<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-41350
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Prospectus Supplement
November 10, 2000
(To Prospectus dated August 22, 2000)
$350,000,00
[Logos of Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones]
DARDEN RESTAURANTS, INC.
Medium-Term Notes, Series A
-------------------------
We may use this prospectus supplement to offer medium-term notes from time
to time. We will provide the final terms for each note in a pricing supplement.
The following terms may apply to the notes:
Redemption and Repayment: Subject to
Maturity: Nine months or more after redemption by us or repayment at the
issuance. holder's option.
Interest Rates: May bear interest at Denominations:
a fixed or floating rate. Some notes
issued at a discount may not bear
interest. . May be denominated in U.S.
dollars or in foreign or
composite currencies.
Base Floating Rates:
. At least $1,000.
. CD Rate
Interest Payments: Interest on fixed
. Commercial Paper Rate rate notes will be paid semi-
annually. Interest on floating rate
. EURIBOR notes will be paid on dates
specified in the pricing supplement.
. Federal Funds Rate
Ranking: The notes will rank equally
. LIBOR with all of our other unsecured and
unsubordinated debt.
. Prime Rate
Trading: The notes will not be
. Treasury Rate listed on any securities exchange.
. Another base rate specified in
the pricing supplement.
Indexed Notes: Payments of principal
or interest are linked to the price
or performance of one or more
securities, currencies, goods or
other indices.
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<TABLE>
<CAPTION>
Per Note Total
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<S> <C> <C>
Public offering price(1)....... 100% $350,000,000
Agents' commissions............ .125% to .750% $437,500 to $2,625,000
Our proceeds................... 98.875% to 99.250% $349,562,500 to $347,375,000
</TABLE>
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(1) The notes will be issued at 100% of the principal amount, unless otherwise
specified in the applicable pricing supplement.
You should carefully read the risk factors beginning on page S-4 for a
discussion of certain risks related to the notes.
We may offer the notes:
. Through agents who solicit offers to purchase the notes and receive a
commission ranging from .125% to .750% of the principal amount of the
notes offered.
. Through agents who purchase the notes as principal and act as
underwriters or dealers and receive a negotiated commission.
.Directly to investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
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Banc of America Securities LLC
First Union Securities, Inc.
SunTrust Equitable Securities Corporation
Wachovia Securities, Inc.
The Williams Capital Group, L.P.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
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<S> <C>
About this Prospectus Supplement and the Pricing Supplements............... S-2
Special Note of Caution Regarding Forward-Looking Statements............... S-3
About Darden............................................................... S-3
Risks Relating to Indexed Notes............................................ S-5
Risks Relating to Foreign Currency Notes................................... S-6
Description of the Notes................................................... S-9
United States Taxation..................................................... S-29
Supplemental Plan of Distribution.......................................... S-38
Validity of the Notes...................................................... S-39
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
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<S> <C>
Special Note of Caution Regarding Forward-Looking Statements............... i
About Darden............................................................... 1
About the Offering......................................................... 1
Ratio of Consolidated Earnings to Fixed Charges............................ 1
Use of Proceeds............................................................ 1
Description of Debt Securities............................................. 2
Plan of Distribution....................................................... 12
Experts.................................................................... 14
Validity of Debt Securities................................................ 14
Where You Can Find More Information About Darden........................... 14
</TABLE>
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
We intend to use this prospectus supplement, the accompanying prospectus and
a related pricing supplement to offer our notes from time to time.
This prospectus supplement sets forth certain terms of the notes that we may
offer and supplements the description of the debt securities contained in the
accompanying prospectus. If information in this prospectus supplement is
inconsistent with the information in this prospectus, the information in this
prospectus supplement will supersede the information in the prospectus.
Each time we issue notes, we will prepare a pricing supplement which will
contain additional terms of the offering and the specific description of the
notes being offered. The pricing supplement may also add, update or change
information in this prospectus supplement or the accompanying prospectus,
including provisions describing the calculation of interest and the method of
making payments under the terms of a note. The pricing supplement will
supercede this prospectus supplement or the prospectus to the extent it
contains information that is different from the information contained in this
prospectus supplement or the prospectus.
You should read both this prospectus supplement and any pricing supplement
together with the accompanying prospectus, including the information described
under "Where You Can Find More Information About Darden."
S-2
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SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Some statements in this prospectus supplement, the accompanying prospectus
and the documents incorporated by reference into this prospectus supplement and
the accompanying prospectus may constitute "forward-looking statements" within
the meaning of federal securities laws. When used in our documents or oral
presentations, the words "anticipate," "estimate," "expect," "objective,"
"projections," "forecast," "goal" or similar words are intended to identify
forward-looking statements. Forward-looking statements are based on our
management's beliefs, assumptions and expectations of our future economic
performance, taking into account the information currently available to them.
These statements are not statements of historical fact. Forward-looking
statements involve risks and uncertainties that may cause our actual results,
performance or financial condition to be materially different from the
expectations of future results, performance or financial condition we express
or imply in any forward-looking statements.
We have identified a number of cautionary factors in our filings with the
SEC, including our most recent Annual Report on Form 10-K and Exhibit 99 to
that annual report, which are incorporated by reference in this prospectus
supplement, and we refer you to those reports for further information. We
qualify any forward-looking statements entirely by these cautionary factors.
ABOUT DARDEN
We are the world's largest casual dining restaurant organization. As of
August 27, 2000, we operated 1,138 restaurants in 49 states, including 653 Red
Lobster, 469 Olive Garden, 14 Bahama Breeze and 2 Smokey Bones BBQ restaurants.
We also operated 37 restaurants in Canada, including 32 Red Lobster and five
Olive Garden restaurants. We operate all of our North American restaurants. In
Japan, as of August 27, 2000, Red Lobster Japan Partners, a Japanese retailer
that is not affiliated with us, operated 35 Red Lobster restaurants under an
Area Development and Franchise Agreement.
We opened our first restaurant, a Red Lobster, in Lakeland, Florida in
January 1968. We were acquired by General Mills, Inc. in 1970. In May 1995, we
became a separate publicly held company when General Mills distributed all of
our outstanding stock to the stockholders of General Mills.
Strategy
We are a leader in the casual dining segment of the restaurant industry and
are committed to the following four strategic building blocks:
. day-to-day operating excellence in our restaurants;
. continuous leadership development throughout our company;
. providing service and hospitality that redefines casual dining; and
. a continuing commitment to culinary excellence.
Our continued focus on each of these four building blocks provides a strong
foundation for our future growth. Our objective is to continue to expand our
current portfolio of restaurant concepts, and to develop or acquire additional
concepts which can be expanded profitably. We are currently testing new ideas
and concepts, as well as expanding our test of Smokey Bones BBQ in light of
favorable consumer response. We also regularly evaluate potential acquisition
candidates to assess whether they would satisfy our strategic and financial
objectives.
We will continue to focus on improving operating returns at Olive Garden and
Red Lobster, and limit new restaurant expansion of those concepts to the
highest-potential sites. In addition, we plan to expand Bahama Breeze at a pace
that will enable each new restaurant to capture the concept's full potential.
The specific number of openings will also depend upon other factors, such as
our ability to locate appropriate sites, negotiate acceptable purchase or lease
terms, obtain necessary local governmental permits, complete construction and
recruit and train restaurant management and hourly personnel.
S-3
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Restaurant Concepts
Red Lobster
Red Lobster is the largest casual dining, seafood-specialty restaurant group
in the United States. It offers an extensive menu featuring fresh fish, shrimp,
crab, lobster, scallops and other seafood in a casual atmosphere. The menu
includes a variety of specialty seafood and non-seafood appetizers and
desserts.
Olive Garden
Olive Garden is the market share leader among casual dining Italian
restaurants in North America. Olive Garden's menu includes a variety of
authentic Italian foods featuring fresh ingredients and an expanded wine list
that includes a broad selection of wines imported from Italy. The menu includes
antipasti (appetizers); soups, salad and garlic breadsticks; baked pastas;
sauteed specialties with chicken, seafood and fresh vegetables; grilled meats;
and a variety of desserts. Olive Garden also uses coffee imported from Italy
for its espresso and cappuccino.
Bahama Breeze
Bahama Breeze is our Caribbean-themed restaurant which offers guests a
distinctive island dining experience. The first Bahama Breeze was opened in
1996.
Smokey Bones BBQ
Our newest casual dining restaurant concept, Smokey Bones BBQ, combines
barbecue with a relaxed sports bar atmosphere. We opened the first Smokey Bones
BBQ in September 1999.
S-4
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RISKS RELATING TO INDEXED NOTES
We use the term "indexed notes" to mean notes whose value is linked to an
underlying property or index. An investment in indexed notes presents
additional risks not normally associated with other types of debt securities.
Indexed notes may present a high level of risk, and those who invest in some
indexed notes may lose their entire investment.
Investors in indexed notes could lose their investment.
The amount of principal or interest payable on an indexed note will be
determined by reference to the price, value or level of one or more securities,
currencies, commodities or other properties, any other financial, economic or
other measure or instrument, including the occurrence or non-occurrence of any
event or circumstance, or one or more indices or baskets of any of these items.
We refer to each of these as an "index." The direction and magnitude of the
change in the price, value or level of the relevant index will determine the
amount of principal or interest payable on an indexed note. The terms of a
particular indexed note may or may not include a guaranteed return of a
percentage of the face amount at maturity or a minimum interest rate. Thus, if
you purchase an indexed note, you may lose all or a portion of the principal or
other amount you invest and may receive no interest on your investment.
The issuer of a security or currency that serves as an index could take actions
that may adversely affect an indexed note.
The issuer of a security that serves as an index or part of an index for an
indexed note will have no involvement in the offer and sale of the indexed note
and no obligations to the holder of the indexed note. The issuer may take
actions, such as a merger or sale of assets, without regard to the interests of
the holder. Any of these actions could adversely affect the value of a note
indexed to that security or to an index of which that security is a component.
If the index for an indexed note includes a non-U.S. dollar currency or
other asset denominated in a non-U.S. dollar currency, the government that
issues that currency will also have no involvement in the offer and sale of the
indexed note and no obligations to the holder of the indexed note. That
government may take actions that could adversely affect the value of the note.
See "Risks Relating to Foreign Currency Notes--Government Policy Can Adversely
Affect Currency Exchange Rates" below for more information about these kinds of
government actions.
An indexed note may be linked to a volatile index, which could hurt your
investment.
Some indices are highly volatile, which means that their value may change
significantly, up or down, over a short period of time. The amount of principal
or interest that can be expected to become payable on an indexed note may vary
substantially from time to time. Because the amounts payable with respect to an
indexed note are generally calculated based on the value or level of the
relevant index on a specified date or over a limited period of time, volatility
in the index increases the risk that the return on the indexed note may be
adversely affected by a fluctuation in the level of the relevant index.
The volatility of an index may be affected by political or economic events,
including governmental actions, or by the activities of participants in the
relevant markets. Any of these events or activities could adversely affect the
value of an indexed note.
An index to which a note is linked could be changed or become unavailable.
Some indices may consist of or refer to several or many different
securities, commodities or currencies or other instruments or measures. The
compiler of the index typically reserves the right to alter the composition of
the index and the manner in which the value or level of the index is
calculated. An alteration may result in a decrease in the value of or return on
an indexed note that is linked to the index. The indices for our indexed notes
may include published indices of this kind.
A published index may become unavailable due to events such as war, natural
disasters, cessation of publication of the index or a suspension or disruption
of trading in one or more securities, commodities or
S-5
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currencies or other instruments or measures on which the index is based. If an
index becomes unavailable or impossible to calculate in the normal manner, the
terms of a particular indexed note may allow us to delay determining the amount
payable as principal or interest on an indexed note, or we may use an
alternative method to determine the value of the unavailable index. Alternative
methods of valuation are generally intended to produce a value similar to the
value resulting from reference to the relevant index. However, it is unlikely
that any alternative method of valuation we use will produce a value identical
to the value that the actual index would produce. If we use an alternative
method of valuation for a security linked to an index of this kind, the value
of the note, or the rate of return on it, may be lower than it otherwise would
be.
Some indexed securities are linked to indices that are not commonly used or
that have been developed only recently. The lack of a trading history may make
it difficult to anticipate the volatility or other risks associated with an
indexed security of this kind. In addition, trading in these indices or their
underlying stocks, commodities or currencies or other instruments or measures,
or options or futures contracts on these stocks, commodities or currencies or
other instruments or measures, may be limited, which could increase their
volatility and decrease the value of the related indexed securities or the
rates of return on them.
We may engage in hedging activities that could adversely affect an indexed
note.
In order to hedge an exposure on a particular indexed note, we may enter
into transactions involving the securities, commodities or currencies or other
instruments or measures that underlie the index for that note, or involving
derivative instruments, such as swaps, options or futures, on the index or any
of its component items. By engaging in transactions of this kind, we could
adversely affect the value of an indexed note. It is possible that we could
achieve substantial returns from our hedging transactions while the value of
the indexed note may decline.
The tax treatment of indexed notes is uncertain.
The treatment of indexed notes for U.S. federal income tax purposes is often
unclear due to the absence of any authority specifically addressing the issues
presented by any particular indexed note. Thus, if you propose to invest in
indexed notes, you should independently evaluate the federal income tax
consequences of purchasing an indexed note that apply in your circumstances.
You should also read "United States Taxation" for a discussion of U.S. tax
matters.
Information about indices may not be indicative of future performance.
If we issue an indexed note, we may include historical information about the
relevant index in the applicable pricing supplement. Any information about
indices that we may provide will be furnished as a matter of information only.
You should not assume that the information will be representative of the range
of, or trends in, fluctuations in the relevant index that may occur in the
future.
RISKS RELATING TO FOREIGN CURRENCY NOTES
You should consult your financial and legal advisors as to any specific
risks entailed by an investment in notes that are denominated or payable in, or
the payment of which is linked to the value of, foreign currency. These notes
are not appropriate investments for investors who are not sophisticated in
foreign currency transactions.
The information set forth in this prospectus supplement is directed to
prospective purchasers who are United States residents. We disclaim any
responsibility to advise prospective purchasers who are residents of countries
other than the United States of any matters arising under foreign law that may
affect the purchase of or holding of, or receipt of payments on, the notes.
These persons should consult their own legal and financial advisors concerning
these matters.
Exchange rates and exchange controls may affect the securities' value or
return.
An investment in a note that is denominated or payable in, or the payment of
which is linked to the value of, currencies other than U.S. dollars entails
significant risks. These risks include the possibility of significant changes
in rates of exchange between the U.S. dollar and the relevant foreign
currencies and the possibility of
S-6
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the imposition or modification of exchange controls by either the U.S. or
foreign governments. These risks generally depend on economic and political
events over which we have no control.
The volatility and unpredictability in currency exchange rates will affect your
investment.
In recent years, rates of exchange between U.S. dollars and some foreign
currencies have been highly volatile, and this volatility may continue in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations that may occur
during the term of any note. Depreciation against the U.S. dollar of the
currency in which a note is payable would result in a decrease in the effective
yield of the note on a U.S. dollar basis and could result in an overall loss to
you on a U.S. dollar basis. In addition, depending on the specific terms of a
currency-linked note, changes in exchange rates relating to any of the relevant
currencies could result in a decrease in its effective yield and in your loss
of all or a substantial portion of the value of that note.
Government policy can adversely affect currency exchange rates.
Foreign exchange rates can either float or be fixed by sovereign
governments. Exchange rates of most economically developed nations are
permitted to fluctuate in value relative to the U.S. dollar and to each other.
However, from time to time governments may use a variety of techniques, such as
intervention by a country's central bank or the imposition of regulatory
controls or taxes, to influence the exchange rates of their currencies.
Governments may also issue a new currency to replace an existing currency or
alter the exchange rate or relative exchange characteristics by a devaluation
or revaluation of a currency. These governmental actions could change or
interfere with currency valuations and currency fluctuations that would
otherwise occur in response to economic forces, as well as in response to the
movement of currencies across borders. As a consequence, these government
actions could adversely affect the U.S. dollar-equivalent yields or payouts for
notes denominated or payable in, or the payment of which is linked to the value
of, currencies other than U.S. dollars.
We will not adjust notes to compensate for changes in currency exchange rates.
We will not make any adjustment or change in the terms of the notes in the
event that exchange rates should become fixed, or in the event of any
devaluation or revaluation or imposition of exchange or other regulatory
controls or taxes, or in the event of other developments affecting the U.S.
dollar or any applicable foreign currency. You will bear those risks.
We may make payments in U.S. dollars if we are unable to obtain the specified
foreign currency.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could also affect the availability of a specified
foreign currency. Even if there are no actual exchange controls, it is possible
that the applicable currency for any note not denominated in U.S. dollars would
not be available when payments on that note are due.
If a payment currency is unavailable, we would make required payments in
U.S. dollars on the basis of the market exchange rate. However, if the
applicable currency for any note is not available because the Euro has been
substituted for that currency, we would make the payments in Euros. The
mechanisms for making payments in these alternative currencies are explained in
"Description of the Notes--Interest and Principal Payments" below.
Information about exchange rates may not be indicative of future performance.
If we issue a note denominated or payable in a foreign currency or requiring
payments that are related to the value of a foreign currency, we may include
information about historical exchange rates for the relevant foreign currency
in the applicable pricing supplement. That information will be furnished only
for information purposes. You should not assume that any historic information
concerning currency exchange rates will be representative of the range of or
trends in fluctuations in currency exchange rates that may occur in the future.
S-7
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You will bear the costs of currency conversion.
If payment on a non-U.S. dollar denominated note is required to be made in
U.S. dollars or payment on a U.S. dollar denominated note is required to be
made in a currency other than U.S. dollars, the exchange rate agent, or a
different exchange rate agent identified in the pricing supplement, will
convert the currencies. You will bear the costs of conversion, which will be
deducted from the payment.
In a lawsuit for payment on a note involving foreign currencies, an investor
may bear additional currency exchange risk.
