<PAGE>
RULE NO. 424(B)(5)
REGISTRATION NO. 33-50109
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 12, 1995
U.S. $150,000,000
Whitman Corporation
Medium-Term Notes, Series B
Due from Nine Months to 30 Years from Date of Issue
----------
Whitman Corporation (the "Company") may offer from time to time its Medium-
Term Notes, Series B (the "Notes") in an aggregate principal amount not to
exceed $150,000,000 (or, if any Notes are to be Original Issue Discount
Notes, Foreign Currency Notes or Indexed Notes (as each such term is
defined under "Description of Notes"), such principal amount as
shall result in an initial aggregate offering price equivalent to
no more than $150,000,000), subject to reduction as a result of
the sale of other debt Securities. See "Description of Notes"
and "Plan of Distribution of Notes."
Each Note will mature from nine months to thirty years from its date of
original issuance ("Issue Date"), as selected by the initial purchaser and
agreed to by the Company. A Note may be subject to optional redemption, or
obligate the Company to redeem or purchase such Note at the option of the
Holder thereof or pursuant to sinking fund or analogous provisions, in
each case as indicated in the applicable Pricing Supplement. Unless
otherwise indicated in the applicable Pricing Supplement, Notes
denominated in U.S. dollars will be issued in fully registered form in
denominations of $100,000 and any integral multiples of $1,000 in
excess thereof or, in the case of Foreign Currency Notes, in such
minimum denominations not less than the equivalent of $100,000 and
such other denomination or denominations in excess thereof as shall
be set forth in the applicable Pricing Supplement. Unless
otherwise indicated in the applicable Pricing Supplement, a
Foreign Currency Note will not be sold in, or to a resident of,
the country of the Specified Currency in which such Note is
denominated. See "Special Provisions Relating to Foreign
Currency Notes."
The interest rate or interest rate formula, if any, currency or currency unit,
issue price, Stated Maturity and redemption or purchase provisions, if any,
for each Note will be established by the Company at the date of issuance of
such Note and will be indicated in a Pricing Supplement. Each interest-
bearing Note will bear interest at either (a) a fixed rate (a "Fixed Rate
Note") or (b) a variable rate determined by reference to an interest rate
formula (a "Floating Rate Note"), which may be adjusted by adding or
subtracting the Spread and/or multiplying by the Spread Multiplier, unless
otherwise indicated in the applicable Pricing Supplement. Unless otherwise
indicated in the applicable Pricing Supplement, the interest rate formula
will be the Commercial Paper Rate, the Prime Rate, the CD Rate, the
Federal Funds Effective Rate, LIBOR or the Treasury Rate. Interest
rates, or interest rate formulas, are subject to change by the Company
from time to time, but no such change will affect any Note already
issued or as to which an offer to purchase has been accepted by the
Company.
Notes may be represented by a permanent Global Security or Securities, as
specified in the applicable Pricing Supplement, registered in the name of
The Depository Trust Company, as Depositary, or a nominee of the
Depositary (each such Note represented by a permanent Global Security
being referred to herein as a "Book-Entry Note"). Beneficial
interests in Book-Entry Notes will only be evidenced by, and
transfers thereof will only be effected through, records
maintained by the Depositary and its participants. Except as
described under "Description of Notes--Book-Entry Notes",
owners of beneficial interests in a permanent Global
Security will not be entitled to receive physical
delivery of Notes in definitive form and will not be
considered the Holders thereof.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Distributors' Proceeds to
Public(1) Commissions(2) Company(2)(3)
---------------- -------------- -----------------
<S> <C> <C> <C>
Per Note..................... 100% .125% -.750% 99.250% -99.875%
Total(4)..................... U.S.$150,000,000 U.S.$187,500- U.S.$148,875,000-
U.S.$1,125,000 U.S.$149,812,500
</TABLE>
(1) Unless otherwise indicated in the applicable Pricing Supplement, each Note
will be issued at 100% of its principal amount.
(2) Unless otherwise specified in the applicable Pricing Supplement, the
Company will pay a commission (or grant a discount) to CS First Boston
Corporation, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated
(the "Distributors"), of .125% to .750% of the principal amount of any
Note, depending on its Stated Maturity, sold through any such Distributor,
acting as agent (or sold to such Distributor as principal in circumstances
in which no other discount is agreed).
(3) Before deducting other expenses payable by the Company estimated at U.S.
$80,000.
(4) Or the equivalent thereof in other currencies or currency units.
----------
The Notes are being offered on a continuing basis by the Company through the
Distributors, each of which has agreed to use reasonable efforts to solicit
offers to purchase the Notes. The Company also may sell Notes to any
Distributor on its own behalf at negotiated discounts for resale to investors
and other purchasers at varying prices related to prevailing market prices at
the time of the resale or, if so agreed, at a fixed public offering price. The
Company reserves the right to sell Notes directly on its own behalf. The
Company also reserves the right to withdraw, cancel or modify the offer made
hereby without notice. The Company or any Distributor may reject any offer to
purchase Notes, in whole or in part. The Notes will not be listed on any
securities exchange, unless otherwise indicated in the applicable Pricing
Supplement, and there can be no assurance that the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market
for the Notes. See "Plan of Distribution of Notes".
CS First Boston
Goldman, Sachs & Co.
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
The date of this Prospectus Supplement is January 12, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE DISTRIBUTORS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- ---------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges (1)..................... 3.5x 2.9x 3.0x 2.6x 2.2x 0.8x(2) 1.9x
</TABLE>
- --------
(1) The ratio of earnings to fixed charges for the Company is defined as income
before provision for income taxes and minority interest plus interest
expense (including amortization of debt issuance expense), and the portion
of rental expense which represents interest (deemed to be one-third of
rentals) divided by fixed charges. Fixed charges include interest expense
(including capitalized interest and amortization of debt issuance expense)
and the portion of rental expense which represents interest.
(2) In 1990, the ratio of earnings to fixed charges was less than one-to-one
coverage principally as a result of a $170.8 million restructuring charge.
The dollar amount of fixed charge coverage deficiency in 1990 was $39.3
million. Excluding the restructuring charge, the ratio of earnings to fixed
charges was 1.8x in 1990.
DESCRIPTION OF NOTES
Unless otherwise specified in the applicable Pricing Supplement, the
following description of the particular terms of the Notes offered hereby
supplements the description of the general terms and conditions of debt
Securities set forth under the heading "Description of Securities" in the
Prospectus, to which description reference is hereby made. See "Glossary" for
definitions of certain terms used in this Prospectus Supplement.
GENERAL
The Notes offered hereby will be issued under the Indenture referred to in
the accompanying Prospectus between the Company and The First National Bank of
Chicago, as Trustee (the "Trustee"). The Notes constitute a single series for
purposes of the Indenture, limited to an aggregate principal amount not to
exceed $150,000,000 (or, if any Notes are to be Original Issue Discount Notes
or are to be denominated in one or more currencies or currency units other than
U.S. dollars ("Foreign Currency Notes") or with amounts payable in respect of
principal of or any premium or interest on the Notes to be determined by
reference to the value, rate or price of one or more specified indices
("Indexed Notes"), such principal amount as shall result in an aggregate
initial offering price equivalent to no more than $150,000,000). The Notes
offered hereby may be reduced by an amount equal to the aggregate initial
offering price of any other debt Securities (as defined in the accompanying
Prospectus) sold by the Company (including any other series of medium-term
notes). See "Plan of Distribution of Notes". The Notes (including the Foreign
Currency Notes) are referred to in the accompanying Prospectus as "Securities".
For a description of the rights attaching to different series of Securities
under the Indenture, see "Description of Securities" in the Prospectus.
Each Note will mature on a Market Day from nine months to thirty years from
its Issue Date, as selected by the initial purchaser and agreed to by the
Company.
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be issuable only in fully registered form in denominations of $100,000 and
integral multiples of $1,000 in excess thereof, or, in the case of Foreign
Currency Notes, in such minimum denomination not less than the equivalent of
$100,000 and such other denomination or denominations in excess thereof as
shall be set forth in the applicable Pricing
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Supplement. Notes may be represented by a permanent Global Security or
Securities, as indicated in the applicable Pricing Supplement, registered in
the name of the Depositary. See "Description of Notes--Book-Entry Notes" below.
The Notes may be issued as Original Issue Discount Notes. An Original Issue
Discount Note is a Note which is issued at a price lower than the principal
amount thereof and which provides that upon redemption or acceleration of the
Stated Maturity thereof an amount less than the principal thereof shall become
due and payable. In the event of redemption or acceleration of the Stated
Maturity of an Original Issue Discount Note, the amount payable to the Holder
of such Note upon such redemption or acceleration will be determined in
accordance with the terms of the Note, but will be an amount less than the
amount payable at the Stated Maturity of such Note. In addition, a Note issued
at a discount may, for United States federal income tax purposes, be considered
an original issue discount note, regardless of the amount payable upon
redemption or acceleration of the Stated Maturity of such Note. See "Certain
Federal Income Tax Considerations--Original Issue Discount" below.
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of and any
premium and interest on the Notes will be made in U.S. dollars in the manner
indicated in the accompanying Prospectus and this Prospectus Supplement. If any
of the Notes are to be denominated in one or more currencies or currency units
other than U.S. dollars, additional information pertaining to the terms of such
Notes and other matters relevant to the Holders thereof will be described in
the applicable Pricing Supplement. See "Special Provisions Relating to Foreign
Currency Notes" below.
The Notes may be issued as Indexed Notes, as indicated in the applicable
Pricing Supplement. Holders of Indexed Notes may receive a principal amount at
Stated Maturity that is greater or less than the face amount of such Notes
depending upon the fluctuation of the relative value, rate or price of the
specified index. Specific information pertaining to the method for determining
the principal amount payable at Stated Maturity, a historical comparison of the
relative value, rate or price of the specified index and the face amount of the
Indexed Note and certain additional tax considerations will be described in the
applicable Pricing Supplement.
The applicable Pricing Supplement will indicate either that a Note cannot be
redeemed prior to its Stated Maturity or that a Note will be redeemable at the
option of the Company on or after a specified date prior to its Stated Maturity
at a specified price or prices (which may include a premium), together with
interest accrued to but excluding the date of redemption. In addition, the
applicable Pricing Supplement will indicate whether the Company will be
obligated to redeem or purchase a Note at the option of the Holder thereof or
pursuant to any sinking fund or analogous provisions. If the Company will be so
obligated, the applicable Pricing Supplement will indicate the period or
periods within which and the price or prices at which the applicable Notes will
be redeemed or purchased, in whole or in part, pursuant to such obligation and
the other detailed terms and provisions of such obligation.
Unless otherwise indicated in an applicable Pricing Supplement, payments of
principal of and any premium and interest, other than with respect to Book-
Entry Notes and Foreign Currency Notes, will be made in immediately available
funds at the Corporate Trust Office of the Trustee in the Borough of Manhattan,
The City of New York, provided that the Note is presented to the Trustee or a
duly authorized paying agent (the "Paying Agent") in time for the Paying Agent
to make such payments in such funds in accordance with its normal procedures;
except that at the option of the Company payment of interest (other than
interest payable at Maturity) may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Security Register
(which, in the case of a Global Security or Global Securities representing
Book-Entry Notes, will be a nominee of the Depositary). Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Notes of like tenor and terms (or the Holder of the equivalent thereof in a
Specified Currency other than U.S. dollars) shall be entitled to
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<PAGE>
receive such interest payments by wire transfer in immediately available funds,
but only if appropriate instructions have been received in writing by the
Paying Agent on or prior to the applicable Record Date for such payment of
interest. With respect to payments at Maturity on Book-Entry Notes and Foreign
Currency Notes, see "Description of Notes--Book-Entry Notes" and "Special
Provisions Relating to Foreign Currency Notes", respectively.
The Notes, other than Book-Entry Notes, may be presented for registration of
transfer or exchange at the Corporate Trust Office of the Trustee in the
Borough of Manhattan, The City of New York. With respect to transfers of Book-
Entry Notes and exchanges of permanent Global Securities representing Book-
Entry Notes, see "Description of Notes--Book-Entry Notes".
Interest rates, interest rate bases and formulas and various other variable
terms of the Notes described herein are subject to change by the Company from
time to time, but no such change will affect any Note already issued or as to
which an offer to purchase has been accepted by the Company.
INTEREST
Each interest-bearing Note will bear interest from and including its Issue
Date or from and including the most recent Interest Payment Date (or in the
case of a Floating Rate Note with daily or weekly Interest Reset Dates, the day
following the most recent Record Date) with respect to which interest on such
Note (or any predecessor Note) has been paid or duly provided for at the fixed
rate per annum, or at the rate per annum determined pursuant to the interest
rate formula, stated therein and in the applicable Pricing Supplement until the
principal thereof is paid or made available for payment. Interest will be
payable on each Interest Payment Date and at Maturity. Interest will be payable
generally to the person (which, in the case of a permanent Global Security
representing Book-Entry Notes, shall be the Depositary) in whose name a Note
(or any predecessor Note) is registered at the close of business on the Record
Date next preceding each Interest Payment Date; provided, however, that
interest payable at Maturity will be payable to the person (which, in the case
of a permanent Global Security representing Book-Entry Notes, shall be the
Depositary) to whom principal shall be payable. Unless otherwise indicated in
the applicable Pricing Supplement, the first payment of interest on any Note
originally issued between a Record Date and an Interest Payment Date will be
made on the second Interest Payment Date following the Issue Date of such Note
to the registered owner on the Record Date immediately preceding such second
Interest Payment Date. With respect to payments of interest on Book-Entry
Notes, see "Description of Notes--Book-Entry Notes".
