Company, the amount of the FlexComp Award to which he or she is otherwise entitled under Section 4.1(d)(1) shall be prorated for the months of the Plan Year that he or she was subject to the terms of an employment agreement with the Company so that his or her FlexComp Award shall equal the sum of (A) and (B), where:

(A) is 2.5% of his or her Current Compensation not in excess of the dollar limit under Code Section 401(a)(17) in effect for the calendar year in which the Plan Year ends for the portion of the Plan Year during which he or she is subject to the terms of the employment agreement, and

(B) is the amount determined in accordance with Section 4.1(a) for the portion of the Plan Year during which he or she is no longer subject to the terms of the employment agreement.

(3) If a RARE FlexComp Award Participant becomes ineligible for a FlexComp Award because he or she no longer meets the eligibility requirements of Section 3.2 for a Plan Year, such ineligibility shall be effective beginning with the January 1 of the calendar year following calendar year in which such ineligibility occurs. Such a RARE FlexComp Award Participant shall be entitled to a FlexComp Award for the portion of the Plan Year beginning in the calendar year of ineligibility, based on his or her Current Compensation for the partial Plan Year.

Section 4.2 Deferral or Payment of Annual FlexComp Award. Effective for the Plan Year beginning June 1, 2008 with respect to officers and for the Plan Year beginning June 1, 2009 for all other employees, the following provisions shall apply with respect to the deferral or payment of FlexComp Awards:

(a) Automatic Deferral. Any employee of the Company who meets the eligibility requirements described in Section 3.2 and who is actively employed by the Company as of the last day of a Plan Year shall have any FlexComp Award to which he or she is entitled for the Plan Year (in accordance with Section 4.1) automatically deferred under the Plan until the January 1 following his or her Separation from Service. Notwithstanding the foregoing, the amount of any deferral may not exceed the gross amount of the Participant’s FlexComp Award reduced by any tax required to be withheld from such amounts under Code Section 3101(a) and (b) or any state or local statute.

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(b) Separation from Service or Death. If a Participant who is otherwise eligible for a FlexComp Award under Section 4.2(a) incurs a Separation from Service or dies before the last day of a calendar year, the FlexComp Award to which the Participant is otherwise entitled for the portion of the calendar year in which the Participant was employed shall be paid (or commence to be paid) as part of the Participant’s FlexComp Account, as soon as practicable after the January 1 following the Participant’s Separation from Service or death.

(c) Disability. If a Participant who is otherwise eligible for a FlexComp Award under Section 4.2(a) is Disabled before the last day of a calendar year, the Participant shall continue to be eligible for FlexComp Awards during the period the Participant is Disabled and until the earlier of the date the Participant incurs a Separation from Service or dies; provided, however, that the automatic deferral of FlexComp Awards to which the Participant is otherwise entitled shall cease to apply for calendar years beginning after the year in which the Participant is Disabled and all such future FlexComp Awards shall be paid in cash to the Participant as soon as practicable after the end of each future Plan Year. (By way of clarification, the FlexComp Award for the calendar year in which the Participant is Disabled shall continue to be automatically deferred until the January following the Participant’s Separation from Service.)

Section 4.3 Salary, Incentive, and Bonus Deferral Elections.

(a) Elections by Officers. A Deferred Comp Participant who is an officer of the Company may make the following deferral elections:

(1) Base Compensation. Such Participant may irrevocably elect to defer up to 25% (in a whole percentage) of his or her base compensation for a calendar year by completing and submitting to the Company a deferral election form at such time and in such manner as determined by the Compensation Committee prior to the beginning of the calendar year in which the base compensation is earned. In the case of an employee who first becomes a Participant during a calendar year (and is not eligible for any other plan with which this Plan is aggregated for purposes of Code Section 409A), elections under Section this Section 4.3(a)(1) for the remainder of the year must be made within 30 days of the date the employee first becomes a Participant, and shall apply only to amounts paid for services to be performed after the date of such election. Any deferral election shall apply to the Participant’s base compensation attributable to payroll periods beginning in each calendar year. A Participant’s deferral election for any calendar year shall continue to apply with respect to all future base compensation until the election is changed by the Participant prior to the beginning of a subsequent calendar year. If a Participant becomes ineligible to defer compensation under this Plan because he or she no longer meets the eligibility requirements of Section 3.3, such ineligibility shall not be effective until the end of the calendar year in which the Participant fails to satisfy the eligibility criteria.

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(2) Management Incentive Plan Bonus Deferral. Such Participant may irrevocably elect to defer up to 100% (in a whole percentage) of his or her Management Incentive Plan incentive compensation otherwise payable in the upcoming calendar year by completing and submitting to the Company a deferral election form at such time and in such manner as determined by the Compensation Committee but no later than November 30 of the Plan Year during which the incentive compensation is earned; provided that in order to be eligible to make the election by the applicable November 30, the Participant continuously performs services from the beginning of the performance period through the date on which the election is made. Otherwise, the Management Incentive Plan incentive compensation for that Plan Year cannot be deferred by the Participant. Any deferral election under this Section 4.3(a)(2) shall apply to all future Management Incentive Plan incentive compensation payments until changed for a future Plan Year by the Participant in writing. Notwithstanding the foregoing, the amount of any deferral may not exceed the gross amount of the Participant’s incentive compensation reduced by any tax required to be withheld from such amounts under Code Section 3101(a) and (b) or any state or local statute. Further, notwithstanding any prior deferral election, if the Participant incurs a Separation from Service prior to the date of any incentive compensation award, then any incentive compensation award for the Plan Year in which the Separation from Service occurs shall be paid as a single lump sum as soon as practicable after the January 1 following the Separation from Service. If a Participant becomes ineligible to defer Management Incentive Plan incentive compensation under this Plan because he or she no longer meets the eligibility requirements of Section 3.3, such ineligibility shall be effective beginning with deferral elections with respect to Management Incentive Plan incentive compensation otherwise payable in the calendar year following the calendar year in which the Participant is no longer eligible.

(b) Elections by All Other Participants. A Deferred Comp Participant who is not an officer of the Company may make the following deferral elections:

(1) Deferrals of Earnable Compensation. Such Participant may irrevocably elect to defer up to 25% (in a whole percentage) of his or her “earnable compensation” (as such term is defined under the DSP) for a calendar year by completing and submitting to the Company a deferral election form at such time and in such manner as determined by the Benefit Plans Committee (or its delegate) prior to the beginning of the calendar year in which the earnable compensation is earned. In the case of an employee who first becomes a Participant during a calendar year (and is not eligible for any other plan with which this Plan is aggregated for purposes of Code

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Section 409A), elections under Section this Section 4.3(b)(1) for the remainder of the year must be made within 30 days of the date the employee first becomes a Participant, and shall apply only to earnable compensation for services to be performed after the date of such election. Any deferral election shall apply to the Participant’s earnable compensation attributable to payroll periods beginning in each calendar year. A Participant’s deferral election for any calendar year shall continue to apply with respect to all future base compensation until the election is changed by the Participant prior to the beginning of a subsequent calendar year. If a Participant becomes ineligible to defer compensation under this Plan because he or she no longer meets the eligibility requirements of Section 3.3, such ineligibility shall not be effective until the end of the calendar year in which the Participant fails to satisfy the eligibility criteria.

(2) Bonus for Operations. Such Participant may irrevocably elect to defer up to 25% (in a whole percentage) of his or her quarterly operations bonuses earned for quarters beginning in an upcoming calendar year by completing and submitting to the Company a deferral election form no later than the November 30 prior to such calendar year. In the case of an employee who first becomes a Participant during a calendar year (and is not eligible for any other plan with which this Plan is aggregated for purposes of Code Section 409A), elections under Section this Section 4.3(b)(2) for the remainder of the year must be made within 30 days of the date the employee first becomes a Participant, and shall apply only to operations bonuses attributable to services to be performed after the date of such election. Any deferral election shall apply to all future operations bonuses until changed by the Participant in writing by November 30 of a calendar year for operations bonuses earned in quarters beginning in the next calendar year. Notwithstanding the foregoing, the amount of any deferral may not exceed the gross amount of the Participant’s operations bonus reduced by any tax required to be withheld from such amounts under Code Section 3101(a) and (b) or any state or local statute. Further, notwithstanding any prior deferral election, if the Participant incurs a Separation from Service prior to the date of any award of an operations bonus, then any operations bonus award for the quarter in which the Separation from Service occurs shall be paid as a single lump sum as soon as practicable after the January 1 following the Separation from Service. If a Participant becomes ineligible to defer quarterly operations bonuses under this Plan because he or she no longer meets the eligibility requirements of Section 3.3, such ineligibility shall be effective beginning with deferral elections with respect to quarterly operations bonuses for quarters beginning in the calendar year following the calendar year in which the Participant is no longer eligible.

(3) Management Incentive Plan Bonus. Such Participant may irrevocably elect to defer up to 25% (in a whole percentage) of his or her Management

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Incentive Plan bonus otherwise payable during the upcoming calendar year by completing and submitting to the Company a deferral election form at such time and in such manner as determined by the Benefit Plans Committee but no later than November 30 of the Plan Year during which the bonus is earned; provided that in order to be eligible to make the election by the applicable November 30, the Participant continuously performs services from the beginning of the performance period through the date on which the election is made. Otherwise, the Management Incentive Plan bonus for that Plan Year cannot be deferred by the Participant. Any deferral election under this Section 4.3(b)(3) shall apply to all future Management Incentive Plan bonus payments until changed for a future Plan Year by the Participant in writing. Notwithstanding the foregoing, the amount of any deferral may not exceed the gross amount of the Participant’s Management Incentive Plan bonus reduced by any tax required to be withheld from such amounts under Code Section 3101(a) and (b) or any state or local statute. Further, notwithstanding any prior deferral election, if the Participant incurs a Separation from Service prior to the date of any incentive compensation award, then any Management Incentive Plan bonus for the Plan Year in which the Separation from Service occurs shall be paid as a single lump sum as soon as practicable after the January 1 following the Separation from Service. If a Participant becomes ineligible to defer Management Incentive Plan bonus under this Plan because he or she no longer meets the eligibility requirements of Section 3.3, such ineligibility shall be effective beginning with deferral elections with respect to Management Incentive Plan bonus otherwise payable in the calendar year following the calendar year in which the Participant is no longer eligible.

(c) Special Bonuses. Any Deferred Comp Participant may elect to defer up to 100% (in a whole percentage) of: (i) any “sign-on bonus” that may become payable to such Participant by completing and submitting to the Company a deferral election form prior to his or her date of hire, and (ii) any “special project bonus” that the Senior Vice President of Human Resources, in his or her sole discretion, (or the Compensation Committee with respect to a Participant who is subject to Section 16 of the Exchange Act) may award to such Participant by completing and submitting to the Company a deferral election form within 30 days of receiving from the Company a written communication regarding the goals and objectives that must be attained in order to earn such special project bonus, provided that the Participant must perform services for a period of at least 12 months from the date the Participant obtains the legally binding right to the special projects bonus and there is a substantial risk of forfeiture of the special projects bonus for a period of at least 12 months from the date the Participant obtains the legally binding right to the special project bonus (or the risk of forfeiture lapses upon death or disability (as determined under Code Section 409A and the regulations thereunder). Notwithstanding the foregoing, the amount of any deferral under this subsection may not exceed the gross amount of the applicable bonus reduced by any tax

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required to be withheld from such amounts under Code Section 3101(a) and (b) or any state or local statute. Further, notwithstanding any prior deferral election, if the Participant incurs a Separation from Service prior to the date of any award of a sign-on or special project bonus, then any deferral election made with respect to such bonus shall not become effective and such amounts shall be paid in the January following Separation from Service.

ARTICLE V

ESTABLISHMENT OF ACCOUNTS AND CREDITS TO ACCOUNTS

Section 5.1 Deferred Accounts and Rates of Return on Deferred Accounts. A deferred compensation account (“Deferred Account”) shall be established on behalf of each Participant with respect to whom an amount is deferred under Section 4.3 of this Plan. The amount of a Participant’s deferrals under this Plan shall be credited to such Participant’s Deferred Account as soon as practicable after the amount would otherwise have been paid in the absence of the deferral election. Each Participant’s Deferred Account shall be credited daily with a “rate of return” on the total deferred amounts credited to the Participant’s Deferred Account and a Participant may make separate elections with respect to “rates of return” for past and future deferrals. Such “rates of return” are described in Section 5.3.

Section 5.2 FlexComp Accounts and Rates of Return on Amounts in FlexComp Accounts. A deferred FlexComp Award account (“FlexComp Account”) shall be established on behalf of each Participant who elects to defer a percentage of his or her FlexComp Awards. The amount of a Participant’s deferred FlexComp Awards shall be credited to such Participant’s FlexComp Account as soon as practicable after the Plan Year in which the FlexComp Award is earned. Each Participant’s FlexComp Account shall be credited daily with a “rate of return” on the total deferred amounts credited to the Participant’s FlexComp Account and a Participant may make separate elections with respect to “rates of return” for past and future deferrals. Such “rates of return” are described in Section 5.3.

Section 5.3 Rates of Return. The “rates of return” credited to a Participant’s accounts under Sections 5.1 and 5.2 shall be based upon the actual investment performance of funds in the DSP, or at such other rates as may be made available to the Participant from time to time pursuant to the provisions of the Plan and the procedures established by the Committee. The Committee may delete funds, on a prospective basis, by notifying all Participants whose Accounts include rates of return based on such funds, in advance, and soliciting elections for transfer to other rates of return then available to such Participants.

Participants may elect to have any combination of the above “rates of return” accrue on amounts in their accounts, from 1% to 100%, provided that the sum of the percentages attributable to such rates equals 100%. A Participant may change the “rate(s) of return” to be credited to his or her accounts, on a daily basis, by notifying the Committee or its delegate, at such time and in such manner as approved by the Committee or its delegate. Each Participant’s accounts will be credited daily with the “rate(s) of return” elected by the Participant until the amount in each Participant’s Accounts is distributed to the Participant on the distribution date(s) elected by the Participant. Each Participant shall receive a quarterly statement of the balance of his or her accounts.

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Section 5.4 Impact on Other Benefit Plans. The Company may maintain life and/or disability plans under which benefits earned or payable are related to a Participant’s earnings. Any such benefits will generally be based upon the earnings that a Participant would have earned in a given calendar year in the absence of any deferral hereunder.

ARTICLE VI

PAYMENT OF ACCOUNTS

Section 6.1 Unforeseeable Emergency. At any time prior to the time an amount is otherwise payable hereunder, an active Participant may request a distribution of deferred amounts on account of the Participant’s unforeseeable emergency, subject to the following requirements. The rules set forth in this Section 6.1 govern distributions of post-2004 Accounts in the case of an unforeseeable emergency. Distributions of pre-2005 Accounts in the case of an unforeseeable emergency shall be governed by terms of the Plan in effect as of October 3, 2004:

(a) Such distribution shall be made, in the sole discretion of the Benefit Plans Committee or its delegate or by the Compensation Committee if the Participant is subject to Section 16 of the Exchange Act, if the Participant has incurred an unforeseeable emergency.

(b) For purposes of this Plan, an “unforeseeable emergency” shall be limited to a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or of a Participant’s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Examples of events that may constitute an unforeseeable emergency include the imminent foreclosure of or eviction from the Participant’s primary residence; the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication; and the need to pay for the funeral expenses of the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)). Examples of circumstances that are not considered to be unforeseeable emergencies include the need to send an individual’s child to college or the desire to purchase a home. In addition to the foregoing, distributions made on account of an “unforeseeable emergency” are limited to the extent reasonably needed to satisfy the emergency need (which may include amounts necessary to pay any federal, state, local or foreign income taxes or penalties reasonably anticipated to result from the distribution).

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(c) Notwithstanding the foregoing, payment under this Section 6.1 may not be made to the extent that such hardship is or may be relieved:

(i) through reimbursement or compensation by insurance or otherwise,

(ii) by liquidation of the participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or

(iii) by cessation of deferrals under the Plan. For this purpose, the Participant may cancel a deferral election under this Plan due to the unforeseeable emergency event such that any later deferral election shall be subject to the provisions governing deferral elections.

(d) Whether a Participant is faced with an “unforeseeable emergency” will be determined based on the relevant facts and circumstances of each case, based on the information supplied by the Participant, in writing, pursuant to the procedure prescribed by the Benefit Plans Committee or its delegate, and in accordance with Code Section 409A and the regulations thereunder. All distributions under this Section 6.1 shall be made as soon as practicable after the Benefit Plans Committee or its delegate or the Compensation Committee, as applicable, has approved the distribution and that the requirements of this Section 6.1 have been met.