Our notes will be governed by New York law. Unlike many courts outside the
State of New York, the courts in the State of New York customarily enter
judgments or decrees for money damages in the foreign currency in which the
notes are denominated. These amounts would then be converted into U.S. dollars
at the rate of exchange in effect on the date the judgment or decree is
entered. You would bear the foreign currency risk until the judgment or decree
is entered, which could be a long time.
S-8
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
and, to the extent inconsistent, supercedes the description of the general
terms of the debt securities set forth under the caption "Description of Debt
Securities" in the accompanying prospectus. You should read this prospectus
supplement together with the accompanying prospectus in order to understand the
terms of the notes.
The specific terms of each note we are offering will be described in a
pricing supplement attached to the front of this prospectus supplement. The
pricing supplement may modify or replace the general terms described in this
section and in the accompanying prospectus. If the pricing supplement is
inconsistent with this prospectus supplement or the accompanying prospectus,
the pricing supplement will control with regard to the notes.
Because this section is a summary, it does not contain all the information
that may be important to you. You should also read our indenture, including the
definitions of terms, before you make an investment decision.
General
We will issue the notes under an indenture, dated as of January 1, 1996,
between us and Wells Fargo Bank Minnesota, National Association (formerly known
as Norwest Bank Minnesota, National Association), as trustee. The notes will
constitute a single series under the indenture, together with any notes we
issue in the future under the indenture that we designate as being part of that
series.
The notes will be our general unsecured obligations. The notes will rank
equally with all of our other unsecured and unsubordinated debt, and senior in
right of payment to all of our future subordinated debt. The indenture does not
limit the aggregate principal amount of debt securities that may be issued
under it. Nor does it limit the number of series or the aggregate principal
amount of any particular series that we may issue. We may, from time to time,
without the consent of the holders of the notes, provide for the issuance of
notes or other debt securities under the indenture in addition to the notes
offered by this prospectus supplement.
We may offer up to $350,000,000 aggregate initial offering price (or the
equivalent in any foreign currency or foreign currency units) of medium-term
notes under this prospectus supplement. We may, however, issue from time to
time other debt securities under the registration statement which includes this
prospectus supplement. If we issue debt securities under the registration
statement other than the medium-term notes offered by this prospectus
supplement, we may correspondingly reduce the amount of medium-term notes that
we may offer under this prospectus supplement.
Terms Specified in Pricing Supplements
A pricing supplement will specify the following terms of the notes to the
extent applicable:
. the specific designation of the notes;
. the issue price;
. the aggregate principal amount;
. the denominations or minimum denominations;
. the original issue date;
. the scheduled maturity date and any terms related to any extension of the
maturity date;
. whether the notes are fixed rate notes, floating rate notes, notes with
original issue discount and/or amortizing notes;
. for fixed rate notes, the rate per year at which the notes will bear
interest, if any, or the method of calculating that rate and the date or
dates on which interest will be payable;
. for floating rate notes, the base rate, the index maturity, the spread,
the spread multiplier, the initial interest rate, the interest reset
periods, the interest payment dates, the maximum interest rate, the
minimum interest rate and any other terms relating to the particular
method of calculating the interest rate for the notes;
S-9
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. if the notes are amortizing notes, the amortization schedule;
. whether the notes may be called, or redeemed, in whole or in part, at
our option or repaid at your option prior to the scheduled maturity
date, and the terms of any redemption or repayment;
. whether the notes are currency-linked notes and/or notes linked to
commodity prices, single securities, baskets of securities or indices;
. if any notes are not denominated and payable in U.S. dollars, the
currency or currencies or composite currencies in which the principal,
premium, if any, and interest, if any, will be paid, which we refer to
as the "specified currency," along with any other terms relating to the
non-U.S. dollar denomination, including exchange rates as against the
U.S. dollar at selected times during the last five years and any
exchange controls affecting that specified currency;
. whether the notes will be listed on any securities exchange;
. whether the notes will be issued in book-entry or certificated form; and
. any other terms of the notes.
Some Definitions
We have defined some of the terms that we use frequently in this prospectus
supplement below:
A "business day" means any day, other than a Saturday or Sunday, which is
both:
. neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (a) in The City of
New York and (b) for notes denominated in a specified currency other
than U.S. dollars or Euros, in the principal financial center (as
defined below) of the country of the specified currency; and
. for notes denominated in Euros, that is also a day on which the Trans-
European Automated Real-time Gross Settlement Express Transfer System,
which is commonly referred to as "TARGET," is operating;
provided that with respect to notes as to which LIBOR is the base rate, the day
must also be a London banking day (as defined below).
"Euro LIBOR notes" means LIBOR notes for which the index currency is Euros.
An "interest payment date" for any note means a date on which, under the
terms of that note, regularly scheduled interest is payable.
"London banking day" means any day on which dealings in deposits in the
relevant index currency are transacted in the London interbank market.
"Principal financial center" means, as applicable:
. the capital city of the country issuing the specified currency; or
. the capital city of the country to which the index currency (as defined
under "Base Rates--LIBOR notes" below) relates;
provided, however, the principal financial center will be The City of New York
for United States dollars, Sydney for Australian dollars (and solely in the
case of the specified currency, Melbourne), Toronto for Canadian dollars,
Frankfurt for Deutsche marks, Amsterdam for Dutch guilders, Milan for Italian
lire, London for Portuguese escudos (solely in the case of the index currency),
Johannesburg for South African rand and Zurich for Swiss francs.
The "record date" for any interest payment date is the date 15 calendar days
prior to that interest payment date, whether or not that date is a business
day.
"TARGET Settlement Day" means any day on which the Trans-European Automated
Real-time Gross Settlement Express Transfer System is open.
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References in this prospectus supplement to "U.S. dollars" or "U.S.$" or "$"
are to the currency of the United States of America.
Form, Denomination and Registration
We will offer the notes on a continuing basis and will issue notes only in
fully registered form either as book-entry notes or as certificated notes.
Book-Entry Notes
For notes in book-entry form, we will issue one or more global certificates
representing the entire issue of notes. The notes will be deposited with DTC or
its custodian. The notes will be represented by one or more global notes
registered in the name of Cede & Co., as nominee of DTC. The interests of
beneficial owners in the global notes will be represented through financial
institutions acting on their behalf as direct or indirect participants in DTC.
The following is based on information furnished to us by DTC:
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the United States Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its direct participants deposit with DTC. DTC also
facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in direct participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
organizations.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a direct participant, either directly or indirectly. The rules
applicable to DTC and its direct and indirect participants are on file with
the SEC. Persons who are not direct or indirect participants may
beneficially own securities held by DTC only through participants.
Purchases of the notes under the DTC system must be made by or through
direct participants, which will receive a credit for the notes on DTC's
records. The ownership interest of each actual purchaser of the notes is in
turn to be recorded on the direct and indirect participants' records.
Beneficial owners will not receive written confirmation from DTC of their
purchase, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct or indirect participants
through which the beneficial owners purchased the notes. Transfers of
ownership interests in the notes are to be accomplished by entries made on
the books of direct and indirect participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in the notes, except in the event
that use of the book-entry system for the notes is discontinued.
To facilitate subsequent transfers, the notes deposited by direct
participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of the notes with DTC and their
registration in the name of Cede & Co. do not effect any change in
beneficial ownership. DTC has no knowledge of the actual beneficial owners
of the notes. DTC's records reflect only the identity of the direct
participants to whose accounts the notes are credited, which may or may not
be the beneficial owners. The direct and indirect participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
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Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by
direct participants and indirect participants to beneficial owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
In those cases where a vote is required, neither DTC nor Cede & Co. will
itself consent or vote with respect to the notes. Under its usual
procedures, DTC would mail an omnibus proxy to us as soon as possible after
the record date. The omnibus proxy assigns Cede & Co.'s consenting or
voting rights to those direct participants to whose accounts the notes are
credited on the record date (identified in a listing attached to the
omnibus proxy).
Payments on the notes will be made to DTC in immediately available
funds. DTC's practice is to credit direct participants' accounts, upon
DTC's receipt of funds on the payment date in accordance with their
respective holdings shown on DTC's records. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of that participant and not of DTC or us, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment to DTC is our responsibility, and disbursement of those payments to
direct participants shall be the responsibility of DTC, and disbursement of
those payments to the beneficial owners shall be the responsibility of
direct and indirect participants.
So long as DTC, or its nominee, is the registered owner of the global
security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the book-entry securities for all purposes under
the indenture. Except as provided in this prospectus supplement, a
beneficial owner of the notes will not be entitled to receive physical
delivery of the notes. Accordingly, each beneficial owner must rely on the
procedures of DTC to exercise any rights under the notes. The laws of some
jurisdictions require that some purchasers of securities take physical
delivery of securities in a definitive form. These laws may impair the
ability to transfer beneficial interests in a global note.
DTC may discontinue providing its services as securities depositary with
respect to the notes at any time by giving reasonable notice. Under those
circumstances, in the event that a successor securities depositary is not
obtained, notes certificates will be printed and delivered to the holders
of record as instructed by DTC to the trustee. Additionally, we may decide
to discontinue use of the system of book-entry transfers through DTC, or a
successor securities depositary, with respect to the notes. In that event,
certificates for the notes will be printed and delivered to the holders of
record as instructed by DTC to the trustee. It is expected that DTC's
instructions to the trustee regarding the holders of record will be based
upon directions received by DTC from its participants with respect to
ownership of beneficial interests in the global note.
We have no responsibility for the performance by DTC or its direct or
indirect participants of their respective obligations as described in this
prospectus supplement or under the rules and procedures governing their
respective operations.
The information in this section concerning DTC and DTC's book entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for its accuracy.
Certificated Notes
If we issue notes in certificated form, the certificate will name the
investor or the investor's nominee as the owner of the note. The person named
in our security register will be considered the owner of the note for all
purposes under the indenture. For example, if we need to ask the holders of the
notes to vote on a proposed amendment to the notes, the person named in our
security register will be asked to cast any vote regarding that note. If you
have chosen to have some other entity hold a certificate for you, that entity
will be considered the owner of your note in our records and will be entitled
to cast the vote regarding your note. You may not exchange certificated notes
for book-entry notes or interests in book-entry notes.
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Denominations
We will issue the notes:
. for U.S. dollar-denominated notes, in denominations of $1,000 or any
amount greater than $1,000 that is an integral multiple of $1,000; or
. for notes denominated in a specified currency other than U.S. dollars,
in denominations of the equivalent of $1,000, rounded to an integral
multiple of 1,000 units of the specified currency, or any larger
integral multiple of 1,000 units of the specified currency, as
determined by reference to the market exchange rate, as defined under "
Interest and Principal Payments Unavailability of Foreign Currency"
below, on the business day immediately preceding the date of issuance.
Redemption at the Option of Darden
Unless otherwise indicated in your pricing supplement, we will not be
entitled to redeem your note before its stated maturity.
If your pricing supplement specifies a "make whole" redemption option, your
note will be redeemable, in whole or in part, at our option, at any time at a
redemption price equal to the greater of:
. 100% of the principal amount of the note, and
. as determined by the quotation agent, the sum of the present values of
the remaining scheduled payments of principal and interest on the note
(not including any portion of those payments of interest accrued as of
the redemption date) discounted to the redemption date on a semi-annual
basis assuming a 360-day year consisting of twelve 30-day months at the
adjusted treasury rate plus a number of basis points specified in the
pricing supplement plus, in each case, accrued and unpaid interest on
the notes to the redemption date.
The quotation agent means the reference treasury dealer appointed by us to
serve in that capacity. The term reference treasury dealer means each of Banc
of America Securities LLC, Wachovia Securities, Inc. and any other referenced
treasury dealer specified in the applicable pricing supplement and their
respective successors. If, however, either of these reference treasury dealers
ceases to be a primary U.S. government securities dealer, we will substitute
another primary treasury dealer.
A reference treasury dealer quotation means, with respect to each reference
treasury dealer and any redemption date, the average, as determined by us, of
the bid and asked prices for the comparable treasury issue (expressed, in each
case, as a percentage of its principal amount) quoted on the third business day
preceding the redemption date.
The adjusted treasury rate means, for any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the comparable
treasury issue, assuming a price of the comparable treasury issue (expressed as
a percentage of its principal amount) equal to the comparable treasury price
for that redemption date. The comparable treasury issue means the United States
treasury security selected by the quotation agent as having a maturity
comparable to the remaining term of the notes to be redeemed that would be
used, at the time of a selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the notes.
The comparable treasury price means for any redemption date:
. the average of the reference treasury dealer quotations for such
redemption date, after excluding the highest and lowest reference
treasury dealer quotation, or
. if the trustee obtains fewer than three reference treasury dealer
quotations, the average of the quotations.
In the case of a partial redemption, selection of the notes for redemption
will be made pro rata, by lot or by such other method as the trustee in its
sole discretion deems appropriate and fair. No notes of a principal amount of
$1,000 or less will be redeemed in part. Notice of any redemption will be
mailed by first class mail at least 30 days but not more than 60 days before
the redemption date to each holder of the notes to be
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redeemed at its registered address. If any note is to be redeemed in part only,
the notice of redemption that relates to the note will state the portion of the
principal amount of the note to be redeemed. A new note in a principal amount
equal to the unredeemed portion of the note will be issued in the name of the
holder of the note upon surrender for cancellation of the original note. Unless
we default in payment of the redemption price, on and after the redemption
date, interest will cease to accrue on the notes or the portions of the notes
called for redemption.
Repayment at Option of Holder
Unless otherwise indicated in your pricing supplement, you will not have the
option to have us repay your note before its stated maturity. If your pricing
supplement specifies one or more repayment dates, your note will be repayable
at the holder's option on the specified repayment date or dates at the
specified repayment price. The repayment price will be equal to 100% of the
principal amount of the note, together with accrued interest to the date of
repayment. For notes issued with original issue discount, the pricing
supplement will specify the amount payable upon repayment.
For us to repay a note, the paying agent must receive at least 15 days but
not more than 30 days prior to the repayment date:
. the note with the form entitled "Option to Elect Repayment" on the
reverse of the note duly completed; or
. a telegram, telex, facsimile transmission or a letter from a broker-
dealer, commercial bank or trust company in the United States setting
forth the name of the holder, the principal amount of the note, the
principal amount of the note to be repaid, the certificate number or a
description of the tenor and terms of the note, a statement that the
option to elect repayment is being exercised and a guarantee that the
note to be repaid, together with the duly completed form entitled
"Option to Elect Repayment" on the reverse of the note, will be received
by the paying agent not later than the fifth business day after the date
of that telegram, telex, facsimile transmission or letter. However, the
telegram, telex, facsimile transmission or letter will only be effective
if that note and completed form are received by the paying agent by the
fifth business day after the date of that telegram, telex, facsimile
transmission or letter.
If applicable, we will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws or regulations in connection with
any repurchase.
Exercise of the repayment option by the holder of a note will be
irrevocable.
The holder may exercise the repayment option for less than the entire
principal amount of the note. In that event, the principal amount of the note
remaining outstanding after repayment must be an authorized denomination.
If a note is represented by a global note, DTC or DTC's nominee will be the
holder of the note and therefore will be the only entity that can exercise a
right to repayment. In order to ensure that DTC's nominee will timely exercise
a right to repayment of a particular note, the beneficial owner of the note
must instruct the broker or other DTC participant through which it holds an
interest in the note to notify DTC of its desire to exercise a right to
repayment. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner
should consult the broker or other DTC participant through which it holds an
interest in a note in order to ascertain the cut-off time by which an
instruction must be given in order for timely notice to be delivered to DTC.
We may purchase notes at any price in the open market or otherwise. Notes so
purchased by us may, at our discretion, be held or resold or surrendered to the
trustee for cancellation.
Interest and Principal Payments
Payments, Exchanges and Transfers
Holders may present notes for payment of principal, premium, if any, and
interest, if any, register the transfer of the notes and exchange the notes at
the agency maintained by us for that purpose. However, holders
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of global notes may transfer and exchange global notes only in the manner and
to the extent set forth above under "--Form, Denomination and Registration." On
the date of this prospectus supplement, the agent for the payment, transfer and
exchange of the notes is the trustee, acting through its corporate trust office
in Minneapolis, Minnesota. We refer to the trustee, acting in this capacity, as
the "paying agent."
No service charge will be made for any registration, transfer or exchange of
notes, but we may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the registration of transfer or
exchange of notes.
Although we anticipate making payments of principal, premium, if any, and
interest, if any, on most notes in U.S. dollars, some notes may be payable in
foreign currencies as specified in the applicable pricing supplement.
Currently, few facilities exist in the United States to convert U.S. dollars
into foreign currencies and vice versa. In addition, most U.S. banks do not
offer non-U.S. dollar denominated checking or savings account facilities.
Accordingly, unless alternative arrangements are made, we will pay principal,
premium, if any, and interest, if any, on notes that are payable in a foreign
currency to an account at a bank outside the United States, which, in the case
of a note payable in Euros will be made by credit or transfer to a Euro account
specified by the payee in a country for which the Euro is the lawful currency.
Recipients of Payments
The paying agent will pay interest to the person in whose name the note is
registered at the close of business on the applicable record date. However,
upon maturity, redemption or repayment, the paying agent will pay any interest
due to the person to whom it pays the principal of the note. The paying agent
will make the payment of interest on the date of maturity, redemption or
repayment, whether or not that date is an interest payment date. The paying
agent will make the initial interest payment on a note on the first interest
payment date falling after the date of issuance, unless the date of issuance is
less than 15 calendar days before an interest payment date. In that case, the
paying agent will pay interest or, in the case of an amortizing note, principal
and interest, on the next succeeding interest payment date to the holder of
record on the record date corresponding to the succeeding interest payment
date.