FIXED RATE NOTES
The applicable Pricing Supplement relating to a Fixed Rate Note will
designate a fixed rate of interest per annum payable on such Note and will
indicate the Interest Payment Dates and the Record Dates with respect to such
Note. Interest payments for Fixed Rate Notes shall be the amount of interest
accrued to, but excluding, the relevant Interest Payment Date, and interest on
Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-
day months. If any Interest Payment Date or the Maturity of a Fixed Rate Note
falls on a day that is not a Market Day, the related payment of principal,
premium, if any, or interest will be made on the next succeeding Market Day as
if made on the date such payment was due, and no interest will accrue on the
amount so payable for the period from and after such Interest Payment Date or
Maturity, as the case may be.
FLOATING RATE NOTES
The applicable Pricing Supplement relating to a Floating Rate Note will
designate an interest rate formula for such Floating Rate Note. Such formula
may be determined by reference to one or more of the following: (a) the
Commercial Paper Rate, in which case such Note will be a Commercial Paper Rate
Note,
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<PAGE>
(b) the Prime Rate, in which case such Note will be a Prime Rate Note, (c) the
CD Rate, in which case such Note will be a CD Rate Note, (d) the Federal Funds
Effective Rate, in which case such Note will be a Federal Funds Effective Rate
Note, (e) LIBOR, in which case such Note will be a LIBOR Note, (f) the
Treasury Rate, in which case such Note will be a Treasury Rate Note or (g)
such other interest rate formula as is set forth in such Pricing Supplement.
The applicable Pricing Supplement for a Floating Rate Note also will specify
the Spread and/or Spread Multiplier, if any, and the maximum or minimum
interest rate limitation, if any, applicable to each Note. In addition, such
Pricing Supplement will define or particularize for each Floating Rate Note
the following terms, if applicable: Calculation Agent, Calculation Dates,
Initial Interest Rate, Interest Payment Dates, Record Dates, Index Maturity,
Interest Determination Dates and Interest Reset Dates with respect to such
Note. See "Glossary" for definitions of certain terms used in this Prospectus
Supplement.
The rate of interest on a Floating Rate Note in effect on any day will be
(a) if such day is an Interest Reset Date with respect to such Floating Rate
Note, the interest rate determined on the Interest Determination Date with
respect to such Interest Reset Date or (b) if such day is not an Interest
Reset Date with respect to such Floating Rate Note, the interest rate on such
Floating Rate Note in effect on the immediately preceding Interest Reset Date
with respect to such Floating Rate Note; provided, however, that (i) the
interest rate in effect from the Issue Date of a Floating Rate Note (or that
of a predecessor Note) to but excluding the first Interest Reset Date with
respect to such Floating Rate Note will be the Initial Interest Rate (as set
forth in the applicable Pricing Supplement) and (ii) the interest rate in
effect for the ten days immediately prior to the Maturity of a Floating Rate
Note will be that in effect on the tenth day preceding such Maturity. Subject
to applicable provisions of law and except as described herein, the rate of
interest on a Floating Rate Note on any Interest Reset Date with respect
thereto will be the rate of interest determined with respect to the Interest
Determination Date pertaining to such Interest Reset Date as determined in
accordance with the applicable provisions described below.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each an "Interest Reset Date")
as specified in the applicable Pricing Supplement. The Interest Reset Date
will be, in the case of Floating Rate Notes which reset daily, each Market
Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) which
reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes
which reset weekly, except as provided in the following paragraph, the Tuesday
of each week; in the case of Floating Rate Notes which reset monthly, the
third Wednesday of each month; in the case of Floating Rate Notes which reset
quarterly, the third Wednesday of March, June, September and December; in the
case of Floating Rate Notes which reset semi-annually, the third Wednesday of
two months of each year, as indicated in the applicable Pricing Supplement;
and in the case of Floating Rate Notes which reset annually, the third
Wednesday of one month of each year, as indicated in the applicable Pricing
Supplement. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Market Day with respect to such Note, such
Interest Reset Date shall be the next succeeding Market Day with respect to
such Note, except that if such Note is a LIBOR Note and the next succeeding
Market Day falls in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Market Day.
The Interest Determination Date pertaining to an Interest Reset Date for a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination
Date"), a Prime Rate Note (the "Prime Rate Interest Determination Date"), a CD
Rate Note (the "CD Rate Interest Determination Date") or a Federal Funds
Effective Rate Note (the "Federal Funds Effective Interest Determination
Date") will be the second Market Day preceding the Interest Reset Date with
respect to such Note. The Interest Determination Date pertaining to an
Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date")
will be the second London Market Day preceding such Interest Reset Date. The
Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate Note (the "Treasury Interest Determination Date") will be the
day on which Treasury bills are auctioned for the week in which such Interest
Reset Date falls, or if no auction is held for such week, the Monday of such
week (or if Monday is a legal holiday, the next succeeding Market Day) and the
Interest Reset Date will the Market Day immediately following such Treasury
Interest
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Determination Date. Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
usually held on the following Tuesday, except that such auction may be held on
the preceding Friday. If an auction for such week is held on Monday or the
preceding Friday, such Monday or preceding Friday shall be the Treasury
Interest Determination Date for such week, and the Interest Reset Date of such
week shall be the Tuesday of such week (or, if such Tuesday is not a Market
Day, the next succeeding Market Day). If the auction for such week is held on
any day of such week other than Monday, then such day shall be the Treasury
Interest Determination Date and the Interest Reset Date for such week shall be
the next succeeding Market Day.
A Floating Rate Note may have either or both of the following: (a) a maximum
numerical interest rate limitation, or ceiling, on the rate of interest which
may accrue during any interest period and (b) a minimum numerical interest
rate limitation, or floor, on the rate of interest which may accrue during any
interest period. In addition to any maximum interest rate which may be
applicable to any Floating Rate Note, the interest rate on the Floating Rate
Notes will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.
Under present New York law the maximum rate of interest is 25% per annum on a
simple interest basis. The limit does not apply to Notes in which $2,500,000
or more has been invested.
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate
Notes which reset daily, weekly or monthly, on the third Wednesday of each
month or on the third Wednesday of March, June, September and December of each
year as indicated in the applicable Pricing Supplement; in the case of
Floating Rate Notes which reset quarterly, on the third Wednesday of March,
June, September and December of each year; in the case of Floating Rate Notes
which reset semi-annually, on the third Wednesday of the two months of each
year specified in the applicable Pricing Supplement; and in the case of
Floating Rate Notes which reset annually, on the third Wednesday of the month
specified in the applicable Pricing Supplement (each an "Interest Payment
Date"), and in each case, at Maturity. If, pursuant to the preceding sentence,
an Interest Payment Date (other than at Maturity) with respect to any Floating
Rate Note would otherwise be a day that is not a Market Day with respect to
such Note, such Interest Payment Date shall be the next succeeding Market Day
with respect to such Note, except that if such Note is a LIBOR Note and the
next succeeding Market Day falls in the next succeeding calendar month, such
Interest Payment Date (other than at Maturity) shall be the immediately
preceding Market Day. If the Maturity of a Floating Rate Note falls on a day
that is not a Market Day, the payment of principal, premium, if any, and
interest will be made on the next succeeding Market Day, and no interest on
such payment shall accrue for the period from and after such Maturity. Unless
otherwise indicated in the applicable Pricing Supplement, the Record Date with
respect to Floating Rate Notes shall be the date 15 calendar days prior to
each Interest Payment Date, whether or not such date shall be a Market Day.
Unless otherwise indicated in the applicable Pricing Supplement, interest
payments for a Floating Rate Note shall be the amount of interest accrued to
but excluding the Interest Payment Date; provided, however, that if the
Interest Reset Dates with respect to any Floating Rate Note are daily or
weekly, interest payable on any Interest Payment Date, other than interest
payable on any date on which principal on any such Note is payable, will
include interest accrued to and including the Record Date next preceding such
Interest Payment Date.
The interest accrued for any period is calculated by multiplying the face
amount of such Floating Rate Note by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in such period. Unless otherwise specified in the Note and the applicable
Pricing Supplement, the interest factor (expressed as a decimal rounded
upwards, if necessary, as described below) for each such day is computed by
dividing the interest rate (expressed as a decimal rounded upwards, if
necessary, as described below) applicable to such date by 360, in the case of
Commercial Paper Rate Notes, Prime Rate Notes, CD Rate Notes, Federal Funds
Effective Rate Notes or LIBOR Notes, or by the actual number of days in the
year, in the case of Treasury Rate Notes.
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Unless otherwise specified in a Pricing Supplement, all percentages resulting
from any calculation on Floating Rate Notes will be rounded, if necessary, to
the nearest one-hundred thousandth of a percentage point, with five one-
millionths of a percentage point rounded upwards (e.g., 7.876545% (or
.07876545) being rounded to 7.87655% or (.0787655) and 7.876544% (or .07876544)
being rounded to 7.87654% (or .0787654)), and all dollar amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded to the
nearest cent or, in the case of Foreign Currency Notes, the nearest unit (with
one-half cent or unit being rounded upwards).
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 which will become effective as a result of a determination made
on the most recent Interest Determination Date with respect to such Floating
Rate Note.
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified on the face of such Commercial Paper Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on
such date for commercial paper having the Index Maturity specified in the
applicable Pricing Supplement as published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published prior to 9:00
A.M., New York City time, on the Calculation Date pertaining to such Commercial
Paper Interest Determination Date, then the Commercial Paper Rate shall be the
Money Market Yield of the rate on such Commercial Paper Interest Determination
Date for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Commercial Paper". If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet published in either H.15(519) or Composite
Quotations, the Commercial Paper Rate for that Commercial Paper Interest
Determination Date shall be the Money Market Yield of the arithmetic mean, as
calculated by the Calculation Agent on such Calculation Date, of the offered
rates, as of 11:00 A.M., New York City time, on that Commercial Paper Interest
Determination Date, of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for commercial paper having 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 rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in
effect on such Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded
upwards, if necessary, to the next higher one-hundred thousandth of a
percentage point) calculated in accordance with the following formula:
D X 360
-----------
Money Market Yield = X 100
360-(D X M)
where "D" refers to the per annum 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.
PRIME RATE NOTES
Each Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified on the face of such Prime Rate Note and in the applicable Pricing
Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Prime Rate Interest Determination Date, the rate set
forth on such date in H.15(519) under the heading "Bank Prime Loan". In the
event that such rate is not published prior to 9:00 A.M., New York City time,
on the Calculation Date pertaining to such Prime Rate Interest Determination
Date, then the Prime Rate will be the arithmetic mean (rounded upwards, if
necessary, to the next higher one-hundred thousandth of a percentage point) of
the rates of interest publicly announced by each bank that appears on the
Reuters Screen NYMF Page as such bank's prime rate or base lending rate as in
effect for that Prime Rate Interest Determination Date. If fewer than four such
rates but more than one such rate appear on the Reuters Screen NYMF Page for
the Prime Rate Interest Determination Date, the Prime Rate will be the
arithmetic mean (rounded upwards, if necessary, to the next higher one-hundred
thousandth of a percentage point), as calculated by the Calculation Agent on
such Calculation Date, of the prime rates quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than two quotations are provided, the Prime Rate shall be determined on
the basis of the rates furnished in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business
under the laws of the United States, or any State thereof, having total equity
capital of at least $500 million and being subject to supervision or
examination by Federal or State authority, selected by the Calculation Agent to
provide such rate or rates; provided, however, that if the banks or trust
companies selected as aforesaid are not quoting as mentioned in this sentence,
the Prime Rate will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
CD RATE NOTES
Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified on the face of such CD Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Rate Interest Determination Date, the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "CDs (Secondary Market)". In the event that such rate is not
published prior to 3:00 P.M., New York City time, on the Calculation Date
pertaining to such CD Rate Interest Determination Date, then the CD Rate shall
be the rate on such CD Rate Interest Determination Date for negotiable
certificates of deposit having the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Certificates of Deposit". If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, the CD Rate for that CD Interest Determination Date shall
be calculated by the Calculation Agent and shall be the arithmetic mean
(rounded upwards, if necessary, to the next higher one-hundred thousandth of a
percentage point) of the secondary market offered rates, as of 10:00 A.M., New
York City time, on that CD Rate Interest Determination Date, of three leading
nonbank dealers of negotiable U.S. dollar certificates of deposit in The City
of New York selected by the Calculation Agent for negotiable certificates of
deposit of major United States money market banks with a remaining maturity
closest to the Index Maturity specified in the applicable Pricing Supplement in
a denomination of $5,000,000; provided, however, that if the dealers selected
as aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate will be the CD Rate in effect on such CD Rate Interest
Determination Date.
FEDERAL FUNDS EFFECTIVE RATE NOTES
Each Federal Funds Effective Rate Note will bear interest at the interest
rate (calculated with reference to the Federal Funds Effective Rate and the
Spread and/or Spread Multiplier, if any) specified on the face of such Federal
Funds Effective Rate Note and in the applicable Pricing Supplement.
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Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Effective
Interest Determination Date, the rate on such date for Federal Funds having the
Index Maturity specified in the applicable Pricing Supplement as published in
H.15(519) under the heading "Federal Funds (Effective)". In the event that such
rate is not published prior to 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Federal Funds Effective Interest
Determination Date, then the Federal Funds Effective Rate will be the rate on
such Federal Funds Effective Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate". If by
3:00 P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, the Federal Funds
Effective Rate for that Federal Funds Effective Interest Determination Date
shall be the arithmetic mean, as calculated by the Calculation Agent on such
Calculation Date, of the rates, as of 9:00 A.M., New York City time, on that
Federal Funds Effective Interest Determination Date, for the last transaction
in overnight Federal Funds arranged by three leading brokers of Federal Funds
transactions in The City of New York selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds
Effective Rate will be the Federal Funds Effective Rate in effect on such
Federal Funds Effective Interest Determination Date.