Section 6.2 Payment of Deferred Accounts and FlexComp Accounts. At the time a Participant makes his or her election to defer any amounts to a Deferral Account and, with respect to pre-2005 FlexComp Accounts, the Participant must also elect a specified distribution date and a form of payment with respect to amounts deferred to a Deferred Account, in accordance with subsections (a) and (b) and subject to subsection (c) below. Each deferred amount under this Plan is paid separately according to the Participant’s deferred distribution date and/or form of payment election. Separately, at such time and in such manner prescribed by the Committee by the November 30 of the calendar year prior to the commencement of a Plan Year, Participants may make an irrevocable election as to a form of payment with respect to amounts deferred to a post-2004 FlexComp Account in accordance with (b) and subject to subsection (c) below. Notwithstanding any Participant election to the contrary, all distributions under this Plan shall be paid or commence to be paid as soon as practicable after the January 1 coincident with or next following the Participant’s Separation from Service from the Company, subject to Section 6.4 in the case of Specified Employees.

(a) Distribution Date. A specified distribution date may be any January of a future even-numbered year that is at least one year subsequent to the date the compensation or bonus would otherwise be payable, but, with respect to pre-2005 Accounts, shall not be later than the date the Participant attains age 70. A Participant may also select a payment date of January 1 following Separation from Service as a specified distribution date with respect to any year’s deferrals.

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(b) Form of Payment.

(1) With respect to pre-2005 Accounts, the Participant may elect to have his or her deferred amounts subject to such election, paid in:

(A) a single payment,

(B) annual installments for a period not to exceed ten (10) years,

(C) annual installments for a period not to exceed fifteen (15) years for deferral elections made prior to December 31, 1985 (if so elected at the time of the original deferral), or

(D) any other form of payment requested in writing by the Participant and approved by the Benefit Plans Committee or its delegate or by the Compensation Committee if the Participant is subject to Section 16 of the Exchange Act, with regard to amounts deferred under Article IV.

The amount of any annual installment payment shall equal the Participant’s distributable Deferred Account or FlexComp Account determined as of the last day of the month preceding the payment date multiplied by a fraction, the numerator of which is one and the denominator of which is the number of installment payments remaining to be paid.

(2) With respect to post-2004 Accounts, and in accordance with procedures established by the Committee, the Participant may irrevocably elect to have his or her deferred amounts paid in:

(A) a single payment,

(B) annual installments for a period not to exceed five (5) years; or

(C) annual installments for a period not to exceed ten (10) years.

The amount of any annual installment payment shall equal the Participant’s distributable Deferred Account or FlexComp Account determined as of the last day of the month preceding the payment date multiplied by a fraction, the numerator of which is one and the denominator of which is the number of installment payments remaining to be paid. In the absence of an election to the contrary, all deferred amounts are paid in the form of a single payment.

(c) Special Rules. Notwithstanding the above, the following provisions shall apply:

(1) Except as provided in Subsection 6.2(c)(4), if a Participant incurs a Separation from Service for any reason other than Retirement or death, the

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Committee or its delegate shall require that full payment of all amounts deferred under this Plan be paid in the form of a single lump sum cash payment as soon as practicable after the January 1 coincident with or next following the Participant’s Separation from Service, subject to Section 6.4 in the case of Specified Employees.

(2) As to pre-2005 Accounts, an active Participant may request to amend his or her distribution date and/or form of payment with respect to a deferral provided: (i) the initial distribution date in the absence of such distribution election amendment is not within twelve (12) months of the date of the amendment; (ii) his or her amended distribution date is an even-numbered year that is at least one year after the distribution date in the absence of such distribution election amendment; (iii) his or her amended form of payment is in substantially equal annual installments for a period not to exceed ten (10) years or a lump sum; and (iv) no modifications for distribution dates and/or forms of payment are permitted with respect to any deferrals after payment of such deferrals has commenced to be paid. No more than two amendments to the Participant’s initial distribution election with respect to a particular deferral shall be permitted. Any such amendment must be in writing and submitted to the Committee for approval.

(3) With respect to post-2004 Accounts, an active Participant may request to amend his or her specified distribution date election with respect to deferrals (other than any deferrals to Separation from Service) provided: (i) the initial distribution date in the absence of such distribution election amendment is not within twelve (12) months of the date of the amendment; (ii) his or her amended distribution date is an even-numbered year that is at least five years after the distribution date that would apply in the absence of such distribution election amendment; (iii) no amounts may be deferred from a specified date to Separation from Service; (iv) no modifications for distribution dates are permitted if the Participant initially elected to receive payment at his or her Separation from Service; and (v) no modifications may be made to the form of payment for any previously deferred amounts. Any such amendment must be in writing and submitted to the Committee in accordance with procedures established for such purpose.

(4) With respect to post-2004 Accounts, the Committee shall establish procedures governing the payment of deferred amounts where a Participant has elected to defer amounts to a specified distribution date to which other amounts have already been deferred. Pursuant to such procedures, all amounts deferred to a distribution date shall be treated as a separate identifiable amount based on the form of distribution otherwise payable on or commencing on that distribution date.

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(5) Notwithstanding any other provision of this Plan to the contrary, with respect to pre-2005 Accounts, a Participant may, at any time prior or subsequent to the distribution date selected by the Participant, request in writing to the Committee to have his or her form of payment of any or all amounts in his or her FlexComp Account, Deferred Compensation Account, and/or Supplemental Savings Account changed to an immediate lump-sum distribution, provided that the amount of any such lump-sum distribution shall be reduced by an amount equal to the product of (X) the total lump-sum distribution otherwise payable (based on the value of the Participant’s FlexComp Account, Deferred Compensation Account, or Supplemental Savings Account, as the case may be) as of the first day of the month in which the lump-sum amount is paid, adjusted by a pro-rata portion of the rate of return for the prior month in which the lump-sum is paid, determined by multiplying the actual rate of return for such prior month by a fraction, the numerator of which is the number of days in the month in which the request is received prior to the date of payment, and the denominator of which is the number of days in the month), and (Y) the rate set forth in Statistical Release H.15(519), or any successor publication, as published by the Board of Governors of the Federal Reserve System for one-year U.S. Treasury notes under the heading “Treasury Constant Maturities” for the first day of the calendar month in which the written request for an immediate lump-sum distribution is approved by the Committee. Any such lump sum distribution shall be paid within one (1) business day of approval by the Committee of such request.

Section 6.3 Death of a Participant. If a Participant dies before the full distribution of his or her Accounts, a lump sum payment of the remaining distribution amount shall be made to the beneficiary designated by the Participant. This payment shall be made as soon as practicable after the Committee receives notification of the Participant’s death. In the absence of any such designation, payment shall be made to the personal representative, executor or administrator of the Participant’s estate.

Section 6.4 Delay in Distribution for Specified Employees. Notwithstanding anything to the contrary in this Plan, if a Participant is a Specified Employee, distributions which are made on account of the Participant’s Separation from Service shall be made on the date that is the earlier of: (A) the Participant’s death or (B) the later of: (i) the first day of the seventh month following the Participant’s Separation from Service (regardless of whether the Participant is reemployed on that date); or (ii) as soon as practicable after the January 1 following the participant’s Separation from Service.

ARTICLE VII

ADMINISTRATION OF THE PLAN

Section 7.1 Committee. This Plan shall be administered by the Committee. The Committee shall act by affirmative vote of a majority of its members at a meeting or in writing

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without a meeting. The Committee shall appoint a secretary who may be but need not be one of its own members. The secretary shall keep complete records of the administration of the Plan. The Committee may authorize each and any one of its members to perform routine acts and to sign documents on its behalf.

Section 7.2 Plan Administration. The Committee may appoint such persons or establish such subcommittees, employ such attorneys, agents, accountants or investment advisors necessary or desirable to advise or assist it in the performance of its duties hereunder, and the Committee may rely upon their respective written opinions or certifications. Administration of the Plan shall consist of interpreting and carrying out the provisions of the Plan in the discretion of the Committee. The Committee shall, in its discretion, determine the eligibility of employees to participate in the different features of the Plan, their rights while Participants in the Plan and the nature and amounts of benefits to be received therefrom. The Committee shall, in its discretion, decide any disputes which may arise under the Plan. The Committee may provide rules and regulations for the administration of the Plan consistent with its terms and provisions. Any construction or interpretation of the Plan and any determination of fact in administering the Plan made in good faith by the Committee shall be final and conclusive for all Plan purposes.

Section 7.3 Claims Procedure.

(a) The Benefit Plans Committee or its delegate shall prescribe a form for the presentation of claims under the terms of this Plan.

(b) Upon presentation to the Benefit Plans Committee or its delegate of a claim on the prescribed form, the Benefit Plans Committee or its delegate shall make a determination of the validity thereof. If the determination is adverse to the claimant, the Benefit Plans Committee or its delegate shall furnish to the claimant within a reasonable period of time after the receipt of the claim a written notice setting forth the following:

(1) The specific reason or reasons for the denial;

(2) Specific reference to pertinent provisions of this Plan on which the denial is based;

(3) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(4) An explanation of this Plan’s claim review procedure.

(c) If a claim is denied, the claimant may appeal such denial to the Benefit Plans Committee or its delegate for a full and fair review of the adverse determination. The claimant’s request for review must be in writing and be made to the Benefit Plans Committee or its delegate within 60 days after receipt by the claimant of the written notification required under subsection (b) above. The claimant or his or

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her duly authorized representative may submit issues and comments in writing which shall be given full consideration by the Benefit Plans Committee or its delegate in its review.

(d) The Benefit Plans Committee or its delegate may, in its sole discretion, conduct a hearing. A request for a hearing will be given full consideration. At such hearing, the claimant shall be entitled to appear and present evidence and be represented by counsel.

(e) A decision on a request for review shall be made by the Benefit Plans Committee or its delegate not later than 60 days after receipt of the request; provided, however, in the event of a hearing or other special circumstances, such decision shall be made not later than 120 days after receipt of such request.

(f) The Benefit Plans Committee’s or its delegate’s decision on review shall state in writing the specific reasons and references to this Plan provisions on which it is based. Such decision shall be immediately provided to the claimant. In the event the claimant disagrees with the findings of the Benefit Plans Committee or its delegate, the matter shall be referred to arbitration in accordance with Section 7.6 hereof.

(g) The Benefit Plans Committee or its delegate may allocate its responsibilities among its several members, except that all matters involving the hearing of and decision on claims and the review of the determination of benefits shall be made by the full Benefit Plans Committee or its delegate. No member of the Benefit Plans Committee or its delegate shall participate in any matter relating solely to himself or herself.

Section 7.4 Non-Assignability. The interests herein and the right to receive distributions from a Participant’s accounts under this Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or a Participant becomes bankrupt, the interests of the Participant under this Plan in his or her accounts may be terminated by the Benefit Plans Committee or its delegate (or the Compensation Committee with respect to a Participant who is subject to Section 16 of the Exchange Act), which, in its sole discretion, may cause the same to be held or applied for the benefit of one or more of the dependents of such Participant or make any other disposition of such interests that it deems appropriate.

Section 7.5 Amendments to Plan. Darden Restaurants, Inc. reserves the right to suspend, amend or otherwise modify or terminate this Plan at any time, without notice. Such action shall be taken by the Board of Directors of Darden Restaurants, Inc. However, this Plan may not be suspended, amended, otherwise modified, or terminated after a Change in Control without the written consent of a majority of Participants determined as of the day before such Change in Control occurs. A “Change in Control” shall mean the occurrence of any of the following events:

(a) any person (including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934) becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the shares of Darden Restaurants, Inc. entitled to vote for the election of directors;

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(b) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sales of assets or contested election, or combination of the foregoing, the persons who were directors of Darden Restaurants, Inc. just before such event shall cease to constitute a majority of Darden Restaurants, Inc.’s Board of Directors; or

(c) the shareholders of Darden Restaurants, Inc. approve an agreement providing for a transaction in which Darden Restaurants, Inc. will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of Darden Restaurants, Inc. occurs.

Notwithstanding any other provision of this Plan to the contrary, the Benefit Plans Committee, or the Compensation Committee with respect to a Participant who is subject to Section 16 of the Exchange Act, may, in its sole discretion, direct that payments be made before such payments are otherwise due if, for any reason (including, but not limited to a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Participant or Beneficiary), such Committee believes that Participants or their Beneficiaries have recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to such Participants under this Plan before such amounts are scheduled to be paid. In making this determination, such Committee shall take into account the hardship that would be imposed on Participants or their Beneficiaries by the payment of federal income taxes under such circumstances.

Section 7.6 Arbitration. Subject to the completion of the claims procedure described in Section 7.3, any controversy or claim arising out of or relating to this Plan, or any alleged breach of the terms or conditions contained herein, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA”) as such rules may be modified herein.

(a) An award rendered in connection with an arbitration pursuant to this Section 7.6 shall be final and binding and judgment upon such an award may be entered and enforced in any court of competent jurisdiction.

(b) The forum for arbitration under this Plan shall be Orlando, Florida and the governing law for such arbitration shall be the laws of the State of Florida.

(c) Arbitration under this Section 7.6 shall be conducted by a single arbitrator selected jointly by Darden Restaurants, Inc. and the Participant or Beneficiary, as applicable (the “Complainant”). If within thirty (30) days after a demand for

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arbitration is made, Darden Restaurants, Inc. and the Complainant are unable to agree on a single arbitrator, three arbitrators shall be appointed to conduct the arbitration. Each party shall select one arbitrator and those two arbitrators shall then select a third neutral arbitrator within thirty (30) days after their appointment. In connection with the selection of the third arbitrator, consideration shall be given to familiarity with executive compensation plans and experience in dispute resolution between parties, as a judge or otherwise. If the arbitrators selected by the parties cannot agree on the third arbitrator, they shall discuss the qualifications of such third arbitrator with the AAA before selection of such arbitrator, which selection shall be in accordance with the Commercial Arbitration Rules of the AAA.

(d) If an arbitrator cannot continue to serve, a successor to an arbitrator selected by a party shall be also selected by the same party, and a successor to a neutral arbitrator shall be selected as specified in subsection (c) of this Section. A full rehearing will be held only if the neutral arbitrator is unable to continue to serve or if the remaining arbitrators unanimously agree that such a rehearing is appropriate.

(e) The arbitrator or arbitrators shall be guided, but not bound, by the Federal Rules of Evidence and by the procedural rules, including discovery provisions, of the Federal Rules of Civil Procedure. Any discovery shall be limited to information directly relevant to the controversy or claim in arbitration.

(f) The parties shall each be responsible for their own costs and expenses, except for the fees and expenses of the arbitrators, which shall be shared equally by Darden Restaurants, Inc. and the Complainant.

Section 7.7 Plan Unfunded. Nothing in this Plan shall be interpreted or construed to require the Company in any manner to fund any obligation to the Participants, terminated Participants or beneficiaries hereunder. Nothing contained in this Plan nor any action taken hereunder shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Company and the Participants, terminated Participants, beneficiaries, or any other persons. Any funds which may be accumulated in order to meet any obligation under this Plan shall for all purposes continue to be a part of the general assets of the Company; provided, however, that the Company may establish a trust to hold funds intended to provide benefits hereunder so long as the assets of such trust become subject to the claims of the general creditors of the Company in the event of bankruptcy or insolvency of the Company. To the extent that any Participant, terminated Participant, or Beneficiary acquires a right to receive payments from the Company under this Plan, such rights shall be no greater than the rights of any unsecured general creditor of the Company.

Section 7.8 Applicable Law. All questions pertaining to the construction, validity and effect of this Plan shall be determined in accordance with the laws of the State of Florida, to the extent not preempted by Federal law.

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Section 7.9 Limitation of Rights. This Plan is a voluntary undertaking on the part of the Company. Neither the establishment of this Plan nor the payment of any benefits hereunder, nor any action of the Company, the Committee or the Benefit Plans Committee or its delegate shall be held or construed to be a contract of employment between the Company and any eligible employee or to confer upon any person any legal right to be continued in the employ of the Company. The Company expressly reserves the right to discharge, discipline or otherwise terminate the employment of any eligible employee at any time. Participation in this Plan gives no right or claim to any benefits beyond those which are expressly provided herein and all rights and claims hereunder are limited as set forth in this Plan.

Section 7.10 Severability. In the event any provision of this Plan shall be held illegal or invalid, or would serve to invalidate this Plan, that provision shall be deemed to be null and void, and this Plan shall be construed as if it did not contain that provision.

Section 7.11 Headings and Number. The headings to the Articles and Sections of this Plan are inserted for reference only, and are not to be taken as limiting or extending the provisions hereof.

Section 7.12 Incapacity. If the Benefit Plans Committee or its delegate determines that a Participant, a terminated Participant, or any Beneficiary under this Plan (each of which shall be referred to as the “Recipient”) is unable to care for his or her affairs because of illness, accident, or mental or physical incapacity, or because the Recipient is a minor, the Benefit Plans Committee or its delegate may direct that any benefit payment due the Recipient be paid to his or her duly appointed legal representative, or, if no such representative is appointed, to the Recipient’s spouse, child, parent, or other blood relative, or to a person with whom the Recipient resides or who has incurred expense on behalf of the Recipient. Any such payment so made shall be a complete discharge of the liabilities of this Plan with respect to the Recipient.

