<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. 33-50007
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 24, 1993)
$100,000,000
ILLINOIS BELL TELEPHONE COMPANY
6 5/8% DEBENTURES DUE FEBRUARY 1, 2025
------------------
Interest Payable February 1 and August 1
------------------
The Debentures will not be redeemable prior to February 1, 2004; on and after
that date, the Debentures will be redeemable, at the option of the Company, as
a whole at any time or in part from time to time, at the redemption prices set
forth herein. See "Certain Terms of the Debentures--Redemption Provisions." The
Debentures do not provide for any sinking fund.
------------------
The Debentures will be represented by one or more global securities
registered in the name of a nominee of the Depository. Beneficial interests in
the global securities will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository (with respect to
participants' interests) and its participants. Except as described herein,
Debentures in definitive form will not be issued. See "Certain Terms of the
Debentures--Book-Entry Procedures." Settlement for the Debentures will be made
in immediately available funds. The Debentures will trade in the Depository's
Same-Day Funds Settlement System until maturity, and secondary market trading
activity for the Debentures will therefore settle in immediately available
funds. All payments of principal and interest will be made by the Company in
immediately available funds. See "Certain Terms of the Debentures--Same-Day
Settlement and Payment."
------------------
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 OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public (1) Discount(2) Company(1)(3)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture.................... 97.183% 0.317% 96.866%
- ------------------------------------------------------------------------------------------
Total............................ $97,183,000 $317,000 $96,866,000
- ------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest from February 1, 1994 to date of delivery.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated at $125,000.
------------------
The Debentures offered by this Prospectus Supplement are offered by the
Underwriter subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriter and
to certain further conditions. Delivery of the Debentures to the Underwriter is
expected to be made through the facilities of The Depository Trust Company, New
York, New York, on or about February 4, 1994.
------------------
LEHMAN BROTHERS
January 28, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
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.
RECENT DEVELOPMENTS
In January 1994, Ameritech Corporation ("Ameritech"), the parent of Illinois
Bell Telephone Company (the "Company"), announced a program to launch a digital
video network upgrade that is expected, by the end of the decade, to make
available interactive information and entertainment services, as well as
traditional cable TV services, to approximately 6 million Ameritech customers.
The Company, as a part of the network upgrade program, expects to make capital
expenditures of approximately $160,000,000 over the next three years, subject
to the timing of regulatory approvals and to market demand. The Company
currently anticipates that its capital expenditures for the upgrade program in
the three-year period will be funded without an increase in its overall level
of capital expenditures which, in 1993, was $535,000,000. The Company will file
an application with the Federal Communications Commission in the near future to
begin construction of the network upgrade in Illinois.
The Company's audited financial statements for 1993 have not yet been
finalized. The Company has determined, on an unaudited basis, that for the year
ended December 31, 1993, its revenues were $3,041,000,000 and its net income
was $417,200,000.
On December 7, 1993, Ameritech filed a waiver request with the Department of
Justice (the "DOJ") asking the DOJ to recommend that the Company be permitted
to offer long distance (interLATA) service on a trial basis. The trial period
would not begin before January, 1995, at the earliest, and would require the
approval of both the U.S. District Court for the District of Columbia and the
Illinois Commerce Commission.
On November 29, 1993, the Illinois Supreme Court (the "Court") granted a
rehearing of its August 26, 1993 decision reversing a 1988 trial court
dismissal of class action lawsuits against the Company arising from a fire in
the Company's Hinsdale, Illinois switching station. The lawsuits sought
recovery of economic losses allegedly suffered by customers during the service
interruption (up to one month for some customers) following the fire. The
Court, in its August 26, 1993 decision (now to be reheard), held that the
Company could not use its tariff to protect itself from liability for service
interruptions alleged to have been caused by violations of the Illinois Public
Utilities Act and related regulations (the "Act"). The Court also held that
common law rules defining the scope of recoverable damages in tort did not
apply to bar tort claims filed under the Act. Under Illinois law, tort claims
seeking solely economic losses cannot be maintained in the absence of personal
injury or tangible property damage. The Company does not believe it has
violated the Act. In 1988, it refunded or reimbursed customers more than
$3,000,000 under its tariffs for the Hinsdale service interruptions.
USE OF PROCEEDS
The net proceeds from the sale of the Debentures offered hereby and the
concurrent sale of $100,000,000 aggregate principal amount of 5.80% Notes due
February 1, 2004 will be used to repay a portion of the indebtedness incurred
by the Company in connection with the redemption on August 9, 1993 of
$150,000,000 aggregate principal amount of 8% First Mortgage Bonds, Series J,
due June 1, 2005, on September 1, 1993 of $125,000,000 aggregate principal
amount of 6% First Mortgage Bonds, Series I, due July 1, 1998, on October 12,
1993 of $175,000,000 aggregate principal amount of 8 1/4% Debentures due August
18, 2016 and on
S-2
<PAGE>
January 12, 1994 of $300,000,000 aggregate principal amount of 8% Debentures
due December 10, 2004, at prices of $1,017.50, $1,000.00, $1,042.40 and
$1,018.50, respectively, for each $1,000 principal amount thereof, plus accrued
interest. The indebtedness incurred for the redemptions was borrowed under
short-term financing arrangements between the Company and Ameritech which
provide that the Company may borrow or repay amounts on a daily basis at market
rates.
CERTAIN TERMS OF THE DEBENTURES
The Debentures are to be issued under an Indenture, dated as of September 1,
1992 (the "Indenture"), between the Company and Harris Trust and Savings Bank,
as trustee (the "Trustee"). The following summaries of certain provisions of
the Indenture and the Debentures offered hereby (referred to in the Prospectus
as "Debt Securities" and "Offered Debt Securities") supplement, and to the
extent inconsistent therewith replace, the description of the general terms and
provisions of the Debt Securities set forth in the Prospectus, to which
description reference is hereby made. The following summaries do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indenture. Capitalized terms used but
not defined herein or in the Prospectus shall have the meanings given to them
in the Indenture.
GENERAL
The Debentures will represent unsecured and unsubordinated obligations of the
Company and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Debentures will be limited to $100,000,000
aggregate principal amount and will mature on February 1, 2025. The Debentures
will bear interest at the rate per annum shown on the cover page of this
Prospectus Supplement from February 1, 1994 or from the most recent Interest
Payment Date to which interest has been paid or provided for, payable semi-
annually on February 1 and August 1 of each year (each an "Interest Payment
Date"), commencing August 1, 1994, to the persons in whose names such
Debentures were registered at the close of business on the next preceding
January 15 and July 15, respectively (each a "Regular Record Date").