LIBOR NOTES
Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified
on the face of such LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR" will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be,
as specified in the applicable Pricing Supplement, either: (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Market Day immediately following such LIBOR
Interest Determination Date, that appear on the Reuters Screen LIBO Page as
of 11:00 A.M., London time, on such LIBOR Interest Determination Date, if
at least two such offered rates appear on the Reuters Screen LIBO Page
("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having the
Index Maturity designated in the applicable Pricing Supplement, commencing
on the second London Market Day immediately following such LIBOR Interest
Determination Date, that appears on Telerate Page 3750 as of 11:00 A.M.,
London time, on such LIBOR Interest Determination Date ("LIBOR Telerate").
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may replace
page LIBO on that service for the purpose of displaying London interbank
offered rates of major banks). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as
may replace the 3750 page on that service or such other service or services
as may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits). If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR will be determined as if LIBOR Reuters had been
specified. If at least two such offered rates appear on the Reuters Screen
LIBO Page, the rate in respect of such LIBOR Interest Determination Date
will be the arithmetic mean of such offered rates as determined by the
Calculation Agent. If fewer than two offered rates appear on the Reuters
Screen LIBO Page, or if no rate appears on Telerate Page 3750, as
applicable, LIBOR in respect of such LIBOR Interest Determination Date will
be determined as if the parties had specified the rate described in (ii)
below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuters Screen LIBO Page, as specified
in (i) (a) above, or on which no rate appears on Telerate Page 3750, as
specified in (i) (b) above, as applicable, LIBOR for such LIBOR Interest
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Determination Date will be determined on the basis of the rates at
approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date at which deposits in U.S. dollars having the Index Maturity specified
in the applicable Pricing Supplement are offered to prime banks in the
London interbank market by four major banks in the London interbank market
selected by the Calculation Agent commencing on the second London Market
Day immediately following such LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that in the
Calculation Agent's judgment is representative for a single transaction in
such market at such time. In such case, the Calculation Agent will request
the principal London office of each of such banks to provide a quotation of
its rate. If at least two such quotations are provided, LIBOR for such
LIBOR Interest Determination Date will be the arithmetic mean, as
calculated by the Calculation Agent, of such quotations. If fewer than two
quotations are provided, LIBOR for such LIBOR Interest Determination Date
will be the arithmetic mean, as calculated by the Calculation Agent, of the
rates quoted at approximately 11:00 A.M., New York City time, on such LIBOR
Interest Determination Date by three major banks in The City of New York,
selected by the Calculation Agent, for loans in U.S. dollars to leading
European banks having the specified Index Maturity commencing on the second
London Market Day immediately following such LIBOR Interest Determination
Date and in a principal amount equal to an amount of not less than
$1,000,000 that in the Calculation Agent's judgment is representative for a
single transaction in such market at such time; provided, however, that if
the banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR will be LIBOR in effect on such LIBOR
Interest Determination Date.
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified on the face of such Treasury Rate Note and in the applicable
Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Pricing Supplement as published in H.15(519) under the heading, "U.S.
Government Securities--auction average (investment)" or, if not so published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Treasury Interest Determination Date, the auction average rate (expressed as a
bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) for such auction as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the Index Maturity specified in the applicable Pricing
Supplement are not published or reported as provided above by 3:00 P.M., New
York City time, on such date, or if no such auction is held in a particular
week, then the Treasury Rate shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean, as calculated by the
Calculation Agent on such Calculation Date, of the secondary market bid rates
as of approximately 3:30 P.M., New York City time, on such Treasury Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent, for the issue of Treasury
bills with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate will be
the Treasury Rate in effect on such Treasury Interest Determination Date.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes of like tenor and having the same Issue
Date will be represented by a single permanent Global Security. Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
The Depository Trust Company, as Depositary (the "Depositary"), located in the
Borough of Manhattan, The City of New York, and will be registered in the name
of the Depositary or a nominee of the Depositary. Currently, the Depositary
will only accept the deposit of a Global Security denominated in U.S. dollars.
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Ownership of beneficial interests in a Global Security representing Book-
Entry Notes will be limited to institutions that have accounts with the
Depositary or its nominee ("participants") or persons that may hold interests
through participants. In addition, ownership of beneficial interests by
participants in such a Global Security will only be evidenced by, and the
transfer of that ownership interest will only be effected through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such a Global Security by persons that hold through
participants will only be evidenced by, and the transfer of that ownership
interest within such participant will only be effected through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in such a Global Security.
The Company understands that upon the issuance of a Global Security
representing Book-Entry Notes, and the deposit of such Global Security with the
Depositary, the Depositary will immediately credit, on its book-entry
registration and transfer system, the respective principal amounts of the Book-
Entry Notes represented by such Global Security to the accounts of
participants. The accounts to be credited shall be designated by the soliciting
Distributor or, to the extent that the Book-Entry Notes are offered and sold
directly, by the Company.
Payment of principal of and any premium and interest on Book-Entry Notes
represented by any Global Security registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered Holder of the Global Security representing such
Book-Entry Notes. None of the Company, the Trustee or any agent of the Company
or the Trustee will have any responsibility or liability for any aspect of the
Depositary's records or any participant's records relating to, or payments made
on account of, beneficial ownership interests in a Global Security representing
such Book-Entry Notes or for maintaining, supervising or reviewing any of the
Depositary's records or any participant's records relating to such beneficial
ownership interests.
The Company understands that upon receipt of any payment of principal of or
any premium or interest in respect of a Global Security, the Depositary will
immediately credit, on its book-entry registration and transfer system,
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of the Depositary. Payments by participants to owners
of beneficial interests in a Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers registered in
"street name", and will be the sole responsibility of such participants.
No Global Security described above may be transferred except as a whole by
the Depositary for such Global Security to a Nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary.
A Global Security representing Book-Entry Notes is exchangeable for Notes
registered in the name of a Holder other than the Depositary only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary or the Depositary shall no longer be eligible to serve as Depositary
and a successor depositary is not appointed by the Company within 90 calendar
days or (ii) the Company in its sole discretion instructs the Trustee that such
Global Security shall be so exchangeable. Notes issued in exchange for a Global
Security shall be registered in the name or names of such person or persons as
the Company shall instruct the Trustee. It is expected that such instructions
may be based upon directions from the Depositary which are received by the
Depositary from its participants with respect to ownership of beneficial
interests in such Global Security.
Except as provided above, owners of beneficial interests in such Global
Security will not be entitled to receive physical delivery of Notes in
certificated form and will not be considered the Holders thereof for any
purpose under the Indenture, and no Global Security representing Book-Entry
Notes shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the
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Depositary or its nominee. Accordingly, each person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a Holder
under the Indenture. The Company understands that under existing industry
practices, in the event that the Company requests any action of Holders or an
owner of a beneficial interest in such Global Security desires to give or take
any action that a Holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning
through them.
The Company understands that the Depositary is a limited-purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve system, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered under the
Securities Exchange Act of 1934. The Depositary was created to hold securities
of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Distributors), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants"). Persons who are not participants may beneficially
own securities held by the Depositary only through participants or indirect
participants.
OPTIONAL REDEMPTION BY THE COMPANY
If one or more Redemption Dates (or range(s) of Redemption Dates) is
specified in the applicable Pricing Supplement, the Notes described therein
will be subject to redemption, in whole or in part, as specified in such
Pricing Supplement, on any such date (or during any such range) or, if such
date is not a Market Day, on the first Market Day following such date, at the
option of the Company upon not less than 30 or more than 60 days' notice, at
the election of the Company, at the Redemption Price or Prices specified in the
applicable Pricing Supplement, together with interest accrued to but excluding
the Redemption Date; provided, however, that interest payments due on or prior
to the Redemption Date will be payable to the Holder of record at the close of
business on the Record Date. If less than the entire principal amount of a Note
is redeemed, the principal amount of such Note that remains outstanding after
such redemption shall not be less than the minimum denomination of such Note.
OPTIONAL REDEMPTION BY THE HOLDER
If one or more Redemption Dates (or range(s) of Redemption Dates) is
specified in the applicable Pricing Supplement, the Notes described therein
will be subject to redemption, in whole or in part, on any such date (or during
any such range) or, if such date is not a Market Day, on the first Market Day
following such date, at the election of the Holder, at the Redemption Price or
Prices specified in the applicable Pricing Supplement, together with interest
accrued to but excluding the Redemption Date; provided, however, that interest
payments due on or prior to the Redemption Date will be payable to the Holder
of record at the close of business on the Record Date.
In order for a Note that is redeemable at the option of the Holder to be
redeemed the Paying Agent must receive at least 30 days but not more than 60
days prior to the Redemption Date either (i) the Note with the form entitled
"Option to Elect Redemption" attached to the Note duly completed or (ii) a
telegram, facsimile transmission or letter from a member of a national
securities exchange or the NASD or 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 portion of the principal amount of the Note to be
redeemed, the certificate
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number or a description of the terms of the Note, a statement that the option
to elect redemption is being exercised thereby and a guarantee that the Note to
be repaid with the form entitled "Option to Elect Redemption" attached to the
Note duly completed will be received by the Paying Agent not later than five
Market Days after the date of such telegram, facsimile transmission or letter
and such Note and form duly completed must be received by the Paying Agent by
such fifth Market Day. Exercise of the redemption option by the Holder of a
Note shall be irrevocable. The redemption option may be exercised by the Holder
of a Note for less than the entire principal amount of the Note provided that
the principal amount of the Note remaining outstanding after repayment is an
authorized denomination. No transfer or exchange of any Note (or, in the event
that any Note is to be redeemed in part, the portion of the Note to be
redeemed) will be permitted after exercise of a redemption option.
If a Note is represented by a Global Security, the Depositary's nominee will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to redemption. In order to ensure that the Depositary's
nominee will timely exercise a right to redemption with respect to a particular
Note, the beneficial owner of such Note must instruct the broker or other
direct or indirect participant through which it holds an interest in such Note
to notify the Depositary of its desire to exercise a right to redemption.
Different firms have different cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in a Note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to the
Depositary.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal United States federal income tax
consequences of the ownership of Notes. The following summary is based on the
Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
legislative history, Treasury Regulations, judicial decisions, administrative
rulings and other authorities that are currently in effect or, in the case of
certain Treasury Regulations, proposed. All of these authorities are subject to
change or differing interpretations. Any such change may apply retroactively.
This summary deals only with Notes held as capital assets by the initial
purchasers and not with special classes of holders, such as dealers in
securities or currencies, life insurance companies, persons holding Notes
either as a hedge of, or hedged against, currency risks, or as part of a
straddle or conversion transaction and United States Holders (as defined below
under "United States Holders") whose functional currency is not the U.S.
dollar. This summary does not address the tax treatment of Original Issue
Discount Notes that are treated as "applicable high-yield discount obligations"
under section 163(i) of the Code. Furthermore, the following discussion does
not address any of the state, local and foreign income and other tax
consequences of purchase, ownership and disposition of the Notes.
Prospective purchasers of Notes should consult their own tax advisors
concerning the United States federal income tax consequences in their
particular situations, as well as any consequences under the laws of any other
taxing jurisdiction.
UNITED STATES HOLDERS
Interest on a Note will be taxable to a holder who or which is (i) a citizen
or resident of the United States, (ii) a domestic corporation, or (iii)
otherwise subject to United States federal income taxation on a net income
basis in respect of a Note (a "United States Holder"). The time at which
interest on a Note is taxable depends on whether it is "qualified stated
interest" or instead is "original issue discount", as those terms are defined
below.
Payments of Interest
General. Interest on a Note, whether payable in the Specified Currency or
U.S. dollars, that is qualified stated interest but not other interest (as
described below under "Original Issue Discount"), will be taxable to a United
States Holder as ordinary interest income at the time it is received or
accrued, depending on the United States Holder's method of accounting for tax
purposes.
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Definition of Qualified Stated Interest. Qualified stated interest generally
includes stated interest that is unconditionally payable at least annually in
an amount equal to the product of the outstanding principal amount of the Note
and a single fixed rate of interest (adjusted to reflect differing lengths of
time between payments, as appropriate).
Qualified stated interest also includes certain stated interest on a debt
instrument that provides for interest at a variable rate, if that debt
instrument qualifies as a "variable rate debt instrument". In general, a debt
instrument qualifies as a variable rate debt instrument if the following
requirements are met. First, the issue price of the debt instrument must not
exceed the total noncontingent principal payments on the debt instrument by
more than an amount equal to the lesser of 15 percent of the total
noncontingent principal payments or .015 multiplied by the product of the total
noncontingent principal payments and the number of complete years to maturity
from the issue date. Second, the debt instrument must provide for stated
interest that is compounded or paid at least annually at a rate or rates
described in Treasury Regulations, including, among others, (a) one or more
"qualified floating rates" or (b) a single fixed rate and one or more qualified
floating rates. Third, the debt instrument must provide that a variable rate in
effect at any time during the term of the instrument is set at a current value
of that rate. A variable rate generally is a qualified floating rate if
variations in the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds. A variable rate will not
qualify as a qualified floating rate if the rate is subject to a restriction or
restrictions on the maximum stated interest rate, minimum stated interest rate
or amount of increase or decrease in the stated interest rate, unless certain
conditions set forth in Treasury Regulations are met.