Section 7.13 Binding Effect and Release. All persons accepting benefits under this Plan shall be deemed to have consented to the terms of this Plan. Any final payment or distribution to any person entitled to benefits under this Plan shall be in full satisfaction of all claims against this Plan, the Committee, the Benefit Plans Committee or its delegate, and the Company arising by virtue of this Plan.

This Plan document has been updated to include the following amendments:

Amended and restated as of July 26, 2002

Further amended March 19, 2003

Further amended December 4, 2003

Further amended November 25, 2008

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EX-10.B

Exhibit 10(b)

DARDEN RESTAURANTS, INC.

DIRECTOR COMPENSATION PROGRAM

EFFECTIVE AS OF OCTOBER 1, 2005

TABLE OF CONTENTS

	Page
ARTICLE I. GENERAL PROVISIONS	1
Section 1. Purpose	1
Section 2. Effective Date and Duration of the Program	1
Section 3. Definitions	1
Section 4. Common Stock Awards under the Program	3
Section 5. Eligibility	4
Section 6. Elections	4
Section 7. Account Statements	4
Section 8. Payment Upon Death	4
Section 9. Unfunded Program	4
Section 10. Section 16	5
Section 11. Notices	5
Section 12. Administration	5
Section 13. No Right to Directorship	5
Section 14. Governing Law	5
Section 15. Amendment, Suspension or Termination of the Program	5
Section 16. No Guarantee of Tax Consequences	5
ARTICLE II. CASH COMPENSATION — CASH ELECTION	6
ARTICLE III. CASH COMPENSATION — DEFERRAL ELECTION	6
Section 1. Deferral Election	6
Section 2. Deferred Cash Compensation Account	6
Section 3. Account Distributions	7
Section 4. Hardship Distributions	7
Section 5. Distributions Upon Approval of the Committee	8
ARTICLE IV. CASH COMPENSATION — COMMON STOCK AND SRO ELECTIONS	9
Section 1. Common Stock Election	9
Section 2. Shares Available	9
Section 3. Computation of Shares	9
Section 4. SRO’s	9
ARTICLE V. STOCK COMPENSATION	10
Section 1. Awards under Stock Plan	10
Section 2. Non-qualified Stock Options	10
Section 3. Annual Stock Awards	10

i

ARTICLE VI. DEFERRAL OF ANNUAL STOCK AWARD	11
Section 1. Purpose and Effect	11
Section 2. Stock Units and Deferred Stock Unit Accounts	11
Section 3. Stock Deferral	12
Section 4. Payment of Deferred Amounts	12
Section 5. Effect on Annual Stock Awards	13

ii

DARDEN RESTAURANTS, INC.

DIRECTOR COMPENSATION PROGRAM

ARTICLE I.

General Provisions

Section 1. Purpose. It is the intent of the Company to provide a compensation program for its Directors which will attract and retain highly qualified individuals to serve in this capacity, to compensate its Directors through various cash and stock-based arrangements and to provide Directors with opportunities for stock ownership in the Company, thereby aligning the interest of Directors with the Company’s shareholders. This Program sets forth the terms and conditions pursuant to which Compensation for Directors shall be paid or deferred. All Stock Compensation, Stock Units, shares of Common Stock and SRO’s that are part of the Compensation paid or deferred pursuant to this Program are awarded pursuant to the terms of the applicable Stock Plan and any applicable Award Agreement. Notwithstanding any provision to the contrary in this program document, each provision in this program document shall be interpreted to permit the deferral of compensation in accordance with Section 409A of the Code and any provision that would conflict with such requirements shall not be valid or enforceable.

Section 2. Effective Date and Duration of the Program. The Program shall be deemed effective as of October 1, 2005 and shall continue in full force and effect until suspended or terminated by the Committee pursuant to Section 15 of Article I. In addition, the terms of this Program shall apply with respect to deferred compensation amounts which were earned or vested on or after January 1, 2005 under the Darden Restaurants, Inc. Compensation Plan for Non-Employee Directors.

Section 3. Definitions. As used in the Program, the following terms shall have the meanings set forth below:

(a) “Annual Stock Award” shall have the meaning assigned to it in Section 3 of Article V.

(b) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an award granted under the Stock Plan. Each Award Agreement shall be subject to the applicable terms and conditions of the Stock Plan under which such Award Agreement was granted and any other terms and conditions (not inconsistent with such Stock Plan) determined by the Committee.

(c) “Board” shall mean the Board of Directors of the Company.

(d) “Cash Compensation” shall mean the annual retainer and any applicable meeting fees for each regular or special Board meeting and any committee meeting attended. Pursuant to the terms set forth herein, Directors may elect to have the Cash Compensation otherwise payable to them paid in any combination of cash, deferred cash, Common Stock and SRO’s as set forth in Article II, Article III and Article IV.

1

(e) “Change of Control,” unless otherwise defined in an Award Agreement, shall mean any of the following events:

(i) any person (including a group as defined in Section 13(d)(3) of the Exchange Act) becomes, directly or indirectly, the beneficial owner of 20% or more of the shares of the Company entitled to vote for the election of Directors;

(ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were Directors of the Company just prior to such event cease to constitute a majority of the Board; or

(iii) the consummation of a transaction in which the Company ceases to be an independent publicly-owned corporation or the consummation of a sale or other disposition of all or substantially all of the assets of the Company.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations or other official guidance promulgated thereunder.

(g) “Committee” shall mean the Compensation Committee of the Board.

(h) “Common Stock” shall mean the common stock, without par value, of the Company.

(i) “Company” shall mean Darden Restaurants, Inc., a Florida corporation.

(j) “Compensation” shall mean Cash Compensation and Stock Compensation, collectively.

(k) “Deferral Participant” shall mean a person who is eligible hereunder to make a deferral election under Article III or Article VI. A person who has become a Deferral Participant shall be considered to continue as a “participant” within the meaning of the Program (even if such person subsequently becomes ineligible to make deferrals under Article III or Article VI) until the date of the Deferral Participant’s death or, if earlier, the date when the Deferral Participant no longer satisfies the eligibility requirements in Section 5 of Article I and the Deferral Participant has received a distribution of all of the Deferral Participant’s Deferred Cash Compensation Account and Deferred Stock Unit Account.

(l) “Deferred Cash Compensation Account” shall mean the bookkeeping account established for each Deferral Participant in accordance with Section 2 of Article III.

(m) “Deferred Stock Unit Account” shall mean the bookkeeping account established for each Deferral Participant in accordance with Section 2 of Article VI.

(n) A “Director” for purposes of the Program is defined as a person who has been elected to the Board and who is not an employee of the Company or any subsidiary of the Company.

(o) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

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(p) “Fair Market Value” shall have the meaning assigned to it in the Stock Plan.

(q) “Non-transferability Period” shall have the meaning assigned to it in Section 3(b) of Article V.

(r) “Option” shall mean a non-qualified option that is not intended to meet the requirements of Sections 422 or 423 of the Code or any successor provision.

(s) “Program” shall mean this Darden Restaurants, Inc. Director Compensation Program, as amended from time to time.

(t) “Program Quarters” shall mean the quarterly periods that correspond to the Company’s fiscal quarters.

(u) “Program Year” shall mean the one-year period which begins the day of the annual shareholders meeting in September and terminates the day before the next succeeding annual shareholders meeting.

(v) “Separation from Service” means a cessation of service as a Director from the Board for any reason, as determined in a manner consistent with Code Section 409A and the regulations thereunder.

(w) “SRO’s” shall mean salary replacement options.

(x) “Stock Compensation” shall mean the Options (if awarded prior to September 1, 2008) and Annual Stock Awards awarded to each Director pursuant to Article V.

(y) “Stock Deferral” shall have the meaning assigned to it in Section 1 of Article VI.

(z) “Stock Plan” shall mean the Company’s shareholder-approved equity compensation plan in effect from time to time pursuant to which the Company is authorized to grant stock and stock-based awards to Directors, as such plan may be amended from time to time. On the effective date of the Program, the Stock Plan is the Darden Restaurants, Inc. 2002 Stock Incentive Plan.

(aa) “Stock Unit” shall mean one of the units credited to Deferral Participants’ Deferred Stock Unit Accounts.

(bb) “Unforeseeable Emergency” shall have the meaning assigned to it in Section 4(b) of Article III.

Section 4. Common Stock Awards under the Program. On and after the effective date of the Program, all Stock Compensation, Stock Units, shares of Common Stock and SRO’s that are part of the Compensation paid or deferred pursuant to the terms of the Program shall be awarded and issued under, and in accordance with, the terms of the applicable Stock Plan and any applicable Award Agreement.

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Section 5. Eligibility. Each person who is a Director of the Company shall be eligible to participate in the Program and to make deferrals pursuant to Article III and Article VI. A person who ceases to be a Director shall not be eligible to make deferrals pursuant to Article III and Article VI.

Section 6. Elections.

(a) Cash Compensation Election. In accordance with the terms of Article II, Article III and Article IV, each Director may elect by written notice to the Company to participate in the Cash Compensation alternative provisions of the Program. Any combination of the alternatives – cash, deferred cash, Common Stock and/or SRO’s – may be elected, provided the aggregate of the alternatives elected equals 100% of the Director’s Cash Compensation otherwise payable. A Director first elected to the Board after the annual shareholder meeting may elect, by written notice to the Company before such Director’s term begins, to participate in the Cash Compensation alternatives for the remainder of that Program Year, and elections for succeeding Program Years shall be on the same basis as other Directors. Any election by a Director shall remain in effect for the entire Program Year to which such election applies. In addition, if a Director fails to submit an election in a timely manner with respect to a subsequent Program Year, a Director’s Cash Compensation for a Program Year shall be paid in cash.

(b) Annual Stock Award Deferral Election. In accordance with the terms of Article VI, each Director may elect by written notice to the Company to make a deferral election with respect to an Annual Stock Award. A Director first elected to the Board after the annual shareholder meeting may elect, by written notice to the Company before such Director’s term begins, to make a deferral election with respect to the prorated Annual Stock Award, and elections for succeeding Program Years shall be on the same basis as other Directors. If a Director fails to submit a deferral election in a timely manner with respect to a subsequent Program Year, any election with respect to the prior Program Year shall remain in effect.

Section 7. Account Statements. As soon as possible after the end of each Program Year, the Company shall supply to each participant an account statement of participation under the Program.

Section 8. Payment Upon Death. If a participant dies prior to payment in full of all amounts due under the Program, the balance of the amount due shall be paid in full in a single sum payment to such participant’s designated beneficiary, or, if none (or if there is no valid beneficiary designation on file with the Company), the participant’s estate as soon as possible following death.

Section 9. Unfunded Program. The Program shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Program shall not establish any fiduciary relationship between the Company and any participant or other person. To the extent any person holds any rights by virtue of an award under the Program, such right shall be no greater than the right of an unsecured general creditor of the Company.

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Section 10. Section 16. With respect to persons subject to Section 16 of the Exchange Act, transactions under the Program are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Program or action by the Board or the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Board or the Committee.

Section 11. Notices. Unless otherwise notified, all notices under the Program shall be sent in writing to the Company, attention the Supervisor, Management Stock Plans, 5900 Lake Ellenor Dr., Orlando, FL 32809. All correspondence to the participants shall be sent to the address which is their last known address as on file with the Company.

Section 12. Administration. The Program shall be administered by the Committee. The Committee shall have full authority and complete discretion to interpret the Program, to promulgate such rules and regulations with respect to the Program as it deems desirable and to make all other determinations necessary or appropriate for the administration of the Program, and such determinations shall be final and binding upon all persons having an interest in the Program.

Section 13. No Right to Directorship. Neither the Program nor any action taken hereunder shall be construed as giving any Director any right to continue to serve as a Director or any right to be nominated for re-election to the Board.

Section 14. Governing Law. The Program shall be governed by the laws of the State of Florida.

Section 15. Amendment, Suspension or Termination of the Program. The Committee may suspend or terminate the Program or any portion thereof at any time, and the Committee may amend the Program from time to time as may be deemed to be in the best interests of the Company; provided, however, that no such amendment, suspension or termination shall be made (a) which would impair the rights of a participant with respect to Compensation theretofore earned, without such participant’s consent, or (b) which would require shareholder approval under the Code or the rules or regulations of the Securities and Exchange Commission (including any approval requirement which is a prerequisite for exemptive relief from Section 16 of the Exchange Act), the New York Stock Exchange, any other securities exchange or the National Association of Securities Dealers, Inc. that are applicable to the Company, without such shareholder approval, or (c) after a Change of Control, which would affect the Compensation earned prior to such amendment, suspension or termination without the written consent of a majority of participants determined as of the day before a Change of Control. Notwithstanding anything herein to the contrary, in no event shall any amendment, suspension, or termination be made in a manner that is inconsistent with the requirements to avoid adverse federal tax consequences under Section 409A of the Code.

Section 16. No Guarantee of Tax Consequences. No person connected with the Program in any capacity, including, but not limited to, the Company (or any of its affiliates) and its directors, officers, agents, and employees may make any representation, commitment or guarantee regarding the tax treatment of any benefits, compensation, or deferrals under this Program.

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ARTICLE II.

Cash Compensation — Cash Election

Each Director may elect to have all or a specified percentage of his or her Cash Compensation for the Program Year paid in cash. In addition, in the absence of a timely election under Article III or Article IV, a Director’s Cash Compensation for a Program Year shall be paid in cash. Each Director with respect to whom all or a specified percentage of his or her Cash Compensation under the Program will be paid in cash shall be paid all or the specified percentage, as the case may be, of his or her Cash Compensation for the Program Year as soon as practicable after the end of each Program Quarter for the Cash Compensation earned during such Program Quarter. Any Director who ceases to be a Director for any reason at any time during a Program Year shall be entitled to have the Cash Compensation earned during the Program Quarter during which such Director ceased to be a Director paid in accordance with the Director’s cash election (with any remaining amount paid to such Director in accordance with the Director’s election under Article III or Article IV), but shall not be entitled to any Cash Compensation for any subsequent Program Quarter during such Program Year.

ARTICLE III.

Cash Compensation — Deferral Election

Section 1. Deferral Election. Each Director may elect to have all or a specified percentage of his or her Cash Compensation for the Program Year deferred until the participant’s Separation from Service. A Director’s deferral election with respect to a Program Year must be made at such time and in such manner as established by the Committee but in no event later than the end of the calendar year preceding the start of such Program Year.

Section 2. Deferred Cash Compensation Account. For each Director who has made a deferred cash election pursuant to this Article III, the Company shall establish a Deferred Cash Compensation Account and shall credit such deferred compensation account as of the end of each Program Quarter for the Cash Compensation otherwise earned during such Program Quarter. Any Director who ceases to be a Director for any reason at any time during a Program Year shall have the Cash Compensation otherwise payable for the Program Quarter during which such Director ceased to be a Director credited to his or her Deferred Cash Compensation Account in accordance with the Director’s deferral election (with any remaining non-deferred amount paid to such Director in accordance with the Director’s election under Article II or Article IV), but shall not be entitled to any Cash Compensation for any subsequent Program Quarter during such Program Year. Each Director for whom a Deferred Cash Compensation Account has been established shall be entitled to elect a daily crediting rate or rates of return based on the rate or rates of return of funds or portfolios established under the Darden Restaurants, Inc. FlexComp Plan, as amended from time to time (“FlexComp”). Such elections shall be made in accordance with procedures established by the Committee. With respect to rates of return that are to be credited based on the FlexComp Common Stock fund, FlexComp stock units shall be credited to the participant’s Deferred Cash Compensation Account as of the last business day of the Program Quarter, in accordance with the recordkeeping and crediting rules applicable under FlexComp.

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Section 3. Account Distributions. At the time a Director makes his or her election to defer any amounts to his or her Deferred Cash Compensation Account, the Director must also irrevocably elect a form of payment with respect to the Deferred Cash Compensation Account. Distribution of the Deferral Participant’s Deferred Cash Compensation Account shall be subject to the following:

(a) All distributions from the Deferral Participant’s Deferred Cash Compensation Account shall be paid or commence to be paid as soon as practicable after the January 1 coincident with or next following the date of the Deferral Participant’s Separation from Service;

(b) A Deferral Participant may elect to have distributions from his or her Deferred Cash Compensation Account paid or commence to be paid in the form of:

(1) a single cash payment, or

(2) annual cash installments for a period not to exceed ten (10) years. If installments are elected, the amount of each installment shall equal the value of the Deferral Participant’s Deferred Cash Compensation Account determined by the Committee (or its delegate) as of the date immediately preceding the effective date of each such installment, divided by the total number of installment payments remaining to be paid.

(c) In the absence of an election at the time of deferral, distribution of all amounts in the Deferral Participant’s Deferred Cash Compensation Account shall be paid in the form of a single cash payment as soon as practicable after the January 1 coincident with or next following the date of the Deferral Participant’s Separation from Service.

Each installment or lump-sum payment shall include the rate of return on the outstanding account balance to the date on which the distribution occurs.

Section 4. Hardship Distributions. At any time prior to the time an amount is otherwise payable hereunder, a participant may request a distribution of deferred amounts on account of the participant’s financial hardship, subject to the following requirements:

(a) Such distribution shall be made, in the sole discretion of the Committee, if the participant has incurred an Unforeseeable Emergency.