Until the Debentures are paid or payment thereof is duly provided for, the
Company will, at all times, maintain a paying agent (the "Paying Agent") in The
City of New York, New York or Chicago, Illinois, capable of performing the
duties described herein to be performed by the Paying Agent. The Company has
initially appointed Harris Trust and Savings Bank, 311 West Monroe Street,
Chicago, Illinois 60606, as the Paying Agent. The Company will notify the
holders of the Debentures, in accordance with the Indenture, of any change in
the Paying Agent or its address. Harris Trust and Savings Bank also serves as
Trustee under the Indenture.
Any payment otherwise required to be made in respect of a Debenture on a date
that is not a Business Day for such Debenture need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on such date, and no additional interest shall accrue as a
result of such delayed payment.
The Indenture does not contain covenants or other provisions designed to
afford holders of the Debentures protection in the event of a highly leveraged
transaction, change in credit or other similar occurrence.
REDEMPTION PROVISIONS
The Debentures will not be redeemable prior to February 1, 2004; on and after
that date and prior to maturity, on not less than 30 days' nor more than 60
days' notice given as provided in the Indenture, the Debentures will be
redeemable, at the option of the Company, as a whole at any time or in part
from time to
S-3
<PAGE>
time, at the following redemption prices (expressed as percentages of principal
amount) for the twelve-month period beginning February 1 of the years indicated
below, together with accrued interest to the date of redemption:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2004.................... 101.904%
2005.................... 101.714%
2006.................... 101.523%
2007.................... 101.333%
2008.................... 101.142%
</TABLE>
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2009.................... 100.952%
2010.................... 100.762%
2011.................... 100.571%
2012.................... 100.381%
2013.................... 100.190%
</TABLE>
and thereafter at 100% of principal amount.
The Debentures are not entitled to any sinking fund.
BOOK-ENTRY PROCEDURES
The Debentures will be issued initially in the form of fully registered
global securities which will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (the "Depository"), and registered in the
name of the Depository's nominee. Except as set forth in the Prospectus under
"Description of Debt Securities--Global Securities," the Debentures will not be
issuable in certificated form.
The Depository has advised the Company and Lehman Brothers Inc. (the
"Underwriter") as follows: The Depository is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended. The Depository holds
securities that its participants ("Participants") deposit with the Depository.
The Depository also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. The
Depository's direct Participants include securities brokers and dealers
(including the Underwriter), banks, trust companies, clearing corporations and
certain other organizations. The Depository is owned by a number of its direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depository's system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a direct Participant, either directly or indirectly. The
rules applicable to the Depository and its Participants are on file with the
Securities and Exchange Commission.
A further description of the Depository's procedures with respect to global
securities is set forth in the Prospectus under "Description of Debt
Securities--Global Securities." The Depository has confirmed to the Company,
the Underwriter and the Trustee that it intends to follow such procedures.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriter in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the
Debentures will trade in the Depository's Same-Day Funds Settlement System
until maturity, and secondary market trading activity in the Debentures will
therefore be required by the Depository to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Debentures.
S-4
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
between the Company and the Underwriter, the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase, the entire principal
amount of the Debentures.
The Underwriter has advised the Company that it proposes initially to offer
the Debentures to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .30% of the principal amount of the
Debentures. The Underwriter may allow, and such dealers may reallow, a discount
not in excess of .25% of the principal amount of the Debentures to certain
other dealers. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the Debentures may be deemed to be
underwriters, and any discounts or commissions received by them and any profit
on the resale of the Debentures by them may be deemed to be underwriting
compensation. After the Debentures are released for sale to the public, the
offering prices and other selling terms may from time to time be varied by the
Underwriter.
The Company does not intend to list the Debentures on any exchange. The
Company has been advised by the Underwriter that the Underwriter intends to
make a market in the Debentures but that the Underwriter is not obligated to do
so and may discontinue making a market at any time without notice. No assurance
can be given to the liquidity of the trading market, if any, for the
Debentures.
The Underwriter and certain affiliates thereof engage or may in the future
engage in transactions with and perform services for the Company and for
affiliates of the Company in the ordinary course of business.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
S-5
<PAGE>
PROSPECTUS
ILLINOIS BELL TELEPHONE COMPANY
DEBT SECURITIES
Illinois Bell Telephone Company (the "Company") from time to time may offer
its unsecured notes, debentures, or other debt securities (the "Debt
Securities"), in one or more series, in an aggregate principal amount
sufficient to result in net proceeds to the Company of up to U.S. $550,000,000
(or its equivalent in foreign denominated currencies or European Currency Units
or other composite currencies). Debt Securities may be issued in registered
form without coupons ("Registered Securities"), in bearer form with or without
coupons attached ("Bearer Securities") or in the form of one or more global
securities (each a "Global Security").
When a particular series of Debt Securities is offered, a supplement to this
Prospectus will be delivered (the "Prospectus Supplement") together with this
Prospectus setting forth the terms of such Debt Securities, including, where
applicable, the specific designation, aggregate principal amount, currency or
currencies in which the principal, premium, if any, and interest are payable,
denominations, maturity, rate (which may be fixed or variable) and time of
payment of interest, any terms for redemption, any terms for repayment at the
option of the holder, any terms for sinking fund payments, the initial public
offering price, the names of, and the principal amounts to be purchased by or
sold through, underwriters, agents or dealers and the compensation of such
underwriters, agents or dealers, any listing of the Debt Securities on a
securities exchange and the other terms in connection with the offering and
sale of such Debt Securities.
The Company may sell the Debt Securities to or through dealers or
underwriters, directly to other purchasers or through agents. If an agent of
the Company or a dealer or an underwriter is involved in the sale of the Debt
Securities in respect of which this Prospectus is being delivered, the agent's
commission or dealer's or underwriter's discount will be set forth in, or may
be calculated from, the Prospectus Supplement. The net proceeds to the Company
from such sale, which will be set forth in the Prospectus Supplement, will be
the purchase price of such Debt Securities less such commission in the case of
an agent, the purchase price of such Debt Securities in the case of a dealer or
the public offering price less such discount in the case of an underwriter, and
less, in each case, the other attributable issuance expenses. See "Plan of
Distribution" for possible indemnification arrangements for any agents, dealers
or underwriters.
