<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration Number 33-60067
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 7, 1997
$650,000,000
AMERITECH CAPITAL FUNDING CORPORATION
$200,000,000 6.125% NOTES DUE 2001
$250,000,000 6.30% NOTES DUE 2004
$200,000,000 6.875% DEBENTURES DUE 2027
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL
AND INTEREST BY
AMERITECH CORPORATION
---------------
Interest on the 6.125% Notes due 2001, the 6.30% Notes due 2004 and the
6.875% Debentures due 2027 (collectively, the "Securities") is payable on
April 15 and October 15 of each year, commencing April 15, 1998. See "Certain
Terms of the Securities--General." The Securities will not be redeemable prior
to maturity.
Each series of Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust
Company, as Depository. Ownership of interests in the global securities will
be shown on, and the transfer thereof will be effected only through, records
maintained by the Depository or its nominee for such global securities and on
the records of participants. Except as otherwise described under "Certain
Terms of the Securities--Book Entry Procedures" below or "Description of Debt
Securities--Global Securities" in the accompanying Prospectus, owners of
beneficial interests in the global securities will not be entitled to receive
Securities in definitive form and will not be considered the holders thereof.
Settlement for the Securities will be made in immediately available funds. The
Securities will trade in the Depository's Same-Day Funds Settlement System and
secondary market trading activity for the Securities will therefore settle in
immediately available funds. See "Certain Terms of the Securities--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 TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING CAPITAL
OFFERING PRICE(1) DISCOUNT(2) FUNDING(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per 6.125% Note due 2001.............. 100.000% 0.500% 99.500%
Total............................. $200,000,000 $1,000,000 $199,000,000
Per 6.30% Note due 2004............... 99.713% 0.625% 99.088%
Total............................. $249,282,500 $1,562,500 $247,720,000
Per 6.875% Debenture due 2027......... 99.633% 0.875% 98.758%
Total............................. $199,266,000 $1,750,000 $197,516,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from October 10, 1997.
(2) Capital Funding and Ameritech have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting."
(3) Before deducting estimated expenses of $1,347,000 payable by Capital
Funding.
---------------
The Securities offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Securities will be distributed through the facilities of The Depository Trust
Company, New York, New York, on or about October 10, 1997 against payment
therefor in immediately available funds.
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
BANCAMERICA ROBERTSON STEPHENS
FIRST CHICAGO CAPITAL MARKETS, INC.
MORGAN STANLEY DEAN WITTER
---------------
The date of this Prospectus Supplement is October 7, 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
RECENT DEVELOPMENTS
On August 19, 1997, the Federal Communications Commission (the "FCC") denied
Ameritech's application to offer long distance services in Michigan, but
provided a detailed road map for future applications. On August 18, 1997, in a
related order, the FCC determined that shared transport is an unbundled
network element which incumbent local exchange carriers must offer to
telecommunications carriers. Ameritech and others have appealed the shared
transport order which is now pending in the Eighth Circuit U.S. Court of
Appeals. Ameritech is evaluating both orders to determine the additional
requirements which must be met before resubmitting its application to provide
long distance services in Michigan. Ameritech remains committed to entering
the long distance marketplace expeditiously, however, the timing of future
long distance applications depends on the resolution of the issues arising out
of the road map prescribed by the FCC and the related implementation
requirements.
USE OF PROCEEDS
Ameritech Capital Funding Corporation ("Capital Funding") intends to lend
the net proceeds from the sale of the Securities to Ameritech Monitoring
Services, Inc. ("AMS"), a wholly-owned subsidiary of Ameritech Corporation
("Ameritech") AMS intends to use the net proceeds to repay Ameritech for
short-term indebtedness incurred by AMS in connection with the purchase by AMS
of security monitoring assets from Republic Industries, Inc. for approximately
$610 million and from Rollins Protective Services, a division of Rollins, Inc.
for approximately $200 million. The AMS short-term borrowings were made under
financing arrangements between AMS and Ameritech which provide that AMS may
borrow or repay amounts on a daily basis at market rates.
CERTAIN TERMS OF THE SECURITIES
The Securities are to be issued under an Indenture, dated as of October 1,
1997 (the "Indenture"), among Ameritech, Capital Funding and Harris Trust and
Savings Bank, as trustee (the "Trustee"). The following summaries of certain
provisions of the Indenture and the Securities offered hereby (referred to in
the accompanying 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 and the Securities. Capitalized terms used but not defined herein or
in the Prospectus shall have the meanings given to them in the Indenture.