If a Floating Rate Note that qualifies as a variable rate debt instrument
provides for stated interest at a single qualified floating rate that is
unconditionally payable in cash or in property (other than debt instruments of
the issuer) at least annually, all stated interest with respect to the debt
instrument is qualified stated interest.
Unless otherwise specified in the applicable pricing supplement, each
Floating Rate Note will qualify as a variable rate debt instrument, and all
stated interest on each Floating Rate Note will qualify as qualified stated
interest.
Accrual of Qualified Stated Interest on Variable Rate Debt Instruments. The
Internal Revenue Service issued proposed Treasury Regulations on December 16,
1994 that provide rules for determining the amount of qualified stated interest
on a variable rate debt instrument deemed to accrue by a holder using the
accrual method of accounting. Under these proposed regulations, which would be
effective for debt instruments issued on or after April 4, 1994, the amount of
qualified stated interest that accrues during an accrual period on a variable
rate debt instrument is determined under the rules applicable to fixed rate
debt instruments by assuming that the variable rate is a fixed rate equal to
the value, as of the issue date, of the qualified floating rate. Qualified
stated interest allocable to an accrual period is increased (or decreased) if
the interest actually paid during an accrual period exceeds (or is less than)
the interest assumed to be paid during the accrual period.
Special Rules Applicable to Foreign Currency Notes. In the case of a United
States Holder of a Foreign Currency Note using the cash method of accounting,
the amount of interest income reported for United States federal income tax
purposes ("taxable interest") will be determined in the Specified Currency and
translated into U.S. dollars using the exchange rate on the date of receipt,
regardless of whether the interest is in fact paid in or converted to U.S.
dollars. In the case of a United States Holder of a Foreign Currency Note using
the accrual method of accounting, the amount of taxable interest will depend on
whether the United States Holder has made a valid election to use a "spot rate
convention" pursuant to the Treasury Regulations. If the United States Holder
has made such an election, the amount of taxable interest will be measured in
the Specified Currency and translated into U.S. dollars using the exchange rate
in effect on the last day of the
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accrual period (or last day of a partial accrual period ending on the last day
of such Holder's taxable year); where interest is paid within five business
days of such last day, the exchange rate in effect on the date of receipt may
be used. If the United States Holder has not made such an election, the amount
of taxable interest will be measured in the Specified Currency and translated
into U.S. dollars using the average exchange rate in effect during the accrual
period or, with respect to an interest accrual period that spans two taxable
years, at the average rate for the partial period within the taxable year. A
United States Holder of a Foreign Currency Note using the accrual method will
also recognize ordinary income or loss for federal income tax purposes
("exchange gain or loss") upon receipt of an interest payment, including a
payment attributable to accrued but unpaid interest upon the sale or retirement
of a Note. Such exchange gain or loss, if any, will be measured by subtracting
the amount of taxable interest with respect to any accrual period from the U.S.
dollar value of the interest payment received attributable to that accrual
period. If such interest payment is made in the Specified Currency, the U.S.
dollar value of the interest payment received will be determined using the
exchange rate in effect on the date of receipt (or, in the case of a payment
attributable to accrued but unpaid interest upon the sale or retirement of a
Note, on the date the Note is sold or retired).
Original Issue Discount
General. A Note will generally be treated as having been issued at an
original issue discount (an "Original Issue Discount Note") if the excess of
its "stated redemption price at maturity" over its issue price (defined as the
initial offering price to the public at which a substantial amount of the Notes
are sold) equals or exceeds 1/4 of 1 percent of such Note's stated redemption
price at maturity multiplied by the number of complete years to its maturity.
"Stated redemption price at maturity" is the total of all payments provided by
the Note that are not payments of qualified stated interest.
A United States Holder of Original Issue Discount Notes having a maturity of
more than one year from their date of issue will have to include original issue
discount in income before the receipt of cash attributable to such income. The
amount of original issue discount includible in income by a United States
Holder of an Original Issue Discount Note is the sum of the daily portions of
original issue discount with respect to such Note for each day during the
taxable year or portion of the taxable year in which it holds such Note
("accrued original issue discount"). The daily portion is determined by
allocating to each day in any "accrual period" a pro rata portion of the
original issue discount allocable to that accrual period. The amount of
original issue discount allocable to an accrual period is the excess of (a) the
product of the Original Issue Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to Stated Maturity (determined
on the basis of compounding at the close of each accrual period and adjusted
for the length of such period) over (b) the sum of the qualified stated
interest payments, if any, payable (or treated as payable) on the Original
Issue Discount Note during the accrual period. The "accrual period" may be of
any length and may vary in length over the term of the Note, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either at the beginning or at the end of an
accrual period. The "adjusted issue price" of an Original Issue Discount Note
at the start of any accrual period is the sum of the issue price of such Note
plus the accrued original issue discount for each prior accrual period minus
any prior payments on such Note that were not payments of qualified stated
interest. The amount of original issue discount includible in income is
adjusted for any United States Holder that acquires an Original Issue Discount
Note at a premium over its adjusted issue price, but at an amount less than the
sum of all amounts payable on the instrument after the acquisition date (other
than payments of qualified stated interest).
Under the foregoing rules, United States Holders of Original Issue Discount
Notes generally will have to include in income increasingly greater amounts of
original issue discount in successive accrual periods and in advance of any
payment of cash related thereto.
At the time the Company issues such a Note, it will make a determination
based on the applicable Treasury Regulations and other authorities whether such
Note bears original issue discount.
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Optional Redemption of Original Issue Discount Notes. If either the Company
or the United States Holder has an option to redeem, or cause the redemption
of, an Original Issue Discount Note prior to its Stated Maturity, such option
will be presumed to be exercised if, by utilizing any date on which such Note
may be redeemed as its maturity date and the amount payable on such date in
accordance with the terms of such Note as its stated redemption price at
maturity, the yield on such Note would be (i) in the case of an option of the
Company, lower than its yield to Stated Maturity or (ii) in the case of an
option of the United States Holder, higher than its yield to Stated Maturity.
If such option is not in fact exercised when presumed to be exercised, the Note
would be treated solely for original issue discount purposes as if it were
redeemed, and a new Note were issued, on the presumed exercise date for an
amount equal to the adjusted issue price of the original Note on such date.
Short-Term Discount Notes. A Note that matures one year or less from the date
of its issuance ("short-term Discount Note") will be treated as having been
issued at an original issue discount equal to the excess of the total principal
and interest payments on the Note over its issue price. Thus, all payments that
otherwise would constitute qualified stated interest are included in original
issue discount. In general, an individual or other cash basis United States
Holder of a short-term Discount Note is not required to accrue original issue
discount for United States federal income tax purposes unless it elects to do
so. An election by such a taxpayer to accrue original issue discount applies to
all short-term obligations acquired by the taxpayer on or after the first day
of the first taxable year to which such election applies. Accrual basis United
States Holders and certain other United States Holders, including banks and
dealers in securities, and cash basis taxpayers electing to accrue original
issue discount, are required to accrue the original issue discount on a short-
term Discount Note on a straight-line basis unless an election is made with
respect to the short-term Discount Note to accrue the original discount under
the constant yield method (based on daily compounding). In the case of a United
States Holder not required and not electing to include the original issue
discount in income currently, any gain realized on the sale or retirement of
the short-term Discount Note will be ordinary income to the extent of the
original issue discount accrued on a straight-line basis (unless an election is
made with respect to the short-term Discount Note to accrue the original issue
discount under the constant yield method) through the date of sale or
retirement. United States Holders who are not required and do not elect to
accrue the original issue discount on short-term Discount Notes will be
required to defer deductions for interest on borrowings allocable to short-term
Discount Notes in an amount not exceeding the deferred income until the
deferred income is realized.
Floating Rate Notes. Any original issue discount on a Floating Rate Note that
qualifies as a variable rate debt instrument and provides for stated interest
at a single qualified floating rate, all of which is qualified stated interest,
is determined under the rules applicable to fixed rate debt instruments by
assuming that the variable rate is a fixed rate equal to the value as of the
issue date of the qualified floating rate.
Foreign Currency Notes. The amount of original issue discount for any accrual
period on an Original Issue Discount Note that is a Foreign Currency Note will
depend on whether the United States Holder has made a valid election to use a
"spot rate convention" pursuant to the Treasury Regulations. If the United
States Holder has made such an election, original issue discount will be
determined in the Specified Currency and translated into U.S. dollars using the
exchange rate in effect on the last day of the accrual period (or last day of a
partial accrual period ending on the last day of the United States Holder's
taxable year); where interest is paid within five business days of such last
day, the exchange rate in effect on the date of receipt may be used. If the
United States Holder has not made such an election, original issue discount
will be determined in the Specified Currency and translated into U.S. dollars
using the average exchange rate in effect during the accrual period (or part of
the accrual period within the taxable year). A United States Holder of an
Original Issue Discount Note that is a Foreign Currency Note will also
recognize ordinary income or loss ("exchange gain or loss") upon receipt of an
amount attributable to original issue discount (whether in connection with a
payment of interest or upon the sale or retirement of an Original Issue
Discount Note). Such exchange gain or loss, if any, will be measured by
subtracting the amount of original issue discount with respect to the accrual
period from the U.S. dollar value of the amount received attributable to that
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accrual period. If such amount received is paid in the Specified Currency, the
U.S. dollar value of the amount received will be determined using the exchange
rate in effect on the date of receipt (or, in connection with a sale or
retirement, on the date the Note is sold or retired).
Notes Issued at a Premium
A United States Holder that purchases a Note for an amount in excess of its
principal amount may elect to treat such excess as "amortizable bond premium",
in which case the amount required to be included in the United States Holder's
income each year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's yield to
maturity) to interest payments includible in income in such year. Any such
election shall apply to all debt instruments (other than debt instruments the
interest on which is excludible from gross income) held by the United States
Holder at the beginning of the first taxable year to which the election applies
or thereafter acquired by the United States Holder, and is irrevocable without
the consent of the Internal Revenue Service. If a Note is callable by the
Company before its Stated Maturity, the earlier call date will be considered as
the Maturity if it results in a smaller amortizable bond premium attributable
to the period of the earlier call date. If a Note is not then called on the
earlier call date, any unamortized bond premium must then be amortized to a
succeeding call date or to its Stated Maturity. Certain of the Notes may be
callable prior to Stated Maturity. United States Holders therefore should
consult with their tax advisors to determine whether this rule will apply to
their individual situations.
Market Discount
A United States Holder may acquire a Note at a "market discount." Market
discount is defined as the excess of a Note's stated redemption price at
maturity over the United States Holder's basis in such Note immediately after
its acquisition. The market discount provisions generally require a United
States Holder of a Note acquired at a market discount to treat as ordinary
interest income any gain recognized on the disposition of such Note to the
extent of the "accrued market discount" on such Note at the time of
disposition. If a United States Holder of a Note makes a gift of such Note, any
accrued market discount will be included in income as if such United States
Holder had sold the Note for a price equal to its fair market value. In
addition, if a United States Holder of a Note acquired at a market discount
receives a partial principal payment prior to its Stated Maturity, that payment
may be treated as ordinary income to the extent of the accrued market discount
on the Note at the time the payment is received. These rules will not apply to
the extent the United States Holder has, pursuant to an election, included the
accrued market discount in income as it accrued. This election, once made,
applies to all market discount obligations acquired on or after the first day
of the first taxable year to which the election applies and may not be revoked
without the consent of the Internal Revenue Service.
The amount of market discount that accrues while a United States Holder holds
a Note will be equal to the amount which bears the same ratio to the market
discount on the Note as the number of days on which the United States Holder
holds the Notes bears to the number of days from the date the United States
Holder acquires the Note through the date of its maturity. Alternatively, the
United States Holder of a Note may elect with respect to such Note to accrue
market discount on the basis of a constant-yield method, rather than the
ratable-accrual method described in the preceding sentence. The election to
treat market discount as accruing on a constant yield basis, in contrast to the
election described in the preceding paragraph to include market discount in
income as it accrues, is made on an obligation-by-obligation basis, and a
United States Holder may make, or not make, each of the two elections
independently of the other.
The market discount rules also provide that a United States Holder of a Note
acquired at a market discount may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to purchase
or carry the Notes until the Notes are disposed of in a taxable transaction.
This rule will not apply if the United States Holder elects to include accrued
market discount in income currently.
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Purchase, Sale and Retirement of Notes
A United States Holder's tax basis in a Note will be its U.S. dollar cost
(which, in the case of a Foreign Currency Note, will be the U.S. dollar value
of the purchase price on the date of purchase), increased by the amount of any
original issue discount or market discount included in the United States
Holder's income with respect to the Note and reduced by the amount of any
interest payments on an Original Issue Discount Note that are not qualified
stated interest payments and by the amount of any amortizable bond premium
applied to reduce interest on the Note. A United States Holder will generally
recognize gain or loss upon the sale or retirement of a Note equal to the
difference between the amount realized upon the sale or retirement and the tax
basis in the Note. The amount realized on a sale or retirement for an amount in
Specified Currency will be the U.S. dollar value of such amount, generally on
the date of sale or retirement. In the case of a sale of Notes traded on an
established securities market for currency other than the U.S. dollar by a
United States Holder that uses the cash method of accounting, however, the
amount realized is determined by translating the units of currency received at
the spot rate on the settlement date of the sale. Except to the extent
described above with respect to short-term Discount Notes and Foreign Currency
Notes and except to the extent attributable to accrued but unpaid interest or
market discount, gain or loss recognized on the sale or retirement of a Note
will be capital gain or loss and will be long-term capital gain or loss if the
Note was held for more than one year.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Foreign Currency Note that is attributable to changes in exchange rates
will be treated as ordinary income or loss. Gain or loss attributable to
fluctuations in exchange rates will equal the difference between the U.S.
dollar value of the foreign currency principal amount of the Note, determined
on the date such payment is received or the Note is disposed of, and the U.S.
dollar value of the foreign currency principal amount of the Note, determined
as of the date the United States Holder acquired the Note.