This Prospectus may not be used to consummate sales of Debt Securities unless
accompanied by the Prospectus Supplement applicable to the Debt Securities
being sold.
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 August 24, 1993.
<PAGE>
IN CONNECTION WITH ANY OFFERING OF DEBT SECURITIES, UNDERWRITERS OR AGENTS
MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICES OF THE DEBT 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.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at its principal office at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
regional offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and at Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of such materials can be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such material may also be inspected
and copied at the offices of the New York Stock Exchange, on which exchange
certain of the Company's debt securities are listed.
The Company has filed with the Commission a registration statement on Form S-
3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
The Company is not required to, nor does it intend to, provide annual or
other reports to holders of the Debt Securities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No. 1-
2222) are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993 and June 30, 1993.
3. The Company's Current Reports on Form 8-K dated February 5, 1993,
March 19, 1993 and June 28, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date 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 or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents which are
incorporated by reference herein, other than exhibits to such documents which
are not specifically incorporated by reference therein. Requests should be
directed to the Assistant Treasurer, Illinois Bell Telephone Company, Room 16F,
225 West Randolph Street, Chicago, Illinois 60606 (telephone number 312/727-
2183).
2
<PAGE>
ILLINOIS BELL TELEPHONE COMPANY
The Company is incorporated under the laws of the State of Illinois and has
its principal executive offices at 225 West Randolph Street, Chicago, Illinois
60606 (telephone number 312/727-9411). The Company was an associated company of
the Bell System and a wholly-owned subsidiary of American Telephone and
Telegraph Company ("AT&T") through December 31, 1983. Effective January 1,
1984, the Company became a wholly-owned subsidiary of Ameritech Corporation
("Ameritech") pursuant to a court-ordered divestiture of certain AT&T assets.
Ameritech was incorporated in October 1983 under the laws of the State of
Delaware and has its principal executive offices at 30 South Wacker Drive,
Chicago, Illinois 60606 (telephone number 312/750-5000). In March 1990, the
Company reorganized as a close corporation and dissolved its Board of Directors
as permitted under Illinois law. The responsibility for decisions formerly made
by the Board of Directors of the Company has been assumed by Ameritech as sole
shareholder through Ameritech's Board of Directors and a management team
comprised of senior officers of Ameritech.
The Company is engaged in the business of furnishing telecommunications
services within Illinois, primarily consisting of local exchange, intraLATA
toll and network access services.
RATIOS OF EARNINGS TO FIXED CHARGES OF THE COMPANY
The following table sets forth the ratio of earnings to fixed charges of the
Company for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ---------------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
5.83 5.65 5.86 4.65 5.28 5.01 5.05
</TABLE>
For the purpose of calculating this ratio, (i) earnings have been calculated
by adding to income before interest expense and accounting changes, the amount
of related taxes on income and the portion of rentals representative of the
interest factor, (ii) the Company considers one-third of rental expense to be
the amount representing return on capital, and (iii) fixed charges comprise
total interest expense and such portion of rentals.
USE OF PROCEEDS
The Company expects that the net proceeds from the sale of the Debt
Securities will be used to retire long-term indebtedness, and the Prospectus
Supplement will set forth the interest rate and maturity of such indebtedness.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms and provisions of the series of Debt Securities offered by a
Prospectus Supplement (the "Offered Debt Securities"), and the extent to which
such general terms and provisions described below may apply thereto, will be
described in the Prospectus Supplement relating to such Offered Debt
Securities.
The Debt Securities are to be issued under an Indenture (the "Indenture"),
dated as of September 1, 1992, between the Company and Harris Trust and Savings
Bank, as trustee (the "Trustee"), a copy of which is incorporated by reference
as an exhibit to the Registration Statement of which this Prospectus is a part.
3
<PAGE>
The following summaries of certain provisions of the Debt Securities and the
Indenture do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the Debt Securities and
the Indenture, including the definitions therein of capitalized terms which are
used but are not defined herein. All section references used herein are to
sections in the Indenture.
GENERAL
The Indenture does not limit the amount of Debt Securities that may be issued
thereunder and provides that Debt Securities may be issued thereunder from time
to time in one or more series. (Section 301). The Indenture does not limit the
amount of other indebtedness or securities which may be issued by the Company.
Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of the Company and will rank on a parity with the Company's other
unsecured and unsubordinated indebtedness.
The Indenture does not contain covenants or other provisions designed to
afford Holders (as defined in the Indenture) of the Debt Securities protection
in the event of a highly leveraged transaction, change in credit rating or
other similar occurrence.
Reference is made to the Prospectus Supplement relating to the particular
Offered Debt Securities offered thereby for the following terms of the Offered
Debt Securities: (i) the title of the Offered Debt Securities or the particular
series thereof; (ii) any limit on the aggregate principal amount of the Offered
Debt Securities; (iii) whether the Offered Debt Securities are to be issuable
as Registered Securities or Bearer Securities or both, whether any of the
Offered Debt Securities are to be issuable initially in temporary global form
and whether any of the Offered Debt Securities are to be issuable in permanent
global form; (iv) the price or prices (generally expressed as a percentage of
the aggregate principal amount thereof) at which the Offered Debt Securities
will be issued; (v) the date or dates on which the Offered Debt Securities will
mature; (vi) the rate or rates per annum, or the formula by which such rate or
rates shall be determined, at which the Offered Debt Securities will bear
interest, if any, and the dates from which any such interest will accrue; (vii)
the Interest Payment Dates on which any such interest on the Offered Debt
Securities will be payable, the Regular Record Date for any interest payable on
any Offered Debt Securities that are Registered Securities on any Interest
Payment Date and the extent to which, or the manner in which, any interest
payable on a Global Security on an Interest Payment Date will be paid if other
than in the manner described below under "Global Securities"; (viii) any
mandatory or optional sinking fund or analogous provisions; (ix) each office or
agency where, subject to the terms of the Indenture as described below under
"Payments and Paying Agents", the principal of and any premium and interest on
the Offered Debt Securities will be payable and each office or agency where,
subject to the terms of the Indenture as described below under "Denominations,
Registration and Transfer", the Offered Debt Securities may be presented for
registration of transfer or exchange; (x) the date, if any, after which and the
price or prices at which the Offered Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed, in whole or in part,
and the other detailed terms and provisions of any such optional or mandatory
redemption provisions; (xi) the date, if any, after which and the price or
prices at which the Offered Debt Securities will be repayable at the option of
the holder thereof prior to maturity; (xii) the denominations in which any
Offered Debt Securities which are Registered Securities will be issuable, if
other than denominations of U.S. $1,000 and any integral multiple thereof, and
the denominations in which any Offered Debt Securities which are Bearer
Securities will be issuable, if other than denominations of U.S. $5,000; (xiii)
the currency or currencies of payment of principal of and any premium and
interest on the Offered Debt Securities; (xiv) any index used to determine the
amount of payments of principal of and any premium and interest on the Offered
Debt Securities; (xv) any additional covenants applicable to the Offered Debt
Securities; and (xvi) any other terms and provisions of the Offered Debt
Securities not inconsistent with the terms
4
<PAGE>
and provisions of the Indenture. Any such Prospectus Supplement will also
describe any special provisions for the payment of additional amounts with
respect to the Offered Debt Securities. (Section 301).