GENERAL
The Securities will represent unsecured and unsubordinated obligations of
Capital Funding and will rank on a parity with all other unsecured and
unsubordinated indebtedness of Capital Funding. The Securities are
unconditionally guaranteed as to payment of principal and interest by
Ameritech, the sole stockholder of Capital Funding.
S-2
<PAGE>
The 6.125% Notes due 2001 will be limited to $200,000,000 aggregate
principal amount and will mature on October 15, 2001; the 6.30% Notes due 2004
will be limited to $250,000,000 aggregate principal amount and will mature on
October 15, 2004; and the 6.875% Debentures due 2027 will be limited to
$200,000,000 aggregate principal amount and will mature on October 15, 2027.
The Securities will bear interest at the respective annual interest rates
shown on the cover page of this Prospectus Supplement from October 10, 1997 or
from the most recent date on which interest has been paid or provided for,
payable semi-annually on April 15 and October 15 of each year (each an
"Interest Payment Date"), commencing April 15, 1998, to the persons in whose
names such Securities were registered at the close of business on the next
preceding March 31 and September 30, respectively (each a "Regular Record
Date").
Until the Securities are paid or payment thereof is duly provided for,
Capital Funding will, at all times, maintain a paying agent (the "Paying
Agent") in the United States capable of performing the duties described herein
to be performed by the Paying Agent. Capital Funding has initially appointed
the Trustee, 311 West Monroe Street, Chicago, Illinois 60606, as the Paying
Agent. Capital Funding will notify the Trustee and the holders of the
Securities, in accordance with the Indenture, of any change in the Paying
Agent or its address.
Any payment otherwise required to be made in respect of a Security on a date
that is not a Business Day for such Security 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 Securities are not subject to redemption prior to maturity and are not
entitled to any sinking fund.
The Indenture does not contain covenants or other provisions designed to
afford holders of the Securities protection in the event of a highly leveraged
transaction, change in credit or other similar occurrence.
BOOK-ENTRY PROCEDURES
Each series of Securities will be issued initially in the form of one or
more 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 and
Guarantees--Global Securities," the Securities will not be issuable in
certificated form.
The Depository has advised Capital Funding and each of the underwriters
named below in the section entitled "Underwriting" (collectively, the
"Underwriters"), 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. Direct Participants include securities brokers and dealers
(including the Underwriters), 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
securities brokers and dealers, banks and
S-3
<PAGE>
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 and Guarantees--Global Securities."
SETTLEMENT AND PAYMENT
Settlement for the Securities will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be
made by Capital Funding in immediately available funds. The Securities will
trade in the Depository's Same-Day Funds Settlement System until maturity, and
secondary market trading in the Securities will therefore be required by the
Depository to settle in immediately available funds.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
Capital Funding has agreed to sell to each of the Underwriters named below,
and each of the Underwriters has severally agreed to purchase, the principal
amount of Securities set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
SECURITIES SECURITIES SECURITIES
UNDERWRITER DUE 2001 DUE 2004 DUE 2027
----------- ------------ ------------ ------------
<S> <C> <C> <C>
Goldman, Sachs & Co.................. $ 70,000,000 $ 87,500,000 $ 70,000,000
Lehman Brothers Inc.................. 70,000,000 87,500,000 70,000,000
BancAmerica Robertson Stephens....... 20,000,000 25,000,000 20,000,000
First Chicago Capital Markets, Inc... 20,000,000 25,000,000 20,000,000
Morgan Stanley & Co. Incorporated.... 20,000,000 25,000,000 20,000,000
------------ ------------ ------------
Total ............................. $200,000,000 $250,000,000 $200,000,000
============ ============ ============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters have committed to take and pay for all of the Securities, if any
are taken.
Capital Funding has been advised by the Underwriters that they propose to
offer the Securities in part directly to the public at the respective initial
public offering prices set forth on the cover page of this Prospectus
Supplement and in part to certain securities dealers at such prices less a
concession of 0.300% of the principal amount in the case of the Securities due
2001, 0.375% of the principal amount in the case of the Securities due 2004
and 0.500% of the principal amount in the case of the Securities due 2027. The
Underwriters may allow, and such dealers may reallow, a concession not to
exceed 0.250% of the principal amount of the Securities to certain brokers and
dealers. After the Securities are released for sale to the public, the
offering prices and other selling terms may from time to time be varied by the
representatives.