Exchange of the Specified Currency
Specified Currency received as interest on a Foreign Currency Note or on the
sale or retirement of a Note will have a tax basis equal to its U.S. dollar
value at the time such interest is received or at the time of such sale or
retirement. Foreign currencies and currency units which are purchased will
generally have a tax basis equal to their U.S. dollar cost. Any gain or loss
realized on a sale or other disposition of a foreign currency or currency unit
(including its use to purchase the Foreign Currency Notes or upon exchange for
U.S. dollars) will be ordinary income or loss.
Election to Treat All Interest as Original Issue Discount
A United States Holder may elect to treat all interest on a particular Note--
including stated interest, original issue discount, de minimis original issue
discount, market discount and de minimis market discount, as adjusted by
acquisition premium and amortizable bond premium--as original issue discount,
and include it in income under the rules set forth above under "Original Issue
Discount." The election, once made, may not be revoked without the consent of
the Internal Revenue Service.
If a United States Holder makes an election to treat all interest with
respect to a Note as original issue discount, such Holder is deemed to have
made the election to amortize premium described above under "Notes Issued at a
Premium."
Indexed Notes
The applicable Pricing Supplement will contain a discussion of the special
United States federal income tax rules, if any, with respect to Notes, payments
on which (whether interest or principal) are determined by reference to any
index and which do not qualify as variable rate debt instruments.
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UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law, and subject to
the discussion below concerning backup withholding:
(a) payments of principal, interest (including original issue discount,
if any) and premium on the Notes by the Company or any paying agent to a
beneficial owner of a Note that is not a United States Holder, as defined
above (hereinafter, a "United States Alien Holder"), will not be subject to
United States federal withholding tax, provided that, in the case of
interest, (i) such Holder does not own, actually or constructively, ten
percent or more of the total combined voting power of all classes of stock
of the Company entitled to vote, (ii) such Holder is not, for United States
federal income tax purposes, a controlled foreign corporation related,
directly or indirectly, to the Company through stock ownership, (iii) such
Holder is not a bank receiving interest described in Section 881(c)(3)(A)
of the Code, (iv) the certification requirements under Section 871(h) or
Section 881(c) of the Code and Treasury Regulations thereunder (summarized
below) are met, and (v) such interest is not effectively connected with the
conduct of a trade or business in the United States or described in Section
871(h)(4) of the Code (which in general is limited to certain types of
contingent interest, as summarized below);
(b) a United States Alien Holder of a Note will not be subject to United
States federal income tax on gain realized on the sale, exchange or other
disposition of such Note, unless (i) such Holder is an individual who is
present in the United States for 183 days or more in the taxable year of
disposition, and certain conditions are met or (ii) such gain is
effectively connected with the conduct by such Holder of a trade or
business in the United States; and
(c) a Note held by an individual who is not a citizen or resident of the
United States at the time of his death will not be subject to United States
federal estate tax as a result of such individual's death, provided that
(i) the individual does not own, actually or constructively, ten percent or
more of the total combined voting power of all classes of stock of the
Company entitled to vote, (ii) the Note does not provide for interest
described in Section 871(h)(4) of the Code (as summarized below), and (iii)
at the time of such individual's death, payments with respect to such Note
would not have been effectively connected to the conduct by such individual
of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that, in order to obtain the exemption from withholding tax described
in paragraph (a) above, either (i) the beneficial owner of a Note must certify,
under penalties of perjury, to the Company or paying agent, as the case may be,
that such owner is a United States Alien Holder and must provide such owner's
name and address, and United States taxpayer identification number, if any, or
(ii) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "Financial Institution") and holds the Note on behalf of the
beneficial owner thereof must certify, under penalties of perjury, to the
Company or paying agent, as the case may be, that such certificate has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and must furnish the payor with a copy thereof. A
certificate described in this paragraph is effective only with respect to
payments of interest (including original issue discount) made to the certifying
United States Alien Holder after issuance of the certificate in the calendar
year of its issuance and the two immediately succeeding calendar years. Under
temporary Treasury Regulations, such requirement will be fulfilled if the
beneficial owner of a Note certifies on Internal Revenue Service Form W-8,
under penalties of perjury, that it is not a United States Holder and provides
its name and address, or any Financial Institution holding the Note on behalf
of the beneficial owner, files a statement with the withholding agent to the
effect that it has received such a statement from the beneficial owner (and
furnishes the withholding agent with a copy thereof).
Interest described in Section 871(h)(4) of the Code will be subject to United
States withholding tax at a 30 percent rate (or such lower rate provided by an
applicable treaty). In general, interest described in Section 871(h)(4) of the
Code includes (subject to certain exceptions) any interest the amount of which
is determined by reference to (a) receipts, sales or other cash flow of the
Company or a related person, (b) any income or profits of the Company or a
related person, (c) any change in the value of any property of the Company or a
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related person or (d) any dividend, partnership distributions or similar
payments made by the Company or a related person. Interest described in Section
871(h)(4) of the Code may include other types of contingent interest identified
by the Internal Revenue Service in future Treasury Regulations. The Company
does not currently expect to issue Notes the interest on which is described in
Section 871(h)(4) of the Code, and the United States withholding tax
consequences of any such Notes issued by the Company will be described in the
applicable Pricing Supplement.
If a United States Alien Holder of a Note is engaged in a trade or business
in the United States, and if interest (including original issue discount or
market discount) on the Note, or gain realized on the sale, exchange or other
disposition of a Note, is effectively connected with the conduct of such trade
or business, the United States Alien Holder, although exempt from United States
withholding tax, will generally be subject to United States income tax on such
interest (including any original issue discount or market discount) or gain in
the same manner as if it were a United States Holder. See "United States
Holders" above. In lieu of the certificate described in the second preceding
paragraph, such a holder will be required to provide to the Company a properly
executed Internal Revenue Service Form 4224 in order to claim an exemption from
withholding tax. In addition, if such United States Alien Holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30 percent (or
such lower rate provided by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest (including original issue discount
or market discount) on, and any gain recognized on the sale, exchange or other
disposition of, a Note will be included in the effectively connected earnings
and profits of such United States Alien Holder if such interest is effectively
connected with the conduct by the United States Alien Holder of a trade or
business in the United States.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, a 31 percent backup
withholding tax and information reporting requirements apply to certain
payments of principal, premium and interest (including original issue discount)
made to, and to the proceeds of sale before maturity by, certain holders of the
Notes.
In the case of a non-corporate United States Holder, backup withholding will
apply only if such Holder (i) fails to furnish its Taxpayer Identification
Number ("TIN") which, for an individual, would be his Social Security number,
(ii) furnishes an incorrect TIN, (iii) is notified by the Internal Revenue
Service that it has failed to properly report payments of interest and
dividends or (iv) under certain circumstances, fails to certify, under
penalties of perjury, that it has furnished a correct TIN and has not been
notified by the Internal Revenue Service that it is subject to backup
withholding for failure to report interest and dividend payments. United States
Holders should consult their tax advisors regarding their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption if applicable.
The amount of any backup withholding from a payment to a United States Holder
will be allowed as a credit against such Holder's United States federal income
tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
In the case of a United States Alien Holder backup withholding will not apply
to payments of principal, premium or interest made by the Company or any paying
agent thereof on a Note if such Holder has provided the required certification
under penalties of perjury that it is not a United States Holder (as defined
above) or has otherwise established an exemption, provided in each case that
the Company or such paying agent, as the case may be, does not have actual
knowledge that the payee is a United States Holder. The Company will, when
required, report to United States Alien Holders of the Notes and the Internal
Revenue Service the amount of any interest paid or original issue discount
accruing on the Notes in each calendar year and the amounts of tax withheld, if
any, with respect to such payments.
Under Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. However, if such
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broker is a United States person, a controlled foreign corporation for United
States tax purposes or a foreign person 50 percent or more of whose gross
income is effectively connected with a United States trade or business for a
specified three-year period, information reporting will be required unless the
broker has in its records documentary evidence that the beneficial owner is not
a United States Holder and certain other conditions are met or the beneficial
owner otherwise establishes an exemption. Under proposed Treasury Regulations,
backup withholding may apply to any payment which such broker is required to
report if such broker has actual knowledge that the payee is a United States
Holder. Payments to or through the United States office of a broker will be
subject to backup withholding and information reporting unless the holder
certifies, under penalties of perjury, that it is not a United States Holder
and that certain other conditions are met or otherwise establishes an
exemption.
United States Alien Holders of Notes should consult their tax advisors
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and
the procedure for obtaining such an exemption, if available. Any amounts
withheld from a payment to a United States Alien Holder under the backup
withholding rules will be allowed as a credit against such Holder's United
States federal income tax liability and may entitle such Holder to a refund,
provided that the required information is furnished to the Internal Revenue
Service.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
The following provisions, which apply to Foreign Currency Notes, supplement
the description of general terms and conditions of (a) Securities set forth
under the heading "Description of Securities" in the accompanying Prospectus
and (b) Notes set forth above under the heading "Description of Notes" in this
Prospectus Supplement.
THIS PROSPECTUS SUPPLEMENT DOES NOT DESCRIBE ALL RISKS OF AN INVESTMENT IN
FOREIGN CURRENCY NOTES OR NOTES INDEXED TO A FOREIGN CURRENCY THAT RESULT FROM
SUCH NOTES BEING DENOMINATED IN A FOREIGN CURRENCY OR CURRENCY UNIT EITHER AS
SUCH RISKS EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY
CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED IN AN INVESTMENT IN
FOREIGN CURRENCY NOTES AND AS TO ANY MATTERS THAT MAY AFFECT THE PURCHASE OR
HOLDING OF A FOREIGN CURRENCY NOTE OR THE RECEIPT OF PAYMENTS OF PRINCIPAL OF
AND ANY PREMIUM AND INTEREST ON A FOREIGN CURRENCY NOTE IN A SPECIFIED
CURRENCY. FOREIGN CURRENCY NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR
INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY
TRANSACTIONS.
Unless otherwise indicated in the applicable Pricing Supplement, a Foreign
Currency Note will not be sold in, or to a resident of, the country of the
Specified Currency (as defined below) in which such Note is denominated.
The authorized denominations of Foreign Currency Notes will be indicated in
the applicable Pricing Supplement.
Specific information pertaining to the foreign currency or currency unit in
which a particular Foreign Currency Note is denominated, including historical
exchange rates and a description of the currency and any exchange controls,
will be described in the applicable Pricing Supplement.
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FOREIGN CURRENCY RISKS
Exchange Rates and Exchange Controls
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the U.S. dollar and the Specified
Currency and the possibility of the imposition or modification of foreign
exchange controls by either the United States or foreign governments. Such
risks generally depend on economic and political events and the supply of and
demand for the relevant currencies, over which the Company has no control. In
recent years, rates of exchange between the U.S. dollar and certain foreign
currencies have been highly volatile and such volatility may be expected in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations in the rate that
may occur during the term of any Foreign Currency Note. Depreciation of the
Specified Currency applicable to a Foreign Currency Note against the U.S.
dollar would result in a decrease in the U.S. dollar-equivalent yield of such
Note, in the U.S. dollar-equivalent value of the principal repayable at the
Maturity of such Note and, generally, in the U.S. dollar-equivalent market
value of such Note.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Note's Maturity. Even if there are not exchange controls, it is possible that
the Specified Currency for any particular Foreign Currency Note would not be
available at such Note's Maturity due to other circumstances beyond the control
of the Company.
Judgments
In the event an action based on Foreign Currency Notes were commenced in a
court of the United States, it is likely that such court would grant judgment
relating to such Notes only in U.S. dollars. It is not clear, however, whether,
in granting such judgment, the rate of conversion into U.S. dollars would be
determined with reference to the date of default, the date judgment is rendered
or some other date. Holders of Foreign Currency Notes would bear the risk of
exchange rate fluctuations between the time the amount of the judgment is
calculated and the time the Trustee converts U.S. dollars to the Specified
Currency for payment of the judgment.
Purchase
Unless otherwise indicated in the applicable Pricing Supplement, purchasers
are required to pay for Foreign Currency Notes in the currency or currency unit
in which a Note is denominated as specified in the applicable Pricing
Supplement (the "Specified Currency"). At the present time there are limited
facilities in the United States for the conversion of U.S. dollars into foreign
currencies or currency units and vice versa, and banks do not generally offer
non-U.S. dollar checking or savings account facilities in the United States. If
requested on or prior to the fifth Market Day preceding the date of delivery of
the Notes, or by such other day as determined by the Distributor who presented
such offer to purchase Notes to the Company, such Distributor is prepared to
arrange for the conversion of U.S. dollars into the Specified Currency to
enable the purchasers to pay for the Notes. Each such conversion will be made
by such Distributor on such terms and subject to such conditions, limitations
and charges as such Distributor may from time to time establish in accordance
with its regular foreign exchange practices. All costs of exchange will be
borne by the purchasers of the Foreign Currency Notes.