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities and such
foreign currency or currencies or foreign currency unit or units will be set
forth in the applicable Prospectus Supplement.
Some of the Debt Securities may be issued as original issue discount
securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below
their stated principal amount. Federal income tax considerations and other
special considerations applicable to original issue discount securities will be
set forth in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Debt Securities will be issuable as Registered Securities, Bearer
Securities or both. Debt Securities may be issuable in the form of one or more
Global Securities, as described below under "Global Securities". Unless
otherwise provided in the applicable Prospectus Supplement, Registered
Securities denominated in U.S. dollars will be issued only in denominations of
$1,000 or any integral multiple thereof and Bearer Securities denominated in
U.S. dollars will be issued only in denominations of $5,000 with coupons
attached. A Global Security will be issued in a denomination equal to the
aggregate principal amount of outstanding Debt Securities represented by such
Global Security. The Prospectus Supplement relating to Debt Securities
denominated in a foreign or composite currency will specify the denominations
thereof. (Sections 201, 203, 301 and 302).
In connection with its original issuance, no Bearer Security shall be mailed
or otherwise delivered to any location in the United States (as defined below
under "Limitations on Issuance of Bearer Securities") and a Bearer Security may
be delivered in connection with its original issuance only if the person
entitled to receive such Bearer Security furnishes written certification, in
the form required by the Indenture, to the effect that such Bearer Security is
not being acquired by or on behalf of a United States person (as defined below
under "Limitations on Issuance of Bearer Securities"), or, if a beneficial
interest in such Bearer Security is being acquired by or on behalf of a United
States person, that such United States person is a financial institution which
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder. (Sections 303 and 304). See "Global Securities" and
"Limitations on Issuance of Bearer Securities" below.
Registered Securities of any series will be exchangeable for other Registered
Securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations. In addition, if Debt Securities of
any series are issuable as both Registered Securities and as Bearer Securities,
at the option of the holder upon request confirmed in writing, and subject to
the terms of the Indenture, Bearer Securities (with all unmatured coupons,
except as provided below, and all matured coupons in default attached) of such
series will be exchangeable for Registered Securities of the same series of any
authorized denominations and of a like aggregate principal amount and tenor.
Unless otherwise indicated in an applicable Prospectus Supplement, any Bearer
Security surrendered in exchange for a Registered Security between a Regular
Record Date or a Special Record Date and the relevant date for payment of
interest shall be surrendered without the coupon relating to such date for
payment of interest attached and interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the holder of such coupon
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when due in accordance with the terms of the Indenture. Except as provided in
an applicable Prospectus Supplement, Bearer Securities will not be issued in
exchange for Registered Securities. (Section 305).
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer duly executed), at the
office of the Security Registrar designated by the Company or at the office of
any transfer agent designated by the Company for such purpose with respect to
any series of Debt Securities and referred to in an applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such transfer or exchange
will be effected upon the Security Registrar or such transfer agent, as the
case may be, being satisfied with the documents of title and identity of the
person making the request. The Company has initially appointed the Trustee as
the Security Registrar under the Indenture. (Section 305). If a Prospectus
Supplement refers to any transfer agent (in addition to the Security Registrar)
initially designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that, if Debt Securities of a series are issuable
only as Registered Securities, the Company will be required to maintain a
transfer agent in each Place of Payment for such series and, if Debt Securities
of a series are issuable as Bearer Securities, the Company will be required to
maintain (in addition to the Security Registrar) a transfer agent in a Place of
Payment for such series located outside the United States. The Company may at
any time designate additional transfer agents with respect to any series of
Debt Securities. (Section 1002).
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of Debt Securities of that series
selected to be redeemed and ending at the close of business on (a) if Debt
Securities of the series are issuable only as Registered Securities, the day of
mailing of the relevant notice of redemption or (b) if Debt Securities of the
series are issuable only as Bearer Securities, the day of the first publication
of the relevant notice of redemption or, if Debt Securities of that series are
also issuable as Registered Securities and there is no publication, the mailing
of the relevant notice of redemption; (ii) register the transfer of or exchange
any Registered Security, or portion thereof, called for redemption, except the
unredeemed portion of any Registered Security being redeemed in part; or (iii)
exchange any Bearer Security called for redemption, except to exchange such
Bearer Security for a Registered Security of that series and like tenor which
is immediately surrendered for redemption. (Section 305).
PAYMENTS AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
principal of and any premium and interest on Registered Securities (other than
a Global Security) will be made at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made (i) by check mailed
to the address of the payee entitled thereto as such address shall appear in
the Security Register or (ii) by wire transfer to an account maintained by such
payee as specified in the Security Register. (Sections 305, 307 and 1002).
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
any installment of interest on Registered Securities will be made to the person
in whose name such Registered Security is registered at the close of business
on the Regular Record Date for such interest payment. (Section 307).
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
principal of and any premium and interest on Bearer Securities will be payable
(subject to applicable laws and regulations) at the offices of such Paying
Agent or Paying Agents outside the United States as the Company may designate
from time to time, except that, at the option of the Company, payment of any
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interest may be made by check or by wire transfer to an account maintained by
the payee outside the United States. (Sections 307 and 1002). Unless otherwise
indicated in an applicable Prospectus Supplement, payment of interest on Bearer
Securities on any Interest Payment Date will be made only against surrender of
the coupon relating to such Interest Payment Date. (Section 1001). No payment
with respect to any Bearer Security will be made at any office or agency of the
Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained in the United States. Payments
will not be made in respect of Bearer Securities or coupons appertaining
thereto pursuant to presentation to the Company or its Paying Agents within the
United States or any other demand for payment to the Company or its Paying
Agents within the United States. Notwithstanding the foregoing, payment of
principal of and any premium and interest on Bearer Securities denominated and
payable in U.S. dollars will be made at the office of the Company's Paying
Agent in the United States if, and only if, payment of the full amount thereof
in U.S. dollars at all offices or agencies outside the United States is illegal
or effectively precluded by exchange controls or other similar restrictions.