Book-Entry Notes
The paying agent will make payments of principal, premium, if any, and
interest, if any, to the account of DTC, as holder of book-entry notes, by wire
transfer of immediately available funds. We expect that DTC, upon receipt of
any payment, will immediately credit its participants' accounts in amounts
proportionate to their respective beneficial interests in the book-entry notes
as shown on the records of DTC. We also expect that payments by DTC's
participants to owners of beneficial interests in the book-entry notes will be
governed by standing customer instructions and customary practices and will be
the responsibility of those participants.
Certificated Notes
Except as indicated below for payments of interest at maturity, redemption
or repayment, the paying agent will make U.S. dollar payments of interest
either:
. by check mailed to the address of the person entitled to payment as shown
on our security register; or
. for a holder of at least $10,000,000 in aggregate principal amount of
certificated notes having the same interest payment date, by wire
transfer of immediately available funds, if the holder has given written
notice providing wire transfer instructions to the paying agent not
later than 15 calendar days prior to the applicable interest payment
date.
U.S. dollar payments of principal, premium, if any, and interest, if any,
upon maturity, redemption or repayment on a note will be made in immediately
available funds against presentation and surrender of the note.
Payment Procedures for Book-Entry Notes Denominated in a Foreign Currency
Book-entry notes payable in a specified currency other than U.S. dollars may
provide that a beneficial owner of interests in those notes may elect to
receive all or a portion of the payments of principal, premium, if
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any, or interest, if any, in U.S. dollars. In those cases, DTC will elect to
receive all payments with respect to the beneficial owner's interest in the
notes in U.S. dollars, unless the beneficial owner takes the following steps:
. The beneficial owner must give complete instructions to the direct or
indirect participant through which it holds the book-entry notes of its
election to receive those payments in the specified currency other than
U.S. dollars by wire transfer to an account specified by the beneficial
owner with a bank located outside the United States. In the case of a
note payable in Euros, the account must be a Euro account in a country
for which the Euro is the lawful currency.
. The participant must notify DTC of the beneficial owner's election on or
prior to the third business day after the applicable record date, for
payments of interest, and on or prior to the twelfth business day prior
to the maturity date or any redemption or repayment date, for payment of
principal or premium.
. DTC will notify the paying agent of the beneficial owner's election on
or prior to the fifth business day after the applicable record date, for
payments of interest, and on or prior to the tenth business day prior to
the maturity date or any redemption or repayment date, for payment of
principal or premium.
Beneficial owners should consult their participants in order to ascertain
the deadline for giving instructions to participants in order to ensure that
timely notice will be delivered to DTC.
Payment Procedures for Certificated Notes Denominated in a Foreign Currency
For certificated notes payable in a specified currency other than U.S.
dollars, the notes may provide that the holder may elect to receive all or a
portion of the payments on those notes in U.S. dollars. To do so, the holder
must send a written request to the paying agent:
. for payments of interest, on or prior to the fifth business day after the
applicable record date; or
. for payments of principal, at least ten business days prior to the
maturity date or any redemption or repayment date.
. To revoke this election for all or a portion of the payments on the
certificated notes, the holder must send written notice to the paying
agent:
-- at least five business days prior to the applicable record date, for
payments of interest; or
-- at least ten calendar days prior to the maturity date or any
redemption or repayment date, for payments of principal.
If the holder does not elect to be paid in U.S. dollars, the paying agent
will pay the principal, premium, if any, or interest, if any, on the
certificated notes:
. by wire transfer of immediately available funds in the specified
currency to the holder's account at a bank located outside the United
States, and in the case of a note payable in Euros, in a country for
which the Euro is the lawful currency, if the paying agent has received
the holder's written wire transfer instructions not less than 15
calendar days prior to the applicable payment date; or
. by check payable in the specified currency mailed to the address of the
person entitled to payment that is specified in the security register,
if the holder has not provided wire instructions.
However, the paying agent will only pay the principal of the certificated
notes, premium, if any, and interest, if any, due at maturity, or on any
redemption or repayment date, upon surrender of the certificated notes at the
office or agency of the paying agent.
Determination of Exchange Rate for Payments in U.S. Dollars for Notes
Denominated in a Foreign Currency
The exchange rate agent will convert the specified currency into U.S.
dollars for holders who elect to receive payments in U.S. dollars and for
beneficial owners of book-entry notes that do not follow the procedures we have
described immediately above. The conversion will be based on the highest bid
quotation in
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The City of New York received by the exchange rate agent at approximately 11:00
a.m., New York City time, on the second business day preceding the applicable
payment date from three recognized foreign exchange dealers for the purchase by
the quoting dealer:
. of the specified currency for U.S. dollars for settlement on the payment
date;
. in the aggregate amount of the specified currency payable to those
holders or beneficial owners of notes; and
. at which the applicable dealer commits to execute a contract.
One of the dealers providing quotations may be the exchange rate agent
unless the exchange rate agent is our affiliate. If those bid quotations are
not available, payments will be made in the specified currency. The holders or
beneficial owners of notes will pay all currency exchange costs by deductions
from the amounts payable on the notes.
Unavailability of Foreign Currency
The relevant specified currency may not be available to us for making
payments of principal, premium, if any, or interest, if any, on any note. This
could occur due to the imposition of exchange controls or other circumstances
beyond our control or if the specified currency is no longer used by the
government of the country issuing that currency or by public institutions
within the international banking community for the settlement of transactions.
If the specified currency is unavailable, we may satisfy our obligations to
holders of the notes by making those payments on the date of payment in U.S.
dollars on the basis of the noon dollar buying rate in The City of New York for
cable transfers of the currency or currencies in which a payment on any note
was to be made, published by the Federal Reserve Bank of New York, which we
refer to as the "market exchange rate." If that rate of exchange is not then
available or is not published for a particular payment currency, the market
exchange rate will be based on the highest bid quotation in The City of New
York received by the exchange rate agent at approximately 11:00 a.m., New York
City time, on the second business day preceding the applicable payment date
from three recognized foreign exchange dealers for the purchase by the quoting
dealer of the specified currency for U.S. dollars for settlement on the payment
date in the aggregate amount of the specified currency payable to those holders
or beneficial owners of notes and at which the applicable dealer commits to
execute a contract.
One of the dealers providing quotations may be the exchange rate agent
unless the exchange rate agent is our affiliate. If those bid quotations are
not available, the exchange rate agent will determine the market exchange rate
at its sole discretion.
These provisions do not apply if a specified currency is unavailable because
it has been replaced by the Euro. If the Euro has been substituted for a
specified currency, we may at our option, or will, if required by applicable
law, without the consent of the holders of the affected notes, pay the
principal, premium, if any, or interest, if any, on any note denominated in the
specified currency in Euros instead of the specified currency, in conformity
with legally applicable measures taken pursuant to, or by virtue of, the treaty
establishing the European Community, as amended by the treaty on European
Union. Any payment made in U.S. dollars or in Euros as described above where
the required payment is in an unavailable specified currency will not
constitute an event of default.
Fixed Rate Notes
Unless otherwise specified in the applicable pricing supplement, each fixed
rate note will bear interest from the date of issuance at the annual rate
stated on its face until the principal is paid or made available for payment.
How Interest is Calculated
Interest on fixed rate notes will be computed on the basis of a 360-day year
of twelve 30-day months.
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How Interest Accrues
Interest on fixed rate notes will accrue from and including the most recent
interest payment date to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for, from and including the issue
date or any other date specified in a pricing supplement on which interest
begins to accrue. Interest will accrue to but excluding the next interest
payment date, or, if earlier, the date on which the principal has been paid or
duly made available for payment, except as described below under "--If a
Payment Date is Not a Business Day."
When Interest is Paid
Payments of interest on fixed rate notes will be made on the interest
payment dates or scheduled maturity date specified in the applicable pricing
supplement. However, if the first interest payment date is less than 15 days
after the date of issuance, interest will not be paid on the first interest
payment date, but will be paid on the second interest payment date.
Amount of Interest Payable
Interest payments for fixed rate notes will include accrued interest from
and including the date of issue or from and including the last date in respect
of which interest has been paid, as the case may be, to but excluding the
relevant interest payment date or date of maturity or earlier redemption or
repayment, as the case may be.
If a Payment Date is Not a Business Day
If any scheduled interest payment date is not a business day, we will pay
interest on the next business day, but interest on that payment will not accrue
during the period from and after the scheduled interest payment date. If the
scheduled maturity date or date of redemption or repayment is not a business
day, we may pay the principal, premium, if any, and interest, if any, on the
next succeeding business day, but interest on that payment will not accrue
during the period from and after the scheduled maturity date or date of
redemption or repayment.
Amortizing Notes
A fixed rate note may pay amounts in respect of both interest and principal
amortized over the life of the note. Payments of principal and interest on
amortizing notes will be made on the interest payment dates specified in the
applicable pricing supplement, and at maturity or upon any earlier redemption
or repayment. Payments on amortizing notes will be applied first to interest
due and payable and then to the reduction of the unpaid principal amount. We
will provide to the original purchaser, and will furnish to subsequent holders
upon request to us, a table setting forth repayment information for each
amortizing note.
Floating Rate Notes
Each floating rate note will mature on the date specified in the applicable
pricing supplement. Each floating rate note will bear interest at a floating
rate determined by reference to an interest rate or interest rate formula,
which we refer to as the "base rate." The base rate may be one or more of the
following:
. the CD rate,
. the commercial paper rate,
. EURIBOR,
. the federal funds rate,
. LIBOR,
. the prime rate,
. the Treasury rate, or
. any other rate or interest rate formula specified in the applicable
pricing supplement and in the floating rate note.
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Formula for Interest Rates
The interest rate on each floating rate note will be calculated by
reference to:
. the specified base rate based on the index maturity,
. plus or minus the spread, if any, and/or
. multiplied by the spread multiplier, if any.
For any floating rate note, "index maturity" means the period of maturity
of the instrument or obligation from which the base rate is calculated, as
specified in the applicable pricing supplement. The "spread" is the number of
basis points to be added to or subtracted from the base rate for a floating
rate note, as specified in the applicable pricing supplement. Each basis point
is 0.01%. The "spread multiplier" is the percentage specified in the
applicable pricing supplement to be applied to the base rate for a floating
rate note.
Limitations on Interest Rate
A floating rate note may also have either or both of the following
limitations on the interest rate:
. a maximum limitation, or ceiling, on the rate of interest which may
accrue during any interest period, which we refer to as the "maximum
interest rate;"
. a minimum limitation, or floor, on the rate of interest that may accrue
during any interest period, which we refer to as the "minimum interest
rate."
Any applicable maximum interest rate or minimum interest rate will be set
forth in the pricing supplement.
In addition, the interest rate on a floating rate note may not be higher
than the maximum rate permitted by New York law, as that rate may be modified
by United States law of general application. Under current New York law, the
maximum rate of interest, subject to some exceptions, for any loan in an
amount less than $250,000 is 16% and for any loan in the amount of $250,000 or
more but less than $2,500,000 is 25% per annum on a simple interest basis.
These limits do not apply to loans of $2,500,000 or more.
How Floating Interest Rates are Reset
The interest rate in effect from the date of issue to the first interest
reset date for a floating rate note will be the initial interest rate
specified in the applicable pricing supplement. We refer to this rate as the
"initial interest rate." The interest rate on each floating rate note may be
reset daily, weekly, monthly, quarterly, semiannually or annually. This period
is the "interest reset period" and the first day of each interest reset period
is the "interest reset date." The "interest determination date" for any
interest reset date is the day the calculation agent will refer to when
determining the new interest rate at which a floating rate will reset, and is
applicable as follows:
. for CD rate notes, commercial paper rate notes, federal funds rate notes
and prime rate notes, the interest determination date will be the second
business day prior to the interest reset date;
. for EURIBOR notes or Euro LIBOR notes, the interest determination date
will be the second TARGET Settlement Day, as defined under "--General
Terms of Notes--Some Definitions," prior to the interest reset date;
. for LIBOR notes (other than Euro LIBOR notes), the interest
determination date will be the second London banking day prior to the
interest reset date, except that the interest determination date
pertaining to an interest reset date for a LIBOR note for which the
index currency is pounds sterling will be the interest reset date; and
. for Treasury rate notes, the interest determination date will be the day
of the week in which the interest reset date falls on which Treasury
bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless
that day is a legal holiday, in which case the auction is normally held on the
following Tuesday, but the auction may be held on the preceding Friday. If, as
the result of a legal holiday, the auction is held on the preceding Friday,
that Friday will
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be the interest determination date pertaining to the interest reset date
occurring in the next succeeding week. If an auction falls on a day that is an
interest reset date, that interest reset date will be the next following
business day.
The interest reset dates will be specified in the applicable pricing
supplement. If an interest reset date for any floating rate note falls on a day
that is not a business day, it will be postponed to the following business day,
except that, in the case of a EURIBOR note or a LIBOR note, if that business
day is in the next calendar month, the interest reset date will be the
immediately preceding business day.
In the detailed descriptions of the various base rates which follow, the
"calculation date" pertaining to an interest determination date means the
earlier of:
. the tenth calendar day after that interest determination date, or, if
that day is not a business day, the next succeeding business day; and
. the business day preceding the applicable interest payment date or
maturity date or, for any principal amount to be redeemed or repaid, any
redemption or repayment date.
How Interest is Calculated
Interest on floating rate notes will accrue from and including the most
recent interest payment date to which interest has been paid or duly provided
for, or, if no interest has been paid or duly provided for, from and including
the issue date or any other date specified in a pricing supplement on which
interest begins to accrue. Interest will accrue to but excluding the next
interest payment date or, if earlier, the date on which the principal has been
paid or duly made available for payment, except as described below under "If a
Payment Date is Not a Business Day."
Upon the request of the holder of any floating rate note, the calculation
agent will provide the interest rate then in effect and, if determined, the
interest rate that will become effective on the next interest reset date for
that floating rate note.
For a floating rate note, accrued interest will be calculated by multiplying
the principal amount of the floating rate note by an accrued interest factor.
This accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which interest is being paid. The
interest factor for each day is computed by dividing the interest rate
applicable to that day:
. by 360, in the case of CD rate notes, commercial paper rate notes,
EURIBOR notes, federal funds rate notes, LIBOR notes, except for LIBOR
notes denominated in pounds sterling, and prime rate notes;
. by 365, in the case of LIBOR notes denominated in pounds sterling; or
. by the actual number of days in the year, in the case of Treasury rate
notes.
For these calculations, the interest rate in effect on any interest reset
date will be the applicable rate as reset on that date. The interest rate
applicable to any other day is the interest rate from the immediately preceding
interest reset date or, if none, the initial interest rate.
All percentages used in or resulting from any calculation of the rate of
interest on a floating rate note will be rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point (.0000001), with five one-
millionths of a percentage point rounded upward, (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)) and all U.S. dollar
amounts used in or resulting from these calculations on floating rate notes
will be rounded to the nearest cent, with one-half cent rounded upward.
When Interest is Paid
We will pay interest on floating rate notes on the interest payment dates
specified in the applicable pricing supplement. However, if the first interest
payment date is less than 15 days after the date of issuance, interest will not
be paid on the first interest payment date, but will be paid on the second
interest payment date.
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If a Payment Date is Not a Business Day
If any scheduled interest payment date, other than the maturity date or any
earlier redemption or repayment date, for any floating rate note falls on a day
that is not a business day, it will be postponed to the following business day,
except that, in the case of a EURIBOR note or a LIBOR note, if that business
day would fall in the next calendar month, the interest payment date will be
the immediately preceding business day. If the scheduled maturity date or any
earlier redemption or repayment date of a floating rate note falls on a day
that is not a business day, the payment of principal, premium, if any, and
interest, if any, will be made on the next succeeding business day, but
interest on that payment will not accrue during the period from and after the
maturity, redemption or repayment date.
CD Rate Notes
CD rate notes will bear interest at the interest rates specified in the CD
rate notes and in the applicable pricing supplement. Those interest rates will
be based on the CD rate and any spread or spread multiplier and will be subject
to the minimum interest rate and the maximum interest rate, if any.
The CD rate will be, for any interest determination date, the rate on that
date for negotiable certificates of deposit having the index maturity specified
in the applicable pricing supplement as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)."
The following procedures will apply if the CD rate cannot be determined as
described above:
. If the above rate is not published in H.15(519) by 3:00 p.m., New York
City time, on the calculation date, the CD rate will be the rate on that
interest determination date set forth in the daily update of H.15(519),
available through the worldwide website of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/hl5/update,
or such other recognized electronic source used for the purpose of
displaying such rate, or any successor site or publication, which is
commonly referred to as the "H.15 Daily Update," for the interest
determination date for certificates of deposit having the index maturity
specified in the applicable pricing supplement, under the caption "CDs
(Secondary Market).
. If the above rate is not yet published in either H.15(519) or the H.15
Daily Update by 3:00 p.m., New York City time, on the calculation date,
the calculation agent will determine the CD rate to be the average of
the secondary market offered rates as of 10:00 a.m., New York City time,
on that interest determination date of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in New York City selected
by the calculation agent, after consultation with us, for negotiable
certificates of deposit of major United States money center banks of the
highest credit standing in the market for negotiable certificates of
deposit with a remaining maturity closest to the index maturity
specified in the applicable pricing supplement in an amount that is
representative for a single transaction in that market at that time.
. If the dealers selected by the calculation agent are not quoting as set
forth above, the CD rate will remain the CD rate for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest rate.
Commercial Paper Rate Notes
Commercial paper rate notes will bear interest at the interest rates
specified in the commercial paper rate notes and in the applicable pricing
supplement. Those interest rates will be based on the commercial paper rate and
any spread or spread multiplier and will be subject to the minimum interest
rate and the maximum interest rate, if any.
The commercial paper rate will be, for any interest determination date, the
money market yield, calculated as described below, of the rate on that date for
commercial paper having the index maturity specified in the applicable pricing
supplement, as that rate is published in H.15(519), under the heading
"Commercial Paper Nonfinancial."