Payment of Principal and any Premium and Interest
Unless otherwise indicated in the applicable Pricing Supplement, the Company
is obligated to make payments of principal of and any premium and interest on
Foreign Currency Notes in the Specified Currency (or, if such Specified
Currency is not at the time of such payment legal tender for the payment of
public and
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private debts, in such other coin or currency of the country which issued such
Specified Currency as at the time of such payment is legal tender for the
payment of such debts). Any such amounts paid by the Company will, unless
otherwise specified in the applicable Pricing Supplement, be converted by the
Exchange Rate Agent to U.S. dollars for payment to Holders. However, unless
otherwise indicated in the applicable Pricing Supplement, the Holder of a
Foreign Currency Note may elect to receive such payments in the Specified
Currency as described below.
Any U.S. dollar amount to be received by a Holder of a Foreign Currency Note
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 Market Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the Exchange Rate Agent) selected
by the Exchange Rate Agent and approved by the Company for the purchase by the
quoting dealer of the Specified Currency for U.S. dollars for settlement on
such payment date in the aggregate amount of the Specified Currency payable to
all Holders of Foreign Currency Notes scheduled to receive U.S. dollar payments
and at which the applicable dealer commits to execute a contract. If such bid
quotations are not available, payments will be made in the Specified Currency.
All currency exchange costs will be borne by the Holder of the Foreign Currency
Note by deductions from such payments.
Unless otherwise specified in the applicable Pricing Supplement, a Holder of
a Foreign Currency Note may elect to receive payment of the principal of and
any premium and interest on such Note in the Specified Currency by transmitting
a written request for such payment to the Trustee at its Corporate Trust Office
in the Borough of Manhattan, The City of New York on or prior to the Record
Date or at least sixteen days prior to Maturity, as the case may be. Such
request may be in writing (mailed or hand delivered) or by cable, telex or
other form of facsimile transmission. A Holder of a Foreign Currency Note may
elect to receive payment in the Specified Currency for all principal and any
premium and interest payments and need not file a separate election for each
payment. Such election will remain in effect until revoked by written notice to
the Trustee, but written notice of any such revocation must be received by the
Trustee on or prior to the relevant Record Date or at least sixteen days prior
to Maturity, as the case may be. Holders of Foreign Currency Notes whose Notes
are to be held in the name of a broker or nominee should contact such broker or
nominee to determine whether and how an election to receive payments in the
Specified Currency may be made.
Principal of, and any premium and interest on, a Foreign Currency Note paid
in U.S. dollars will be paid in the manner specified in the accompanying
Prospectus and this Prospectus Supplement for interest on Notes denominated in
U.S. dollars. Interest on a Foreign Currency Note paid in the Specified
Currency will be paid by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register. All checks
payable in a Specified Currency will be drawn on a bank office located outside
the United States. Payments of principal of and any premium and interest on
Foreign Currency Notes paid in the Specified Currency at Maturity will be made
by wire transfer in immediately available funds to an account with a bank
located in the country of the Specified Currency, as shall have been designated
at least sixteen days prior to Maturity by the Holder, provided that the Note
is presented at the Corporate Trust Office of the Trustee in the Borough of
Manhattan, The City of New York, in time for such Paying Agent to make such
payments in such funds in accordance with its normal procedures.
Payment Currency
If a Specified Currency is not available for the payment of principal or any
premium or interest with respect to a Foreign Currency Note due to the
imposition of exchange controls or other circumstances beyond the control of
the Company, the Company will be entitled to satisfy its obligations to Holders
of Foreign Currency Notes by making such payment in U.S. dollars on the basis
of the Market Exchange Rate on the second Market Day prior to such payment or
if such Market Exchange Rate is not then available, on the basis of the most
recently available Market Exchange Rate or as otherwise indicated in the
applicable Pricing Supplement. See "Special Provisions Relating to Foreign
Currency Notes--Exchange Rates and Exchange Controls".
S-23
<PAGE>
PLAN OF DISTRIBUTION OF NOTES
Under the terms of a Distribution Agreement dated January 12, 1995, the Notes
are offered on a continuing basis by the Company through the Distributors, each
of which has agreed to use reasonable efforts to solicit purchases of the
Notes. The Company will pay each Distributor, acting as agent, a commission of
from .125% to .750% of the principal amount of each Note, depending on its
Stated Maturity, sold through such Distributor. The Company will have the sole
right to accept offers to purchase Notes and may reject any such offer, in
whole or in part. Each Distributor shall have the right, in its discretion
reasonably exercised, without notice to the Company, to reject any offer to
purchase Notes received by it, in whole or in part. The Company also may sell
Notes to any Distributor, acting as principal, or to a group of underwriters
named in the applicable Pricing Supplement for whom such Distributor will act
as representative, at a discount to be agreed upon at the time of sale (which
may be the same as the commissions described above), for their own account or
for resale to one or more investors at varying prices related to prevailing
market prices at the time of such resale, as determined by such Distributor, or
if so agreed, at a fixed public offering price set forth on the cover page of
the applicable Pricing Supplement less the applicable concession, expressed as
a percentage of the principal amount of the Notes. In addition, the
Distributors may offer the Notes they have purchased as principal to other
dealers. The Distributors may sell Notes to any dealer at a discount and,
unless otherwise specified in an applicable Pricing Supplement, such discount
allowed to any dealer will not be in excess of the discount to be received by
such Distributor from the Company. After the initial public offering of Notes
to be resold to investors and other purchasers, the public offering price (in
the case of a fixed price public offering), concession and discount may be
changed. The Company has reserved the right to sell Notes directly or
indirectly to investors from time to time on its own behalf, in which case no
commission would be paid. The Company may appoint additional distributors for
the purpose of soliciting offers to purchase Notes, subject to the terms of the
Distribution Agreement. Such other distributors, if any, will be named in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes, other than Foreign Currency Notes, will be
required to be made in funds immediately available in The City of New York.
With respect to payment of the purchase price of Foreign Currency Notes, see
"Special Provisions Relating to Foreign Currency Notes--Purchase" herein.
The Distributors may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"). The Company has agreed to indemnify the
Distributors against certain liabilities, including civil liabilities under the
Act, or contribute to payments which the Distributors may be required to make
in respect thereof. The Company has agreed to reimburse the Distributors for
certain expenses.
The Distributors engage or may engage in the future in transactions with and
performs services for the Company and its affiliates in the ordinary course of
business.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by William B.
Moore, Vice President, Secretary and General Counsel of the Company, and by
Sidley & Austin, Chicago, Illinois, and for the Distributors by Kirkland &
Ellis, Chicago, Illinois. The opinions of Mr. Moore, Sidley & Austin and
Kirkland & Ellis will be conditioned upon, and subject to certain assumptions
regarding, future action required to be taken by the Company and the Trustee in
connection with the issuance and sale of any particular Note, the specific
terms of Notes and other matters which may affect the validity of Notes but
which cannot be ascertained on the date of such opinions. Mr. Moore is an
officer and full-time employee of the Company and owns, and holds options to
purchase, shares of its common stock.
S-24
<PAGE>
GLOSSARY
Set forth below are definitions, or the locations elsewhere of definitions,
of some of the terms used in this Prospectus Supplement.
"Calculation Agent" means the agent appointed by the Company to calculate
interest rates for Floating Rate Notes. Unless otherwise provided in a Pricing
Supplement, the Calculation Agent will be The First National Bank of Chicago.
"Calculation Date" means the date on which the Calculation Agent is to
calculate an interest rate for a Floating Rate Note, which, unless otherwise
indicated in the applicable Pricing Supplement will be the earlier of (i) the
tenth calendar day after such Interest Determination Date, or, if such day is
not a Market Day, the next succeeding Market Day or (ii) the Market Day
preceding the applicable Interest Payment Date or Stated Maturity, as the case
may be.
"CD Rate" means the rate calculated as set forth under the heading
"Description of Notes--Floating Rate Notes--CD Rate Notes", unless otherwise
indicated in the applicable Pricing Supplement.
"Commercial Paper Rate" means the rate calculated as set forth under the
heading "Description of Notes--Floating Rate Notes--Commercial Paper Rate
Notes", unless otherwise indicated in the applicable Pricing Supplement.
"Composite Quotations" means the daily statistical release entitled
"Composite 3:30 P.M. Quotations for U.S. Government Securities", or any
successor publication, published by the Federal Reserve Bank of New York.
"Exchange Rate Agent" means the agent appointed by the Company to convert
principal and any premium and interest payments in respect of Foreign Currency
Notes into U.S. dollars. Unless otherwise provided in a Pricing Supplement, the
Exchange Rate Agent will be The First National Bank of Chicago.
"Federal Funds Effective Rate" means the rate calculated as set forth under
the heading "Description of Notes--Floating Rate Notes--Federal Funds Effective
Rate Notes", unless otherwise indicated in the applicable Pricing Supplement.
"Fixed Rate Note" shall have the meaning set forth under the heading
"Description of Notes--Interest".
"Floating Rate Notes" shall have the meaning set forth under the heading
"Description of Notes--Interest".
"H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15(519), Selected Interest Rates", or any successor publication,
published by the Board of Governors of the Federal Reserve System.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as indicated in the applicable Pricing Supplement.
"Initial Interest Rate" means the rate at which a Floating Rate Note will
bear interest from its Issue Date (or that of a predecessor Note) to the first
Reset Date, as indicated in the applicable Pricing Supplement.
"Interest Determination Date" means the date as of which the interest rate
for a Floating Rate Note is to be calculated, to be effective as of the
following Reset Date and calculated on the related Calculation Date (except in
the case of Prime Rate and LIBOR, which are calculated on the related Prime
Rate Interest Determination Date and LIBOR Interest Determination Date,
respectively). See the fourth paragraph under the heading "Description of
Notes--Floating Rate Notes" for the Interest Determination Dates for Floating
Rate Notes. The Interest Determination Dates for any Floating Rate Note will
also be indicated in the applicable Pricing Supplement.
S-25
<PAGE>
"Interest Reset Date" means the date on which a Floating Rate Note will begin
to bear interest at the variable interest rate determined as of any Interest
Determination Date. See "Description of Notes--Floating Rate Notes" for the
applicable Reset Dates for such Notes. The Reset Dates with respect to any
Floating Rate Note will also be set forth in the applicable Pricing Supplement
and in such Note.
"LIBOR" means the rate calculated as set forth under the heading "Description
of Notes--Floating Rate Notes--LIBOR Notes", unless otherwise indicated in the
applicable Pricing Supplement.
"London Market Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Market Day" means (a) with respect to any Note, any day that is not a
Saturday or Sunday and that, in Chicago, Illinois and The City of New York, is
not a day on which banking institutions generally are authorized or obligated
by law or executive order to close and (b) with respect to LIBOR Notes only,
any such day on which dealings in deposits in U.S. dollars are transacted in
the London interbank market and (c) with respect to Foreign Currency Notes
only, any such day that is not a Saturday or Sunday and that, in the principal
financial center of the country of the Specified Currency or, with respect to
Foreign Currency Notes denominated in European Currency Units, Brussels, is not
a day on which banking institutions generally are authorized or obligated by
law or executive order to close.
"Market Exchange Rate" for any Specified Currency means the noon buying rate
in The City of New York for cable transfers for such Specified Currency as
certified for customs purposes by (or if not so certified as otherwise
determined by) the Federal Reserve Bank of New York.
"Maturity" means, when used with respect to any Note, the date on which the
principal of such Note becomes due and payable, whether at Stated Maturity or
by declaration of acceleration, call for redemption or otherwise.
"Prime Rate" means the rate calculated as set forth under the heading
"Description of Notes--Floating Rate Notes--Prime Rate Notes", unless otherwise
indicated in the applicable Pricing Supplement.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on the
Reuters Monitor Money Rates Service (or such other page as may replace the NYMF
page on that service for the purpose of displaying prime rates or base lending
rates of major United Stated banks).
"Specified Currency" shall have the meaning set forth under the heading
"Special Provisions Relating to Foreign Currency Notes--Purchase".
"Spread" means the number of basis points specified in the applicable Pricing
Supplement as being applicable to the interest rate for a particular Floating
Rate Note.
"Spread Multiplier" means the percentage specified in the applicable Pricing
Supplement as being applicable to the interest rate for a particular Floating
Rate Note.
"Stated Maturity" means, when used with respect to any Note, the date on
which the last payment of principal of such Note is due and payable in
accordance with the terms thereof.
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits).
"Treasury Rate" means the interest rate calculated as set forth under the
heading "Description of Notes--Floating Rate Notes--Treasury Rate Notes",
unless otherwise indicated in the applicable Pricing Supplement.
S-26
<PAGE>
PROSPECTUS
LOGO
WHITMAN CORPORATION
$338,500,000
DEBT SECURITIES
---------------
Whitman Corporation ("Whitman" or the "Company") may offer from time to time
its unsecured debentures, notes or other evidences of indebtedness
("Securities"), in one or more series, in amounts, at prices and on terms to be
determined at the time of sale, from which the Company will receive up to an
aggregate of $338,500,000 in proceeds, or the equivalent thereof if any of the
Securities are denominated in one or more foreign currencies or currency units.
The Securities may be sold to underwriters, to or through dealers, acting as
principals or acting as agents, or directly to other purchasers (see "Plan of
Distribution").
The Securities may be issued in registered form without coupons, or in
unregistered form with or without coupons. In addition, all or a portion of the
Securities may be issued in temporary or definitive global form. Securities
which are book-entry Securities will be issued in registered global form.
The specific designation, aggregate principal amount, designated coin,
currency or currencies, or currency unit or units in which the principal, any
premium or any interest is payable, authorized denominations, purchase price,
maturity, interest rate (which may be fixed or variable) and time of payment of
any interest, any redemption terms or other special terms and the terms of the
offering in connection with the sale of the Securities in respect of which this
Prospectus is being delivered, together with the names of any underwriters,
dealers or agents, applicable commissions or discounts and net proceeds to the
Company from the sale thereof, are set forth in the accompanying Prospectus
Supplement ("Prospectus Supplement").