(b) For purposes of the Program, an “Unforeseeable Emergency” shall be limited to a severe financial hardship to the participant resulting from an illness or accident of the participant, the participant’s spouse, the participant’s beneficiary, or of a participant’s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); loss of the participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); the need to pay for the funeral expenses of the participant’s spouse, the participant’s beneficiary, or the participant’s dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); or other similar extraordinary and

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unforeseeable circumstances arising as a result of events beyond the control of the participant. Whether a participant is faced with an Unforeseeable Emergency will be determined based on the relevant facts and circumstances of each case and be based on the information supplied by the participant, in writing, pursuant to the procedure prescribed by the Committee. In addition to the foregoing, distributions under this section shall not be allowed for purposes of sending a child to college or the participant’s desire to purchase a home or other residence. In all events, distributions made on account of an Unforeseeable Emergency are limited to the extent reasonably needed to satisfy the emergency need (which may include amounts necessary to pay any federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution).

Notwithstanding the foregoing, payment under this section may not be made to the extent that such hardship is or may be relieved:

(i) through reimbursement or compensation by insurance or otherwise;

(ii) by liquidation of the participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or

(iii) by cessation of deferrals under the Program. For this purpose, the participant may cancel a deferral election due to such hardship event such that any later deferral election shall be subject to the provisions governing initial deferral elections.

(c) All distributions under this section shall be made as soon as practicable after the Committee has approved the distribution and the requirements of this section are met. In addition, all distributions under this section shall not be made under any circumstances otherwise not permitted for such distributions pursuant to Section 409A of the Code.

Section 5. Distributions Upon Approval of the Committee. Notwithstanding any other provision of the Program to the contrary, and solely to the extent permitted by Section 409A of the Code, the Committee, by majority approval, may, in its sole discretion, direct that payments be made before such payments are otherwise due if, for any reason (including, but not limited to, a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his or her delegate, or a decision by a court of competent jurisdiction involving a participant or beneficiary), it believes that a participant or beneficiary has recognized income for federal income tax purposes with respect to amounts that are or will be payable to such participant or beneficiary under the Program before they are paid to such participant or beneficiary. In making this determination, the Committee shall take into account the hardship that would be imposed on the participant or beneficiary by the payment of federal income taxes under such circumstances.

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ARTICLE IV.

Cash Compensation — Common Stock and SRO Elections

Section 1. Common Stock Election. Each Director may elect, at such time established by the Committee prior to payment, to receive all or a specified percentage of his or her Cash Compensation for the Program Year paid in shares of Common Stock, which will be issued as soon as practicable after the end of each Program Quarter for the Cash Compensation earned during such Program Quarter. Any Director who makes such an election and who ceases to be a Director for any reason at any time during a Program Year shall be entitled to payment of the Cash Compensation earned during the Program Quarter during which such Director ceased to be a Director paid in accordance with the foregoing election in the form of shares of Common Stock (with any remaining amounts paid to such Director in accordance with the Director’s election under Article II, Article III or Section 4 of this Article IV), but shall not be entitled to any Cash Compensation for any subsequent Program Quarter during such Program Year.

Section 2. Shares Available. The Company shall ensure that an adequate number of shares of Common Stock are available for distribution to those participants making this election, and all such shares of Common Stock shall be issued under the applicable Stock Plan. Only a whole number of shares will be issued, with any fractional share amounts paid in cash.

Section 3. Computation of Shares. For purposes of computing the number of shares earned each Program Quarter, the value of each share shall be equal to the closing sale price of shares of the Common Stock on the New York Stock Exchange on the last day on which the New York Stock Exchange is open for trading of each Program Quarter.

Section 4. SRO’s. Each Director may elect to receive all or a specified percentage of his or her Cash Compensation for the Program Year in the form of SRO’s. The Committee shall grant SRO’s to each such Director pursuant to the applicable Stock Plan. Such grants shall be made on the last day of each Program Quarter for the Cash Compensation earned during such Program Quarter. A Director’s SRO election with respect to a Program Year must be made at such time and in such manner as established by the Committee but in no event later than the end of the calendar year preceding the start of such Program Year. Any Director who makes such an SRO election and who ceases to be a Director for any reason at any time during a Program Year shall be entitled to the Cash Compensation earned during the Program Quarter during which such Director ceased to be a Director paid in accordance with such Director’s SRO election in the form of SRO’s (with any remaining amounts paid to such Director in accordance with the Director’s election under Article II, Article III or Section 1 of this Article IV), but shall not be entitled to any Cash Compensation for any subsequent Program Quarter during such Program Year. Such grants shall be valued by the same formula as used by the Committee for awards of SRO’s under the applicable Stock Plan to employees of the Company. SRO’s shall become exercisable in full after a period of six months from the date of grant, or such longer period if so determined by the Committee at the date of the grant of the SRO. SRO’s shall be treated as Options under the applicable Stock Plan for all other purposes and shall be subject to the terms and conditions of the applicable Stock Plan and the applicable Award Agreement.

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ARTICLE V.

Stock Compensation

Section 1. Awards under Stock Plan. All Stock Compensation paid pursuant to this Article V (or deferred under Article VI) is awarded under, and in accordance with, the terms of the applicable Stock Plan. In addition to the terms and conditions set forth below, such awards are subject to the terms and conditions of the applicable Stock Plan and any applicable Award Agreement.

Section 2. Non-qualified Stock Options. This Section 2 of this Article V shall be effective prior to September 1, 2008; on and after that date, this Section 2 shall not apply.

(a) Option Awards. Each person who becomes a Director for the first time after the effective date of the Program shall be awarded an Option to purchase 12,500 shares of Common Stock, effective as of the date such person becomes a Director. In addition, at the close of business on each annual shareholders meeting, each Director elected or re-elected to the Board shall be granted an Option to purchase 3,000 shares of Common Stock. An Award Agreement in the form approved by the Committee shall evidence such Options. All Options granted under the Program shall be non-qualified stock options governed by Section 83 of the Code.

(b) Option Exercise Price. The per share price to be paid by the Director at the time an Option is exercised shall be 100% of the Fair Market Value of the Common Stock on the date of grant.

(c) Term of Option. Each Option shall expire 10 years from the date of grant.

(d) Exercise of Option. Options shall become exercisable in full on the first anniversary of the date of grant, except that the 12,500 Options granted to a Director upon his or her first election to the Board shall become exercisable in full on the third anniversary of the date of grant.

Section 3. Annual Stock Awards.

(a) At the close of business on the date of each annual shareholders meeting, each Director elected or re-elected to the Board at such shareholders meeting shall be granted an award equal to that number of shares of Common Stock having a Fair Market Value on the date of grant equal to $100,000, rounded to the nearest whole share (the “Annual Stock Award”). Each Director who is appointed as a Director of the Company at any time other than at an annual shareholders meeting shall be granted on the date of such appointment a prorated Annual Stock Award equal to that number of shares of Common Stock, rounded to the nearest whole share, having a Fair Market Value on the date of grant equal to $100,000 multiplied by a fraction, the numerator of which is 365 minus the number of days in the period from the date of the annual shareholders meeting immediately preceding such appointment to the date of such appointment and the denominator of which is 365. Notwithstanding the foregoing, a Director may elect with respect to each such Annual Stock Award at the time and on the terms and conditions set

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forth in Article VI, to defer receipt of 100% of the Common Stock that would otherwise be received pursuant to his or her Annual Stock Award until a date that is on or after the cessation of Board service (or if prior to September 1, 2008, to receive 25% or 50% of the Annual Stock Award in cash with the remaining amount in whole shares of Common Stock (with cash for fractional shares)). Any such deferral election shall result in such shares of Common Stock not being issued to the Director and, in exchange, the Director will be credited with Stock Units, representing the Company’s obligation to pay deferred compensation at a later date in the form of unrestricted Common Stock, all on the terms and conditions set forth in Article VI.

(b) Non-transferability. From the date of grant to the first anniversary of the date of grant of any Annual Stock Award (the “Non-transferability Period”), none of the shares of Common Stock subject to the Annual Stock Award may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by a Director other than by (1) the Director’s last will and testament or (2) the applicable laws of descent and distribution. During the Non-transferability Period, any certificate representing shares of Common Stock that are subject to an Annual Stock Award shall bear a legend giving notice of the restrictions described in this Section 3(b). During the Non-transferability Period, each Director shall have all the rights and privileges of a shareholder with respect to the shares of Common Stock subject to the Annual Stock Award, including the right to vote such shares and to receive dividends thereon. Notwithstanding the foregoing, the Non-transferability Period shall terminate and restrictions on Annual Stock Awards shall lapse upon the occurrence of a Change of Control.

ARTICLE VI.

Deferral of Annual Stock Award

Section 1. Purpose and Effect. This Article VI authorizes the deferred receipt of Common Stock that would otherwise be received due to an Annual Stock Award under Article V, notwithstanding any other provision in the Program to the contrary. In accordance with the rules set forth in this Article VI, participants may elect to defer receipt of shares of Common Stock that would have been issued under an Annual Stock Award in exchange for the Company’s agreement to pay deferred compensation in the form of unrestricted shares of Common Stock (“Stock Deferral”).

Section 2. Stock Units and Deferred Stock Unit Accounts. Stock Deferrals made pursuant to Section 1 and Section 3 of this Article VI shall be reflected as Stock Units and shall be credited to the participant’s Deferred Stock Unit Account, subject to the following rules:

(a) Stock Units. For each share of Common Stock that a participant elects to defer under this Article VI, a Stock Unit shall be credited to the Participant’s Deferred Stock Unit Account effective as of the date of the Annual Stock Award.

(b) Dividend Equivalents. On each payment date for cash dividends paid on the Common Stock, the Company shall credit to each Deferral Participant’s Deferred Stock Unit Account a dividend equivalent amount equal to the cash dividends that would be payable by the Company on a number of shares of Common Stock equal to the

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number of Stock Units then credited to the Deferral Participant’s Deferred Stock Unit Account. Such dividend equivalent amounts shall then be credited in the form of additional Stock Units, based on the closing sale price of the Common Stock on the New York Stock Exchange as reported in the consolidated transaction reporting system on the date of the dividend payment.

(c) Adjustments to Deferred Stock Unit Accounts. In the event that the Committee determines that 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 or event affects the Common Stock such that an adjustment to the Deferral Participants’ allocations to their Deferred Stock Unit Accounts is appropriate to prevent the reduction or enlargement of the benefits or potential benefits intended to be made available under the Program, then the Committee, may, in its sole discretion and in such manner as it may deem equitable, adjust the Stock Units credited to the Deferral Participants’ Deferred Stock Unit Accounts.

(d) Stock Unit Status. Participants will have no rights as shareholders with respect to any Stock Units credited to their Deferred Stock Unit Accounts. Payment of amounts credited as Stock Units shall be in the form of Common Stock and not in cash, and all such Common Stock shall be issued under the applicable Stock Plan. Only a whole number of shares shall be issued, with any fractional share amount paid in cash.

Section 3. Stock Deferral. At such time as specified in this Section 3, a Deferral Participant may complete and submit to the Company an irrevocable election not to receive shares of Common Stock pursuant to an Annual Stock Award, and to be credited instead with a number of Stock Units equal to the number of shares of Common Stock of the Company subject to the deferral election, which shall be credited to the Deferral Participant’s Deferred Stock Unit Account. A Director’s Stock Deferral election with respect to a Program Year must be made at such time and in such manner as established by the Committee but in no event later than the end of the calendar year preceding the start of such Program Year, or in the case of a Director who is first elected to the Board, prior to the date such Director is elected to the Board. Any Stock Deferral election made pursuant to this Section shall apply to all of the shares of Common Stock attributable to the specified Annual Stock Award.

Section 4. Payment of Deferred Amounts. At the time a Director makes his or her election to defer any amounts to his or her Deferred Stock Unit Account, the Director must also irrevocably elect a form of payment with respect to the Deferred Stock Unit Account. Distribution of the Deferral Participant’s Stock Unit Account shall be subject to the following:

(a) A Deferral Participant may elect to have distributions from his or her Deferred Stock Unit Account paid or commence to be paid in the form of:

(1) a single payment in whole shares of Common Stock (with cash for fractional shares) as soon as practicable after the January 1 coincident with or next following the date of the Deferral Participant’s Separation from Service. All such Common Stock shall be issued under the applicable Stock Plan. or

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(2) annual installments for a period not to exceed ten (10) years commencing as soon as practicable after the January 1 coincident with or next following the date of the Deferral Participant’s Separation from Service. If installments are elected, the amount of each installment shall equal the value of the Deferral Participant’s Deferred Stock Unit Account determined by the Committee (or its delegate) as of the date immediately preceding the effective date of each such installment, divided by the total number of installment payments remaining to be paid. Each such installment payment shall be paid in whole shares of Common Stock (with cash for fractional shares). All such Common Stock shall be issued under the applicable Stock Plan.

(b) Payments with respect to Stock Units that are attributable to a Stock Deferral under this Article VI shall not occur prior to the time when any transfer restrictions that would have applied to the relevant Annual Stock Award would have ended.

(c) In the absence of an election at the time of deferral, distribution of all amounts in the Deferral Participant’s Deferred Stock Unit Account shall be paid in the form of a single payment in whole shares of Common Stock (with cash for fractional shares) as soon as practicable after the January 1 coincident with or next following the date of the Deferral Participant’s Separation from Service.

(d) In addition to the foregoing provisions of this Article VI, Section 4, the Committee is authorized to implement a one-time transition election in a manner consistent with the requirements of Code Section 409A and the guidance issued thereunder whereby a Director may modify the form of distribution previously elected (or applicable pursuant to Section 4(c)) for amounts previously deferred. Such transition election may not modify the time for payment of any deferred amounts.

Section 5. Effect on Annual Stock Awards. Deferral elections made pursuant to this Article VI shall constitute amendments to the Annual Stock Award to which the deferral elections apply. Any shares of Common Stock paid pursuant to this Article VI on account of a Deferral Participant’s deferral election shall be deemed issued under the Stock Plan under which the corresponding Annual Stock Award was granted.

Adopted December 15, 2005 and effective October 15, 2005.

Amended December 14, 2007 and effective December 14, 2007 except as otherwise provided herein.

Amended December 18, 2008 and effective October 15, 2005.

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EX-10.C

Exhibit 10(c)

DARDEN RESTAURANTS, INC.

STOCK PLAN FOR DIRECTORS

1. Purpose. The purpose of the Darden Restaurants, Inc. Stock Plan (the “Plan”) for Directors is to increase the proprietary interest of Directors in Darden Restaurants, Inc. (the “Company”) by granting them non-qualified options to purchase Common Stock of the Company (“Common Stock”) and shares of Common Stock subject to the restrictions described herein that will promote long-term shareholder value through ownership of Common Stock.

2. Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company. Grants of options to purchase Common Stock under the Plan and the amount and nature of the awards of Common Stock shall be made automatically or by the Board of Directors as provided in Section 4. However, subject to the express provisions of the Plan and applicable law, the Compensation Committee shall have full authority to: (i) interpret the Plan; (ii) promulgate such rules and regulations with respect to the Plan as it deems desirable; (iii) amend the terms and conditions of any award or award agreement, provided, however, that, except as otherwise provided in Section 5 hereof, the Committee shall not reprice, adjust or amend the exercise price of options to purchase Common Stock of the Company previously awarded to any Director, whether through amendment, cancellation and replacement grant, or any other means; (iv) determine whether, to what extent and under what circumstances shares of Common Stock payable with respect to an award under the Plan shall be deferred either automatically or at the election of the holder of the award or the Committee; and (v) make all other determinations necessary or appropriate for the administration of the Plan, and such determinations shall be final and binding upon all persons having an interest in the Plan. By way of clarification, with respect to any deferrals of compensation, the terms of this Plan in effect on October 3, 2004 shall apply with respect to amounts that were earned and vested as of December 31, 2004. Any deferrals of compensation with respect to amounts earned or vested on or after January 1, 2005 shall be governed by the terms of the Darden Restaurants, Inc. Director Compensation Program, effective as of October 1, 2005 as amended from time to time.

3. Participation. Each person who is a Director of the Company or any of its subsidiaries at the date of each grant or award shall be eligible to participate in the Plan. A “Director” for purposes of this Plan is defined as a person who has been elected to the Board of Directors of the Company and does not have an employee status with the Company.

4. Awards under the Plan. The number of shares of Common Stock authorized for grants under the Plan is 375,000, provided that all such shares shall be issued from Common Stock held in the Company’s treasury. In addition, all shares of Common Stock authorized, but unissued under the predecessor Stock Plan for Directors effective May 28, 1995, as amended, shall be available and authorized for issuance under this Plan. If any shares of Common Stock covered by an award or to which an award relates are not purchased or are forfeited or otherwise reacquired by the Company (including shares of Restricted Stock, as described below, whether or not dividends have been paid on such shares), or if an award otherwise terminates or is cancelled without delivery of any shares of Common Stock, then the number of shares of Common Stock counted against the aggregate number of shares available under the Plan with respect to such award, to the extent of any such forfeiture, termination or cancellation, shall again be available for granting awards under the Plan. In addition, any shares of Common Stock that are used by a participant in connection with the satisfaction of tax obligations relating to an award, as described below, under the Plan shall be available for granting awards under the Plan.