No series of Securities will have an established trading market when issued.
No series of Securities will be listed on any securities exchange. Each
Underwriter may make a market in one or more series of Securities, but such
Underwriter is not obligated to do so and may discontinue any market-making at
any time without notice. There can be no assurance that the Securities offered
hereby will be sold or that there will be a secondary market for any series of
Securities.
S-4
<PAGE>
In connection with the offering, the Underwriters may purchase and sell the
Securities in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover short positions created by
the Underwriters in connection with the offering. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or
retarding a decline in the market price of the Securities; and short positions
created by the Underwriters involve the sale by the Underwriters of a greater
number of Securities than they are required to purchase from Capital Funding
in the offering. The Underwriters also may impose a penalty bid, whereby
selling concessions allowed to broker-dealers in respect of the Securities
sold in the offering may be reclaimed by the Underwriters if such Securities
are repurchased by the Underwriters in stabilizing or covering transactions.
These activities may stabilize, maintain or otherwise affect the market price
of the Securities, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the over-the-
counter market or otherwise.
Each of the Underwriters and certain affiliates thereof engage or may in the
future engage in transactions with and perform services for each of Capital
Funding and Ameritech in the ordinary course of business.
Capital Funding and Ameritech have agreed to indemnify each Underwriter
against certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended, or to contribute to payments such Underwriter may be
required to make in respect thereof.
S-5
<PAGE>
AMERITECH CAPITAL FUNDING CORPORATION
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST BY
AMERITECH CORPORATION
----------------
Ameritech Capital Funding Corporation ("Capital Funding") 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 Capital Funding of up to U.S.
$1,000,000,000 (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"), bearer
form with or without coupons attached ("Bearer Securities") or in the form of
one or more global securities (each a "Global Security"). All Debt Securities
will be unconditionally guaranteed as to payment of principal, premium, if
any, and interest (the "Guarantees") by Ameritech Corporation ("Ameritech").
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 other terms or information in connection with the
offering and sale of such Debt Securities.
Capital Funding may sell the Debt Securities to or through dealers or
underwriters, directly to other purchasers or through agents. If an agent of
Capital Funding 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
Capital Funding 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 October 7, 1997.
<PAGE>
AVAILABLE INFORMATION
Ameritech is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by Ameritech may be inspected and
copied at the public reference facilities maintained by the Commission 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 Branch 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,
Boston, Chicago, Philadelphia and Pacific Stock Exchanges, on each of which
exchanges certain of Ameritech's securities are listed. The Commission also
maintains a web site (http://www.sec.gov) that contains reports and other
information regarding registrants that file electronically with the
Commission.
Ameritech and Capital Funding have 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 Commission's Office of Chief Counsel, Division of Corporate Finance, has
indicated to Capital Funding that, in connection with the issuance of the Debt
Securities, it will not raise any objection if Capital Funding does not file
periodic reports pursuant to Sections 13(a) and 15(d) of the Exchange Act.
Accordingly, Capital Funding will not file such periodic reports.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Ameritech with the Commission (File No. 1-
8612) are incorporated herein by reference:
1. Ameritech's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. Ameritech's Quarterly Report on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997.
3. Ameritech's Current Reports on Form 8-K dated January 13, 1997, April
15, 1997 and July 15, 1997.
All documents filed by Ameritech 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.
Ameritech and Capital Funding 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
2
<PAGE>
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 Vice President--Investor
Relations, Ameritech Corporation, 30 South Wacker Drive, Chicago, Illinois
60606 (telephone number (312) 750-5353).
AMERITECH CORPORATION
Ameritech, a holding company incorporated in 1983 under the laws of the
State of Delaware, has its principal executive offices at 30 South Wacker
Drive, Chicago, Illinois 60606 (telephone number (800) 257-0902). Ameritech is
a leading global supplier of full-service communications services and advanced
information services.
AMERITECH CAPITAL FUNDING CORPORATION
Capital Funding was established to provide financing to Ameritech and to the
direct and indirect subsidiaries of Ameritech. Capital Funding may raise funds
through the offering of Debt Securities in the United States, Europe, and
other overseas markets and will lend the net proceeds to Ameritech or one or
more subsidiaries of Ameritech. Capital Funding does not and will not engage
in any separate business activities. All of the Debt Securities will be
unconditionally guaranteed as to payment of principal, premium, if any, and
interest by Ameritech.