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The following procedures will apply if the commercial paper rate cannot be
determined as described above:
. If the above rate is not published by 3:00 p.m., New York City time, on
the calculation date, then the commercial paper rate will be the money
market yield of the rate on that interest determination date for
commercial paper of the index maturity specified in the applicable
pricing supplement available through the worldwide website of the Board
of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us./releases/h15/update, or such other recognized
electronic source used for the purpose of displaying such rate, or any
successor site or publication, which is commonly referred to as the
"H.15 Daily Update," under the heading "Commercial Paper--Nonfinancial."
. If by 3:00 p.m., New York City time, on that calculation date the rate
is not yet published in either H.15(519) or the H.15 Daily Update, then
the calculation agent will determine the commercial paper rate to be the
money market yield of the average of the offered rates as of 11:00 a.m.,
New York City time, on that interest determination date of three leading
dealers of commercial paper in The City of New York selected by the
calculation agent, after consultation with us, for commercial paper of
the index maturity specified in the applicable pricing supplement,
placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized statistical rating
organization.
. If the dealers selected by the calculation agent are not quoting as
mentioned above, the commercial paper rate for that interest
determination date will remain the commercial paper rate for the
immediately preceding interest reset period, or, if there was no
interest reset period, the rate of interest payable will be the initial
interest rate.
The "money market yield" will be a yield calculated in accordance with the
following formula:
D X 360
money market yield = ------------- X 100
360 - (D X M)
where
. "D" refers to the applicable per year rate for commercial paper quoted
on a bank discount basis and expressed as a decimal; and
. "M" refers to the actual number of days in the interest period for which
interest is being calculated.
EURIBOR Notes
EURIBOR notes will bear interest at the interest rates specified in the
EURIBOR notes and in the applicable pricing supplement. That interest rate will
be based on EURIBOR and any spread or spread multiplier and will be subject to
the minimum interest rate and the maximum interest rate, if any.
"EURIBOR" means, for any interest determination date, the rate for deposits
in Euros as sponsored, calculated and published jointly by the European Banking
Federation and ACI -- The Financial Market Association, or any company
established by the joint sponsors for purposes of compiling and publishing
those rates, for the index maturity specified in the applicable pricing
supplement as that rate appears on the display on Bridge Telerate, Inc., or any
successor service, on page 248 or any other page as may replace page 248 on
that service, which is commonly referred to as "Telerate Page 248," as of 11:00
a.m. (Brussels time).
The following procedures will apply if the rate cannot be determined as
described above:
. If the above rate does not appear, the calculation agent will request
the principal Euro-zone office of each of four major banks in the Euro-
zone interbank market, as selected by the calculation agent, after
consultation with us, to provide the calculation agent with its offered
rate for deposits in Euros, at approximately 11:00 a.m. (Brussels time)
on the interest determination date, to prime banks in the Euro-zone
interbank market for the index maturity specified in the applicable
pricing supplement commencing on the applicable interest reset date, and
in a principal amount not less than the
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equivalent of U.S. $1 million in Euro that is representative of a single
transaction in Euro, in that market at that time. If at least two
quotations are provided, EURIBOR will be the average of those
quotations.
. If fewer than two quotations are provided, EURIBOR will be the average
of the rates quoted by four major banks in the Euro-zone, as selected by
the calculation agent, after consultation with us, at approximately
11:00 a.m. (Brussels time), on the applicable interest reset date for
loans in Euro to leading European banks for a period of time equivalent
to the index maturity specified in the applicable pricing supplement
commencing on that interest reset date in a principal amount not less
than the equivalent of U.S. $1 million in Euro.
. If the banks so selected by the calculation agent are not quoting as
mentioned in the previous bullet point, the EURIBOR rate in effect for
the applicable period will be the same as EURIBOR for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest will be the initial interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty
establishing the European Community, as amended by the treaty on European
Union.
Federal Funds Rate Notes
Federal funds rate notes will bear interest at the interest rates specified
in the federal funds rate notes and in the applicable pricing supplement.
Those interest rates will be based on the federal funds rate and any spread or
spread multiplier and will be subject to the minimum interest rate and the
maximum interest rate, if any.
The federal funds rate will be, for any interest determination date, the
rate on that date for federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)" as displayed on Bridge Telerate, Inc., or
any successor service, on page 120 or any other page as may replace the
applicable page on that service, which is commonly referred to as "Telerate
Page 120."
The following procedures will apply if the federal funds rate cannot be
determined as described above:
. If the above rate is not published by 9:00 a.m., New York City time, on
the calculation date, the federal funds rate will be the rate on that
interest determination date as published in the H.15 Daily Update under
the heading "Federal Funds/ Effective Rate."
. If that rate is not yet published in either H.15(519) or the H.15 Daily
Update by 3:00 p.m., New York City time, on the calculation date, the
calculation agent will determine the federal funds rate to be the
average of the rates for the last transaction in overnight federal funds
by each of three leading brokers of federal funds transactions in The
City of New York selected by the calculation agent, after consultation
with us, prior to 9:00 a.m., New York City time, on that interest
determination date.
. If the brokers selected by the calculation agent are not quoting as
mentioned above, the federal funds rate relating to that interest
determination date will remain the federal funds rate for the
immediately preceding interest reset period, or, if there was no
interest reset period, the rate of interest payable will be the initial
interest rate.
LIBOR Notes
LIBOR notes will bear interest at the interest rates specified in the LIBOR
notes and in the applicable pricing supplement. That interest rate will be
based on the London interbank offered rate, which is commonly referred to as
"LIBOR," and any spread or spread multiplier and will be subject to the
minimum interest rate and the maximum interest rate, if any.
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The calculation agent will determine "LIBOR" for each interest determination
date as follows:
. As of the interest determination date, LIBOR will be either:
-- If "LIBOR Reuters" is specified in the applicable pricing
supplement, the average of the offered rates for deposits in the
index currency having the index maturity designated in the
applicable pricing supplement, commencing on the second London
banking day immediately following that interest determination date,
that appear on the Designated LIBOR Page, as defined below, as of
11:00 a.m., London time, on that interest determination date, if at
least two offered rates appear on the Designated LIBOR Page, except
that if the specified Designated LIBOR Page, by its terms provides
only for a single rate, that single rate will be used; or
-- If "LIBOR Telerate" is specified in the applicable pricing
supplement, the rate for deposits in the index currency having the
index maturity designated in the applicable pricing supplement,
commencing on the second London banking day immediately following
that interest determination date or, if pounds sterling is the index
currency, commencing on that interest determination date, that
appears on the Designated LIBOR Page at approximately 11:00 a.m.,
London time, on that interest determination date.
. If fewer than the required number of offered rates appear, then the
calculation agent will request the principal London offices of each of
four major reference banks in the London interbank market, as selected
by the calculation agent after consultation with us, to provide the
calculation agent with its offered quotation for deposits in the index
currency for the period of the index maturity specified in the
applicable pricing supplement commencing on the second London banking
day immediately following the interest determination date or, if pounds
sterling is the index currency, commencing on that interest
determination date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on that interest determination
date and in a principal amount that is representative of a single
transaction in that index currency in that market at that time.
. If at least two quotations are provided, LIBOR determined on that
interest determination date will be the average of those quotations. If
fewer than two quotations are provided, LIBOR will be determined for the
applicable interest reset date as the average of the rates quoted at
approximately 11:00 a.m., London time, or some other time specified in
the applicable pricing supplement, in the applicable principal financial
center for the country of the index currency on that interest reset
date, by three major banks in that principal financial center selected
by the calculation agent, after consultation with us, for loans in the
index currency to leading European banks, having the index maturity
specified in the applicable pricing supplement and in a principal amount
that is representative of a single transaction in that index currency in
that market at that time.
. If the banks so selected by the calculation agent are not quoting as
mentioned in the previous bullet point, LIBOR in effect for the
applicable period will be the same as LIBOR for the immediately
preceding interest reset period, or, if there was no interest reset
period, the rate of interest payable will be the initial interest rate.
The "index currency" means the currency specified in the applicable pricing
supplement as the currency for which LIBOR will be calculated, or, if the Euro
is substituted for that currency, the index currency will be the Euro. If that
currency is not specified in the applicable pricing supplement, the index
currency will be U.S. dollars.
"Designated LIBOR Page" means either:
. if "LIBOR Reuters" is designated in the applicable pricing supplement,
the display on the Reuters Monitor Money Rates Service for the purpose
of displaying the London interbank rates of major banks for the
applicable index currency or its designated successor; or
. if "LIBOR Telerate" is designated in the applicable pricing supplement,
the display on Bridge Telerate Inc., or any successor service, on the
page specified in the applicable pricing supplement, or any other page
as may replace that page on that service, for the purpose of displaying
the London interbank rates of major banks for the applicable index
currency.
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If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
pricing supplement, LIBOR for the applicable index currency will be determined
as if LIBOR Telerate were specified, and, if the U.S. dollar is the index
currency, as if Telerate page 3750, had been specified.
Prime Rate Notes
Prime rate notes will bear interest at the interest rates specified in the
prime rate notes and in the applicable pricing supplement. That interest rate
will be based on the prime rate and any spread or spread multiplier and will be
subject to the minimum interest rate and the maximum interest rate, if any.
The prime rate will be, for any interest determination date, the base
lending rate on that date as published in H.15(519) under the heading "Bank
Prime Loan."
The following procedures will apply if the prime rate cannot be determined
as described above:
. If the rate is not published prior to 3:00 p.m., New York City time, on
the calculation date, then the prime rate will be the rate on that
interest determination date as published in H.15 Daily Update under the
heading "Bank Prime Loan."
. If the rate is not published prior to 3:00 p.m., New York City time, on
the calculation date in either H.15(519) or the H.15 Daily Update, then
the calculation agent will determine the prime rate to be the average of
the rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME 1 Page, as defined below, as that bank's
prime rate or base lending rate as in effect for that interest
determination date.
. If fewer than four rates appear on the Reuters Screen USPRIME 1 Page for
that interest determination date, the calculation agent will determine
the prime rate to be the average of the prime rates quoted on the basis
of the actual number of days in the year divided by 360 as of the close
of business on that interest determination date by at least three major
banks in The City of New York selected by the calculation agent, after
consultation with us.
. If the banks selected are not quoting as mentioned above, the prime rate
will remain the prime rate for the immediately preceding interest reset
period, or, if there was no interest reset period, the rate of interest
payable will be the initial interest rate.
"Reuters Screen USPRIME 1 Page" means the display designated as page
"USPRIME 1" on the Reuters Monitor Money Rates Service, or any successor
service, or any other page as may replace the USPRIME 1 Page on that service
for the purpose of displaying prime rates or base lending rates of major United
States banks.
Treasury Rate Notes
Treasury rate notes will bear interest at the interest rates specified in
the Treasury rate notes and in the applicable pricing supplement. That interest
rate will be based on the Treasury rate and any spread or spread multiplier and
will be subject to the minimum interest rate and the maximum interest rate, if
any.
The treasury rate will be the rate from the auction held on the applicable
interest determination date of direct obligations of the United States, which
are commonly referred to as "Treasury Bills," having the index maturity
specified in the applicable pricing supplement as that rate appears under the
caption "INVESTMENT RATE" on the display on Bridge Telerate, Inc., or any
successor service, on page 56 or any other page as may replace page 56 on that
service, which we refer to as "Telerate Page 56" or page 57 or any other page
as may replace page 57 on that service, which we refer to as "Telerate Page
57."
The following procedures will apply if the treasury rate cannot be
determined as described above:
. If the rate described above is not published by 3:00 p.m., New York City
time, on the related calculation date, the bond equivalent yield of the
auction rate of the applicable Treasury Bills, announced by the United
States Department of the Treasury.
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. In the event that the rate referred to in the immediately preceding
bullet point is not announced by the United States Department of the
Treasury, or if the auction is not held, the bond equivalent yield of
the rate on the applicable interest determination date of Treasury Bills
having the index maturity specified in the applicable pricing supplement
published in H.15(519) under the caption "U.S. Government Securities/
Treasury Bills/ Secondary Market."
. If the rate referred to in the immediately preceding bullet point is not
so published by 3:00 p.m., New York City time, on the related
calculation date, the rate on the applicable interest determination date
calculated by the calculation agent as the bond equivalent yield of the
average of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on the applicable interest determination date,
of three primary United States government securities dealers, which may
include the agent or its affiliates, selected by the calculation agent,
for the issue of Treasury Bills with a remaining maturity closest to the
index maturity specified in the applicable pricing supplement.
. If the dealers selected by the calculation agent are not quoting as
mentioned in the immediately preceding bullet point, the Treasury rate
for the immediately preceding interest reset period, or, if there was no
interest reset period, the rate of interest payable will be the initial
interest rate.
The "bond equivalent yield" means a yield calculated in accordance with the
following formula and expressed as a percentage:
D X N
bond equivalent yield = ------------- X 100
360 - (D X M)
where
. "D" refers to the applicable per annum rate for Treasury Bills quoted on
a bank discount basis;
. "N" refers to 365 or 366, as the case may be; and
. "M" refers to the actual number of days in the interest period for which
interest is being calculated.
Calculation Agent and Exchange Rate Agent
We have initially appointed Wells Fargo Bank Minnesota, National Association
as our calculation agent for the notes. The exchange rate agent will be
specified in the applicable pricing supplement.
Indexed Notes
We may issue notes for which the amount of interest or principal that you
will receive will not be known on your date of purchase. Interest or principal
payments for these types of notes, which we call "indexed notes," are
determined by reference to securities, financial or non-financial indices,
currencies, commodities, interest rates, or composites or baskets of any or all
of the above. Examples of indexed items that may be used include a published
stock index, the common stock price of a publicly traded company, the value of
the U.S. Dollar versus the Japanese Yen or the price of a barrel of West Texas
intermediate crude oil. If you purchase an indexed note, your pricing
supplement will include information about the formula for calculating the
amount of interest or principal payments as well as the indexed item that will
be used.
The following are examples of some types of indexed notes that we may offer:
. Notes with a maturity of seven years that pay zero interest, but provide
a principal payment at maturity equal to the face amount of the notes
plus an additional amount equal to (a) the face amount (or a specified
portion of the face amount) multiplied by (b) the percentage that the
indexed item has increased during the term of the notes.
. Notes with a maturity of five years and a face amount equal to the price
of the common stock of a publicly traded corporation on the issuance
date. You will receive a stated fixed rate of interest that will be
significantly higher than the dividend yield of the common stock as of
the date of issuance of the notes. At maturity, you will receive a
principal amount equal to the price of the common stock as of 5 business
days prior to the maturity date. That principal amount may be higher or
lower than the
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face amount of the notes. However, no matter how high the price of the
common stock has risen, the principal amount that you receive on the
maturity date may or may not be limited to a face amount of the notes.
. Notes with a maturity of five years that pay a rate of interest that is
40 basis points, or 0.40%, per year greater than the interest rate that
you would earn if at the same time you had purchased conventional notes
issued by us with the same maturity. In addition, the principal payment
at maturity will be equal to the face amount only if there is no default
on any of four investment grade, publicly traded corporate bonds (each
with a different issuer) that will be specified in the pricing
supplement.
If you purchase an indexed note, you may receive a principal amount at
maturity that is greater than or less than the note's face amount, and an
interest rate that is greater than or less than the interest rate that you
would have earned if you had instead purchased a conventional debt security
issued by us at the same time with the same maturity. The amount of interest
and principal that you will receive will depend on the structure of the
indexed note and the level of the specified indexed item throughout the term
of the indexed note and at maturity. The pricing supplement will include
specific information pertaining to the method of determining the interest
payments and the principal amount and about the relevant index. Before you
purchase any indexed note, you should read the section entitled "Risks
Relating to Indexed Notes."
Original Issue Discount Notes
A fixed rate note, a floating rate note or an indexed note may be an
original issue discount note. A note of this type is issued at a price lower
than its principal amount and provides that, upon redemption or acceleration
of its maturity, an amount less than its principal amount will be payable. An
original issue discount note may be a zero coupon note. There may not be any
periodic interest payments on original issue discount notes. For those notes,
interest usually accrues during the life of the note and is paid at the
maturity date or upon earlier redemption or acceleration. A note issued at a
discount to its principal may, for U.S. federal income tax purposes, be
considered an original issue discount note, regardless of the amount payable
upon redemption or acceleration of maturity. See "United States Taxation--
United States Holders--Original Issue Discount" below for a brief description
of the U.S. federal income tax consequences of owning an original issue
discount note.
Renewable Notes
We may issue renewable notes which will automatically renew at their
maturity date unless the holder of the renewable note elects to terminate the
automatic extension feature by giving notice in the manner described in the
related pricing supplement.
If you are a holder of a renewable note, you must give notice of
termination at least 15 but not more than 30 days prior to the renewable date.
You may terminate the automatic extension for less than all of your renewable
notes only if the terms of the note specifically permit partial termination.
An election to terminate the automatic extension of any portion of your
renewable notes is not revocable and will be binding on you. If you elect to
terminate the automatic extension of the maturity of the note, you will become
entitled to the principal and interest accrued up to the renewal date. The
related pricing supplement will identify a final maturity date beyond which
the maturity date cannot be renewed.
If a note is represented by a global note, DTC or its nominee will be the
holder of the note and therefore will be the only entity that can exercise a
right to terminate the automatic extension of the note. In order to ensure
that DTC or its nominee will timely exercise a right to terminate the
automatic extension provisions of a particular note, the beneficial owner of
the note must instruct the broker or other DTC participant through which it
holds an interest in the note to notify DTC of its desire to terminate the
automatic extension of the note. Different firms have different cut-off times
for accepting instructions from their customers and, accordingly, each
beneficial owner should consult the broker or other participant through which
it holds an interest in a note to ascertain the cut-off time by which an
instruction must be given for delivery of timely notice to DTC or its nominee.
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Extendible Notes
We may issue notes whose stated maturity date may be extended at our option
for one or more whole year periods, up to but not beyond a final maturity date
described in the related pricing supplement.