(a) Non-qualified Stock Options

(i) Grant of Options. Each person who becomes a Director for the first time after the effective date of the Plan shall be awarded an option (“Option”) to purchase 12,500 shares of Common Stock, effective as of the date such person becomes a Director. In addition, at the close of business on each annual shareholders’ meeting, each Director elected or re-elected to the Board shall be granted an Option to purchase 3,000 shares of Common Stock. The written agreement evidencing such Options granted under the Plan

shall be dated as of the applicable date of each grant. All Options granted under the Plan shall be non-qualified stock options governed by Section 83 of the Internal Revenue Code of 1986, as amended.

(ii) Option Exercise Price. The per share price to be paid by the Director at the time an Option is exercised shall be 100% of the Fair Market Value of the Common Stock on the date of grant. “Fair Market Value” shall equal the mean of the high and low price for the Common Stock on the New York Stock Exchange on the relevant date or, if the New York Stock Exchange is closed on that date, on the last preceding date on which the Exchange was open for trading.

(iii) Term of Option. Each Option shall expire ten (10) years from the date of grant.

(iv) Exercise of Option. Options shall be exercisable only after one year from the date the Option is granted, except that (1) “SRO’s” may be exercised after a period of six months or longer if so determined by the Board of Directors at the date of the grant of the SRO and (2) the 12,500 Options granted to a Director upon his or her first election to the Board of Directors shall be exercisable only after three years from the date the Options are granted.

(v) Method of Exercise and Tax Obligations. Each notice of exercise shall be accompanied by the full purchase price of the shares being purchased. Such payment may be made in cash, check, shares of Common Stock valued using the Fair Market Value as of the exercise date or a combination thereof. The Company may also require payment of the amount of any federal, state or local withholding tax attributable to the exercise of an Option or the delivery of shares of Common Stock upon lapse of the Restricted Period described below.

(vi) Non-transferability. An Option shall be non-assignable and non-transferable by a Director other than by (1) the Director’s last will and testament, or (2) the applicable laws of descent and distribution, or (3) by gift by a Director to a “family member” defined by the Compensation Committee. Such Option may be exercised only by such Director or his or her guardian or legal representative or the donee family member. A Director shall forfeit any Option assigned or transferred, voluntarily or involuntarily, other than as permitted under this subsection.

(vii) Notwithstanding anything contained herein to the contrary, upon retirement of a Director or other cessation of service on the Board of Directors, the Director’s Options will vest and be exercisable according to the following schedules.

(1) For a Director with at least five years of Board service, including service on the predecessor General Mills, Inc. Board of Directors, unvested Options granted prior to September 1999 will continue to vest. Once vested, Options will be exercisable for the full term of the Option.

(2) For a Director with less than five years of Board service, including service on the predecessor General Mills, Inc. Board of Directors, unvested Options will be forfeited. Options granted prior to September 1999 that have vested will be exercisable for the full Option term. Options granted beginning with and after the September 1999 grant if vested, must be exercised within ninety days of the end of Board service or, otherwise, will be forfeited.

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(b) Restricted Stock.

(i) Awards. Each Director on the effective date of the Plan shall be granted an award of 3,000 shares of Common Stock, restricted as described below (“Restricted Stock”). At the close of business on each successive annual stockholders’ meeting date thereafter, each Director then elected or re-elected to the Board shall be granted an award of 3,000 shares of Restricted Stock. Notwithstanding the foregoing, prior to the date of each annual stockholders’ meeting, with respect to any such award of Restricted Stock to be made for such upcoming year, a Director may elect (1) on such terms and conditions as the Committee shall determine (including through the terms of the Compensation Plan for Non-Employee Directors), to defer receipt of all or any portion of the Common Stock that would otherwise be received pursuant to his or her Restricted Stock award until a date that is on or after the cessation of Board service or (2) to receive the equivalent of 1,000 of the 3,000 shares of any Restricted Stock award in cash based on the Fair Market Value of the Common Stock on the date of such stockholders’ meeting. Any such deferral election shall result in the Restricted Stock not being issued to the Director and, in exchange, the Director will be credited with stock units, representing the Company’s obligation to pay deferred compensation at a later date in the form of unrestricted Common Stock, all on such terms and conditions as the Committee shall determine (including through the terms of the Compensation Plan for Non-Employee Directors).

(ii) Restricted Period. The restrictions set forth shall apply from the date of each grant until the earlier of the following: (1) the last day on which the New York Stock Exchange is open for trading immediately prior to the annual stockholders meeting next succeeding the grant of such Restricted Stock, or (2) the Director’s death or disability (the “Restricted Period”). Until the expiration of the Restricted Period, none of the Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of, and all of the Restricted Stock shall be forfeited and all further rights of the Director to or with respect to such Restricted Stock shall terminate without any obligation on the part of the Company unless the Director has remained a Director throughout the Restricted Period applicable to such Restricted Stock.

(iii) Other Terms and Conditions. Any shares of Restricted Stock granted hereunder may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of stock certificates, and may be held in escrow. If certificated, each such certificate shall bear a legend giving notice of the restrictions. Each Director must also endorse in blank and return to the Company a stock power for each grant of Restricted Stock. During the Restricted Period, each Director shall have all the rights and privileges of a shareholder with respect to the Restricted Stock, including the right to vote the shares and to receive dividends thereon. At the expiration of the Restricted Period, a stock certificate free of all restrictions for the number of shares of Restricted Stock so registered shall be delivered to the Director or his or her estate.

(c) Stock Award.

(i) Awards. At the close of business on the date of each annual stockholders’ meeting occurring after July 26, 2002, in lieu of the award of Restricted Stock described in Section 4(b) above, each Director elected or re-elected to the Board at such stockholders’ meeting shall be granted an award equal to that number of shares of Common Stock having a Fair Market Value on the date of grant equal to $100,000, rounded to the nearest whole share (the “Stock Award”). Each Director who, after July 26, 2002, is appointed as a Director of the Company at any time other than at an annual stockholders’ meeting shall be granted on the date of such appointment a prorated Stock Award equal to that number of shares of Common Stock, rounded to the nearest whole share, having a Fair Market Value on the date of grant equal to $100,000 multiplied by a fraction, the numerator of which is 365 minus the number of days in the period from the date of the annual stockholders’ meeting immediately preceding such appointment to the date of

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such appointment and the denominator of which is 365. Notwithstanding the foregoing, prior to the date of each annual stockholders’ meeting or the date of any such appointment, as the case may be, a Director may elect with respect to each such Stock Award to be granted on such date (1) on such terms and conditions as the Committee shall determine (including through the terms of the Compensation Plan for Non-Employee Directors), to defer receipt of all or any portion of the Common Stock that would otherwise be received pursuant to his or her Stock Award until a date that is on or after the cessation of Board service or (2) to receive 25% or 50% of the Stock Award in cash. Any such deferral election shall result in such shares of Common Stock not being issued to the Director and, in exchange, the Director will be credited with stock units, representing the Company’s obligation to pay deferred compensation at a later date in the form of unrestricted Common Stock, all on such terms and conditions as the Committee shall determine (including through the terms of the Compensation Plan for Non-Employee Directors).

(ii) Non-transferability. From the date of grant to the first anniversary of the date of grant of any Stock Award (the “Non-transferability Period”), none of the shares of Common Stock subject to the Stock Award may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by a Director other than by (1) the Director’s last will and testament, or (2) the applicable laws of descent and distribution. During the Non-transferability Period, any certificate representing shares of Common Stock that are subject to a Stock Award shall bear a legend giving notice of the restrictions described in this Section 4(c)(ii). During the Non-transferability Period, each Director shall have all the rights and privileges of a shareholder with respect to the shares of Common Stock subject to the Stock Award, including the right to vote such shares and to receive dividends thereon.

(d) “SRO’s”.

In addition to the awards described in Sections 4(a), (b) and (c) above, the Board of Directors also shall grant salary replacement options (“SRO’s”) to one or more of the Directors pursuant to the annual decision of each Director in lieu of all or part of an annual retainer or for directors fees for attendance at Board or Committee meetings or other compensation for services as a Director. Such grants shall be made on the last day of each fiscal quarter of the Company for compensation accrued during such quarter and be valued by the same formula as used by the Compensation Committee for awards of SRO’s to employees of the Company. SRO’s shall be treated as Options under this Plan for all other purposes.

(e) Change of Control.

The Options granted hereunder shall become exercisable and the restrictions on Restricted Stock and Stock Awards shall lapse upon the occurrence of a “Change of Control.” Each of the following shall constitute a “Change of Control”:

(i) if any person (including a group as defined in Section 13(d)(3) of the 1934 Act) becomes, directly or indirectly, the beneficial owner of 20% or more of the shares of the Company entitled to vote for the election of directors;

(ii) as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were Directors of the Company just prior to such event cease to constitute a majority of the Company’s Board of Directors; or

(iii) the stockholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs.

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5. Adjustments. In the event of a stock dividend or stock split, or combination or other reduction in the number of issued shares of Common Stock, a merger, consolidation, reorganization, recapitalization, sale or exchange of substantially all assets or dissolution of the Company, or whenever the Committee determines such adjustments are appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then appropriate adjustments shall be made in the shares and number of shares of Common Stock subject to and authorized by this Plan and the number of shares of Common Stock subject to Options, Restricted Stock and Stock Awards previously granted hereunder and the exercise price of Options previously granted hereunder, in order to prevent dilution or enlargement of the rights of the Directors under the Plan.

6. Amendment of the Plan. The Board of Directors may suspend or terminate the Plan or any portion thereof at any time, and the Board of Directors may amend the Plan from time to time as may be deemed to be in the best interests of the Company; provided, however, that no such amendment, alteration or discontinuation shall be made (a) that would impair the rights of a Director with respect to Options, Restricted Stock or Stock Awards theretofore awarded, without such person’s consent, or (b) without the approval of the stockholders, (i) if such approval is necessary to comply with any legal, tax or statutory requirement, including any approval requirement which is a prerequisite for exemptive relief from Section 16 of the Securities Exchange Act of 1934 (the “1934 Act”) or (ii) would materially change the definition of persons eligible to receive awards under this Plan, or (c) unless such amendment is necessary to comply with changes in the Internal Revenue Code of 1986, as amended, or the Employment Retirement Income Security Act of 1974, as amended, or rules promulgated thereunder.

7. Miscellaneous Provisions. Neither the Plan nor any action taken hereunder shall be construed as giving any Director any right to be nominated for re-election to the Board. The Plan shall be governed by the laws of the state of Florida.

8. Effective Date and Duration of Plan. The Plan shall be deemed effective as of the effective date of the distribution of Common Stock to the holders of General Mills, Inc. Common Stock. No awards shall be made hereunder after September 30, 2005.

9. Section 16. With respect to persons subject to Section 16 of the 1934 Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

As amended and restated July 26, 2002

As further amended March 19, 2003, effective as of July 26, 2002

As amended June 19, 2003

As amended December 18, 2008

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EX-10.D

Exhibit 10(d)

DARDEN RESTAURANTS, INC.

COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

PART I

GENERAL PROVISIONS

A. OBJECTIVE AND SUMMARY OF THE PLAN

It is the intent of the Company to provide a compensation program for its non-employee directors which will attract and retain highly qualified individuals to serve in this capacity. This program shall be called the “Darden Restaurants, Inc. Compensation Plan for Non-Employee Directors” (hereinafter the “Plan”). “Compensation” shall mean the annual retainer and meeting fees for each regular or special Board of Directors meeting and any committee meeting attended. Such Compensation may be received in any combination of the following:

1. Cash

2. Deferred Cash

3. Darden Restaurants, Inc. Common Stock (“Common Stock”)

The combination of alternatives for each non-employee director shall equal the aggregate Compensation earned by each non-employee director. Such Compensation shall be distributed as outlined in Parts II, III, and IV hereof. By way of clarification, with respect to any deferrals of Compensation, the terms of this Plan in effect on October 3, 2004 shall apply with respect to amounts that were earned and vested as of December 31, 2004. Any deferrals of Compensation with respect to amounts earned or vested on or after January 1, 2005 shall be governed by the terms of the Darden Restaurants, Inc. Director Compensation Program, effective as of October 1, 2005 as amended from time to time.

B. ADMINISTRATION

The Plan shall be administered by the Compensation Committee (hereinafter the “Committee”) of the Board of Directors. The Committee shall have full authority and complete discretion to interpret the Plan, to promulgate such rules and regulations with respect to the Plan as it deems desirable and to make all other determinations necessary or appropriate for the administration of the Plan, and such determinations shall be final and binding upon all persons having an interest in the Plan.

C. AWARDS UNDER THE PLAN

The aggregate number of shares of Company Common Stock authorized to be issued under Parts III and IV hereof is 75,000, provided that all of such shares shall be issued from shares of Common Stock held in the Company’s treasury. In addition, all shares of Common Stock authorized, but unissued under the predecessor Compensation Plan for Non-Employee Directors, effective May 28, 1995, as amended, shall be available and authorized for issuance under Part III or IV of this Plan.

D. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall be deemed effective October 1, 2000. No awards shall be made hereunder after September 30, 2005.

E. AMENDMENT OF THE PLAN

The Board of Directors may suspend or terminate the Plan or any portion thereof at any time, and the Board of Directors may amend the Plan from time to time as may be deemed to be in the best interests of the Company;

provided, however, that no such amendment, suspension or termination shall be made (a) which would impair the rights of a non-employee director with respect to Compensation theretofore earned, without such person’s consent, or (b) without the approval of the stockholders, which would materially increase the maximum number of shares subject to this Plan, materially increase the maximum number of shares issuable to any non-employee director under this Plan, or materially change the definition of persons eligible to receive awards under this Plan, or (c) if the Plan has been amended within the preceding six months, unless such amendment is necessary to comply with changes in the Internal Revenue Code of 1986, as amended (the “Code”), or the Employee Retirement Income Security Act of 1974, as amended, or rules promulgated thereunder.

F. CHANGE OF CONTROL

After a “Change in Control,” no amendments, suspension to or action to terminate the Plan may be made which would affect Compensation earned prior to such amendments, suspensions or termination without the written consent of a majority of participants determined as of the day before a “Change in Control.” Any decision or interpretation adopted by the Committee shall be final and conclusive. A “Change in Control” shall mean the occurrence of any of the following events:

1. if any person (including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934) becomes, directly or indirectly, the beneficial owner of twenty percent (20%) or more of the shares of the Company entitled to vote for the election of directors;

2. as a result of or in connection with any cash tender offer, exchange offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Company just prior to such event shall cease to constitute a majority of the Company’s Board of Directors; or

3. the stockholders of the Company approve an agreement providing for a transaction in which the Company will cease to be an independent publicly-owned corporation or a sale or other disposition of all or substantially all of the assets of the Company occurs.

G. PARTICIPATION

1. Each non-employee director of Darden Restaurants, Inc., may elect by written notice to the Company on or before each annual stockholder meeting, to participate in the Compensation alternative provisions of the Plan. Any combination of the alternatives—Cash, Deferred Cash and/or Company Common Stock—may be elected, provided the aggregate of the alternatives elected equals one hundred percent of the non-employee director’s Compensation.

2. The election shall remain in effect for a one-year period which shall begin the day of the annual stockholders meeting in September and terminate the day before the succeeding annual stockholders meeting (hereinafter “Plan Year”). The first election hereunder shall be the election made on or before the September 2000 annual stockholders meeting, and such election shall remain effective until the annual stockholders meeting to be held in September 2001. If a non-employee director fails to submit an election prior to the commencement of a new Plan Year, the election from the prior year shall remain in effect.

3. The Plan Year shall include four Plan Quarters. Plan Quarters shall correspond to the Company’s fiscal quarters.

4. A director elected to the Board after the September Board meeting may elect, by written notice to the Company before such director’s term begins, to participate in the Compensation alternatives for the remainder of that Plan Year, and elections for succeeding years shall be on the same basis as other directors.

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5. As soon as possible after the end of each Plan Year, the Company shall supply to each participant an account statement of participation under the Plan.

6. Unless otherwise notified, all notices under this Plan shall be sent in writing to the Company, attention the Supervisor, Management Stock Plans, 5900 Lake Ellenor Dr., Orlando, FL 32809. All correspondence to the participants shall be sent to the address which is their recorded address as listed on the election forms.

PART II

CASH COMPENSATION PROVISIONS

A. Each non-employee director who elects to participate under the Cash Compensation Provision of the Plan shall be paid all or the specified percentage of his or her Compensation for the Plan Year in cash, and such cash payment shall be made as of the end of each Plan Quarter.