(Section 1002).
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in Chicago, Illinois will be designated as the
Company's Paying Agent office for payments with respect to Debt Securities
which are issuable solely as Registered Securities. Any Paying Agent outside
the United States and any other Paying Agent in the United States initially
designated by the Company for the Debt Securities will be named in the
applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except
that, if Debt Securities of a series are issuable only as Registered
Securities, the Company will be required to maintain a Paying Agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (i) a
Paying Agent in each Place of Payment for such series in the United States for
payments with respect to any Registered Securities of such series (and for
payments with respect to Bearer Securities of such series in the circumstances
described above, but not otherwise), (ii) a Paying Agent in each Place of
Payment located outside the United States where (subject to applicable laws and
regulations) Debt Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment; provided that if the Debt
Securities of such series are listed on The International Stock Exchange,
London or the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, the Company
will maintain a Paying Agent in London or Luxembourg City or any other required
city located outside the United States, as the case may be, for Debt Securities
of such series, and (iii) a Paying Agent in each Place of Payment located
outside the United States where (subject to applicable laws and regulations)
Registered Securities of such series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company may
be served. (Section 1002).
All moneys paid by the Company to a Paying Agent for the payment of principal
of and any premium or interest on any Debt Security that remains unclaimed at
the end of two years after such principal, premium or interest shall have
become due and payable will be repaid to the Company and thereafter the holder
of such Debt Security or any coupon appertaining thereto will look only to the
Company for payment thereof. (Section 1003).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the form
of one or more Global Securities that will be deposited with, or on behalf of,
a depository identified in the applicable Prospectus Supplement (the
"Depository"). Global Securities may be issued in either registered or bearer
form and in either temporary or permanent form. (Section 305). Unless and until
it is exchanged for Debt Securities in definitive form, a temporary Global
Security in registered form may not be transferred
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except as a whole by the Depository for such Global Security to a nominee of
such Depository or by a nominee of such Depository to such Depository or
another nominee of such Depository or by such Depository or any such nominee to
a successor of such Depository or a nominee of such successor. (Section 304).
The specific terms of the depository arrangement with respect to a series of
Debt Securities or any part thereof will be described in the applicable
Prospectus Supplement. The Company anticipates that the following provisions
will apply to all depository arrangements relating to Global Securities.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit the accounts of persons holding beneficial
interests in such Global Security with the respective principal amounts of the
Debt Securities represented by such Global Security. Such accounts shall be
designated by the underwriters or agents with respect to such Debt Securities
or by the Company if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Security will be limited
to persons that have accounts with the Depository for such Global Security or
its nominee ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depository or its nominee (with respect to interests
of participants) for such Global Security and on the records of participants
(with respect to interests of persons other than participants). The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limitation and such laws
may impair the ability to transfer beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. (Section 308). Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of such Debt Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payment of principal of and any premium and interest on Debt Securities
registered in the name of a Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the registered owner of the
Global Security representing such Debt Securities. Neither the Company, the
Trustee, any Paying Agent nor the Security Registrar for such Debt Securities
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of
the Global Security for such Debt Securities or for maintaining, supervising or
receiving any records relating to such beneficial ownership interests.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities" below, the Company expects that the Depository or its
nominee, as the case may be, upon receipt of any payment of principal, premium
or interest, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Global Security for such Debt Securities as shown on the records
of such Depository or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in such 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 in bearer form or registered in "street name", and will be the
responsibility of such participants. Receipt by owners of beneficial interests
in a temporary Global Security of payments in respect of such temporary Global
Security will be subject to restrictions discussed under "Certain Limitations
on Issuance of Bearer Securities" below.
If the Depository is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Debt Securities of
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such series in definitive form in exchange for the Global Security representing
such series of Debt Securities. In addition, the Company may at any time and in
its sole discretion determine not to have the Registered Securities of a series
represented by a Global Security and, in such event, the Company will issue
Registered Securities of such series in definitive form in exchange for the
Global Security representing such series of Registered Securities. Further, if
the Company so specifies with respect to the Debt Securities of a series, an
owner of a beneficial interest in a Global Security representing Debt
Securities of such series may, on terms acceptable to the Company and the
Depository, receive Debt Securities of such series in definitive form. In any
such instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of Debt Securities of the
series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name (if
the Debt Securities of such series are issuable as Registered Securities). Debt
Securities of such series so issued in definitive form will be issued (i) as
Registered Securities in denominations, unless otherwise specified by the
Company, of U.S. $1,000 and integral multiples thereof if the Debt Securities
of such series are issuable as Registered Securities, (ii) as Bearer Securities
in denominations, unless otherwise specified by the Company, of U.S. $5,000
with coupons attached if the Debt Securities of such series are issuable as
Bearer Securities, or (iii) as either Registered or Bearer Securities, if the
Debt Securities of such series are issuable in either form. (Section 305). See,
however, "Certain Limitations on Issuance of Bearer Securities" below for a
description of certain restrictions on the issuance of a Bearer Security in
definitive form in exchange for an interest in a Global Security.
CERTAIN LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered, sold, resold or delivered in connection with
their original issue in the United States or to United States persons (each as
defined in the Code and the regulations thereunder) other than to offices
located outside of the United States of United States financial institutions
which agree to comply with the requirements of Section 165(j)(3)(A), (B) or (C)
of the Code and the regulations thereunder, and any underwriters, agents and
dealers participating in the offering of Debt Securities must agree that they
will not offer any Bearer Securities for sale or resale in the United States or
to United States persons (other than the financial institutions described
above) nor deliver Bearer Securities within the United States. In addition, any
such underwriters, agents and dealers must agree to send confirmations to each
purchaser of a Bearer Security confirming that such purchaser represents that
it is not a United States person or is a financial institution described above
and, if such person is a dealer, that it will send similar confirmations to
purchasers from it.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code". Under Sections 165(j) and 1287(a) of the Code, holders
that are United States persons, with certain exceptions, will not be entitled
to deduct any loss on Bearer Securities and must treat as ordinary income any
gain realized on the sale or other disposition (including the receipt of
principal) of Bearer Securities.