We may exercise our option to extend the stated maturity by notifying the
trustee, or any duly appointed paying agent, at least 45 but not more than 60
days prior to the then effective maturity date. At least 40 days prior to the
maturity date, the trustee will mail to the registered holder of the note a
notice informing the holder of our election, the new maturity date and any
updated terms. Upon the mailing of the extension notice, the maturity of the
note will be extended automatically as set forth in the extension notice.
However, not later than 20 days prior to the maturity date of the note, we
may, at our option, establish a higher interest rate in the case of a fixed
rate note, or a higher spread or spread multiplier in the case of a floating
rate note, for the extension period by mailing or causing the trustee to mail
notice of the higher interest rate or higher spread or spread multiplier to the
holder of the note. The notice will be irrevocable.
If we elect to extend the maturity of a note, the holder of the note will
have the option to instead elect repayment of the note by us on the then
effective maturity date. In order for a note to be so repaid on the maturity
date, we must receive, at least 15 days but not more than 30 days prior to the
maturity date:
(1)the note with the form "Option to Elect Repayment" on the reverse of the
note duly completed; or
(2) a telegram, telex, facsimile transmission or a letter from a broker-
dealer, a commercial bank or trust company in the United States
setting forth the name of the holder of the note, the principal amount
of the note, the principal amount of the note to be repaid, the
certificate number or a description of the tenor and terms of the
note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that the note to be repaid, together
with the duly completed form entitled "Option to Elect Repayment" on
the reverse of the note, will be received by the trustee (or paying
agent) not later than the fifth business day after the date of the
telegram, telex, facsimile transmission or letter; provided, however,
that the telegram, telex, facsimile transmission or letter will only
be effective if the note and form duly completed are received by the
trustee (or paying agent) by that fifth business day. The option may
be exercised by the holder of a note for less than the aggregate
principal amount of the note then outstanding if the principal amount
of the note remaining outstanding after repayment is an authorized
denomination.
If a note is represented by a global note, DTC or its nominee will be the
holder of that note and therefore will be the only entity that can exercise a
right to repayment. To ensure that DTC or its nominee timely exercises a right
to repayment with respect to a particular note, the beneficial owner of that
note must instruct the broker or other participant through which it holds an
interest in the note to notify DTC of its desire to exercise a right to
repayment. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner
should consult the broker or other participant through which it holds an
interest in a note to determine the cut-off time by which an instruction must
be given for timely notice to be delivered to DTC or its nominee.
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UNITED STATES TAXATION
This section describes the material United States federal income tax
consequences of owning, selling and of disposing the notes we are offering. It
applies to you only if you hold the notes as capital assets for tax purposes.
This section does not apply to you if you are a member of a class of holders
subject to special rules, such as:
. a dealer in securities or currencies;
. a trader in securities that elects to use a mark-to-market method of
accounting for securities holdings;
. a bank or other financial institution;
. a life insurance company;
. a tax-exempt organization;
. a regulated investment company;
. a person that owns notes that are a hedge or that are hedged against
interest rate or currency risks;
. a person that owns notes as part of a straddle or conversion transaction
for tax purposes; or
. a person whose functional currency for tax purposes is not the U.S.
dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in
effect. These authorities are subject to change, possibly on a retroactive
basis.
Please consult your own tax advisor concerning the consequences of owning
the notes in your particular circumstances under the Internal Revenue Code and
the laws of any other taxing jurisdiction.
United States Holders
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a note and you
are:
. a citizen or resident of the United States;
. a domestic corporation or domestic partnership;
. an estate whose income is subject to United States federal income tax
regardless of its source; or
. a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you
and you should refer to the section titled "--United States Alien Holders"
below.
Payments of Interest
General. Except as described below in the case of interest on a discount
note that is not qualified stated interest, each as defined below under "--
Original Issue Discount," you will be taxed on any interest on your note,
whether payable in U.S. dollars or a non-U.S. dollar currency, including a
composite currency or basket of currencies other than U.S. dollars, as ordinary
income at the time you receive the interest or when it accrues, depending on
your method of accounting for tax purposes.
Payments of Interest in Non-U.S. Dollar Currency. If you are a taxpayer that
uses the cash receipts and disbursements method of accounting for tax purposes
and you receive an interest payment that is denominated in, or determined by
reference to, a non-U.S. dollar currency, you must recognize income equal to
the U.S. dollar value of the interest payment, based on the exchange rate in
effect on the date of receipt, regardless of whether you actually convert the
payment into U.S. dollars.
If you are a taxpayer that uses an accrual method of accounting for tax
purposes, you may determine the amount of income that you recognize with
respect to an interest payment denominated in, or determined by reference to, a
non-U.S. dollar currency by using one of two methods. Under the first method,
you will determine the amount of income accrued based on the average exchange
rate in effect during the interest
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accrual period or, with respect to an accrual period that spans two taxable
years, that part of the period within the taxable year.
If you elect the second method, you would determine the amount of income
accrued on the basis of the exchange rate in effect on the last day of the
accrual period, or, in the case of an accrual period that spans two taxable
years, the exchange rate in effect on the last day of the part of the period
within the taxable year. Additionally, under this second method, if you receive
a payment of interest within five business days of the last day of your accrual
period or taxable year, you may instead translate the interest accrued into
U.S. dollars at the exchange rate in effect on the day that you actually
receive the interest payment. If you elect the second method, it will apply to
all debt instruments that you hold at the beginning of the first taxable year
to which the election applies and to all debt instruments that you subsequently
acquire. You may not revoke this election without the consent of the Internal
Revenue Service.
When you actually receive an interest payment, including a payment
attributable to accrued but unpaid interest upon the sale or retirement of your
note, denominated in, or determined by reference to, a non-U.S. dollar currency
for which you accrued an amount of income, you will recognize ordinary income
or loss measured by the difference, if any, between the exchange rate that you
used to accrue interest income and the exchange rate in effect on the date of
receipt, regardless of whether you actually convert the payment into U.S.
dollars.
Original Issue Discount
General. If you own a note, other than a short-term note with a term of one
year or less, it will be treated as a discount note issued at an original issue
discount if the amount by which the note's stated redemption price at maturity
exceeds its issue price is more than a de minimis amount.
Generally, a note's issue price will be the first price at which a
substantial amount of notes included in the issue of which the note is a part
is sold to persons other than bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers. A note's stated redemption price at maturity is the total of all
payments to be made with respect to the note that are not payments of qualified
stated interest. Generally, an interest payment on a note is qualified stated
interest if it is one of a series of stated interest payments on a note that
are unconditionally payable at least annually at a single fixed rate, with
certain exceptions for lower rates paid during some periods, applied to the
outstanding principal amount of the note. There are special rules for variable
rate notes. These are discussed below under "--Variable Rate Notes."
In general, your note is not a discount note if the amount by which its
stated redemption price at maturity exceeds its issue price is less than the de
minimis amount of 0.25 percent of its stated redemption price at maturity
multiplied by the number of complete years to its maturity. Your note will have
de minimis original issue discount if the amount of the excess is less than the
de minimis amount. If your note has de minimis original issue discount, you
must include the de minimis amount in income as stated principal payments are
made on the note, unless you make the election described below under "--
Election to Treat All Interest as Original Issue Discount." You can determine
the includible amount with respect to each such payment by multiplying the
total amount of your note's de minimis original issue discount by a fraction
equal to:
. the amount of the principal payment made
divided by:
. the stated principal amount of the note.
Generally, if your discount note matures more than one year from its date of
issue, you must include original issue discount in income before you receive
cash attributable to that income. The amount of original issue discount that
you must include in income is calculated using a constant-yield method, and
generally you will include increasingly greater amounts of original issue
discount in income over the life of your note. More specifically, you can
calculate the amount of original issue discount that you must include in income
by adding the daily portions of original issue discount with respect to your
discount note for each day during the taxable
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year or portion of the taxable year that you hold your discount note. You can
determine the daily portion by allocating to each day in any accrual period a
pro rata portion of the original issue discount allocable to that accrual
period.
You may select an accrual period of any length with respect to your discount
note and you may vary the length of each accrual period over the term of your
discount note. However, no accrual period may be longer than one year and each
scheduled payment of interest or principal on the discount note must occur on
either the first or final day of an accrual period.
You can determine the amount of original issue discount allocable to an
accrual period by:
. multiplying your discount note's adjusted issue price at the beginning
of the accrual period by your note's yield to maturity; and then
. subtracting from this figure the sum of the payments of qualified stated
interest on your note allocable to the accrual period.
You must determine the discount note's yield to maturity on the basis of
compounding at the close of each accrual period and adjusting for the length of
each accrual period. Further, you determine your discount note's adjusted issue
price at the beginning of any accrual period by:
. adding your discount note's issue price and any accrued original issue
discount for each prior accrual period; and then
. subtracting any payments previously made on your discount note that were
not qualified stated interest payments.
Notes Subject to Alternative Payment Schedules, Including Optional
Redemption or Repayment. If your note provides for an alternative payment
schedule or schedules applicable upon the occurrence of a contingency or
contingencies, other than a remote or incidental contingency and whether such
contingency relates to payments of interest or of principal, you must determine
the yield and maturity of your note by assuming that the payments will be made
according to the payment schedule most likely to occur if:
. the timing and amounts of the payments that comprise each payment
schedule are known as of the issue date; and
. one of such schedules is significantly more likely than not to occur.
If there is no single payment schedule that is significantly more likely
than not to occur, other than because of a mandatory sinking fund, you must
include income on your note in accordance with the general rules that govern
contingent payment debt instruments. These rules will be discussed in the
applicable prospectus supplement.
Notwithstanding the general rules for determining yield and maturity, if
either you or we have an unconditional option or options that, if exercised,
would require payments to be made on the note under an alternative payment
schedule or schedules, then:
. in the case of an option or options that we may exercise, we will be
deemed to exercise or not exercise an option or combination of options
in the manner that minimizes the yield on your note; and
. in the case of an option or options that you may exercise, you will be
deemed to exercise or not exercise an option or combination of options
in the manner that maximizes the yield on your note.
If both you and we hold options described in the preceding sentence, those
rules will apply to each option in the order in which they may be exercised.
You may determine the yield on your note for the purposes of those calculations
by using any date on which your note may be redeemed or repurchased as the
maturity date and the amount payable on the date that you chose in accordance
with the terms of your note as the principal amount payable at maturity.
If a contingency, including the exercise of an option, actually occurs or
does not occur contrary to an assumption made according to the above rules
then, except to the extent that a portion of your note is repaid as
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a result of this change in circumstances and solely to determine the amount and
accrual of original issue discount, you must redetermine the yield and maturity
of your note by treating your note as having been retired and reissued on the
date of the change in circumstances for an amount equal to your note's adjusted
issue price on that date.
Election to Treat All Interest as Original Issue Discount. You may elect to
include in gross income all interest that accrues on your note using the
constant-yield method described above, with the modifications described below.
For purposes of this election, interest will include stated interest, original
issue discount, de minimis original issue discount, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium, described below under "--Amortizable Bond Premium," or acquisition
premium.
Generally, this election will apply only to the note for which you make it.
The election must be made during the taxable year in which the U.S. holder
acquires the note, and may not be revoked without the consent of the Internal
Revenue Service. You should consult your own tax advisor about this election.
Variable Rate Notes. Special rules apply for determining original issue
discount with respect to variable rate notes. Your note will be a variable rate
note if:
. your note's issue price does not exceed the total noncontingent
principal payments by more than the lesser of:
1. .015 multiplied by the product of the total noncontingent principal
payments and the number of complete years to maturity from the issue
date; or
2. 15 percent of the total noncontingent principal payments;
. your note provides for stated interest, compounded or paid at least
annually, only at:
1. one or more qualified floating rates;
2. a single fixed rate and one or more qualified floating rates;
3. a single objective rate; or
4. a single fixed rate and a single objective rate that is a qualified
inverse floating rate; and
. your note does not provide for any principal payments that are
contingent, except as provided in the first bullet point above.
Your note will have a variable rate that is a qualified floating rate if:
. variations in the value of the rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds
in the currency in which your note is denominated; or
. the rate is equal to such a rate multiplied by either:
1. a fixed multiple that is greater than 0.65 but not more than 1.35;
or
2. a fixed multiple greater than 0.65 but not more than 1.35,
increased or decreased by a fixed rate; and
. the value of the rate on any date during the term of your note is set no
earlier than three months prior to the first day on which that value is
in effect and no later than one year following that first day.
If your note provides for two or more qualified floating rates that are
within 0.25 percentage points of each other on the issue date or can reasonably
be expected to have approximately the same values throughout the term of the
note, the qualified floating rates together constitute a single qualified
floating rate.
Your note will not have a qualified floating rate, however, if the rate is
subject to certain restrictions (including caps, floors, governors, or other
similar restrictions) unless such restrictions are fixed throughout the term of
the note or are not reasonably expected to significantly affect the yield on
the note.
Your note will have a variable rate that is a single objective rate if:
. the rate is not a qualified floating rate;
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. the rate is determined using a single, fixed formula that is based on
objective financial or economic information that is not within the
control of or unique to the circumstances of the issuer or a related
party; and
. the value of the rate on any date during the term of your note is set no
earlier than three months prior to the first day on which that value is
in effect and no later than one year following that first day.
Your note will not have a variable rate that is an objective rate, however,
if it is reasonably expected that the average value of the rate during the
first half of your note's term will be either significantly less than or
significantly greater than the average value of the rate during the final half
of your note's term.
An objective rate as described above is a qualified inverse floating rate
if:
. the rate is equal to a fixed rate minus a qualified floating rate and
. the variations in the rate can reasonably be expected to inversely
reflect contemporaneous variations in the cost of newly borrowed funds.
Your note will also have a single qualified floating rate or an objective
rate if interest on your note is stated at a fixed rate for an initial period
of one year or less followed by either a qualified floating rate or an
objective rate for a subsequent period, and either:
. the fixed rate and the qualified floating rate or objective rate have
values on the issue date of the note that do not differ by more than
0.25 percentage points or
. the value of the qualified floating rate or objective rate is intended to
approximate the fixed rate.
In general, if your note qualifies as a variable rate note as defined above
and if your variable rate note provides for stated interest at a single
qualified floating rate or objective rate, or one of those rates after a single
fixed rate for an initial period of one year or less, all stated interest on
your note is qualified stated interest. In this case, the amount of original
issue discount, if any, is determined by using, in the case of a qualified
floating rate or qualified inverse floating rate, the value as of the issue
date of the qualified floating rate or qualified inverse floating rate or, for
any other objective rate, a fixed rate that reflects the yield reasonably
expected for your note.
If your note qualifies as a variable rate note as defined above and if your
variable rate note does not provide for stated interest at a single qualified
floating rate or a single objective rate, and also does not provide for
interest payable at a fixed rate other than a single fixed rate for an initial
period of one year or less, you generally must determine the interest and
original issue discount accruals on your note by:
. determining a fixed rate substitute for each variable rate provided under
your variable rate note;
. constructing the equivalent fixed rate debt instrument, using the fixed
rate substitute described above;
. determining the amount of qualified stated interest and original issue
discount with respect to the equivalent fixed rate debt instrument; and
. adjusting for actual variable rates during the applicable accrual period.
When you determine the fixed rate substitute for each variable rate provided
under the variable rate note, you generally will use the value of each variable
rate as of the issue date or, for an objective rate that is not a qualified
inverse floating rate, a rate that reflects the reasonably expected yield on
your note.
If your variable rate note provides for stated interest either at one or
more qualified floating rates or at a qualified inverse floating rate, and also
provides for stated interest at a single fixed rate other than at a single
fixed rate for an initial period, you generally must determine interest and
original issue discount accruals by using the method described in the previous
paragraph. However, your variable rate note will be treated, for purposes of
the first three steps of the determination, as if your note had provided for a
qualified floating rate, or a qualified inverse floating rate, rather than the
fixed rate. The qualified floating rate, or qualified inverse floating rate,
that replaces the fixed rate must be such that the fair market value of your
variable rate note as of the issue date approximates the fair market value of
an otherwise identical debt instrument that provides for the qualified floating
rate, or qualified inverse floating rate, rather than the fixed rate.
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Short-Term Notes. In general, if you are an individual or other cash-basis
United States holder of a short-term note, you are not required to accrue
original issue discount, as specially defined below for the purposes of this
paragraph, for United States federal income tax purposes unless you elect to do
so. However, you may be required to include any stated interest in income as
you receive it. If you are an accrual basis taxpayer, a taxpayer in a special
class, including, but not limited to, a regulated investment company, common
trust fund, or a certain type of pass-through entity, or a cash basis taxpayer
who so elects, you will be required to accrue original issue discount on short-
term notes on either a straight-line basis or under the constant-yield method,
based on daily compounding.
If you are not required and do not elect to include original issue discount
in income currently, any gain you realize on the sale or retirement of your
short-term note will be ordinary income to the extent of the accrued original
issue discount, which will be determined on a straight-line basis unless you
make an election to accrue the original issue discount under the constant-yield
method, through the date of sale or retirement. However, if you are not
required and do not elect to accrue original issue discount on your short-term
notes, you will be required to defer deductions for interest on borrowings
allocable to your short-term notes in an amount not exceeding the deferred
income until the deferred income is realized.
When you determine the amount of original issue discount subject to these
rules, you must include all interest payments on your short-term note,
including stated interest, in your short-term note's stated redemption price at
maturity.
Non-U.S. Dollar Currency Discount Notes. If your discount note is
denominated in, or determined by reference to, a non-U.S. dollar currency, you
must determine original issue discount for any accrual period on your discount
note in the non-U.S. dollar currency and then translate the amount of original
issue discount into U.S. dollars in the same manner as stated interest accrued
by an accrual basis United States holder, as described above under "--Payments
of Interest." You may recognize ordinary income or loss when you receive an
amount attributable to original issue discount in connection with a payment of
interest or the sale or retirement of your note.