B. If a participant dies prior to payment in full of all amounts due under the Plan, the balance of the amount due shall be payable in full to such participant’s designated beneficiary, or, if none, the estate as soon as possible following death.

PART III

DEFERRED CASH COMPENSATION PROVISION

A. Each non-employee director may elect to have all or a specified percentage of his or her Compensation for the Plan Year deferred until the participant ceases to be a director.

B. For each director who has made this Deferred Cash election, the Company shall establish a deferred compensation account and shall credit such account quarterly for the Compensation due. Each account shall be credited daily at the rate or rates of return of funds or portfolios established under a qualified benefit plan maintained by the Company which the Committee or the Minor Amendment Committee of the Committee (the “Minor Amendment Committee”), or its delegate, in its discretion, may from time to time establish. With respect to allocations made to the Company Common Stock fund, stock units shall be credited as of the last business day of the fiscal quarter, based on the mean of the high and low sale prices of Company Common Stock on the New York Stock Exchange as reported in the consolidated transaction reporting system. On each payment date for cash dividends paid on the Company’s Common Stock, the Company shall credit to each participant’s account a dividend equivalent amount equal to the cash dividends that would be payable by the Company on a number of shares of Common Stock equal to the number of stock units then credited to the participant’s account. Such dividend equivalent amounts shall then be credited in the form of additional stock units, based on the mean of the high and low sale prices of Company Common Stock on the New York Stock Exchange as reported in the consolidated transaction reporting system on the date of the dividend payment date. Participants will have no rights as shareholders with respect to stock units credited to their accounts. Payment of amounts allocated to stock units shall be in the form of Company Common Stock and not in cash. Only a whole number of shares shall be issued, with any fractional share amount paid in cash.

C. Distribution of the participant’s deferred compensation account shall be as follows:

1. at the time, and in the form of payment, elected by the participant at the time of deferral, provided that payments will not commence until the participant ceases to be a director; or

2. in the absence of an election at the time of deferral, in ten substantially equal annual installments beginning on January 1 of each year following the year in which the participant ceases to be a director; or

3. as to any future or previous deferral, a participant may request to amend his or her distribution date and, if the participant elects, his or her form of payment, with respect to the deferral, provided: (i) the initial

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distribution date in the absence of such distribution election amendment is not within twelve (12) months of the date of the amendment; (ii) his or her amended distribution date is at least one year after the distribution date in the absence of such distribution election amendment; (iii) his or her amended form of payment is in substantially equal annual installments for a period not to exceed ten (10) years, or a lump sum; and (iv) no modifications for distribution dates and/or forms of payment are permitted with respect to any deferrals after payment of such deferrals has commenced. No more than two amendments to the participant’s initial distribution election with respect to a particular deferral shall be permitted. Any such amendment must be in writing and submitted to the Committee for approval; or

4. a participant may, at any time prior or subsequent to the distribution date selected by the participant, request in writing to the Committee to have his or her form of payment with respect to a deferral changed to an immediate lump-sum distribution, provided, however, that the amount of any such lump-sum distribution shall be reduced by an amount equal to ten percent (10%) of the balance of the participant’s account attributable to that deferral. Any such lump sum distribution shall be paid within one (1) business day of approval by the Committee of such request.

Each installment or lump sum payment shall include the rate of return on the outstanding account balance to the date on which the distribution occurs.

D. At any time prior to the time an amount is otherwise payable hereunder, a participant may request a distribution of deferred amounts on account of the participant’s financial hardship, subject to the following requirements:

1. Such distribution shall be made, in the sole discretion of the Committee, if the participant has incurred an unforeseeable emergency.

2. For purposes of this Plan, an “unforeseeable emergency” shall mean an unanticipated emergency that is caused by an event beyond the control of the participant and that would result in severe financial hardship to the participant resulting from a sudden and unexpected illness or accident of the participant or a participant’s dependent (as defined in Code section 152(a)), loss of the participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the participant’s control. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case and be based on the information supplied by the participant, in writing, on the form provided by the Committee.

3. Notwithstanding the foregoing, payment under this Subpart D may not be made to the extent that such hardship is or may be relieved:

(a) through reimbursement or compensation by insurance or otherwise;

(b) by liquidation of the participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or

(c) by cessation of deferrals under the Plan.

In addition to the foregoing, distributions under this Subpart D shall not be allowed for purposes of sending a child to college or the participant’s desire to purchase a home or other residence. In all events, distributions made on account of an unforeseeable emergency are limited to the extent reasonably needed to satisfy the emergency need.

4. All distributions under this Subpart D shall be made as soon as practicable after the Committee has approved the distribution and the requirements of this paragraph are met.

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E. If a participant dies prior to payment in full of all amounts due under the Plan, the balance of the amount due shall be payable in full to the participant’s designated beneficiary, or, if none, the estate as soon as possible following death.

F. Notwithstanding any other provision of this Plan to the contrary, the Committee, by majority approval, may, in its sole discretion, direct that payments be made before such payments are otherwise due if, for any reason (including, but not limited to, a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his or her delegate, or a decision by a court of competent jurisdiction involving a participant or beneficiary), it believes that a participant or beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to him under the Plan before they are paid to him. In making this determination, the Committee shall take into account the hardship that would be imposed on the participant or beneficiary by the payment of federal income taxes under such circumstances.

PART IV

DRI COMMON STOCK PROVISIONS

A. Each participant may elect to receive all or a specified percentage of his or her Compensation in shares of Darden Restaurants, Inc. Common Stock, which will be issued at the end of each Plan Quarter.

B. The Company shall ensure that an adequate number of Darden Restaurants, Inc. shares of Common Stock are available for distribution to those participants making this election.

C. Only whole number of shares will be issued, with any fractional share amounts paid in cash.

D. For purposes of computing the number of shares earned each Plan Quarter, the value of each share shall be equal to the mean of the high and low prices of shares of Darden Restaurants, Inc. Common Stock on the New York Stock Exchange on the last Business Day of each Plan Quarter. For the purposes of this Plan, “Business Day” shall mean a day on which the New York Stock Exchange is open for trading.

E. If a participant dies prior to payment in full of all amounts due under the Plan, the balance of the amount due shall be payable in full to the participant’s designated beneficiary, or, if none, to the participant’s estate, in cash, as soon as possible following death.

PART V

DEFERRAL OF STOCK AWARDS

A. PURPOSE AND EFFECT

This Part V authorizes the deferred receipt of Common Stock that would otherwise be received due to a Stock Award, notwithstanding any other provision in the Plan to the contrary. The Stock Awards that may be subject to deferral elections authorized by this Part V are limited to those made under the following stock plans of the Company (collectively, the “Stock Plans”):

(a) Darden Restaurants, Inc. Stock Plan for Directors;

(b) Darden Restaurants, Inc. 2002 Stock Incentive Plan; and

(c) any future stock plan, agreement or arrangement of the Company that explicitly provides for such deferral elections.

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In accordance with the rules set forth in this Part V, eligible Participants may elect to defer receipt of shares of Common Stock that would have been issued under a Stock Award in exchange for the Company’s agreement to pay deferred compensation in the form of unrestricted shares of Common Stock (“Stock Deferral”). Grants of Stock Awards are governed by the Stock Plans, as they may be amended from time to time. No shares of Common Stock are authorized to be issued under this Plan (other than pursuant to Part III or IV of the Plan). Participants who elect to make a deferral in accordance with this Part V will have no rights as shareholders of the Company with respect to Stock Units credited to their Deferred Stock Unit Accounts.

B. DEFINITIONS

For purposes of this Part V, the terms defined elsewhere in the Plan shall have the same meanings when used in this Part V unless a different meaning is given in this Part V. In addition, the terms listed below shall have the following meanings:

(a) Common Stock shall mean the common stock, without par value, of Darden Restaurants, Inc.

(b) Compensation Committee shall mean the Compensation Committee of the Board of Directors of the Company.

(c) Deferred Stock Unit Account shall mean the account established for each Participant in accordance with Subpart E of this Part V.

(d) Net Shares shall mean, with respect to any Stock Deferral, the number of shares of Common Stock that are subject to the deferral election that would have been issued pursuant to a Stock Award, less any shares that are used to satisfy any taxes due at the time Stock Units are credited due to the Stock Deferral.

(e) Participant shall mean a person who is eligible under Subpart C of this Part V to make a Stock Deferral as described in Subpart D of this Part V. A person who has become a Participant shall be considered to continue as a “participant” within the meaning of the Plan (even if such person subsequently becomes ineligible to make deferrals under this Part V) until the date of the Participant’s death or, if earlier, the date when the Participant no longer satisfies the eligibility requirements in Subpart C of this Part V and the Participant has received a distribution of all of the Participant’s Deferred Stock Unit Account.

(f) Stock Award shall mean any award of Common Stock pursuant to one or more of the Company’s Stock Plans.

(g) Stock Unit shall mean one of the units credited to Participants’ Deferred Stock Unit Accounts based on the number of Net Shares.

C. ELIGIBILITY

A person shall be eligible to make deferrals pursuant to this Part V if he or she is a non-employee director of the Company. A person who ceases to be a non-employee director of the Company shall not be eligible to make deferrals pursuant to this Part V.

D. STOCK DEFERRAL

Prior to the date on which a Participant would be granted a Stock Award, a Participant may complete and submit to the Company an irrevocable election not to receive shares of Common Stock pursuant to that award, and to be credited instead with a number of Stock Units equal to the number of Net Shares resulting from the deferral election. Such deferral election shall specify the following:

(a) the anticipated Stock Award; and

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(b) the distribution date and form of distribution, in accordance with the rules for payment under Part III of the Plan, as modified by Subpart F below.

Any deferral election made pursuant to this Subpart D shall apply to all of the shares of Common Stock attributable to the specified Stock Award (after reduction for any portion of the Stock Award that the Participant has elected to receive in the form of an immediate cash payment).

E. DEFERRED STOCK ACCOUNTS

A Deferred Stock Unit Account shall be established on behalf of each Participant for Net Shares deferred under Subpart D of this Part V. The provisions of this Subpart E shall be subject to the following rules:

(a) For each Net Share deferred, a Stock Unit shall be credited to the Participant’s Deferred Stock Unit Account effective as of the date of the Stock Award.

(b) On each payment date for cash dividends paid on the Company’s Common Stock, the Company shall pay to each Participant a dividend equivalent amount equal to the cash dividends that would be payable by the Company on a number of shares of Common Stock equal to the number of Stock Units then credited to the Participant’s Deferred Stock Unit Account. Such dividend equivalent amounts shall be paid directly to Participants in cash and shall not be eligible for deferral under this Plan.

(c) In the event that the Compensation Committee determines that 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 or event affects the Common Stock such that an adjustment to the Participants’ allocations to their Deferred Stock Unit Accounts is appropriate to prevent the reduction or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Compensation Committee, may, in its sole discretion and in such manner as it may deem equitable, adjust the Stock Units credited to the Participants’ Deferred Stock Unit Accounts.

F. PAYMENT OF DEFERRED AMOUNTS

The rules regarding payment of amounts under Subparts C through F of Part III of the Plan shall apply to Deferred Stock Unit Accounts, except that:

(a) payment of Deferred Stock Unit Accounts shall be made only in the form of shares of Common Stock and not in cash;

(b) payment with respect to Stock Units that are attributable to a Stock Deferral shall not occur prior to the time when any transfer restrictions that would have applied to the relevant Stock Award would have ended;

(c) unless the Participant elects otherwise prior to the commencement of payment, the Company shall, to the extent permitted by law, withhold from the shares of Common Stock to be transferred to the Participant the number of shares sufficient to satisfy any tax withholding required at the time of payment; and

(d) accelerated distributions described in Section 4 of Subpart C in Part III of the Plan shall not be permitted.

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G. FORMS AND PROCEDURE

Deferral elections made pursuant to this Part V must be made in writing on forms approved by the Compensation Committee, and shall be subject to such other procedural rules as the Compensation Committee may establish.

H. EFFECT ON STOCK AWARDS

Deferral elections made pursuant to this Part V shall constitute amendments to the Stock Awards to which the deferral elections apply. Any shares of Common Stock paid pursuant to this Part V on account of a Participant’s deferral election shall be deemed issued under the Stock Plan under which the corresponding Stock Award was granted.

As amended and restated July 26, 2002

As further amended March 19, 2003, effective as of July 26, 2002

As further amended December 18, 2008

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EX-10.E

Exhibit 10(e)

AMENDMENT NO. 1

TO

DARDEN RESTAURANTS, INC.

BENEFITS TRUST AGREEMENT

This Amendment No. 1 dated December 19, 2008 (“Amendment”) to that certain Darden Restaurants, Inc. Benefits Trust Agreement dated as of October 3, 1995 (“Original Agreement”) between Darden Restaurants, Inc. (“Darden”) and Wells Fargo Bank, National Association, as successor to Wells Fargo Bank Minnesota, National Association, formerly known as Norwest Bank Minnesota, National Association, as trustee (the “Trustee”).

In consideration of the mutual covenants contained herein, the parties hereto agree as follows:

1. Amendments to the Original Agreement.

a. The reference to “Item 1(a)” in the second sentence of Section 4 on page 3 of the Original Agreement is hereby amended to be “Item 5.01”, so the first clause of that sentence shall read as follows (with the amended text underlined):

“For the purpose of this Benefits Trust Agreement, a “Change of Control” shall mean an event required to be reported in response to Item 5.01 of the Current Report on Form 8-K of the Grantor, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 (the “Exchange Act”); …”

b. Each reference to “Change in Control” contained in Section 5(b), 6(c), 7 and 14(a) shall be amended to read “Change of Control.”

c. The second to last sentence of Section 6(a) of the Original Agreement under the heading “Distribution of Trust Assets” is hereby amended and restated in its entirety to read as follows (the new text to be added is underlined):

“All payments to a Beneficiary from the Trust shall be made in accordance with the provisions of the applicable Plan and any applicable requirements of Section 409A of the Code.”

d. The second to last sentence of Section 6(b) of the Original Agreement under the heading “Distribution of Trust Assets,” is hereby amended and restated in its entirety to read as follows (the new text to be added is underlined):

“If, however, the Trustee is unable to resolve such difference(s) to its satisfaction within 60 business days after its receipt of the Beneficiary’s representations, the Trustee shall make payment at such time and in such form and manner as is

allowed under the Plans as of the date first stated above and as the Trustee, in its sole discretion, selects, as applicable to such amounts and in accordance with Section 409A of the Code.”

e. Section 6(c) of the Original Agreement is hereby amended and restated in its entirety to read as follows (the new text to be added is underlined):

“(c) Notwithstanding any other provision of the Trust Agreement to the contrary, the Trustee shall make payments hereunder before such payments are otherwise due under the provisions of paragraph (b) above and after a Change of Control if it determines, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, or a decision by a court of competent jurisdiction involving a Beneficiary, or a closing agreement made under Code Section 7121 that is approved by the Internal Revenue Service and involves a Beneficiary, that a Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to the Beneficiary under the Plans, provided, however, that the accelerated payment of any amounts hereunder that are subject to Code Section 409A shall only be made to the extent the Plan fails to meet the requirements of Code Section 409A and the regulations thereunder and the amount of any such payment shall not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code Section 409A and the regulations thereunder.”

f. Section 14(b)(ii) of the Original Agreement is hereby amended and restated in its entirety to read as follows:

“(ii) The Trustee:

Wells Fargo Bank, National Association

Institutional Trust Services

MAC T2651-050

7000 Central Parkway, Suite 585

Atlanta, Ga. 30328

Attention:   Monique Etheridge, CEBS, CTFA

                   Relationship Manager”

2. Definitions. Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings specified in the Original Agreement.

3. Counterparts. This Amendment may be executed and delivered in counterparts (including by facsimile transmission), each of which shall be deemed an original.

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4. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to the conflicts of laws provisions thereof.

5. No Further Modification. All terms and conditions of the Original Agreement not expressly modified herein remain in full force and effect, without waiver or amendment.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

Attest:		DARDEN RESTAURANTS, INC.
By:	/s/ Douglas E. Wentz	By:	/s/ William R. White III
Name:	Douglas E. Wentz	Name:	William R. White, III
Title:	Assistant Secretary	Title:	Senior Vice President and Treasurer
Attest:		WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ A. Jacob Vogelsong	By:	/s/ Monique Etheridge
Name:	A. Jacob Vogelsong	Name:	Monique Etheridge
Title:	Vice President	Title:	Assistant Vice President & R.M.

3

EX-10.F

Exhibit 10(f)

RARE HOSPITALITY INTERNATIONAL, INC.

AMENDED AND RESTATED 2002 LONG TERM INCENTIVE PLAN

(Amended and Restated Effective as of October 1, 2007, as further amended June 19, 2008 and

December 31, 2008)

ARTICLE 1

PURPOSE

1.1. General. The purpose of the RARE Hospitality International, Inc. Amended and Restated 2002 Long Term Incentive Plan (the “Plan”) is to promote the success, and enhance the value, of Darden Restaurants, Inc. (the “Company”), by linking the personal interests of employees, officers, directors, consultants and advisors of the Company or any Affiliate (as defined below) who, as of September 30, 2007, were employees, officers, directors, consultants and advisors to RARE Hospitality International, Inc. (“RARE”) or its subsidiaries or affiliates to those of Company shareholders and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers, directors, consultants and advisors upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. Accordingly, the Plan permits the grant of stock options and restricted stock awards from time to time to selected employees, officers, directors, consultants and advisors of the Company or any Affiliate.