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
THE DATE OF THIS PROSPECTUS IS JANUARY 12, 1995.
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IN CONNECTION WITH ANY OFFERING
CONTEMPLATED HEREBY OR THEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THIS
PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company with the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: New York Office, Seven World Trade Center,
New York, New York 10048; and Chicago Office, 500 West Madison Street, 14th
Floor, Chicago, Illinois 60661. Copies of such material can also be obtained
from the Public Reference Section of the Commission, at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Such reports, proxy statements and other information concerning the Company
can be inspected at the offices of the national securities exchanges on which
the Company's Common Stock is listed: New York Stock Exchange, 20 Broad Street,
New York, New York 10005; Chicago Stock Exchange, 440 South LaSalle Street,
Chicago, Illinois 60605; and the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California 94104. This Prospectus does not contain all the
information set forth in the Registration Statement and exhibits thereto which
the Company has filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated by
reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1993; and
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994, June 30, 1994 and September 30, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified and superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been incorporated by reference in this
Prospectus, excluding exhibits. Such requests should be directed to Corporate
Communications Department, Whitman Corporation, 3501 Algonquin Road, Rolling
Meadows, Illinois 60008, telephone: (708) 818-5000.
2
<PAGE>
THE COMPANY
Whitman is a holding company which conducts its business through three
principal subsidiaries: Pepsi-Cola General Bottlers, Inc. ("Pepsi General"),
Midas International Corporation ("Midas"), and Hussmann Corporation
("Hussmann"). The Company's principal executive offices are located at 3501
Algonquin Road, Rolling Meadows, Illinois 60008, telephone: (708) 818-5000.
In 1988 the Company changed its name from IC Industries, Inc. to Whitman
Corporation and sold its aerospace and defense subsidiary (Pneumo Abex
Corporation). In 1989 the Company spun off to its shareholders its railroad
operations (Illinois Central Railroad Company). In 1991, the Company spun off
to its shareholders all of the common stock of Pet Incorporated, a specialty
foods company.
PEPSI GENERAL
Pepsi General is the largest independent Pepsi bottler in the United States.
Pepsi General packages and distributes Pepsi-Cola products, including Pepsi,
Diet Pepsi, Caffeine-Free Pepsi, Mountain Dew, Slice and All-Sport, under
exclusive franchises in markets in 12 states in the North-Central United States
with a population of over 24 million people. Pepsi General also packages and
sells other beverages in some markets, including 7-Up, Dr. Pepper, Dad's Root
Beer, Canada Dry, Hawaiian Punch, Ocean Spray and Lipton's Tea.
Pepsi General's franchises grant it the exclusive right to produce and sell
the products and use the related trade names and trademarks in the franchised
territories. The franchises require Pepsi General, among other things, to
purchase its concentrate requirements solely from the franchisor at prices
established by the franchisor, and to promote diligently the sale and
distribution of the franchised products. Packaging materials (bottles, bottle
caps, cans, cartons and cases) are obtained from manufacturers approved by the
franchisor and other items are purchased in the general market. The franchises
are for an indefinite term and are subject to termination upon failure to
comply with the provisions of the franchise agreement.
Products are distributed by Pepsi General to retail outlets primarily by
trucks operated by Pepsi General route salesmen. Pepsi General owns, leases or
sells the vending machines which dispense its soft drink products in factories,
offices, schools, stores, gasoline stations and other locations. Pepsi
General's facilities include five bottling plants, three canning plants, three
combination bottling/canning plants and 59 distribution warehouses.
As the result of an agreement entered into in 1987, Pepsi General is 80%
owned by Whitman and 20% owned by a subsidiary of PepsiCo, Inc. ("PepsiCo"),
which is the franchisor of Pepsi-Cola products. While Pepsi General manages all
phases of its operations, including pricing of its products, PepsiCo and Pepsi
General exchange production, marketing, and distribution information.
In 1994, PepsiCo granted Pepsi General a franchise for the distribution of
Pepsi-Cola products in the western and northern areas of Poland for an initial
term of 15 years. Pepsi General anticipates an investment of $100 million over
the next 5-8 years in Poland, and will in the near term incur losses in Poland
as this new venture is developed.
MIDAS
Midas operates the world's largest franchised dealer network specializing in
under-the-car services. Midas services automotive exhaust systems,
steering/suspension systems and brakes through approximately 2,575 franchised
and company-owned shops operating in 14 countries. Approximately 87% of the
shops are franchised and the remainder are company-owned.
Four domestic manufacturing plants produce nearly 1,800 different types of
mufflers which will fit nearly 96% of the cars and light trucks -- both foreign
and domestic -- on the road today in the U.S. The principal source of Midas'
revenue is derived from its network of franchised and company-owned and
operated retail shops. Midas collects an initial franchise fee and receives
yearly royalties based upon the franchisees' gross revenues. In addition, Midas
generates revenues from the sale of manufactured mufflers and tubing, and from
3
<PAGE>
the resale of purchased parts (primarily brakes, shocks and front-end alignment
components) to its franchisees. Midas also sells its manufactured exhaust
system parts under other brand names to automotive parts distributors, jobbers
and automobile accessory stores and its fabricated tube-bending equipment to
jobbers and retail installers.
Midas' warranty of mufflers, brakes and shocks is particularly important to
its marketing program. Competitors include automotive service centers of retail
chain stores, muffler shops, automotive dealers, gasoline stations and
independent repair shops.
HUSSMANN
Hussmann produces merchandising and refrigeration systems for supermarkets
and other food stores. Products include refrigerated display cases,
commercial/industrial refrigeration systems, storage coolers, bottle coolers,
walk-in coolers, and HVAC equipment. Hussmann is the market leader in North
America, and has substantial operations in the United Kingdom. Its customers
include independent and chain-owned supermarkets, other grocery stores and
convenience/specialty stores.
Hussmann operates 15 manufacturing facilities in the United States, Mexico,
Canada and the United Kingdom, and also operates a number of branch facilities
which sell, install and service Hussmann products. Hussmann products are
marketed internationally by both Hussmann sales personnel and independent
distributors.
In December, 1994, Hussmann announced that it had entered into a joint
venture in China with Luoyang Refrigeration Machinery Factory to produce
refrigeration systems and food display cases. Hussmann has a 55% interest in
the joint venture, and will initially invest $5.5 million for state-of-the-art
production systems in China.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement, the
net proceeds from the sale of the Securities will be used for general corporate
purposes, including the repayment of indebtedness.
DESCRIPTION OF SECURITIES
The following description of the Securities sets forth certain general terms
and provisions to which any Prospectus Supplement may relate. The particular
terms of Securities being offered and the extent to which such general
provisions apply are described in the Prospectus Supplement relating thereto.
The Securities are to be issued under an Indenture dated as of January 15,
1993 (the "Indenture"), between the Company and The First National Bank of
Chicago, as Trustee ("Trustee"). The form of the Indenture is filed as an
exhibit to the Registration Statement. The following summary of certain
provisions of the Securities and the Indenture do not purport to be complete
and is subject to, and is qualified in its entirety by, all of the provisions
of the Indenture. Article and section references in parentheses are to the
Indenture. Wherever particular provisions (including definitions) of the
Indenture are referred to, such provisions are incorporated by reference as a
part of the statements made, and the statements are qualified in their entirety
by such reference.
GENERAL
The Securities will be unsecured and will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Company. The Indenture
provides that the Securities may be issued thereunder from time to time in one
or more series and does not limit the aggregate principal amount of the
Securities or of any particular series of Securities.
The Securities may be issued in fully registered form without coupons or in
unregistered form with or without coupons. The Securities may also be issued in
the form of one or more temporary or definitive global
4
<PAGE>
securities (each a "Global Security"). Registered Securities which are book-
entry securities will be issued as registered Global Securities. Unregistered
Securities may also be issued in the form of temporary or definitive Global
Securities.
The Securities may be denominated in U.S. dollars, or in any other currency
or currency unit. If any of the Securities are sold for any foreign currency or
currency unit or if principal of (and premium, if any) and interest, if any, on
any of the Securities are payable in any foreign currency or currency unit, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Securities and such foreign currency or currency
unit will be set forth in the Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the following terms of a
series of Securities being offered: (a) the title of such Securities; (b) the
aggregate principal amount of Securities; (c) the rate or rates (which may be
fixed or variable) at which the Securities will bear interest, if any, or the
method of determining any interest, the date or dates from which any such
interest will accrue, the date or dates on which any such interest will be
payable, and the record date for the interest payable on any interest payment
date; (d) the date or dates of maturity; (e) the period or periods within
which, the price or prices at which, and the terms and conditions upon which,
the Company may redeem the Securities; (f) the obligation, if any, of the
Company to redeem the Securities pursuant to a sinking fund or at the option of
the holder and the period or periods within which, the price or prices at
which, and the terms and conditions upon which, the Securities will be
redeemed; (g) the portion of the principal amount of the Securities due upon
acceleration of maturity in the event of a default; (h) the denominations in
which the Securities will be issuable if other than denominations of $1,000 if
registered and $5,000 if unregistered; (i) the form used to evidence ownership
of the Securities; (j) information with respect to conversion of the
Securities, if convertible; (k) the places where the principal (and premium, if
any) and interest, if any, are payable; (1) additional offices or agencies for
registration of transfer and exchange and for payment of the principal (and
premium, if any) and interest, if any; (m) whether the Securities will be
issued as registered Securities, or as unregistered Securities, including
temporary and definitive Global Securities, the depositary for any Global
Security, and the circumstances, if any, upon which such Securities may be
exchanged for Securities issued in a different form; (n) if other than U.S.
dollars, the coin, currency or currencies, or currency unit or units for which
the Securities may be purchased and in which the payment of principal of (and
premium, if any) and interest, if any, on such Securities will be made; (o) if
the Company or the holders of such Securities may elect payment in a coin,
currency or currencies, or currency unit or units other than that in which such
Securities are denominated, then the period or periods within which, and the
terms and conditions upon which, such election may be made and any provision
requiring the holders to bear currency exchange costs; (p) if the amount of any
payment on the Securities may be determined with reference to a currency,
currency unit, commodity or financial or non-financial index or indices, then
the manner in which any such amount shall be determined; (q) whether and under
what circumstances the Company will pay additional amounts to any holder of
such Securities who is not a U.S. person in respect of any tax, assessment or
governmental charge required to be withheld or deducted and, if so, whether the
Company will have the option to redeem such Securities rather than pay any
additional amounts; (r) the person to whom any interest on a registered
Security will be payable if other than as registered on the record date, the
manner in which or person to whom any interest on an unregistered Security will
be payable if other than upon surrender of the appropriate coupon and the
manner in which any interest on a Global Security will be paid; (s) whether
defeasance and discharge provisions will not apply to the Securities; and (t)
any other terms not inconsistent with the Indenture. (Section 2.01)
Unless otherwise indicated in the Prospectus Supplement, principal (and
premium, if any) and interest, if any, will be payable, and the Securities
covered thereby may be registered for transfer or exchange, at the principal
corporate trust office of the Trustee in Chicago, Illinois, provided that at
the option of the Company, payment of interest on registered Securities may be
made by check mailed to the address of the person entitled thereto as it
appears on the Security Register or by wire transfer as instructed by the
person entitled thereto. (Sections 4.01 and 4.02) No service charge will be
made for any exchange or registration of transfer of the Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge. (Section 2.06)
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Unless otherwise described in a Prospectus Supplement, there are no covenants
or provisions contained in the Indenture which may afford the holders of
Securities of a series protection in the event of a highly leveraged
transaction involving the Company.
GLOBAL SECURITIES
Securities of a series may be issued in whole or in part as one or more
Global Securities that will be deposited with, or on behalf of, a depositary
identified in the Prospectus Supplement relating to such series. Global
Securities may be issued in either registered or unregistered form and in
either temporary or definitive form. (Section 2.01) The specific terms of the
depositary arrangement with respect to any Global Security of a series will be
described in the Prospectus Supplement relating to such series.
LIMITATION ON LIENS
The Indenture provides that neither the Company nor any Restricted Subsidiary
(as defined below) will issue, assume or guarantee any notes, bonds, debentures
or other similar evidences of indebtedness for money borrowed ("Debt") secured
by a mortgage, security interest, lien, pledge or other encumbrance ("liens")
upon any Principal Property (as defined below), or on any shares of stock or
indebtedness of any Restricted Subsidiary (whether such Principal Property,
shares of stock or indebtedness are now owned or hereafter acquired), without
effectively providing that the Securities (together with, if the Company so
determines, any other indebtedness or obligation then existing or thereafter
created, ranking equally with the Securities) shall be secured equally and
ratably with (or prior to) such Debt so long as such Debt is so secured. This
restriction will not apply to (a) liens affecting property of a corporation
existing at the time it becomes a Subsidiary (as defined below) of the Company
or at the time it is merged into or consolidated with or purchased by the
Company or a Subsidiary; (b) liens existing at the time of acquisition of the
property affected thereby or purchase money liens incurred within 180 days
after acquisition of the property; (c) liens to secure the cost of construction
of new plants or facilities, incurred within 180 days of completion of
construction; (d) liens which secure indebtedness owing by a Restricted
Subsidiary to the Company or another Restricted Subsidiary; (e) liens existing
on the date of the Indenture; (f) liens in connection with the issuance of
certain pollution control or industrial revenue bonds or similar financings;
(g) certain statutory liens or similar liens arising in the ordinary course of
business; (h) certain liens in connection with legal proceedings and government
contracts and certain deposits or liens made to comply with workers'
compensation or similar legislation; (i) liens existing on property acquired by
the Company or a Restricted Subsidiary through the exercise of rights arising
out of defaults on receivables acquired in the ordinary course of business; (j)
liens for certain judgments and awards; (k) liens for certain taxes,
assessments, governmental charges or other liens of a similar nature, which do
not materially impair the use of such property in the operation of the business
of the Company or a Restricted Subsidiary or the value of such property for the
purposes of such business; and (l) certain extensions, renewals or replacements
of any liens referred to in the foregoing clauses (a) through (k). (Section
4.05) See also "Exempted Indebtedness" below.