Acquisition Premium
If you purchase your note for an amount that is less than or equal to the
sum of all amounts, other than qualified stated interest, payable on your note
after the purchase date but is greater than the amount of your note's adjusted
issue price, as determined above, the excess is acquisition premium. If you do
not make the election described above under "--Original Issue Discount--
Election to Treat All Interest as Original Issue Discount," then you must
reduce the daily portions of original issue discount by an amount equal to:
. the excess of your adjusted basis in the note immediately after purchase
over the adjusted issue price of the note
divided by:
. the excess of the sum of all amounts payable, other than qualified
stated interest, on the note after the purchase date over the note's
adjusted issue price.
Market Discount
You will be treated as if you purchased your note, other than a short-term
note, at a market discount, and your note will be a market discount note if the
difference between the note's stated redemption price at maturity or, in the
case of a discount note, the note's revised issue price, and the price you paid
for your note is equal to or greater than 0.25 percent of your note's stated
redemption price at maturity or revised issue price, respectively, multiplied
by the number of complete years to the note's maturity. To determine the
revised issue price of your note for these purposes, you generally add any
original issue discount that has accrued on your note to its issue price.
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If your note's stated redemption price at maturity or, in the case of a
discount note, its revised issue price, does not exceed the price you paid for
the note by an amount equal to 0.25 percent multiplied by the number of
complete years to the note's maturity, the excess constitutes de minimis market
discount and the rules discussed below do not apply to you.
You must treat any gain you recognize on the maturity or disposition of your
market discount note as ordinary income to the extent of the accrued market
discount on your note. Alternatively, you may elect to include market discount
in income currently over the life of your note. If you make this election, it
will apply to all debt instruments with market discount that you acquire on or
after the first day of the first taxable year to which the election applies.
You may not revoke this election without the consent of the Internal Revenue
Service. If you own a market discount note and do not make this election, you
will generally be required to defer deductions for interest on borrowings
allocable to your note in an amount not exceeding the accrued market discount
on your note until the maturity or disposition of your note.
If you make the election described in the preceding paragraph, you will
accrue market discount on your market discount note on a straight-line basis
unless you elect to accrue market discount using a constant-yield method. If
you make this election, it will apply only to the note with respect to which it
is made and you may not revoke it.
Amortizable Bond Premium
If you purchase your note for an amount in excess of its principal amount,
you may elect to treat the excess as amortizable bond premium. If you make this
election, you will reduce the amount required to be included in your income
each year with respect to interest on your note by the amount of amortizable
bond premium allocable to that year, based on your note's yield to maturity.
If your note is denominated in, or determined by reference to, a non-U.S.
dollar currency, you will compute your amortizable bond premium in units of the
non-U.S. dollar currency and your amortizable bond premium will reduce your
interest income in units of the non-U.S. dollar currency. Gain or loss
recognized that is attributable to changes in exchange rates between the time
your amortized bond premium offsets interest income and the time of the
acquisition of your note is generally taxable as ordinary income or loss.
If you make an election to amortize bond premium, it will apply to all debt
instruments, other than debt instruments the interest on which is excludible
from gross income, that you hold at the beginning of the first taxable year to
which the election applies or that you thereafter acquire, and you may not
revoke it without the consent of the Internal Revenue Service. See also "--
Original Issue Discount--Election to Treat All Interest as Original Issue
Discount" above.
Purchase, Sale and Retirement of the Notes
Your tax basis in your note will generally be the U.S. dollar cost, as
defined below, of your note, adjusted by:
. adding any original issue discount, market discount, de minimis original
issue discount and de minimis market discount previously included in
income with respect to your note; and then
. subtracting any payments on your note that are not qualified stated
interest payments and any amortizable bond premium applied to reduce
interest on your note.
If you purchase your note with non-U.S. dollar currency, the U.S. dollar
cost of your note will generally be the U.S. dollar value of the purchase price
on the date of purchase.
You will generally recognize gain or loss on the sale or retirement of your
note equal to the difference between the amount you realize on the sale or
retirement and your tax basis in your note. If your note is sold or retired for
an amount in non-U.S. dollar currency, the amount you realize will be the U.S.
dollar value of such amount on:
. the date payment is received, if you are a cash basis taxpayer; or
. the date of disposition, if you are an accrual basis taxpayer.
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You will recognize capital gain or loss when you sell or retire your note,
except to the extent:
. described above under "--Original Issue Discount","--Short-Term Notes" or
"--Market Discount";
. attributable to accrued but unpaid interest;
. the rules governing contingent payment debt instruments apply; or
. attributable to changes in exchange rates as described below.
You must treat any portion of the gain or loss that you recognize on the
sale or retirement of a note as ordinary income or loss to the extent
attributable to changes in exchange rates. However, you take exchange gain or
loss into account only to the extent of the total gain or loss you realize on
the transaction.
Exchange of Amounts in Other Than U.S. Dollars
If you receive non-U.S. dollar currency as interest on your note or on the
sale or retirement of your note, your tax basis in the non-U.S. dollar currency
will equal its U.S. dollar value when the interest is received or at the time
of the sale or retirement. If you purchase non-U.S. dollar currency, you
generally will have a tax basis equal to the U.S. dollar value of the non-U.S.
dollar currency on the date of your purchase. If you sell or dispose of a non-
U.S. dollar currency, including if you use it to purchase notes or exchange it
for U.S. dollars, any gain or loss recognized generally will be ordinary income
or loss.
Indexed and Other Notes
The applicable prospectus supplement will discuss any special United States
federal income tax rules with respect to contingent non-U.S. dollar currency
notes, notes the payments on which are determined by reference to any index or
formula and other notes that are subject to the rules governing contingent
payment debt instruments which are not subject to the rules governing variable
rate notes.
United States Alien Holders
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a note and are, for United States federal income tax purposes:
. a nonresident alien individual:
. a foreign corporation;
. a foreign partnership; or
. an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a note.
If you are a United States holder, this section does not apply to you.
This discussion assumes that the note is not subject to the rules of Section
871(h)(4)(A) of the Internal Revenue Code, relating to interest payments that
are determined by reference to the income, profits, changes in the value of
property or other attributes of the debtor or a related party.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below, if you are a United States alien
holder of a note:
. we and other payors will not be required to deduct United States
withholding tax from payments of principal, premium, if any, and
interest, including original issue discount, to you if, in the case of
interest:
1. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company
entitled to vote;
2. you are not a controlled foreign corporation that is related to the
Company through stock ownership; and
3. either:
a. you certify to us or a U.S. payor, under penalties of perjury,
that you are not a United States holder and provide your name and
address; or
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b. a non-U.S. securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business and holds the note
certifies to us or a U.S. payor under penalties of perjury that
a similar statement has been received from you by it or by a
similar financial institution between it and you and furnishes
the payor with a copy thereof;
. no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your note.
Further, a note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's gross
estate for United States federal estate tax purposes if:
. the decedent did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company
entitled to vote at the time of death; and
. the income on the note would not have been effectively connected with a
U.S. trade or business of the decedent at the same time.
If you receive a payment after December 31, 2000, recently finalized U.S.
Treasury regulations will apply. Under these final withholding regulations,
after December 31, 2000, you must comply with revised certification
requirements. Among other things, if you are a partner in a foreign
partnership, after December 31, 2000, you, in addition to the foreign
partnership, must provide the certification described above and the partnership
must provide certain information. The Internal Revenue Service will apply a
look-through rule in the case of tiered partnerships.
U.S. Backup Withholding And Information Reporting
United States Holders
In general, if you are a noncorporate United States holder, we and other
payors are required to report to the Internal Revenue Service all payments of
principal, any premium and interest on your note, and the accrual of original
issue discount on a discount note. In addition, the proceeds of the sale of
your note before maturity within the United States will be reported to the
United States Internal Revenue Service. Additionally, backup withholding at a
rate of 31% will apply to any payments, including payments of original issue
discount, if you fail to provide an accurate taxpayer identification number, or
if the Internal Revenue Service notifies you that you have failed to report all
interest and dividends required to be shown on your federal income tax returns.
United States Alien Holders
You are generally exempt from backup withholding and information reporting
with respect to any payments of principal, premium or interest, including
original issue discount, that we or other payors make, provided you provide the
certification described above under "--United States Alien Holders," and
provided further that the payor does not have actual knowledge that you are a
United States person. See "--United States Alien Holders" above for a
discussion of the rules under the final withholding regulations. We and other
payors, however, may report payments of interest on your notes on Internal
Revenue Service Form 1042-S.
In general, payment of the proceeds from the sale of notes to or through a
United States office of a broker is subject to both U.S. backup withholding and
information reporting. If, however, you are a United States alien holder, you
will not be subject to information reporting and backup withholding if you
certify as to your non-U.S. status, under penalties of perjury, or otherwise
establish an exemption. Payments of the proceeds from the sale by a United
States alien holder of a note made to or through a foreign office of a broker
will not be subject to information reporting or backup withholding. However,
information reporting, but not backup withholding, may apply to a payment made
outside the United States of the proceeds of a sale of a note through an office
outside the United States if the broker is:
. a United States person;
. a controlled foreign corporation for United States tax purposes;
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. a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-
year period; or
. with respect to payments made after December 31, 2000, a foreign
partnership with certain connections to the United States,
unless the broker has documentary evidence in its records that you are a non-
U.S. person or you otherwise establish an exemption.
SUPPLEMENTAL PLAN OF DISTRIBUTION
We may sell the notes:
. through agents who solicit offers to purchase the notes,
. through agents purchasing as principal and acting as underwriters or
dealers, or
. directly to investors.
Distribution Through Agents
We may sell the notes on a continuing basis through agents that become
parties to a distribution agreement, a form of which will be filed as an
exhibit to a current report on Form 8-K. Each agent's obligations are separate
and several from those of any other agent. Each agent will use reasonable
efforts when requested by us to solicit purchases of the notes.
We will pay each agent a commission to be negotiated at the time of sale.
Unless otherwise specified in the pricing supplement, the commission may range
from .125% to .750% of the principal amount of each note sold through that
agent. We will receive from 98.875% to 99.250% of the principal amount of each
note, before deducting a portion of the aggregate offering expenses of
approximately $250,000.
Distribution Through Underwriters
We may also sell notes to any agent, acting as principal, for its own
account or for resale to one or more investors or other purchasers, including
other broker-dealers.
The agents may sell any notes they have purchased as principal to any dealer
at a discount. Unless otherwise specified in the pricing supplement, the
discount allowed to any dealer will not be in excess of the discount to be
received by the agent from us. Unless otherwise specified in the pricing
supplement, any note sold to an agent as principal will be purchased by that
agent at a price equal to 100% of the principal amount of that note less a
percentage ranging from .125% to .750% of that principal amount. The notes may
be resold by the agent to investors and other purchasers from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale, or the
notes may be resold to certain dealers as described above. After the initial
public offering of any notes, the public offering price and discount may be
changed.
Direct Sales
We may sell notes directly to investors, without the involvement of any
agent or underwriter. In this case, we would not be obligated to pay any
commission or discount in connection with the sale.
General Information
The name of any agents or other persons through which we sell any notes, as
well as any commissions or discounts payable to those agents or other persons,
will be set forth in the pricing supplement. As of the date of this prospectus
supplement, the agents include Banc of America Securities LLC, First Union
Securities, Inc., SunTrust Equitable Securities Corporation, Wachovia
Securities, Inc, and The Williams Capital Group, L.P. We may replace any of the
agents or appoint additional agents in connection with the offering of the
notes from time to time.
S-38
<PAGE>
Any agent, underwriter or dealer that participates in the offering of the
notes may be an "underwriter" within the meaning of the Securities Act of 1933.
We have agreed to indemnify each agent and other persons against some
liabilities, including liabilities under the Securities Act. We have also
agreed to reimburse the agents for some expenses.
We will have the sole right to accept offers to purchase notes and may, in
our absolute discretion, reject any proposed purchase of notes in whole or in
part. Each agent will have the right, in its discretion, to reject in whole or
in part any proposed purchase of notes through it.
The underwriters, as well as dealers and agents, may purchase and sell the
notes in the open market. These transactions may include stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of bids and
purchases made to prevent or slow a decline in the market price of the notes.
Syndicate short positions arise when the underwriters or agents sell more notes
than we are required to sell to them in the offering. The underwriters may also
impose penalty bids by which the underwriting syndicate may reclaim selling
concessions allowed to either syndicate members or broker dealers who sell
notes in the offering for their own account if the syndicate repurchases the
notes in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market price of the notes, which may be higher
as a result of these activities than it might otherwise be in the open market.
These activities, if commenced, may be discontinued at any time without notice.
We and the underwriters make no representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the notes. In addition, we and the underwriters make no
representation that the underwriters will engage in those types of transactions
or that those transactions, once commenced, will not be discontinued without
notice.
The notes will not be listed on any securities exchange. The agents have
advised us that they may from time to time purchase and sell the notes in the
secondary market. However, no agent is obligated to do so and any agent may
discontinue making a market in the notes at any time without notice. No
assurance can be given as to the existence or liquidity of any secondary market
for the notes.
The agents, as well as other agents to or through which we may sell notes,
and their affiliates may engage in transactions with us and perform services
for us in the ordinary course of business.
Bank of America, N.A., an affiliate of Banc of America Securities LLC, is a
co-agent and a co-lender under our $300 million revolving credit facility dated
as of October 29, 1999. First Union National Bank, an affiliate of First Union
Securities, Inc., is the documentation agent and a co-lender under that credit
facility. SunTrust Bank, Central Florida, N.A., an affiliate of SunTrust
Equitable Securities Corporation, is the syndication agent and a co-lender
under that credit facility. Wachovia Bank, N.A., an affiliate of Wachovia
Securities, Inc., is the administrative agent and a co-lender under that credit
facility, and Wachovia Securities, Inc. was the lead arranger under that credit
facility. In addition, Wachovia Bank of Georgia, N.A., an affiliate of Wachovia
Securities, Inc., is the lender under the ESOP loan agreement under which $49.7
million was outstanding as of August 27, 2000, and First Union National Bank is
the transfer agent and the registrar for our common stock.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon for us by Dorsey & Whitney
LLP, and for the agents by McGuireWoods LLP. The opinions of Dorsey & Whitney
LLP and of McGuireWoods LLP will be based on assumptions about future actions
required to be taken by us and the trustee in connection with the issuance and
sale of each note, about the specific terms of each note and about other
matters that may affect the validity of the notes but which could not be
ascertained on the date of those opinions. In rendering their opinion, Dorsey &
Whitney LLP will rely on the opinion of McGuireWoods LLP as to all matters of
Florida law.
S-39
<PAGE>
PROSPECTUS
$500,000,000
DARDEN RESTAURANTS, INC.
Debt Securities
----------------
. We may use this prospectus from . A supplement to this prospectus
time to time to offer unsecured will name any underwriters,
debt securities in one or more dealers or agents involved in the
series. sale of our debt securities and
describe their compensation.
. We are the world's largest casual
. The debt securities will be dining restaurant organization.
issued under the terms of an We operate Red Lobster(R), Olive
indenture, which is described in Garden(R), Bahama Breeze(R) and
this prospectus. Smokey Bones BBQ Sports BarSM
restaurants. We are based in
Orlando, Florida.
. The specific terms of each series . We do not expect our debt
of debt securities issued will be securities to officially trade in
described in detail in a any public market.
supplement to this prospectus.
. We may sell debt securities
directly to purchasers, through
underwriters, dealers or agents
or through any combination of
these methods.
This prospectus may not be used to consummate sales of these debt securities
unless accompanied by a prospectus supplement. The prospectus supplement may
update or change information contained in this prospectus.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is August 22, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS............... i
ABOUT DARDEN............................................................... 1
ABOUT THE OFFERING......................................................... 1
RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES............................ 1
USE OF PROCEEDS............................................................ 1
DESCRIPTION OF DEBT SECURITIES............................................. 2
PLAN OF DISTRIBUTION....................................................... 12
EXPERTS.................................................................... 14
VALIDITY OF DEBT SECURITIES................................................ 14
WHERE YOU CAN FIND MORE INFORMATION ABOUT DARDEN........................... 14
</TABLE>
----------------
SPECIAL NOTE OF CAUTION REGARDING
FORWARD-LOOKING STATEMENTS
Some statements in this prospectus, any applicable prospectus supplement and
the documents incorporated by reference into this prospectus may constitute
"forward-looking statements" within the meaning of federal securities laws.
When used in our documents or oral presentations, the words "anticipate,"
"estimate," "expect," "objective," "projection," "forecast," "goal" or similar
words are intended to identify forward-looking statements. Forward-looking
statements are based on our management's beliefs, assumptions, and expectations
of our future economic performance, taking into account the information
currently available to them. These statements are not statements of historical
fact. Forward-looking statements involve risks and uncertainties that may cause
our actual results, performance or financial condition to be materially
different from the expectations of future results, performance or financial
condition we express or imply in any forward-looking statements.
We have identified a number of cautionary factors in our filings with the
SEC including our most recent Annual Report on Form 10-K and Exhibit 99
attached thereto, which are incorporated by reference in this prospectus, and
we refer you to those reports for further information. We qualify any forward-
looking statements entirely by these cautionary factors.
i
<PAGE>
ABOUT DARDEN
We are the world's largest casual dining restaurant organization. As of May
28, 2000, we operated 1,102 restaurants in 49 states, including 622 Red
Lobster, 464 Olive Garden, 14 Bahama Breeze and two Smokey Bones BBQ Sports Bar
restaurants. We also operated 37 restaurants in Canada, including 32 Red
Lobster and five Olive Garden restaurants. We operate all of our North American
restaurants. In Japan, as of May 28, 2000, Red Lobster Japan Partners, a
Japanese retailer that is not affiliated with us, operated 35 Red Lobster
restaurants under an Area Development and Franchise Agreement.
We opened our first restaurant, a Red Lobster, in Lakeland, Florida in
January 1968. We were acquired by General Mills, Inc. in 1970. In May 1995, we
became a separate publicly held company when General Mills distributed all of
our outstanding stock to the stockholders of General Mills.