ARTICLE 2

DEFINITIONS

2.1. Definitions. When a word or phrase appears in the Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section 2.1 unless a clearly different meaning is required by the context. The following words and phrases shall have the following meanings:

(a) “Affiliate” means (i) any Subsidiary or Parent, or (ii) an entity that directly or through one or more intermediaries controls, is controlled by or is under common control with, the Company, as determined by the Committee.

(b) “Award” means any Option or Restricted Stock Award granted to a Participant under the Plan.

(c) “Award Certificate” means a written document, in such form as the Committee prescribes from time to time, setting forth the terms and conditions of an Award.

(d) “Board” means the Board of Directors of the Company.

(e) “Cause”, with respect to a Participant who is (i) an officer or employee, shall have the meaning assigned such term in the employment agreement, if any, between such Participant and the Company or an Affiliate, provided, however, that if there is no such employment agreement in which such term is defined, and unless otherwise defined in the applicable Award Certificate, “Cause” means any of the following acts by the Participant, as determined by the Board: gross neglect of duty, prolonged absence from duty without the consent of the Company, acceptance of a position with another employer without consent of the Company, intentionally engaging in any activity that is in conflict with or adverse to the business or other interests of the Company, or willful misconduct, misfeasance or malfeasance of duty which is reasonably determined to be detrimental to the Company, or (ii) is a director, consultant or advisor means any of the following acts by the Participant, as determined by the Board, unless a contrary definition is contained in the applicable Award Certificate: (A) the Participant’s egregious and willful misconduct, or (B) the Participant’s final conviction of a felonious crime; provided, however, that the foregoing definition shall only apply to Awards granted prior to September 30, 2007.

(f) “Change of Control” shall have the meaning set forth in an Award Certificate, provided that, with respect to Awards granted prior to September 30, 2007, “Change of Control” means and includes each of the following:

(1) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 25% 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 constitute a Change of Control: (i) any acquisition by a Person who is on the Effective Date the beneficial owner of 25% or more of the Outstanding Company Voting Securities, (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 which complies with clauses (i), (ii) and (iii) of subsection (3) of this definition;

(2) Individuals who, as of the Effective Date, 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 Effective Date 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 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

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(3) Consummation of a reorganization, merger, share exchange or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (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 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which 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, and (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of 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

(4) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(h) “Committee” means the committee of the Board described in Article 4.

(i) “Company” means Darden Restaurants, Inc., a Florida corporation, its successors and assigns.

(j) “Continuous Status as a Participant” means the absence of any interruption or termination of service as an employee, officer, director, consultant or advisor of the Company or an Affiliate, as applicable; provided, however, that for purposes of an Incentive Stock Option, “Continuous Status as a Participant” means the absence of any interruption or termination of service as an employee of the Company or any Parent or Subsidiary, as applicable. Continuous Status as a Participant shall not be considered interrupted in the case of any leave of absence authorized in writing by the Company prior to its commencement.

(k) “Covered Employee” means a covered employee as defined in Code Section 162(m)(3).

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(l) “Disability” shall mean any illness or other physical or mental condition of a Participant that renders the Participant incapable of performing his customary and usual duties for the Company, or any medically determinable illness or other physical or mental condition resulting from a bodily injury, disease or mental disorder which, in the judgment of the Committee, is permanent and continuous in nature. The Committee may require such medical or other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition. Notwithstanding the above, with respect to an Incentive Stock Option, Disability shall mean Permanent and Total Disability as defined in Section 22(e)(3) of the Code.

(m) “Effective Date” means the date set forth in Section 3.1.

(n) “Eligible Participant” means an employee, officer, director, consultant or advisor of the Company or any Affiliate.

(o) “Exchange” means the New York Stock Exchange or any national securities exchange on which the Stock may from time to time be listed or traded.

(p) “Fair Market Value”, on any date, means with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Notwithstanding the foregoing, unless otherwise determined by the Committee, the Fair Market Value of Shares on a given date for purposes of the Plan shall be the mean of the high and low sales prices of the Shares on the New York Stock Exchange as reported in the consolidated transaction reporting system on such date or, if such Exchange is not open for trading on such date, on the most recent preceding date when such Exchange is open for trading.

(q) “Good Reason” for a Participant’s termination of employment after a Change of Control shall have the meaning assigned such term in the employment agreement, if any, between such Participant and the Company or an Affiliate, provided, however that if there is no such employment agreement in which such term is defined, or unless otherwise specified in the Award Certificate, “Good Reason” shall mean any of the following acts by the employer without the consent of the Participant (in each case, other than an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the employer promptly after receipt of notice thereof given by the Participant): (i) the assignment to the Participant of duties materially inconsistent with the Participant’s position, authority, duties or responsibilities as in effect immediately prior to the Change of Control, or (ii) a reduction by the employer in the Participant’s base salary or benefits as in effect immediately prior to the Change of Control, unless a similar reduction is made in salary and benefits of peer employees, or (iii) the Company’s requiring the Participant to be based at any office or location more than 50 miles from the office or location at which the Participant was stationed immediately prior to the Change of Control; provided, however, that the foregoing definition shall only apply to Awards granted prior to September 30, 2007.

(r) “Grant Date” means the date an Award is made by the Committee.

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(s) “Incentive Stock Option” means an Option that is designated as an Incentive Stock Option and that meets the requirements of Section 422 of the Code or any successor provision thereto.

(t) “Non-Employee Director” means a director of the Company who is not a common law employee of the Company or any Affiliate.

(u) “Non-Qualified Stock Option” means an Option that is not intended to be an Incentive Stock Option or which does not meet the requirements of Section 422 of the Code or any successor provision thereto.

(v) “Option” means a right granted to a Participant under Article 7 of the Plan to purchase Stock at a specified price during specified time periods. An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

(w) “Parent” means a company, limited liability company, partnership or other entity that owns or beneficially owns a majority of the outstanding voting stock or voting power of the Company. Notwithstanding the above, with respect to an Incentive Stock Option, Parent shall have the meaning set forth in Section 424(e) of the Code.

(x) “Participant” means an Eligible Participant who has been granted an Award under the Plan; provided that in the case of the death of a Participant, the term “Participant” refers to a beneficiary designated pursuant to Section 9.4 or the legal guardian or other legal representative acting in a fiduciary capacity on behalf of the Participant under applicable state law and court supervision.

(y) “Plan” means the RARE Hospitality International, Inc. Amended and Restated 2002 Long-Term Incentive Plan, as amended from time to time.

(z) “Qualified Performance-Based Award” means (i) a Restricted Stock Award that is intended to qualify for the Section 162(m) Exemption and is made subject to performance goals based on Qualified Performance Criteria as set forth in Section 9.10, or (ii) an Option having an exercise price equal to or greater than the Fair Market Value of the underlying Stock as of the Grant Date.

(aa) “Qualified Performance Criteria” means one or more of the performance criteria listed in Section 9.10 upon which performance goals for certain Qualified Performance-Based Awards may be established by the Committee

(bb) “Restricted Stock Award” means Stock granted to a Participant under Article 8 that is subject to certain restrictions and to risk of forfeiture.

(cc) “Restricted Stock Unit Award” means the right to receive shares of Stock or cash based upon the Fair Market Value of a specified number of shares of Stock in the future, granted to a Participant under Article 8.

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(dd) “Section 162(m) Exemption” means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code or any successor provision thereto.

(ee) “Shares” means shares of the Company’s Stock. If there has been an adjustment or substitution pursuant to Section 10.1, the term “Shares” shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted pursuant to Section 10.1.

(ff) “Stock” means the no par value common stock of the Company and such other securities of the Company as may be substituted for Stock pursuant to Article 10.

(gg) “Subsidiary” means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive Stock Option, Subsidiary shall have the meaning set forth in Section 424(f) of the Code.

(hh) “1933 Act” means the Securities Act of 1933, as amended from time to time.

(ii) “1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.

ARTICLE 3

EFFECTIVE DATE

3.1. Effective Date. The Plan originally became effective as of May 13, 2002, the date it was first approved by a majority of the shareholders of RARE. An amended and restated version of the Plan was approved by the shareholders of RARE effective as of April 10, 2003, and a second amended and restated version of the Plan was approved by the shareholders effective as of May 10, 2004 (the “Effective Date”). The shareholders of RARE approved further amendments to the Plan at the 2007 annual meeting of shareholders on May 8, 2007.

3.2. Termination of Plan. No Awards may be granted under the Plan after the ten-year anniversary of the Effective Date, but the Plan shall remain in effect as long as any Awards under it are outstanding.

ARTICLE 4

ADMINISTRATION

4.1. Committee. The Plan shall be administered by the Compensation Committee of the Board. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “Non-Employee Director” within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m) of the Code. To the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as

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administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board shall control.

4.2. Actions and Interpretations by the Committee. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Certificate and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s or an Affiliate’s independent certified public accountants, Company counsel or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

4.3. Authority of Committee. Except as provided below, the Committee has the exclusive power, authority and discretion to:

(a) Grant Awards;

(b) Designate Participants;

(c) Determine the type or types of Awards to be granted to each Participant;

(d) Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

(e) Determine the terms and conditions of any Award granted under the Plan, including but not limited to, the exercise price or grant price, any restrictions or limitations on the Award, any schedule for lapse of restrictions on the exercisability of an Award, and accelerations or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines;

(f) Accelerate the vesting, exercisability or lapse of restrictions of any outstanding Award, in accordance with Article 9, based in each case on such considerations as the Committee in its sole discretion determines;

(g) Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property, or an Option may be canceled, forfeited, or surrendered;

(h) Prescribe the form of each Award Certificate, which need not be identical for each Participant;

(i) Decide all other matters that must be determined in connection with an Award;

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(j) Establish, adopt or revise any rules, regulations, guidelines or procedures as it may deem necessary or advisable to administer the Plan;

(k) Make all other decisions and determinations that may be required under the Plan or as the Committee deems necessary or advisable to administer the Plan;

(l) Amend the Plan or any Award Certificate as provided herein; and

(m) Adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or any Affiliate may operate, in order to assure the viability of the benefits of Awards granted to participants located in such other jurisdictions and to meet the objectives of the Plan.

Notwithstanding the foregoing, grants of Awards to Non-Employee Directors hereunder shall be made only in accordance with the terms, conditions and parameters of one or more separate “formula” subplans for the compensation of Non-Employee Directors, and the Committee may not make discretionary grants hereunder to Non-Employee Directors.

To the extent permitted under Florida law, the Board or the Committee may expressly delegate to a special committee consisting of one or more directors who are also officers of the Company some or all of the Committee’s authority under subsections (a) through (i) above, except that no delegation of its duties and responsibilities may be made to officers of the Company with respect to Awards to Eligible Participants who are, or who are anticipated to be become, either (i) Covered Employees or (ii) persons subject to the short-swing profit rules of Section 16 of the 1934 Act. The acts of such delegates shall be treated hereunder as acts of the Committee and such delegates shall report to the Committee regarding the delegated duties and responsibilities.

The Company intends that Awards and Restricted Stock Units under the Plan shall satisfy the requirements of Section 409A of the Code to avoid any adverse tax results thereunder and the Committee shall administer and interpret the Plan and all Award Certificates and Restricted Stock Unit Awards in a manner consistent with that intent. In this regard, if any provision of the Plan, an Award Certificate, or a Restricted Stock Unit Award would result in adverse tax consequences under Section 409A of the Code, the Committee may amend that provision (or take any other action reasonably necessary) to avoid any adverse tax results and no action taken to comply with Section 409A of the Code shall be deemed to impair or otherwise adversely affect the rights of any holder of an Award or Restricted Stock Unit or beneficiary thereof.

4.4. Award Certificates. Each Award shall be evidenced by an Award Certificate. Each Award Certificate shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.

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ARTICLE 5

SHARES SUBJECT TO THE PLAN

5.1. Number of Shares. Subject to adjustment as provided in Section 10.1, the aggregate number of Shares reserved and available for issuance pursuant to Awards granted under the Plan shall be 3,899,227, of which 399,227 are available only for issuance pursuant to the exercise of Options and may not be granted as Awards of Restricted Stock or Restricted Stock Units.

5.2. Share Counting.

(a) To the extent that an Award is canceled, terminates, expires, is forfeited or lapses for any reason, any unissued Shares subject to the Award will again be available for issuance pursuant to Awards granted under the Plan.

(b) For purposes of this Article 5, if an Award entitles the holder thereof to receive or purchase Shares, the Shares covered by such Award or to which such Award relates shall be counted, in accordance with this Section 5.2(b), on the date of grant of such Award against the aggregate number of Shares available for Awards under the Plan. With respect to Options, the number of Shares available for Awards under the Plan shall be reduced by one Share for each Share covered by such Award or to which such Award relates. With respect to any Awards that are granted on or after June 19, 2008, other than Options, the number of Shares available for Awards under the Plan shall be reduced by two Shares for each Share covered by such Award or to which such Award relates. Awards that do not entitle the holder thereof to receive or purchase Shares and Awards that are settled in cash shall not be counted against the aggregate number of Shares available for Awards under the Plan.

(c) If the exercise price of an Option is satisfied by either delivering Shares to the Company (by either actual delivery or attestation) or through a “net exercise” feature, the full number of Shares subject to the Option shall be considered as issued for purposes of determining the maximum number of Shares remaining available for issuance pursuant to Awards granted under the Plan.

(d) If Shares are withheld upon exercise of an Option to satisfy a Participant’s tax withholding requirements, the full number of Shares subject to the Option shall be considered as issued for purposes of determining the number of Shares remaining available for issuance pursuant to Awards granted under the Plan.

5.3. Stock Distributed. Any Stock distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

5.4. Limitation on Awards. Notwithstanding any provision in the Plan to the contrary (but subject to adjustment as provided in Section 10.1), the maximum number of Shares with respect to one or more Options that may be granted during any one calendar year under the Plan to any one Participant shall not exceed 221,793; provided, however, that in connection with his initial employment with the Company or an Affiliate, a Participant may be granted Options with

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respect to up to an additional 88,717 Shares, which shall not count against the foregoing annual limit. The maximum fair market value (measured as of the Grant Date) of any Restricted Stock or Restricted Stock Unit Awards that may be received by any one Participant (less any consideration paid by the Participant for such Award) during any one calendar year under the plan shall be $1,000,000.

ARTICLE 6

ELIGIBILITY

6.1. General. Options may be granted only to Eligible Participants; except that Incentive Stock Options may not be granted to Eligible Participants who are not employees of the Company or a Parent or Subsidiary as defined in Section 424(e) and (f) of the Code.

ARTICLE 7

STOCK OPTIONS

7.1. General. The Committee is authorized to grant Options to Participants on the following terms and conditions:

(a) Exercise Price. The exercise price per share of Stock under an Option shall be determined by the Committee, provided that the exercise price for any Option shall not be less than the Fair Market Value as of the Grant Date.

(b) Time and Conditions of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(d). The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised or vested. Subject to Section 9.8, the Committee may waive any exercise or vesting provisions at any time in whole or in part based upon factors as the Committee may determine in its sole discretion so that the Option becomes exercisable or vested at an earlier date. The Committee may permit an arrangement whereby receipt of Stock upon exercise of an Option is delayed until a specified future date.

(c) Payment. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash, Shares, or other property (including “cashless exercise” arrangements), and the methods by which Shares shall be delivered or deemed to be delivered to Participants; provided, however, that if Shares are used to pay the exercise price of an Option, such Shares must have been held by the Participant as fully vested shares for such period of time, if any, as necessary to avoid variable accounting for the Option.

(d) Exercise Term. In no event may any Option be exercisable for more than ten years from the Grant Date.

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7.2. Incentive Stock Options. The terms of any Incentive Stock Options granted under the Plan must comply with the following additional rules:

(a) Lapse of Option. An Incentive Stock Option shall lapse under the earliest of the following circumstances; provided, however, that the Committee may, prior to the lapse of the Incentive Stock Option under the circumstances described in subsections (3), (4), (5) and (6) below, provide in writing that the Option will extend until a later date, but if an Option is exercised after the dates specified in subsections (3) and (4) below, or more than three months after termination of employment for any other reason, it will automatically become a Non-Qualified Stock Option:

(1) The expiration date set forth in the Award Certificate.

(2) The tenth anniversary of the Grant Date.

(3) Three months after termination of the Participant’s Continuous Status as a Participant for any reason other than the Participant’s Disability, death or termination for Cause.

(4) One year after the termination of the Participant’s Continuous Status as a Participant by reason of the Participant’s Disability.

(5) One year after the Participant’s death occurring during his Continuous Status as a Participant or during the three-month period described in subsection (3) above or the one-year period described in subsection (4) above and before the Option otherwise lapses.