LIMITATION ON SALE AND LEASE-BACK
The Indenture provides that neither the Company nor any Restricted Subsidiary
will enter into any sale and lease-back transaction with respect to any
Principal Property (except for temporary leases of a term, including renewals,
not exceeding five years) unless either (a) the Company or such Restricted
Subsidiary would be entitled, pursuant to the provisions of Section 4.05, to
incur Debt secured by a lien on the property to be leased without equally and
ratably securing the Securities, or (b) the Company within 180 days after the
effective date of such transaction applies to the voluntary retirement of its
funded debt an amount equal to the value of such transaction, defined as the
greater of the net proceeds of the sale of the property leased in such
transaction or the fair value, in the opinion of the Board of Directors, of the
leased property at the time such transaction was entered into. (Section 4.06)
See also "Exempted Indebtedness" below.
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DEFINITIONS
The term "Principal Property" means any manufacturing plant or warehouse
owned or leased by the Company or any Subsidiary located within the United
States of America, the gross book value of which exceeds one percent of
Consolidated Net Worth (as defined below), other than manufacturing plants and
warehouses which the Board of Directors by resolution declares, together with
all other plants and warehouses previously so declared, is not of material
importance to the total business conducted by the Company and its Restricted
Subsidiaries as an entirety. The term "Restricted Subsidiary" is defined to
mean any Subsidiary which owns or leases a Principal Property and substantially
all the property of which is located, or substantially all of the business of
which is carried on, within the United States of America or which is
incorporated under the laws of any state of the United States of America. The
term "Subsidiary" means any corporation at least a majority of the outstanding
securities of which having ordinary voting power to elect a majority of the
board of directors of such corporation (whether or not any other class of
securities has or might have voting power by reason of the occurrence of a
contingency) is at the time owned or controlled, directly or indirectly, by the
Company, by one or more Subsidiaries or by the Company and one or more
Subsidiaries. (Article One). The term "Consolidated Net Worth" means the excess
of assets over liabilities of the Company and its consolidated Subsidiaries,
plus Minority Interests, as determined from time to time in accordance with
generally accepted accounting principles consistently applied. The term
"Minority Interest" is defined as any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares) that are not owned by the
Company or a Subsidiary. (Section 6.01)
EXEMPTED INDEBTEDNESS
Notwithstanding the foregoing limitations on liens and sale and lease-back
transactions, the Company and its Restricted Subsidiaries may issue, assume, or
guarantee Debt secured by a lien without securing the Securities, or may enter
into sale and lease-back transactions without retiring funded debt, or enter
into a combination of such transactions, if the sum of the principal amount of
all such Debt and the aggregate value of all such sale and lease-back
transactions does not at any such time exceed 10% of the consolidated total
assets of the Company and its consolidated Subsidiaries as shown in the audited
consolidated balance sheet contained in the latest annual report to the
shareholders of the Company. (Section 4.07)
DEFEASANCE
Unless otherwise provided in the applicable Prospectus Supplement, the
following defeasance provisions will apply to the Securities being offered
thereby.
Satisfaction and Discharge. The Indenture provides that, unless inapplicable
to any series of Securities, the Company will be discharged from any and all
obligations in respect of the Securities of any series (except, among other
things, for certain obligations to register the transfer or exchange of
Securities of such series, to replace stolen, lost, destroyed or mutilated
Securities of such series, to maintain paying agencies and to hold monies for
payment in trust), if the Company shall deposit with the Trustee, in trust,
money and/or Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of (and premium, if any) and each
installment of interest on the Securities of such series on the due date of
such payments in accordance with the terms of the Indenture and the Securities
of such series. Such a trust may only be established if, among other things,
the Company has delivered to the Trustee an opinion of counsel of recognized
national standing to the effect that holders of the Securities of such series
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit, satisfaction and discharge and will be subject to
federal income tax on the same amount and in the same manner and at the same
times, as would have been the case if such deposit, defeasance and discharge
had not occurred. (Section 12.02(a)) The term "Government Obligations" with
respect to any series of Securities means direct noncallable obligations of the
government which issued the currency in which the Securities of that series are
denominated or noncallable obligations the payment of the principal of and
interest on which is fully guaranteed by such government and which, in either
case, are full faith and credit obligations of such government. (Article One)
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Defeasance of Certain Covenants and Certain Events of Default. The Indenture
provides that, unless inapplicable to any series of Securities, the Company may
omit to comply with certain covenants in Sections 4.05 (Limitation on Liens),
4.06 (Limitation on Sale and Lease-back) and 4.07 (Exempted Indebtedness) and
Article Eleven (Consolidation, Merger, Sale, Conveyance or Lease) if the
Company shall deposit with the Trustee, in trust, money and/or Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and each installment
of interest on the Securities of such series on the due date of such payments
in accordance with the terms of the Indenture and the Securities of such
series. All obligations of the Company under the Indenture and the Securities
of such series other than with respect to the covenants referred to above and
all Events of Default other than with respect to such covenants shall remain in
full force and effect. Such a trust may only be established if, among other
things, the Company has delivered to the Trustee an opinion of counsel of
recognized national standing to the effect that the holders of the Securities
of such series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain covenants and
Events of Default and will be subject to federal income tax on the same amount
and in the same manner and at the same times, as would have been the case if
such deposit and defeasance had not occurred. (Section 12.02(b))
Defeasance and Certain Other Events of Default. In the event the Company
exercises its option to omit to comply with Sections 4.05, 4.06 and 4.07 and
Article Eleven of the Indenture with respect to the Securities of any series as
described above and the Securities of such series are declared due and payable
because of the occurrence of any Event of Default other than default with
respect to Sections 4.05, 4.06 and 4.07 and Article Eleven as referred to
above, the amount of money and Government Obligations on deposit with the
Trustee will be sufficient to pay amounts payable on the Securities of such
series on their respective due dates without such acceleration, but may not be
sufficient to pay amounts due on the Securities of such series at the time of
the acceleration resulting from such Event of Default. However, the Company
would remain liable for such payments.
MERGER AND CONSOLIDATION
The Company may consolidate with, or merge into, or sell, lease or convey all
or substantially all of its assets to, any person, if, among other things, (i)
the Company is the continuing corporation or the successor is a U.S.
corporation which assumes all the obligations of the Company under the
Securities and under the Indenture and (ii) after giving effect thereto, no
Event of Default under the Indenture or no event which, after notice or lapse
of time or both, would become an Event of Default shall have occurred and be
continuing. (Section 11.01)
EVENTS OF DEFAULT
An Event of Default with respect to any series of Securities is defined as
being: default for 30 days in payment of interest, if any, on any Security of
that series; default in payment of principal (or premium, if any) on any
Security of that series as and when the same becomes due; default by the
Company in the performance of any of the other covenants in Securities of that
series or in the Indenture relating to Securities of that series which shall
not have been remedied within a period of 90 days after notice to the Company
by the Trustee or holders of at least 25% in aggregate principal amount of the
Securities of that series then outstanding; certain events of bankruptcy,
insolvency or reorganization of the Company; or acceleration of any
indebtedness for money borrowed by the Company or any Restricted Subsidiary in
excess of the greater of $30,000,000 in aggregate principal amount or 5% of the
Consolidated Net Worth of the Company. (Section 6.01) No Event of Default with
respect to the Securities of a particular series constitutes an Event of
Default with respect to any other series. Additional Events of Default may be
prescribed for the benefit of holders of certain series of Securities and
described in the Prospectus Supplement relating to such Securities. The
Indenture provides that the Trustee will notify the holders of Securities of
each series of Events of Default known to it and affecting that series within
90 days after the occurrence thereof; provided that, except in the
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<PAGE>
case of default in the payment of principal (and premium, if any) and interest,
if any, or in the making of any sinking fund payment, the Trustee will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the holders of such
Securities. (Section 7.02)
The Indenture provides that if an Event of Default with respect to any series
of Securities shall have occurred and be continuing, either the Trustee or the
holders of at least 25% in aggregate principal amount of Securities of that
series then outstanding may declare, upon written notice, the principal amount
(or, if the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of that
series) of all the Securities of that series to be immediately due and payable,
but upon certain conditions such declaration may be annulled and past defaults
(except, unless theretofore cured, a default in payment of principal of (and
premium, if any) and interest, if any, on Securities of that series) may be
waived by the holders of a majority in principal amount of the Securities of
that series then outstanding. (Section 6.02)
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default with respect to any series of Securities
shall occur and be continuing, the Trustee will be under no obligation to
exercise any of the rights or powers in the Indenture at the request or
direction of any of the holders of that series, unless such holders shall have
offered to the Trustee reasonable security or indemnity. (Sections 7.01 and
7.03) The holders of a majority in principal amount of the Securities of each
series affected by an Event of Default and then outstanding have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee under the Indenture or exercising any trust or power
conferred on the Trustee with respect to the Securities of that series.
(Section 6.12)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of the Securities of each series at the time outstanding, to execute
supplemental indentures adding any provisions to, or changing in any manner or
eliminating any of the provisions of, the Indenture or any supplemental
indenture with respect to the Securities of such series; provided that no such
supplemental indenture may, among other things (a) extend the maturity of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of any interest thereon, or reduce any premium payable upon
the redemption thereof, or change the currency in which any Security is
payable, without the consent of the holder of each Security so affected, or (b)
reduce the aforesaid majority in principal amount of the Securities of such
series, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all Securities of
such series. (Section 10.02)
THE TRUSTEE
The First National Bank of Chicago has lending and other customary banking
relationships with the Company.
PLAN OF DISTRIBUTION
Whitman may sell Securities to underwriters, to or through dealers, acting as
principals or as agents, or directly to other purchasers. Securities also may
be sold by underwriters directly to other purchasers or through other dealers,
which may receive compensation from the underwriters in the form of discounts,
concessions or commissions. The Prospectus Supplement with respect to
Securities being offered sets forth the terms of the offering, including the
name or names of any underwriters or agents, any discounts, commissions and
other items constituting compensation from the Company and any discounts,
concessions or commissions allowed or reallowed or paid by any underwriters to
other dealers. Underwriters, dealers and agents that participate in the
distribution of the Securities may be deemed to be underwriters and any
discounts, concessions or commissions received by them and any profit on the
resale of Securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act.
9
<PAGE>
The Securities may be sold from time to time in one or more transactions at a
fixed price or prices, which may be changed, at market prices prevailing at the
time of sale, at prices related to such market prices or at negotiated prices.
The place and time of delivery of Securities in respect of which this
Prospectus is delivered are set forth in the Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company has authorized
underwriters or agents to solicit offers by certain specified institutions to
purchase Securities from the Company at the offering price set forth in the
Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement and to
the condition that the purchase of such Securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. Any commission payable for solicitation of such contracts
is set forth in the Prospectus Supplement. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
Each series of Securities to be offered will be a new issue of securities
with no established trading market. Certain underwriters to whom Securities are
sold by the Company for public offering and sale may make a market in such
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Securities.
Underwriters and agents may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act. Such underwriters
and agents may be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of business.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement, certain legal
matters in connection with the Securities offered hereby will be passed upon
for the Company by William B. Moore, Vice President, Secretary and General
Counsel of the Company, and by Sidley & Austin, Chicago, Illinois, and for any
underwriters or agents by Kirkland & Ellis, Chicago, Illinois. Mr. Moore is an
officer and full-time employee of the Company and owns, and holds options to
purchase, shares of its common stock.
EXPERTS
The consolidated financial statements incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1993 have been so incorporated in reliance on the reports of KPMG Peat Marwick
LLP, independent certified public accountants, given upon the authority of said
firm as experts in accounting and auditing.
10
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NO DEALER, AGENT, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, PROSPECTUS SUPPLEMENT AND ANY PRICING SUPPLEMENT IN CON-
NECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMA-
TION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR BY ANY DISTRIBUTOR. THIS PROSPECTUS, PROSPECTUS SUPPLEMENT AND
ANY PRICING SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITA-
TION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN
THIS PROSPECTUS, PROSPECTUS SUPPLEMENT OR ANY PRICING SUPPLEMENT OR AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS, PROSPECTUS SUPPLEMENT OR ANY PRICING
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR RESPECTIVE DATES OR THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATES.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Ratios of Earnings to Fixed Charges........................................ S-2
Description of Notes....................................................... S-2
Certain Federal Income Tax Considerations.................................. S-13
Special Provisions Relating to Foreign Currency Notes...................... S-21
Plan of Distribution of Notes.............................................. S-24
Legal Opinions............................................................. S-24
Glossary................................................................... S-25
PROSPECTUS
Available information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 4
Description of Securities.................................................. 4
Plan of Distribution....................................................... 9
Legal Opinions............................................................. 10
Experts.................................................................... 10
</TABLE>
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Whitman Corporation
U.S. $150,000,000
Medium-Term Notes,
Series B
PROSPECTUS SUPPLEMENT
CS First Boston
Goldman, Sachs & Co.
Merrill Lynch & Co.
Morgan Stanley & Co.
Incorporated
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