We were incorporated under the laws of the State of Florida in 1995. Our
principal executive offices are located at 5900 Lake Ellenor Drive, Orlando,
Florida 32809. Our telephone number is (407) 245-4000.
ABOUT THE OFFERING
We may offer and sell from time to time, in one or more series, unsecured
debt securities, which may consist of notes, debentures or other evidences of
indebtedness. The total initial offering prices of the debt securities that we
may offer and sell under this prospectus and supplements to it will not be
greater than $500,000,000 or the equivalent in a foreign currency at the time
of sale. This prospectus provides you with a general description of the
securities we may offer.
Each time we offer securities, we will provide you with a prospectus
supplement that will describe the specific amounts, prices and terms of the
securities being offered. The prospectus supplement may also add, update or
change information contained in this prospectus. To understand the terms of our
securities, you should carefully read this prospectus with the attached
prospectus supplement, which together provide the specific terms of the
securities that we are offering.
RATIO OF CONSOLIDATED EARNINGS TO FIXED CHARGES
The following table describes the ratio of our consolidated earnings to
fixed charges for each of the years indicated:
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------------
May 28, May 30, May 31, May 25, May 26,
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Ratio of consolidated earnings to
fixed charges....................... 7.07 6.18 4.96 2.89 5.57
</TABLE>
Earnings represent consolidated pretax earnings from continuing operations
before restructuring and asset impairment expense or credit, net, plus fixed
charges (net of capitalized interest). Fixed charges represent interest costs,
whether expensed or capitalized, and the percent of minimum restaurant and
equipment lease payments deemed to represent the interest factor.
USE OF PROCEEDS
We will use the net proceeds we receive from the sale of the debt securities
for general corporate purposes, unless we specify another use in the applicable
prospectus supplement. General corporate purposes may include working capital,
capital expenditures, stock repurchases, debt repayment or the financing for
possible acquisitions.
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<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities that are offered by this prospectus. We will offer the debt
securities, at various times, in one or more series, under an indenture dated
as of January 1, 1996 between us and Wells Fargo Bank Minnesota, National
Association (formerly known as Norwest Bank Minnesota, National Association),
as trustee.
This description of some provisions of the indenture is not complete. You
should refer to the applicable provisions of the indenture covering the debt
securities. The indenture is an exhibit to our registration statement, filed
with the Securities and Exchange Commission, File No. 333-41350, of which this
prospectus is a part. Each prospectus supplement will state the particular
terms that will apply to the offered debt securities included in the supplement
and will describe the extent, if any, to which the general terms and provisions
described in this prospectus do not apply to those particular securities.
Because this is a summary, it does not contain all the information that may
be important to you. You should read the entire indenture, including the
definitions of terms, and the applicable prospectus supplement before you make
any investment decision. Some of the terms used in the following discussion are
defined in the indenture, and their definitions are incorporated by reference
in this prospectus.
The covenants in the indenture do not necessarily protect you from a decline
in our credit rating due to highly leveraged or other transactions involving
us.
General
We may offer the debt securities in one or more series, as we may authorize
at various times. The indenture does not limit the aggregate principal amount
of debt securities that we may issue under it. We may specify a maximum
aggregate principal amount for a series of debt securities, but we may also
increase the specified maximum aggregate principal amount by resolution of our
board of directors. All debt securities will be our direct, unsecured
obligations and will rank equally with all of our other unsecured and
unsubordinated debt.
Except as described under the section entitled "Some Restrictive Covenants"
below, the indenture does not limit us or any of our subsidiaries from
incurring more debt or issuing more securities, and does not contain financial
or similar restrictions on us or any of our subsidiaries. Our rights and the
rights of our creditors, including holders of debt securities, to participate
in any distribution of assets of any of our subsidiaries at the time of the
subsidiary's liquidation or reorganization or otherwise, are effectively
subordinated to the claims of the subsidiary's creditors, except to the extent
that we or any of our creditors may be a creditor of that subsidiary.
The applicable prospectus supplement relating to the particular series of
debt securities being offered will specify the amounts, prices and terms of
those debt securities. These terms may include:
. the title of the offered debt securities;
. any limit on the aggregate principal amount of the offered debt
securities;
. the person to whom interest is payable, if other than the person in whose
name it is registered as of the record date for payment of interest;
. the date(s) on which the offered debt securities will mature and any
rights of extension;
. the annual rate(s), if any, which may be fixed or variable, at which the
offered debt securities will bear interest, or the method by which this
rate(s) will be determined;
. the date from which interest will accrue, the interest payment date(s)
and the regular related applicable record date(s);
. the place(s) where the principal, premium, if any, and interest on the
offered debt securities will be payable;
2
<PAGE>
. the period(s), if any, within which and the price(s) at which the offered
debt securities may be redeemed, under any redemption provisions, at our
option, and other detailed terms of the optional redemption provisions;
. our obligation to redeem or purchase the offered debt securities under
any sinking fund, or at your option, and the terms and conditions under
which the offered debt securities may be redeemed or purchased, in whole
or in part, under this obligation;
. if other than in denominations of U.S. $1,000 or multiples of U.S.
$1,000, the denominations in which the offered debt securities will be
issued;
. any index or formula used to determine the amount of principal, premium,
if any, or interest payable on the offered debt securities;
. the currency or currency units in which the offered debt securities are
denominated, and principal and interest may be payable, and for which the
debt securities may be purchased, if other than in U.S. dollars;
. if the principal, premium, if any, or interest paid on the offered debt
securities are specified or payable at our option or at yours, in a
currency other than U.S. dollars, whether and under what terms and
conditions this election can be made and the amount payable, or the
manner in which this amount is determined;
. if other than the principal amount of the offered debt security, the
portion of the principal payable at acceleration of the offered debt
securities following an event of default;
. if the principal amount payable at maturity of the offered debt
securities will not be determinable as of any date prior to maturity, the
principal amount of offered debt securities at that date, including the
principal amount deemed outstanding as of any date prior to maturity, or
in any case, the manner in which this amount is determined;
. if the offered debt securities are not defeasible as described under the
section entitled "Defeasance" below;
. whether the offered debt securities are to be issued in whole or in part
in the form of one or more global securities and, if so, the identity of
the depositary for the global security or debt securities and the
circumstances under which you may exchange any global security for debt
securities registered in the name of, and any transfer of the global
security registered to an entity other than the depositary or its
nominee;
. any event of default or covenant related to the offered debt securities
of a particular series, if not specified in this prospectus; and
. any other terms of the offered debt securities that will not conflict
with the provisions of the indenture.
Unless the applicable prospectus supplement specifies otherwise, we will
issue the debt securities in fully registered form denominated in U.S. dollars
in denominations of $1,000 or multiples of $1,000. We may issue the offered
debt securities in the form of one or more global certificates, as described
below under the section entitled "Global Securities." The applicable prospectus
supplement will describe special federal income tax and other considerations
related to offered debt securities denominated in foreign currencies.
Exchange, Registration and Transfer
You may exchange debt securities of any series that are not global
securities for other registered securities of the same series and of like
aggregate principal amount in different authorized denominations. Transfers and
exchanges may be made without service charge and after payment of any taxes or
other governmental charges as described in the indenture. We have appointed the
trustee as security registrar as provided under the indenture. The security
registrar will effect the transfer or exchange when it is satisfied with the
documents of title and identity of the person making the request.
3
<PAGE>
Original Issue Discount Debt Securities
We may issue the offered debt securities as original issue discount debt
securities, bearing no interest or with an interest rate which at the time of
issuance is below market rates. We may sell original issue discount debt
securities at a substantial discount below their principal amount. The
applicable prospectus supplement will describe special federal income tax and
other considerations related to original issue discount debt securities.
Payment and Paying Agent
Unless the applicable prospectus supplement specifies otherwise, we will pay
the principal, premium, if any, and interest on the offered debt securities,
and the transfer of the offered debt securities will be registrable, at the
principal corporate trust office of the trustee. In addition, unless the
applicable prospectus supplement specifies otherwise, and with the exception of
global securities, we may, at our option, pay interest by check mailed to the
address of the person entitled to it, as it appears on our security register.
Global Securities
We may issue the offered debt securities of a series in whole or in part in
the form of one or more global certificates that we will deposit with a
depositary identified in the applicable prospectus supplement. We may issue
global securities in a denomination equal to the aggregate principal amount of
outstanding debt securities of the series.
Unless and until it is exchanged in whole or in part for the individual debt
securities it represents, a global security may not be transferred except as a
whole:
. by the applicable depositary to a nominee of the depositary,
. by any nominee to the depositary itself or another nominee, or
. by the depositary or any nominee to a successor depositary or any nominee
of the successor.
We will describe the specific terms of the depositary arrangement related to
a series of debt securities in the applicable prospectus supplement. We
anticipate that the following provisions will generally apply to depositary
arrangements.
When we issue a global security, the depositary for the global security or
its nominee will credit, on its book-entry registration and transfer system,
the respective principal amounts of the individual debt securities represented
by that global security to the accounts of persons that have accounts with the
depositary, which we refer to as the participants. Those accounts will be
designated by the dealers, underwriters or agents related to the underlying
debt securities or by us if those debt securities are offered and sold directly
by us. Ownership of beneficial interests in the global security will be shown
on records maintained by the applicable depositary or its nominee. For
interests of persons other than participants, that ownership information will
be shown on the records of participants. Transfer of that ownership will be
effected only through those records. The laws of some states require that some
purchasers of securities take physical delivery of securities in definitive
form. These limits and laws may impair our ability to transfer beneficial
interests in a global security.
As long as the depositary for a global security, or its nominee, is the
registered owner of that global security, the depositary or nominee will be
considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the applicable indenture. Except as
provided below, owners of beneficial interest in a global security:
. will not be entitled to have any of the underlying debt securities
registered in their names;
. will not receive or be entitled to receive physical delivery of any of
the underlying debt securities in definitive form; and
. will not be considered the owners or holders under the indenture relating
to those debt securities.
4
<PAGE>
Payments of principal, premium, if any, and interest on individual debt
securities represented by a global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee as the
registered owner of the global security representing these debt securities.
Neither we, the trustee for the debt securities, any paying agent nor the
registrar for the debt securities will be responsible for any aspect of the
records relating to or payments made by the depositary or any participants on
account of beneficial interests of the global security.
We expect that the depositary or its nominee, after receipt of any payment
of principal, premium, if any, or interest relating to a permanent global
security representing any series of debt securities, will immediately credit
the participants' accounts with the payments. Those payments will be credited
in amounts proportional to the respective beneficial interests of the
participants in the principal amount of the global security as shown on the
records of the depositary or its nominee. We also expect that payments by
participants to owners of beneficial interests in the global security held
through those participants will be governed by standing instructions and
customary practices. This is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Those payments will
be the sole responsibility of those participants.
If the depositary for a series of debt securities is at any time unwilling,
unable or ineligible to continue as depositary and we do not appoint a
successor depositary within 90 days, we will issue individual debt securities
of that series in exchange for the global security or securities representing
that series. In addition, we may at any time in our sole discretion determine
not to have any debt securities of a series represented by one or more global
securities. In that case, we will issue individual debt securities of that
series in exchange for the global security or securities. Further, if we
specify, the owner of a beneficial interest in a global security may, on terms
acceptable to us, the trustee and the applicable depositary, receive individual
debt securities of that series in exchange for those beneficial interests. The
foregoing is subject to any limitations described in the applicable prospectus
supplement. In this instance, the owner of the beneficial interest will be
entitled to physical delivery of individual debt securities equal in principal
amount to the beneficial interest and to have the debt securities registered in
its name. Those individual debt securities will be issued in denominations,
unless we specify otherwise, of $1,000 or integral multiples of $1,000.
Some Restrictive Covenants
Limitations on Liens
Unless the applicable prospectus supplement specifies otherwise, neither we
nor any restricted subsidiary will incur, issue, assume or guarantee any debt
secured by a lien on any principal property, of ours or of any restricted
subsidiary, or on shares of capital stock or debt issued by any restricted
subsidiary and owned by us or any restricted subsidiary, whether the principal
property, shares or debt were owned on the date of the indenture or acquired
after that date, without providing that the debt securities will be secured
equally and ratably with all other debt also secured, as long as this debt is
secured.
Debt means any obligation of ours or of any of our subsidiaries, or any
obligation guaranteed by us or any of our subsidiaries to repay money borrowed,
whether evidenced by bonds, debt securities, notes or similar instruments, and
including reimbursement obligations related to commercial letters of credit,
bankers' acceptances or similar facilities.
Lien means, for any property or assets, any mortgage or deed of trust,
pledge, hypothecation, assignment, security interest, lien, encumbrance, or
other security arrangement of any kind related to that property or assets,
including any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing.
Principal property means all restaurant or related equipment and real
property, in each case which is owned by us or a subsidiary and which
constitutes all or part of any restaurant located within the United States or
Canada.
5
<PAGE>
Restricted subsidiary means any subsidiary of ours which does not meet the
following conditions:
. the greater portion of the operating assets is located, or the principal
business is carried on, outside the United States and Canada, or which,
during the twelve most recent calendar months, or shorter period elapsed
since its organization, derived the major portion of its gross revenues
from sources outside the United States or Canada;
. the principal business consists of financing or assisting in the
financing of dealers, distributors or other customers to facilitate:
- the acquisition or disposition of our products or of any of our
subsidiaries, or
- obtaining equipment or machinery used in this acquisition or
disposition;
. the principal business consists of owning, leasing, dealing in or
developing real property; or
. substantially all of the assets consist of securities of subsidiaries
described in the first three bullet points above.
Subsidiary means a corporation in which we or one or more subsidiaries
directly or indirectly own more than 50% of the outstanding voting stock.
Voting stock is a stock which ordinarily has voting power for the election of
directors, at all times or as long as no senior class of stock has this voting
power due to a contingency.
The limitations on liens do not apply to:
. liens existing on the date of the indenture;
. liens on any principal property acquired, constructed or improved by us
or any restricted subsidiary after the date of the indenture which are
created or assumed at the time of, or within 180 days of the acquisition,
construction or improvement, to secure or provide for the payment of all
or any part of the cost of the acquisition, construction or improvement;
. liens on property, shares of capital stock or debt existing at the time
they are acquired by us whether by merger, consolidation, purchase, lease
or some other method, including liens existing at the time that this
corporation becomes a restricted subsidiary;
. liens in favor of us or any of our restricted subsidiaries;
. liens in favor of the state or federal government, any department, agency
or subdivision of any state or federal government, or Canada or political
subdivision of Canada, to secure partial, progress, advance or other
payments, to secure other contractual or statutory obligations, or to
secure any debt incurred to finance the cost of acquiring, constructing
or improving the property that is subject to the lien, including liens
incurred in connection with pollution control, industrial revenue or
similar financings;
. liens on any property created, assumed or otherwise brought into
existence in contemplation of the sale or other disposition of the
underlying property, whether directly or indirectly, by way of share
disposition or otherwise if we disposed of the property within 180 days
after the creation of these liens and if any debt secured by these liens
will be without recourse to us or any subsidiary;
. liens imposed by law, including mechanics', workmen's, repairmen's,
materialmen's, carriers', warehousemen's, vendors' or other liens arising
in the ordinary course of business, or federal, state or municipal liens
arising out of contracts for the sale of products or services by us or
any restricted subsidiary, or deposits or pledges to obtain the release
of any of these liens;
. pledges or deposits under workmen's compensation or similar laws or under
other circumstances;
. liens in connection with legal proceedings, including liens arising out
of judgments or awards, contested in good faith by us or our restricted
subsidiary, or liens incurred by us or our restricted subsidiary to
obtain a stay or discharge in the course of legal proceedings;
. liens for taxes or assessments not yet due or delinquent, or which can be
paid without penalty, or contested in good faith by appropriate
proceedings;
6
<PAGE>
. liens consisting of restrictions on the use of real property which do not
interfere materially with the property's use or value; or
. any extension, renewal or replacement, as a whole or in part, of any lien
existing on the date of the indenture or of any lien referred to, in the
first two and in the last six bullet points. This extension, renewal or
replacement lien must however be limited to all or part of the same
property, shares of stock or debt that secured the lien, plus
improvements on the property, and the debt secured by the lien at that
time must not be increased.
The limitations on liens also do not apply if at the time and after giving
effect to any debt secured by a lien and any retirement of debt secured by a
lien:
. the total amount of all existing debt secured by liens which could not
have been incurred by us or our restricted subsidiary without equally or
ratably securing the debt securities, and which is not subject to the
exceptions described above; plus
. the attributable value of all sale and leaseback transactions entered
into in reliance on the section titled "Limitations on Sale and
Leaseback"
does not exceed the greater of 10% of our consolidated capitalization or
$250,000,000.
Consolidated capitalization means consolidated total assets less
consolidated non-interest bearing current liabilities, all as shown by our
consolidated balance sheet and the consolidated balance sheet of our
subsidiaries, whether or not consolidated for accounting purposes.
Limitations on Sale and Leaseback
Unless the applicable prospectus supplement specifies otherwise, neither we
nor any of our restricted subsidiaries will enter into any sale and leaseback
transaction involving the leasing for a period greater than three years of any
principal property, unless either:
. we or our restricted subsidiary would be, at the time of entering into
the sale and leaseback transaction, entitled, without equally and
ratably securing the debt securities then existing, to incur, issue,
assume or guarantee debt secured by a lien on the property, under the
provisions described above in the section entitled "Limitations on
Liens," or
. within 180 days after that sale or transfer, we apply to retire our
funded debt, subject to credits for some voluntary retirements of funded
debt, an amount equal to the greater of:
- the net proceeds of the sale of the principal property sold and leased
back under that arrangement, or
- the fair market value of the principal property so sold and leased
back.
This limitation will not apply to a sale and leaseback transaction between
us and a restricted subsidiary, or between restricted subsidiaries, or
involving the taking back of a lease for a period of less than three years.
Funded debt means notes, bonds, debt securities or other debt for money
borrowed which by its terms matures at, or is extendible or renewable at the
option of the lender to a date more than 12 months after the date of the
creation of that debt.