Other restrictions and additional tax considerations may apply to the
issuance and holding of Bearer Securities. A description of such restrictions
and tax consequences will be set forth in the applicable Prospectus Supplement.
LIENS ON ASSETS
If at any time the Company mortgages, pledges, or otherwise subjects to any
lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as hereinafter provided, the Company will secure the
outstanding Debt Securities, and any other obligations of the Company
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which may be then outstanding and entitled to the benefit of a covenant similar
in effect to this covenant, equally and ratably with the indebtedness or
obligations secured by such mortgage, pledge, or lien, for as long as any such
indebtedness or obligation is so secured. The foregoing covenant does not apply
to the creation, extension, renewal or refunding of liens secured by that
certain First Mortgage dated January 15, 1941 between the Company and Harris
Trust and Savings Bank, as trustee, as supplemented by nine supplemental
indentures confirming the lien thereof (the "First Mortgage"), purchase-money
mortgages or liens, landlords' liens, liens with respect to the sale or
financing of accounts or chattel paper or other liens to which any property or
asset acquired by the Company is subject as of the date of its acquisition by
the Company or to the making of any deposit or pledge to secure public or
statutory obligations or with any governmental agency at any time required by
law in order to qualify the Company to conduct its business or any part thereof
or in order to entitle it to maintain self-insurance or to obtain the benefits
of any law relating to workers' compensation, unemployment insurance, old age
pensions or other social security, or with any court, board, commission, or
governmental agency as security incident to the proper conduct of any
proceeding before it. Nothing contained in the Indenture prevents any Person
other than the Company from mortgaging, pledging, or subjecting to any lien any
of its property or assets, whether or not acquired by such Person from the
Company. (Section 1006).
The Company has outstanding under the First Mortgage its First Mortgage Bonds
Series D, Series G to I, inclusive, and Series K, in the aggregate principal
amount of $455,000,000. Substantially all the property of the Company now owned
or hereafter acquired in the State of Illinois is subjected to the lien of the
First Mortgage. The Indenture provides that nothing therein contained shall
prevent the Company from taking any action deemed necessary by it in order to
comply with the requirements of the First Mortgage (Section 1006). The First
Mortgage provides that, subject to certain conditions, additional bonds may be
issued thereunder for various purposes. However, as long as any of the Debt
Securities remains outstanding, the Company may not issue any additional bonds
under the First Mortgage except in respect of bonds which may be surrendered
for exchange or may be mutilated, destroyed, lost or stolen. (Section 1006).
RESTRICTIONS ON MERGERS AND SALES OF ASSETS
The Company may not consolidate with or merge into any other corporation, or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company may not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company unless (i)
the corporation formed by such consolidation or into which the Company is
merged or the Person to which the properties and assets of the Company are
transferred substantially as an entirety shall be a corporation organized and
existing under the laws of the United States, any State thereof or the District
of Columbia and shall expressly assume the payment of the principal of,
premium, if any, and interest, if any, on the Debt Securities and the
performance of the other covenants of the Company under the Indenture, (ii)
after giving effect to such transaction, no Event of Default (as defined
below), or event which after notice or lapse of time or both would become an
Event of Default, shall have occurred and be continuing and (iii) if, as a
result of such transaction, properties or assets of the Company would become
subject to a Mortgage not permitted by Section 1006 of the Indenture without
equally and ratably securing the Debt Securities as provided therein (see
"Liens on Assets" above), steps shall have been taken to secure the Debt
Securities equally and ratably with (or prior to) all indebtedness secured
thereby pursuant to Section 1006 of the Indenture. (Section 801).
MODIFICATION AND WAIVER
Certain modifications and amendments of the Indenture, including the rights
of Holders of a series of Outstanding Debt Securities, may be made by the
Company and the Trustee only with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of each
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series affected by the modification or amendment, provided that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby: (i) change the stated maturity date
of the principal of, or any installment of principal or interest on, any such
Debt Security; (ii) reduce the principal amount of, premium, if any, or
interest, if any, on any such Debt Security (including in the case of an
Original Issue Discount Security the amount payable upon acceleration of the
Maturity thereof); (iii) change the Place of Payment where, or the coin or
currency in which, any principal of, premium, if any, or interest, if any, on
any such Debt Security is payable; (iv) impair the right to institute suit for
the enforcement of any payment on or with respect to any such Debt Security;
(v) reduce the above-stated percentage of Outstanding Debt Securities of any
series the consent of the Holders of which is necessary to modify or amend the
Indenture; or (vi) modify the foregoing requirements or reduce the percentage
of aggregate principal amount of Outstanding Debt Securities of any series
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults. (Section 902).
The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of any series may, on behalf of the Holders of all Debt
Securities of such series, waive, insofar as such series is concerned,
compliance by the Company with certain restrictive provisions of the Indenture.
(Section 1007). The Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of the Holders of all
Debt Securities of such series, waive any past default under the Indenture with
respect to such series, except a default in the payment of the principal of,
premium, if any, or interest, if any, on any Debt Security of such series or in
respect of a provision under which the Indenture cannot be modified or amended
without consent of the Holder of each Outstanding Debt Security of such series
affected. (Section 513).
EVENTS OF DEFAULT
The Indenture defines an Event of Default with respect to any series of Debt
Securities as being any one of the following events: (i) default for 90 days in
any payment of interest on such series; (ii) default in any payment of
principal of, or premium, if any, on such series when due; (iii) default in the
payment of any sinking fund installment with respect to such series when due;
(iv) default for 90 days after appropriate notice by the Holders of at least
25% in aggregate principal amount of the Outstanding Debt Securities in
performance of any other covenant or warranty in the Indenture (other than a
covenant or warranty included in the Indenture solely for the benefit of series
of Debt Securities other than such series); or (v) certain events in
bankruptcy, insolvency or reorganization with respect to the Company. In case
an Event of Default shall occur and be continuing with respect to any series of
Debt Securities, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Debt Securities of such series may declare
the principal of such series (or, if the Debt Securities of such series are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms of such series) to be due and payable. Any Event of
Default with respect to a particular series of Debt Securities may be waived by
the Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of such series, except in each case a failure to pay the principal
of, premium, if any, or interest, if any, on such Debt Security. (Sections 501,
502 and 513).
The Company is required to furnish the Trustee, not less often than annually,
with a certificate as to the Company's compliance with all conditions and
covenants under the Indenture. (Section 704(d)).
Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that the Trustee may withhold notice to the Holders of
the Debt Securities of any default (except in the payment of principal,
premium, if any, or interest, if any, or any sinking fund installment) if it
considers it in the interest of the Holders of the Debt Securities to do so.
(Section 602).
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Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the
Indenture provides that the Trustee shall be under no obligation to exercise
any of its rights or powers under the Indenture at the request, order or
direction of the Holders of the Debt Securities unless such Holders shall have
offered to the Trustee reasonable indemnity. (Sections 601 and 603(e)). Subject
to such provisions for indemnification and certain other rights of the Trustee,
the Indenture provides that the Holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series affected shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to the Debt Securities of such series. (Sections 512
and 603).
No Holder of any Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless (i) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default with respect to Debt Securities of such
series, (ii) the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of such series shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and (iii) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
such series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. (Section 507). However, the Holder of
any Debt Security will have an absolute right to receive payment of the
principal of, premium, if any, and interest, if any, on such Debt Security on
or after the due dates expressed in such Debt Security and to institute suit
for the enforcement of any such payment. (Section 508).
DEFEASANCE
Defeasance and Discharge. If the terms of a series of Debt Securities so
provide and the Company deposits or causes to be deposited with the Trustee as
trust funds in trust for that purpose money and/or U.S. 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
and discharge (i) the principal of, and premium, if any, and each installment
of principal and premium, if any, and interest, if any, on the Outstanding Debt
Securities of such series on the Stated Maturity of such principal or
installment of principal or interest (or on the Redemption Date of the
Outstanding Debt Securities of such series if the Company has elected to redeem
such Outstanding Debt Securities in accordance with Section 1102 of the
Indenture), and (ii) any mandatory (or, if applicable, optional) sinking fund
payments applicable to the Outstanding Debt Securities of such series on the
day on which such payments are due and payable, then the Indenture will cease
to be of further effect with respect to such series (except for certain
obligations to compensate, reimburse and indemnify the Trustee, to register the
transfer or exchange of Debt Securities, to replace stolen, lost or mutilated
Debt Securities, to maintain paying agencies and to hold monies for payment in
trust and to pay any tax indemnity), and the Company will be deemed to have
satisfied and discharged the Indenture with respect to such series. (Section
403). In the event of any such defeasance, holders of Debt Securities of such
series would be able to look only to such trust fund for payment of principal
of, premium, if any, and interest, if any, on such Debt Securities.
Under current United States federal income tax law, such defeasance will be
treated as a taxable exchange of the related Debt Securities for an interest in
the trust. As a consequence, each holder of such Debt Securities will recognize
gain or loss equal to the difference between the holder's cost or other tax
basis for the Debt Securities and the value of the holder's interest in the
trust, and thereafter will be required to include in income a share of the
income, gain and loss of the trust, including gain or loss recognized in
connection with any substitution of collateral, as described below under
"Substitution of Collateral". Prospective investors are urged to consult their
own tax advisors as to the specific consequences of such a defeasance.
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Defeasance of Certain Covenants and Certain Events of Default. If the terms
of the Debt Securities of any series so provide, the Company may omit to comply
with certain restrictive covenants in Section 801 (Consolidation, Merger,
Conveyance, Transfer or Lease) and Sections 1005 (Purchase of Securities by
Company or Subsidiary) and 1006 (Lien on Assets), and Sections 501(d), 501(e)
and 501(f) of the Indenture, as described in clauses (iv) and (v) under "Events
of Default" above, shall not be deemed to be Events of Default under the
Indenture with respect to such series, upon the deposit with the Trustee, in
trust, of money and/or U.S. 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 and discharge (i) the principal
(and premium, if any) and each installment of principal, and premium, if any,
and interest on the Outstanding Debt Securities of such series on the Stated
Maturity of such principal or installment of principal or interest (or on the
Redemption Date of the Outstanding Debt Securities of such series if the
Company has elected to redeem such Outstanding Debt Securities in accordance
with Section 1102 of the Indenture) and (ii) any mandatory (or, if applicable,
optional) sinking fund payments applicable to the Outstanding Debt Securities
of such series on the day on which such payments are due and payable. The
obligations of the Company under the Indenture and the Debt Securities other
than with respect to the covenants referred to above and the Events of Default
other than the Events of Default referred to above shall remain in full force
and effect. (Section 1008).
In the event the Company exercises its option to omit compliance with certain
covenants of the Indenture with respect to the Debt Securities of any series as
described above and the Debt Securities of such series are declared due and
payable because of the occurrence of any Event of Default other than Events of
Default described in clauses (iv) and (v) under "Events of Default" above, the
amount of money and/or U.S. Government Obligations on deposit with the Trustee
will be sufficient to pay amounts due on the Debt Securities of such series on
their Stated Maturity or Redemption Date, but may not be sufficient to pay
amounts due on such Debt Securities at the time of the acceleration resulting
from such Event of Default. However, the Company shall remain liable for such
payments. (Section 1008).
Limitation on Defeasance. To exercise either option referred to above under
Defeasance and Discharge and Defeasance of Certain Covenants and Certain Events
of Default, the Company is required to deliver to the Trustee an opinion of
outside counsel (which opinion, in the case of the option referred to under
Defeasance and Discharge above, is based on there having been, since the date
of the Indenture, a change in the applicable United States federal income tax
law (including a change in official interpretation thereof)), or a ruling from
or published by the Internal Revenue Service, to the effect that the exercise
of such option will not cause holders of Debt Securities to recognize income,
gain or loss for United States federal income tax purposes, and that such
holders of Debt Securities will be subject to United States federal income tax
on the same amount and in the same manner and at the same time as would have
been the case if such option had not been exercised.
Substitution of Collateral. If the terms of a series of Debt Securities so
provide, the Company will be permitted at any time to withdraw any money or
U.S. Government Obligations deposited pursuant to the foregoing defeasance
provisions, provided that the Company in substitution therefor simultaneously
deposits money and/or U.S. Government Obligations which would then be
sufficient to satisfy the Company's payment obligations in respect of the Debt
Securities in the manner contemplated by such defeasance provisions.
NOTICES
Except as may otherwise be set forth in an applicable Prospectus Supplement,
notices to holders of Bearer Securities will be given by publication in a daily
newspaper in the English language of general circulation in The City of New
York and in London, and so long as such Bearer Securities are listed on the
Luxembourg Stock Exchange and the Luxembourg Stock Exchange shall so require,
in a daily newspaper of general circulation in Luxembourg City or, if not
practical, elsewhere in Western Europe. Such publication is expected to be made
in The Wall Street Journal, the Financial Times and the
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Luxemburger Wort. Notices to holders of Registered Securities will be given by
mail to the addresses of such holders as they appear in the Security Register.