(6) The date of the termination of the Participant’s Continuous Status as a Participant if such termination is for Cause.

Unless the exercisability of the Incentive Stock Option is accelerated as provided in Article 9, if a Participant exercises an Option after termination of his Continuous Status as a Participant, the Option may be exercised only with respect to the Shares that were otherwise vested on the date of termination of his Continuous Status as a Participant.

(b) Individual Dollar Limitation. The aggregate Fair Market Value (determined as of the Grant Date) of all Shares with respect to which Incentive Stock Options are first exercisable by a Participant in any calendar year may not exceed $100,000.00.

(c) Ten Percent Owners. No Incentive Stock Option shall be granted to any individual who, at the Grant Date, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary unless the exercise price per share of such Option is at least 110% of the Fair Market Value per Share at the Grant Date and the Option expires no later than five years after the Grant Date.

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(d) Expiration of Authority to Grant Incentive Stock Options. No Incentive Stock Option may be granted pursuant to the Plan after the day immediately prior to the tenth anniversary of the Effective Date.

(e) Right to Exercise. During a Participant’s lifetime, an Incentive Stock Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative.

(f) Eligible Recipients. Incentive Stock Options may not be granted to Eligible Participants who are not employees of the Company or a Parent or Subsidiary as defined in Section 424(e) and (f) of the Code.

ARTICLE 8

RESTRICTED STOCK AND RESTRICTED STOCK UNIT AWARDS

8.1. Grant of Restricted Stock. The Committee is authorized to make Awards of Restricted Stock or Restricted Stock Units to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee.

8.2. Issuance and Restrictions. Restricted Stock or Restricted Stock Units shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. Except as otherwise provided in an Award Certificate, the Participant shall have all of the rights of a shareholder with respect to the Restricted Stock, and the Participant shall have none of the rights of a shareholder with respect to Restricted Stock Units until such time as Shares of Stock are paid in settlement of the Restricted Stock Units.

8.3. Forfeiture. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of Continuous Status as a Participant during the applicable restriction period or upon failure to satisfy a performance goal during the applicable restriction period, Restricted Stock or Restricted Stock Units that are at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide in any Award Certificate that restrictions or forfeiture conditions relating to Restricted Stock or Restricted Stock Units will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock or Restricted Stock Units.

8.4. Certificates for Restricted Stock. Shares of Restricted Stock shall be delivered to the Participant at the time of grant either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Committee, a stock certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Stock are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

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ARTICLE 9

PROVISIONS APPLICABLE TO AWARDS

9.1. Stand-Alone, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or (subject to Section 11.2(c)) in substitution for, any other Award granted under the Plan. If an Award is granted in substitution for another Award, the Committee may require the surrender of such other Award in consideration of the grant of the new Award. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

9.2. Form of Payment for Options. Subject to the terms of the Plan and any applicable law or Award Certificate, payments or transfers to be made by the Company or an Affiliate on the grant or exercise of an Award may be made in such form as the Committee determines at or after the Grant Date, including without limitation, cash, Stock, other Awards, or other property, or any combination, and may be made in a single payment or transfer, in installments, or on a deferred basis, in each case determined in accordance with rules adopted by, and at the discretion of, the Committee.

9.3. Limits on Transfer. No right or interest of a Participant in any unexercised Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or an Affiliate, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or an Affiliate. No unexercised or restricted Award shall be assignable or transferable by a Participant other than to a beneficiary designated as provided in 9.4 or by will or the laws of descent and distribution or, except in the case of an Incentive Stock Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Option under the Plan; provided, however, that the Committee may (but need not) permit other transfers where the Committee concludes that such transferability (i) does not result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive Stock Option to fail to be described in Code Section 422(b), and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, state or federal tax or securities laws applicable to transferable Awards.

9.4. Beneficiaries. Notwithstanding Section 9.3, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Certificate applicable to the Participant, except to the extent the Plan and Award Certificate otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated or survives the Participant, payment shall be made to the Participant’s estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

9.5. Compliance with Laws. All Stock issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply

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with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends on any stock certificate or issue instructions to the transfer agent to reference restrictions applicable to the Stock.

9.6. Acceleration upon Death. Notwithstanding any other provision in the Plan or any Participant’s Award Certificate to the contrary, upon a Participant’s death during his Continuous Status as a Participant, all of such Participant’s outstanding Options shall become fully vested and exercisable and all restrictions on the Participant’s outstanding Restricted Stock Awards shall lapse. Any Option shall thereafter continue or lapse in accordance with the other provisions of the Plan and the Award Certificate. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section 7.2(b), the excess Options shall be deemed to be Non-Qualified Stock Options.

9.7. Acceleration upon a Change of Control. With respect to Awards outstanding as of September 30, 2007, except as otherwise provided in the Award Certificate, all of a Participant’s outstanding Options shall become fully vested and exercisable and all restrictions on the Participant’s outstanding Restricted Stock Awards shall lapse if the Participant’s employment is terminated without Cause or the Participant resigns for Good Reason within two years after the effective date of a Change of Control. Any Options shall thereafter continue or lapse in accordance with the other provisions of the Plan and the applicable Award Certificates.

9.8. Acceleration for other Reasons. Regardless of whether an event has occurred as described in Section 9.6 or 9.7 above, the Committee may in its sole discretion at any time determine that, upon the termination of employment or service of a Participant, all or a portion of such Participant’s Options shall become fully or partially exercisable and/or that all or a part of the restrictions on all or a portion of the Participant’s Restricted Stock Awards shall lapse, in each case, as of such date as the Committee may, in its sole discretion, declare. The Committee may discriminate among Participants and among Awards granted to a Participant in exercising its discretion pursuant to this Section 9.8.

9.9. Effect of Acceleration. If an Award is accelerated under Section 9.6, 9.7 or 9.8, the Committee may, in its sole discretion, provide (i) that the Award will expire after a designated period of time after such acceleration to the extent not then exercised, (ii) that the Award will be settled in cash rather than Stock, (iii) that the Award will be assumed by another party to a transaction giving rise to the acceleration or otherwise be equitably converted or substituted in connection with such transaction, (iv) that the Award may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise price of the Award, or (v) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated. To the extent that such acceleration causes Incentive Stock Options to exceed the dollar limitation set forth in Section 7.2(b), the excess Options shall be deemed to be Non-Qualified Stock Options.

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9.10. Qualified Performance-Based Awards.

(a) The provisions of the Plan are intended to ensure that all Options granted hereunder to any Covered Employee qualify for the Section 162(m) Exemption.

(b) When granting any Restricted Stock Award, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination that the recipient is or may be a Covered Employee with respect to such Award, and the Committee wishes such Award to qualify for the Section 162(m) Exemption. If an Award is so designated, the Committee shall establish performance goals for such Award within the time period prescribed by Section 162(m) of the Code based on one or more of the following Qualified Performance Criteria, which may be expressed in terms of Company-wide objectives or in terms of objectives that relate to the performance of an Affiliate or a division, region, department or function within the Company or an Affiliate: (1) earnings per share, (2) EBITDA (earnings before interest, taxes, depreciation and amortization), (3) EBIT (earnings before interest and taxes), (4) economic profit, (5) cash flow, (6) sales growth, (7) net profit before tax, (8) gross profit, (9) operating income or profit, (10) return on equity, (11) return on assets, (12) return on capital, (13) changes in working capital, or (14) shareholder return.

(c) Each Qualified Performance-Based Award (other than an Option) shall be earned, vested and payable (as applicable) only upon the achievement of performance goals established by the Committee based upon one or more of the Qualified Performance Criteria, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate; provided, however, that the Committee may provide, either in connection with the grant thereof or by amendment thereafter, that achievement of such performance goals will be waived upon the death or Disability of the Participant, or upon termination of the Participant’s employment without Cause or for Good Reason within 12 months after the effective date of a Change of Control.

(d) Any payment of a Qualified Performance-Based Award granted with performance goals pursuant to subsection (c) above shall be conditioned on the written certification of the Committee in each case that the performance goals and any other material conditions were satisfied. Except as specifically provided in subsection (c), no Qualified Performance-Based Award may be amended, nor may the Committee exercise any discretionary authority it may otherwise have under the Plan with respect to a Qualified Performance-Based Award under the Plan, in any manner to waive the achievement of the applicable performance goal based on Qualified Performance Criteria or to increase the amount payable pursuant thereto or the value thereof, or otherwise in a manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption.

(e) Section 5.4 sets forth the maximum number of Shares or dollar value that may be granted in any one-year period to a Participant.

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9.11. Determination of Employment Status. Whether military, government or other service or other leave of absence shall constitute a termination of employment shall be determined in each case by the Committee at its discretion, and any determination by the Committee shall be final and conclusive. A Participant’s Continuous Status as a Participant shall not be deemed to terminate (i) in a circumstance in which a Participant transfers from the Company to an Affiliate, transfers from an Affiliate to the Company, or transfers from one Affiliate to another Affiliate, or (ii) in the discretion of the Committee as specified at or prior to such occurrence, in the case of a spin-off, sale or disposition of the Participant’s employer from the Company or any Affiliate. To the extent that this provision causes Incentive Stock Options to extend beyond three months from the date a Participant is deemed to be an employee of the Company, a Parent or Subsidiary for purposes of Sections 424(e) and 424(f) of the Code, the Options held by such Participant shall be deemed to be Non-Qualified Stock Options.

ARTICLE 10

CHANGES IN CAPITAL STRUCTURE

10.1. General. In the event of a corporate event or transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the authorization limits under Section 5.1 and 5.4 shall be adjusted proportionately, and the Committee shall adjust Awards to preserve the benefits or potential benefits of the Awards. Action by the Committee may include: (i) adjustment of the number and kind of shares which may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards; and (iv) any other adjustments that the Committee determines to be equitable. In addition, the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Stock, (ii) that Awards will become immediately vested and exercisable and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Stock, as of a specified date associated with the transaction, over the exercise price of the Award, or (v) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated. Without limiting the foregoing, in the event of a subdivision of the outstanding Stock (stock-split), a declaration of a dividend payable in shares of Stock, or a combination or consolidation of the outstanding Stock into a lesser number of shares, the authorization limits under Section 5.1 and 5.4 shall automatically be adjusted proportionately, and the Shares then subject to each Award shall automatically be adjusted proportionately without any change in the aggregate purchase price therefor.

ARTICLE 11

AMENDMENT, MODIFICATION AND TERMINATION

11.1. Amendment, Modification and Termination. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without shareholder

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approval; provided, however, that that if an amendment to the Plan would, in the reasonable opinion of the Board or the Committee, either (i) materially increase the benefits accruing to Participants, (ii) materially increase the number of Shares issuable under the Plan, (iii) expand the types of awards provided under the Plan, (iv) materially expand the class of participants eligible to participate in the Plan, (v) materially extend the term of the Plan, or (vi) otherwise constitute a material amendment requiring shareholder approval under applicable laws, policies or regulations or the applicable listing or other requirements of an Exchange, then such amendment shall be subject to shareholder approval; and provided, further, that the Board or Committee may condition any amendment or modification on the approval of shareholders of the Company if such approval is necessary or deemed advisable to (i) permit Awards made hereunder to be exempt from liability under Section 16(b) of the 1934 Act, (ii) to comply with the listing or other requirements of an Exchange, or (iii) to satisfy any other tax, securities or other applicable laws, policies or regulations.

11.2. Awards Previously Granted. At any time and from time to time, the Committee may, without additional consideration, amend, modify or terminate any outstanding Award without approval of the Participant; provided, however:

(a) Subject to the terms of the applicable Award Certificate, such amendment, modification or termination shall not, without the Participant’s consent, reduce or diminish the value of such Award determined as if the Award had been exercised or cashed in at the spread value as of the date of such amendment or termination;

(b) The original term of an Award may not be extended without the prior approval of the shareholders of the Company;

(c) Except as otherwise provided in Article 10, an Option may not be repriced, and the exercise price of an Award may not be reduced, directly or indirectly (including, without limitation, an Award granted in substitution of another Award pursuant to Section 9.1), without the prior approval of the shareholders of the Company; and

(d) No termination, amendment, or modification of the Plan shall adversely affect any Award previously granted under the Plan, without the written consent of the Participant affected thereby.

ARTICLE 12

GENERAL PROVISIONS

12.1. No Rights to Awards; Non-Uniform Determinations. No Participant or any Eligible Participant shall have any claim to be granted any Award under the Plan. Neither the Company, its Affiliates nor the Committee is obligated to treat Participants or Eligible Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Eligible Participants who receive, or are eligible to receive, Awards (whether or not such Eligible Participants are similarly situated).

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12.2. No Shareholder Rights. No Award gives a Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.

12.3. Withholding. The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. If Shares are surrendered to the Company to satisfy withholding obligations in excess of the minimum withholding obligation, such Shares must have been held by the Participant as fully vested shares for such period of time, if any, as necessary to avoid variable accounting for the Award. With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by withholding from the Award Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes.

12.4. No Right to Continued Service. Nothing in the Plan, any Award Certificate or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any Participant’s employment or status as an officer, director consultant or advisor at any time, nor confer upon any Participant any right to continue as an employee, officer, director, consultant or advisor of the Company or any Affiliate, whether for the duration of a Participant’s Award or otherwise.

12.5. Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Certificate shall give the Participant any rights that are greater than those of a general creditor of the Company or any Affiliate.

12.6. Indemnification. To the extent allowable under applicable law, each member of the Committee shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense (including, but not limited to, attorneys fees) that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which such member may be a party or in which he may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by such member in satisfaction of judgment in such action, suit, or proceeding against him provided he gives the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

12.7. Relationship to Other Benefits. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company or any Affiliate unless provided otherwise in such other plan.

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12.8. Expenses. The expenses of administering the Plan shall be borne by the Company or its Affiliates.

12.9. Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

12.10. Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

12.11. Fractional Shares. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down.

12.12. Government and Other Regulations.

(a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933 Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act.

(b) Notwithstanding any other provision of the Plan, if at any time the Committee shall determine that the registration, listing or qualification of the Shares covered by an Award upon any Exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such Award unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Committee. Any Participant receiving or purchasing Shares pursuant to an Award shall make such representations and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.

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12.13. Governing Law. To the extent not governed by federal law, the Plan and all Award Certificates shall be construed in accordance with and governed by the laws of the State of Florida.

12.14. Additional Provisions. Each Award Certificate may contain such other terms and conditions as the Committee may determine; provided that such other terms and conditions are not inconsistent with the provisions of the Plan.

12.15. No Limitations on Rights of Company. The grant of any Award shall not in any way affect the right to power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to grant or assume Awards, other than under the Plan, to or with respect to any person. If the Committee so directs, the Company may issue or transfer Shares to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Affiliate will transfer such Shares to a Participant in accordance with the terms of an Award granted to such Participant and specified by the Committee pursuant to the provisions of the Plan.

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EX-12

Exhibit 12

DARDEN RESTAURANTS, INC.

COMPUTATION OF RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES

(Dollar amounts in millions)

(Unaudited)

	Quarter Ended						Six Months Ended
	November 23, 2008			November 25, 2007			November 23, 2008			November 25, 2007
Consolidated earnings from continuing operations before income taxes	$	82.5		$	59.2		$	196.9		$	211.1
Plus fixed charges:
Gross interest expense(1)		30.1			24.1			59.2			34.9
40% of restaurant and equipment minimum rent expense		10.6			8.4			21.0			15.2
Total fixed charges		40.7			32.5			80.2			50.1
Less capitalized interest		(2.1	)		(1.3	)		(3.8	)		(2.4	)
Consolidated earnings from continuing operations before income taxes available to cover fixed charges	$	121.1		$	90.4		$	273.3		$	258.8
Ratio of consolidated earnings from continuing operations to fixed charges		3.0			2.8			3.4			5.2

(1) Gross interest expense includes interest recognized in connection with our unrecognized income tax benefits.

EX-31.A

Exhibit 31(a)

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Clarence Otis, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Darden Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

January 2, 2009

/s/ Clarence Otis, Jr.

Clarence Otis, Jr.

Chairman and Chief Executive Officer

EX-31.B

Exhibit 31(b)

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, C. Bradford Richmond, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Darden Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

January 2, 2009

/s/ C. Bradford Richmond

C. Bradford Richmond

Senior Vice President and

Chief Financial Officer

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Darden Restaurants, Inc. (“Company”) on Form 10-Q for the quarter ended November 23, 2008, as filed with the Securities and Exchange Commission (“Report”), I, Clarence Otis, Jr., Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

January 2, 2009

/s/ Clarence Otis, Jr.

Clarence Otis, Jr.

Chairman and Chief Executive Officer

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Darden Restaurants, Inc. (“Company”) on Form 10-Q for the quarter ended November 23, 2008, as filed with the Securities and Exchange Commission (“Report”), I, C. Bradford Richmond, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

January 2, 2009

/s/ C. Bradford Richmond

C. Bradford Richmond

Senior Vice President and

Chief Financial Officer