This limitation on sale and leaseback transactions also does not apply if at
the time of the sale and leaseback:
. the attributable value of all sale and leaseback transactions existing at
that time and which is not subject to the exceptions described above;
plus
. the total amount of all existing debt secured by liens that we entered
into in reliance on the last two bullet points of the section entitled
"Limitations on Liens,"
does not exceed the greater of 10% of our consolidated net tangible assets or
$250,000,000.
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Attributable value means, for any sale and leaseback transaction, at the
time of determination, the lesser of:
. the sale price of the principal property so leased, multiplied by a
fraction, the numerator of which is the remaining portion of the base
term of the lease included in sale and leaseback transaction and the
denominator of which is the base term of such lease, and
. the total obligation, discounted to present value at the highest rate of
interest specified by the terms of any series of debt securities then
outstanding compounded semi-annually, of the lessee for rental payments,
other than amounts required to be paid on account of property taxes as
well as maintenance, repairs, insurance, water rates and other items
which do not constitute payments for property rights, during the
remaining portion of the base term of the lease included in that sale and
leaseback transaction.
Events of Default
Events of default when used in the indenture, mean any of the following for
a series of offered debt securities:
. failure to pay any interest on any debt security for 30 days after the
interest becomes due;
. failure to pay the principal or premium, if any, on any debt security
when due;
. failure to deposit any sinking fund payment on any debt security when
due;
. failure to perform or breach of any other covenant in the indenture that
continues for 60 days after written notice;
. a default under any bond, debt security, note or other debt for money
borrowed by us, including a default related to debt securities of any
series other than that series, or under any mortgage, indenture or
instrument, including the indenture, under which there may be issued or
by which there may be secured or evidenced any debt for money borrowed by
us, having an aggregate principal amount outstanding of at least
$25,000,000, whether that debt now exists or is later created, which debt
has become due and has not been paid, or whose maturity has been
accelerated, and which debt has not been discharged or that acceleration
has not been annulled within 10 business days after written notice as
provided in the indenture;
. some events of bankruptcy, insolvency or reorganization; and
. any other event of default related to the debt securities of that series.
If any event of default, other than an event of default described in the
sixth bullet point above for any series, occurs and is continuing, the trustee
or the holders of at least 25% in principal amount of the outstanding debt
securities of that series may declare the principal amount, or, if any of the
debt securities of that series are original issue discount debt securities, the
lesser portion of the principal amount of these debt securities as may be
specified by their terms, of all of the debt securities of that series to be
due and immediately payable.
If an event of default described in the sixth bullet point above occurs, the
principal amount, or if any of the debt securities of that series are original
issue discount securities, the portion of the principal amount of these debt
securities as may be specified by their terms, will automatically become
immediately due and payable, and without any declaration or other action on the
part of the trustee or any holder.
The trustee is required, within 90 days after the occurrence of an event of
default related to the debt securities of any series, to give to the holders of
the debt securities of that series notice of the default that it actually knows
of, if not cured or waived. However, except in the case of default in the
payment of principal, premium, if any, or interest on any debt security of that
series, or in the deposit of any sinking fund payment which is provided, the
trustee will be protected in withholding the notice if the trustee in good
faith determines that the withholding of the notice is in the interest of the
holders of the debt securities of that series. In addition, the notice will not
be given until 30 days after the occurrence of an event of default related to
the debt
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securities of any series in the performance of a covenant in the indenture
other than for the payment of the principal, premium, if any, or interest on
any debt security of that series or the deposit of any sinking fund payment
with respect to the debt securities of that series.
At any time after a declaration of acceleration of any debt securities of a
series is made, but before the trustee has obtained a judgment for payment of
money, the holders of a majority in aggregate principal amount of the existing
debt securities of that series may, under some circumstances, rescind this
acceleration.
The indenture contains provisions entitling the trustee to be indemnified by
the holders of the debt securities of the relevant series before proceeding to
exercise any right or power under the indenture at the request of those
holders. Subject to these provisions for the indemnification of the trustee,
the holders of a majority in aggregate principal amount of the outstanding debt
securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, related to the debt
securities of that series.
The holder of debt securities will not have any right to institute any
proceeding related to the indenture, or for the appointment of a receiver or
trustee for any other remedy under the indenture, unless:
. the holder has previously given to the trustee written notice of a
continuing event of default related to the debt securities of that
series;
. holders of at least 25% in aggregate principal amount of the outstanding
debt securities of that series have made a written request to the trustee
to institute the proceeding and the holders have offered reasonable
indemnity; and
. the trustee has failed to institute the proceeding, and has not received
from the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series instructions which conflict
with that request, within 60 days after the notice, request and offer.
The indenture requires us to file annually with the trustee a certificate
executed by one officer, indicating whether the officer has knowledge of any
default under the indenture.
The right of any holder to receive payment of the principal, premium, if
any, and interest on the debt securities or to institute a legal proceeding
cannot be impaired without the holder's consent.
Modification and Waiver
With the consent of the holders of at least a majority in aggregate
principal amount of the outstanding debt securities of any series affected by
the modification or amendment, voting as one class, we and the trustee may
execute supplemental indentures modifying or amending the indenture or any
supplemental indenture.
Without the consent of the holder of each debt security affected by the
modification, we may not:
. change the maturity of, the principal of, or any installment of principal
or interest on any debt security; or
. reduce the principal amount of the debt security; or
. reduce the rate of interest on the debt security; or
. reduce any premium payable at redemption of the debt security; or
. reduce the amount of the principal of an original issue discount security
due or any other security due at acceleration of maturity; or
. change the place of payment, or coin or currency in which the principal,
premium, if any, or interest on any debt security is payable; or
. impair the right to institute suit for the enforcement of any payment on
or after maturity, or in the case of redemption or repayment, on or after
the redemption or repayment date; or
. reduce the percentage in principal amount of outstanding debt securities
of any series, the consent of the holders of which is required for
modification or amendment of the indenture; or
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. reduce the percentage of outstanding debt securities necessary to waive
compliance with some provisions of the indenture or for waiver of some
defaults; or
. modify the foregoing requirements.
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of each series may, on behalf of the holders of all
debt securities of that series, waive, for that series, our compliance with
some provisions of the indenture.
The holders of at least a majority in aggregate principal amount of the
outstanding debt securities of each series may, on behalf of the holders of all
debt securities of that series, waive any past default under the indenture for
the debt securities of that series, except a default:
. in the payment of principal, premium, if any, or interest on any debt
security, or
. related to a covenant or provision of the indenture which cannot be
modified or amended without the consent of the holder of each outstanding
debt security of the series affected.
The indenture provides that, in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given, made
or taken any request, demand, authorization, direction, notice, consent, waiver
or other action as of any date:
. the principal amount of an original issue discount security deemed
outstanding will be the amount of the principal of the original issue
discount security due at acceleration of maturity to that date;
. if, as of that date, the principal amount payable at the maturity of a
debt security cannot be determined, the principal amount of the debt
security deemed outstanding will be the amount determined under a board
resolution and specified in an officers' certificate, or determined in
one or more supplemental indentures, prior to the issuance of the debt
securities;
. the principal amount of a debt security denominated in one or more
foreign currencies or currency units deemed outstanding will be the U.S.
dollar equivalent, determined as of that date as described in the
previous bullet point, of the principal amount of the debt security, or
in the case of a debt security described in either of the first two
bullet points, of the amount determined as described in that bullet point
above; and
. debt securities owned by us or any other lender on the debt securities,
or any affiliates of ours or of any lender, will be disregarded and
deemed not to be outstanding, except that in determining whether the
trustee will be protected in relying on such request, demand,
authorization, direction, notice, consent, waiver or other action, only
debt securities which the trustee knows to be so owned will be
disregarded.
Debt securities so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
trustee the pledgee's right to so act for the debt securities and that the
pledgee is not us or any other lender on the debt securities or any of our
affiliates or other lender.
Consolidation, Merger and Sale of Assets
We may not consolidate with or merge into another entity or convey, transfer
or lease our property and assets substantially as an entirety to any other
entity, and we may not permit any entity to consolidate with or merge into us
or convey, transfer or lease their properties and assets substantially as an
entirety to us, unless:
. any successor or purchaser is a corporation, partnership, limited
liability company or trust organized under the laws of the United States,
any State or the District of Columbia, and this successor or purchaser
expressly assumes our obligations on the debt securities under a
supplemental indenture in a form satisfactory to the trustee;
. immediately after giving effect to the transaction, no event of default,
and no event which after notice or lapse of time or both would become an
event of default, occurred and is continuing;
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. if, as a result of this transaction, our property or assets become
subject to a lien which is not permitted by the indenture, our successor
or us, as the case may be, takes the necessary steps to secure the debt
securities issued under the indenture equally and ratably with debt
secured by the lien; and
. other conditions required under the indenture are met.
If we consolidate or merge into or if we convey, transfer or lease our
assets substantially as an entirety, our successor will succeed to, and will be
substituted for us under the indenture, and in this case, but not in the case
of a lease, we will be relieved of all obligations and covenants under the
indenture and debt securities.
Defeasance
Unless the applicable prospectus supplement specifies otherwise, the
following provisions relating to defeasance and discharge of debt, or relating
to defeasance of some restrictive covenants under the indenture, will apply to
the debt securities of any series, or to any specified part of a series.
The indenture contains a provision which permits us to elect:
. to defease and be discharged from all of our obligations, subject to
limited exceptions, related to any series of debt securities then
outstanding, which we refer to as legal defeasance; or
. to be released from our obligations under some restrictive covenants,
including those described above under the section entitled "Some
Restrictive Covenants," which we refer to as covenant defeasance.
To make this election, we must:
. deposit in trust for the benefit of the holders of the debt securities,
money or U.S. government obligations, or both, which, through the payment
of principal, premium, if any, and interest in accordance with their
terms, will provide sufficient money to repay in full the series of debt
securities and any mandatory sinking fund payments on the respective
maturities;
. deliver to the trustee an opinion of counsel as provided under the
indenture, that holders of debt securities will not recognize gain or
loss for federal income tax purposes as a result of the deposit,
defeasance and discharge and will be subject to federal income tax in the
same amount, in the same manner and at the same times as would have been
the case if this deposit, defeasance and discharge had not occurred; and
. comply with other conditions of the indenture.
If we exercised the legal defeasance option on any debt securities and these
debt securities were declared due and payable because an event of default
occurred, the amount of money and U.S. government obligations deposited in
trust would be sufficient to pay the amounts due on the debt securities at the
time of their respective maturities but may not be sufficient to pay the
amounts due on the debt securities at acceleration resulting from the event of
default. In that case, we would remain liable for the payments.
U.S. government obligation means:
. any security which is:
- a direct obligation of the United States for the payment of which the
full faith and credit of the United States is pledged, or
- an obligation of a person controlled or supervised by and acting as an
agency or instrumentality of the United States the payment of which is
unconditionally guaranteed as a full faith and credit obligation by
the United States, which, in case of either this paragraph or the
previous paragraph, is not callable or redeemable at the option of the
issuer; and
. any depositary receipt issued by a bank, as custodian for any U.S.
government obligation which is specified in the first bullet point above
and held by that bank for the account of the holder of the depositary
receipt, or for any specific payment of principal or interest on any U.S.
government obligation so specified and held, provided that, except as
required by law, the custodian is not
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authorized to make any deduction from the amount payable to the holder of
the depositary receipt from any amount received by the custodian for the
U.S. government obligation or the specific payment of principal or
interest evidenced by the depositary receipt.
The Trustee
Wells Fargo Bank Minnesota, National Association (formerly known as Norwest
Bank Minnesota, National Association) is the trustee under the indenture. The
trustee may resign or be removed by the act of holders of a majority in
principal amount of the securities of a series, with respect to one or more
series of debt securities, and we may appoint a successor trustee to act for
these series. If two or more persons are acting as trustee for different series
of debt securities, each trustee will be a trustee of a trust under the
indenture separate and apart from the trust administered by any other trustee,
and any action described in this prospectus to be taken by the "trustee" may
then be taken by each trustee for, and only for, the series of securities for
which it is trustee.
The trustee participates in our credit agreement and maintains customary
banking relationships with us. The trustee also serves as our register and
transfer agent for the offered debt securities.
Governing Law
The indenture and the offered debt securities will be governed by, and
construed under, the laws of the State of New York.
PLAN OF DISTRIBUTION
We may sell the offered debt securities:
. through underwriters or dealers;
. directly to one or a limited number of institutional purchasers;
. through agents; or
. through some combination of these methods.
This prospectus or the applicable prospectus supplement will describe the
terms of the offering of any debt securities, including the name or names of
any underwriters, dealers or agents, the price of the offered securities and
the net proceeds to us from the sale, including any underwriting commissions or
other items constituting underwriters' compensation.
By Underwriters
If underwriters are used in the sale, the offered debt securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The debt securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by one
or more investment banking firms or others, as designated. Unless the
applicable prospectus supplement specifies otherwise, the obligations of the
underwriters or agents to purchase the offered debt securities will be subject
to some conditions. The underwriters will be obligated to purchase all the
offered debt securities if any of the securities are purchased. Any initial
public offering price and any underwriting commissions or other items
constituting underwriters' compensation may be changed from time to time.
By Dealers
If a dealer is utilized in the sale of any offered debt securities, we will
sell those debt securities to the dealer, as principal. The dealer may then
resell the debt securities to the public at varying prices to be determined by
the dealer at the time of resale.
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By Agents
We may also sell offered debt securities through agents. Unless otherwise
indicated in the prospectus supplement, any agent will be acting on a
reasonable efforts basis for the period of its appointment.
By Direct Sales
We may also directly sell offered debt securities. In this case, no
underwriters, dealers or agents would be involved.
General Information
Underwriters, dealers and agents that participate in the distribution of the
offered debt securities may be deemed underwriters under the Securities Act,
and any discounts or commissions they receive from us and any profit on their
resale of the debt securities may be treated as underwriting discounts and
commissions under the Securities Act. Any underwriters, dealers or agents will
be identified and their compensation described in a prospectus supplement.
If the applicable prospectus supplement so indicates, we will authorize
agents, underwriters or dealers to solicit offers by some specified
institutions to purchase offered debt securities from us at the public offering
price specified in the prospectus supplement under delayed delivery contracts
providing for payment and delivery on a specified date in the future. These
contracts will be subject only to those conditions stated in the prospectus
supplement, and the prospectus supplement will specify the commission payable
for solicitation of the contracts.
Under agreements entered into with us, agents and underwriters who
participate in the distribution of the offered debt securities may be entitled
to indemnification by us against some civil liabilities, including liabilities
under the Securities Act, or to contribution regarding payments that the agents
or underwriters may be required to make. Agents and underwriters may be
customers of, engage in transactions with, or perform services for us in the
ordinary course of business.
The offered debt securities will be a new issue of securities with no
established trading market. Any underwriters or agents to or through whom we
sell the debt securities for public offering and sale may make a market in the
debt securities. The underwriters or agents are not obligated to make a market
in the offered debt securities and may discontinue market making at any time
without notice. We cannot predict the liquidity of the trading market for any
debt securities.
In connection with an offering of our debt securities, underwriters, dealers
or agents may purchase and sell them in the open market. These transactions may
include stabilizing transactions and purchases to cover syndicate short
positions created in connection with the offering. Stabilizing transactions
consist of some bids or purchases for the purpose of preventing or slowing a
decline in the market price of the debt securities, and syndicate short
positions involve the sale by the underwriters or agents, as the case may be,
of a greater number of securities than they are required to purchase from us in
the offering. Underwriters may also impose a penalty bid, which means that the
underwriting syndicate may reclaim selling concessions allowed to syndicate
members or other broker dealers who sell securities in the offering for their
account if the syndicate repurchases the securities in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the debt securities, which may be higher than the price that
might otherwise prevail in the open market. These activities, if commenced, may
be discontinued at any time without notice. These transactions may be affected
on any securities exchange on which the debt securities may be listed, in the
over-the-counter market or otherwise.
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EXPERTS
The consolidated financial statements of Darden Restaurants, Inc. as of May
28, 2000 and May 30, 1999, and for each of the years in the three-year period
ended May 28, 2000 have been incorporated by reference in the prospectus and in
the registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference in the prospectus, and
upon the authority of said firm as experts in accounting and auditing.
VALIDITY OF DEBT SECURITIES
The validity of the offered debt securities will be passed upon for us by
George T. Williams, Esq., as Associate General Counsel of Darden, and, unless
otherwise indicated in the applicable prospectus supplement or prospectus
supplements, for any underwriters or agents by McGuireWoods LLP. As of July 7,
2000, George T. Williams owned 11,443 shares of our common stock and had
options to purchase 120,397 shares of our common stock.
WHERE YOU CAN FIND MORE INFORMATION ABOUT DARDEN
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C., 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Our SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov. You may also obtain copies of our SEC filings at the office
of the New York Stock Exchange, Inc. For further information on obtaining
copies of Darden's public filings at the New York Stock Exchange, you should
call 1-212-656-3000.
The SEC allows us to incorporate by reference into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information filed with the SEC will update and supersede this
information. We incorporate by reference the document listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14, or 14(d) of
the Securities Exchange Act of 1934 until our offering is completed:
. Annual Report on Form 10-K for the year ended May 28, 2000.
You may request a copy of this filing, at no cost, by writing to or
telephoning us at the following address (or by visiting our website at
http://www.darden.com):
Investor Relations
Darden Restaurants, Inc.
5900 Lake Ellenor Drive
Orlando, Florida 32809
(407) 245-4000
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or the
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
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$350,000,000
[Logos of Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones]
DARDEN RESTAURANTS, INC.
Medium-Term Notes, Series A
-----------------------------
PROSPECTUS SUPPLEMENT
November 10, 2000
-----------------------------
Banc of America Securities LLC
First Union Securities, Inc.
SunTrust Equitable Securities Corporation
Wachovia Securities, Inc.
The Williams Capital Group, L.P.
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