(Sections 101 and 106).
TITLE
Title to any temporary global Debt Security, any permanent global Debt
Security, any Bearer Securities and any coupons appertaining thereto will pass
by delivery. The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security, the bearer of any coupon
and the registered owner of any Registered Security as the absolute owner
thereof (whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all other purposes. (Section 308).
REPLACEMENT OF SECURITIES AND COUPONS
Any mutilated Security or a Security with a mutilated coupon appertaining
thereto will be replaced by the Company at the expense of the Holder upon
surrender of such Security to the Trustee. Securities or coupons that become
destroyed, stolen or lost will be replaced by the Company at the expense of the
Holder upon delivery to the Trustee of the Security and coupons or evidence of
the destruction, loss or theft thereof satisfactory to the Company and the
Trustee; in the case of any coupon which becomes destroyed, stolen or lost,
such coupon will be replaced by issuance of a new Security in exchange for the
Security to which such coupon appertains. In the case of a destroyed, lost or
stolen Security or coupon, an indemnity satisfactory to the Trustee and the
Company may be required at the expense of the Holder of such Security or coupon
before a replacement Security will be issued. (Section 306).
GOVERNING LAW
The Indenture and the Debt Securities are governed by and construed in
accordance with the laws of the State of Illinois. The interest rate on the
Debt Securities will in no event be higher than the maximum rate permitted by
Illinois law as the same may be modified by United States law of general
application. Under present Illinois law, no maximum rate of interest would
apply to the Debt Securities.
CONCERNING THE TRUSTEE
The Company, Ameritech and certain of Ameritech's subsidiaries maintain
banking relationships in the ordinary course of business with the Trustee, and
the Trustee has a commitment of $100,000,000 under a revolving credit facility
available to Ameritech. In addition, the Trustee serves as trustee under the
First Mortgage. The Trustee also serves as trustee of trusts in connection with
retirement and other employee benefit plans for Ameritech and certain of its
subsidiaries and provides ancillary services in connection therewith.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Debt Securities being offered hereby: (i) directly
to purchasers, (ii) through agents, (iii) through underwriters, (iv) through
dealers or (v) through a combination of any such methods of sale.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions either (i) at a fixed price or prices, which may be
changed; (ii) at market prices prevailing at the time of sale; (iii) at prices
related to such prevailing market prices; or (iv) at negotiated prices.
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Offers to purchase Debt Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, which
may be deemed to be an underwriter, as that term is defined in the Securities
Act, involved in the offer or sale of the Debt Securities in respect of which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement or in a
pricing supplement thereto (the "Pricing Supplement"). Unless otherwise
indicated in the Prospectus Supplement or Pricing Supplement, any such agent
will be acting on a best efforts basis for the period of its appointment.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriters at the time of sale to
them and the names of the underwriters and the terms of the transaction will be
set forth in the Prospectus Supplement or Pricing Supplement, which will be
used by the underwriters to make resales of the Debt Securities.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
Underwriters, dealers, agents, and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against, or contribution with respect to, certain civil liabilities, including
liabilities under the Securities Act. Underwriters, dealers and agents may be
customers of, engage in transactions with, or perform services for, the Company
in the ordinary course of business.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
dealers or other persons acting as the Company's agents to solicit offers by
certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and others, but in all cases, such institutions must
be approved by the Company. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (a) the purchase of
the Debt Securities shall not at the time of delivery be prohibited under the
laws of the jurisdiction to which such purchaser is subject; and (b) if the
Debt Securities are also being sold to underwriters, the Company shall have
sold to such underwriters the Debt Securities not sold for delayed delivery.
The dealers and such other persons will not have any responsibility in respect
of the validity or performance of such contracts.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company as of December 31, 1992 and for the year then ended, included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1992,
have been audited by Arthur Andersen & Co., independent public accountants, as
set forth in the report of such firm. The consolidated financial statements and
financial statement schedules referred to above are incorporated by reference
herein in reliance upon the authority of Arthur Andersen & Co. as experts in
giving said reports.
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LEGAL OPINIONS
Certain matters relating to the legality of the Debt Securities to be offered
hereby will be passed upon for the Company by John W. McNulty, Solicitor of the
Company, and by Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois
60601, and for the agents or underwriters, if any, by Mayer, Brown & Platt, 190
South LaSalle Street, Chicago, Illinois 60603. The opinions of Mr. McNulty,
Winston & Strawn and Mayer, Brown & Platt with respect to the Debt Securities
may be conditioned upon, and subject to certain assumptions regarding, future
action to be taken by the Company and the Trustee in connection with the
issuance and sale of particular Debt Securities, the specific terms of Debt
Securities and other matters that may affect the validity of Debt Securities
but that cannot be ascertained on the date of such opinions. Mayer, Brown &
Platt from time to time acts as counsel in certain matters for the Company and
certain of its affiliates. As of the date of this Prospectus, Mr. McNulty owned
beneficially and had options to acquire shares of Common Stock of Ameritech
which in the aggregate constituted less than .01% of the total issued and
outstanding shares of the Common Stock of Ameritech.
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No dealer, salesman or any other person has been authorized to give any in-
formation or to make any representations not contained in this Prospectus Sup-
plement or the accompanying Prospectus and, if given or made, such information
or representation must not be relied upon as having been authorized by the Com-
pany or any agent or underwriter. This Prospectus Supplement and the accompany-
ing Prospectus do not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such an offer in such jurisdiction. Neither the
delivery of this Prospectus Supplement and the Prospectus nor any sale made
hereunder and thereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Recent Developments........................................................ S-2
Use of Proceeds............................................................ S-2
Certain Terms of the Debentures............................................ S-3
Underwriting............................................................... S-5
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Illinois Bell Telephone Company............................................ 3
Ratios of Earnings to Fixed Charges of the Company......................... 3
Use of Proceeds............................................................ 3
Description of Debt Securities............................................. 3
Plan of Distribution....................................................... 14
Experts.................................................................... 15
Legal Opinions............................................................. 16
</TABLE>
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$100,000,000
LOGO
ILLINOIS BELL TELEPHONE COMPANY
6 5/8% DEBENTURES DUE
FEBRUARY 1, 2025
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PROSPECTUS SUPPLEMENT
January 28, 1994
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LEHMAN BROTHERS
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