Capital Funding was incorporated under the laws of the State of Delaware in
May, 1989 and is a wholly owned subsidiary of Ameritech. Capital Funding
became a close corporation under Delaware law effective January 1, 1990. The
principal executive offices of Capital Funding are located at 30 South Wacker
Drive, Chicago, Illinois 60606 (telephone number (800) 257-0902).
RATIO OF EARNINGS TO FIXED CHARGES OF AMERITECH
The following table sets forth the ratio of earnings to fixed charges of
Ameritech for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
6.83 6.27 6.14 6.45 4.40 5.29 4.50
</TABLE>
Results for 1995 reflect a $134 million pretax credit primarily from
settlement gains resulting from lump sum pension payments from the Ameritech
pension plan to former employees who left the business in the nonmanagement
work force restructuring, partially offset by $74 million associated with
increased force costs related to the work force restructuring, started in
1994, as well as a $58 million charge recorded to write down certain data
processing equipment to net realizable value. Results for 1994 reflect a $728
million pretax charge associated with the nonmanagement work force
restructuring. Costs of the work force restructuring program have largely been
funded from the Ameritech pension plan.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used to
provide funds for Ameritech and subsidiaries of Ameritech.
Capital Funding will invest in or loan to Ameritech or one or more of the
subsidiaries of Ameritech at least 85% of the cash raised by Capital Funding
hereunder as soon as practicable after receipt, but in no event later than six
months after Capital Funding receives such cash. In the interim, Capital
Funding will invest any funds held by it only in securities permitted by Rule
3a-5(a)(6) of the Commission under the Investment Company Act of 1940, as
amended.
3
<PAGE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description sets forth certain general terms and provisions of
the Debt Securities and Guarantees 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 dated as of October
1, 1997 (the "Indenture"), among Ameritech, Capital Funding and Harris Trust
and Savings Bank, as trustee (the "Trustee"), a form of which is incorporated
by reference as an exhibit to the Registration Statement of which this
Prospectus is a part.
The following summaries of certain provisions of the Debt Securities, the
Guarantees 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, the Guarantees 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
Capital Funding.
Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of Capital Funding, will rank on a parity with Capital Funding's
other unsecured and unsubordinated indebtedness and will have the benefit of
the Guarantees described below.
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 Security issued in global form
(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
4
<PAGE>
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
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.
GUARANTEES
Ameritech will unconditionally guarantee the due and punctual payment of the
principal, premium, if any, and interest on the Debt Securities when and as the
same shall become due and payable, whether at maturity, upon redemption, or
otherwise. (Sections 311 and 312). The Guarantees will rank equally with all
other unsecured and unsubordinated obligations of Ameritech. Since Ameritech is
a holding company, the right of Ameritech and, hence, the right of creditors of
Ameritech (including the holders of the Debt Securities) to participate in any
distribution of the assets of any subsidiary of Ameritech, whether upon
liquidation, reorganization, or otherwise, is subject to prior claims of
creditors of each such subsidiary, except to the extent that claims of
Ameritech itself as a creditor of a subsidiary may be allowed. The right of
creditors of Ameritech (including the holders of the Debt Securities) to
participate in the distribution of the stock owned by Ameritech in certain
subsidiaries of Ameritech, including the Ameritech landline telephone
companies, may also be subject to approval by certain state and federal
regulatory authorities having jurisdiction over such subsidiaries.
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 the denomination of $5,000 with coupons
attached. A Global Security will be issued in a denomination
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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 (or its
possessions) (as defined below under "Certain 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 "Certain
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
"Certain 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 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 Capital Funding or at the
office of any transfer agent designated by Capital Funding 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. Capital Funding 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 Capital Funding with respect to
any series of Debt Securities, Capital Funding 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, Capital Funding 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, Capital
Funding 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. Capital Funding 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, Capital Funding 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
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business 15 days before any selection of Debt Securities of that series 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 that such a Bearer
Security may be exchanged for a Registered Security of that series and like
tenor, provided that such Registered Security 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 Capital Funding may designate from time to time, except that,
at the option of Capital Funding, 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 Capital Funding may
designate from time to time, except that, at the option of Capital Funding,
payment of any interest may be made by check or by wire transfer to an account
maintained by the payee outside the United States (or its possessions).
(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 Capital
Funding in the United States (or its possessions) or by check mailed to any
address in the United States (or its possessions) or by transfer to an account
maintained in the United States (or its possessions). Payments will not be
made in respect of Bearer Securities or coupons appertaining thereto pursuant
to presentation to Capital Funding or its Paying Agents within the United
States (or its possessions) or any other demand for payment to Capital Funding
or its Paying Agents within the United States (or its possessions).
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 Capital Funding'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 (or its possessions) is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 1002).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will serve as Paying Agent and the Corporate Trust Office of the
Trustee will be designated as Capital Funding'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 Capital
Funding for the Debt Securities will be named in the applicable Prospectus
Supplement. Capital Funding 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, Capital Funding 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, Capital
Funding will
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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, Capital Funding 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 Capital Funding may be
served. (Section 1002).
All moneys paid by Capital Funding to a Paying Agent for the payment of
principal of and any premium and 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 Capital Funding and
thereafter the holder of such Debt Security or any coupon appertaining thereto
will look only to Capital Funding 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 depositary 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 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 depositary arrangement with respect to a series of
Debt Securities or any part thereof will be described in the applicable
Prospectus Supplement. Capital Funding anticipates that the following
provisions will apply to all depositary 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 a
beneficial interest 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 Capital Funding if such Debt Securities are offered
and sold directly by Capital Funding. 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
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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 Capital Funding,
Ameritech, 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 "Certain Limitations on Issuance
of Bearer Securities" below, Capital Funding 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. Capital Funding 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
depository and a successor depository is not appointed by Capital Funding
within 90 days, Capital Funding will issue Debt Securities of such series in
definitive form in exchange for the Global Security representing such series
of Debt Securities. In addition, Capital Funding 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, Capital Funding will
issue Registered Securities of such series in definitive form in exchange for
the Global Security representing such series of Registered Securities.
Further, if Capital Funding 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
Capital Funding 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 Capital Funding, 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 Capital Funding, 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 its possessions) or to United
States persons (each as defined in the Code and the regulations thereunder)
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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 its possessions) or to United States
persons (other than the financial institutions described above) nor deliver
Bearer Securities within the United States (or its possessions).
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. Holders of Bearer Securities should
consult their tax advisors concerning any such tax restrictions.
LIENS ON ASSETS
If, at any time, Capital Funding 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, Capital Funding will
secure the outstanding Debt Securities, and any other obligations of Capital
Funding 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
landlords' liens, liens with respect to the sale or financing of accounts or
chattel paper, purchase-money mortgages or liens, liens arising under the Code
or liens with respect to taxes, assessments or other governmental charges or
levies which may be owed by Capital Funding from time to time and which, if
delinquent, are being contested in good faith, or other liens to which any
property or asset acquired by Capital Funding is subject as of the date of its
acquisition by Capital Funding 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 Capital Funding 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 Ameritech or any Person other than Capital
Funding from mortgaging, pledging, or subjecting to any lien any of its
property or assets, whether or not acquired by such Person from Capital
Funding. (Section 1006).
RESTRICTIONS ON MERGERS AND SALES OF ASSETS
Neither Capital Funding nor Ameritech may 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 neither Capital Funding nor
Ameritech shall permit any Person to consolidate with or merge into Capital
Funding or Ameritech or convey, transfer or lease its properties and assets
substantially as an entirety to Capital Funding or Ameritech unless (i) the
corporation formed by such consolidation or into which Capital Funding or
Ameritech is merged or the Person to which the properties and assets of
Capital Funding or Ameritech 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
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any, on the Debt Securities and the performance of the other covenants of
Capital Funding or Ameritech, as the case may be, under the Indenture, (ii)
after giving effect to such transaction, no Event of Default, 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 Capital Funding 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 Capital
Funding and the Trustee only with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of each 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; (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; or (vii) change the substantive provisions of
the Guarantees. (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 Capital Funding 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 percent 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 either of
Capital Funding or Ameritech. 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 percent in aggregate principal amount of the
Outstanding Debt Securities of such series may declare the principal
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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).
Each of Capital Funding and Ameritech is required to furnish the Trustee,
not less often than annually, with a certificate as to its respective
compliance with all conditions and covenants under the Indenture.
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 event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to the Debt Securities
of such series (except in the payment of principal of, 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).
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). 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 not less than 25 percent 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 Capital Funding 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 Date of
such principal or installment of principal or interest (or on the Redemption
Date of the Outstanding
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Debt Securities of such series if Capital Funding 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 Capital Funding 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 adjusted
tax basis for the Debt Securities and the fair market value of the holder's
interest in the trust will be treated as payment of interest and will not be
taken into account in determining such gain or loss. Thereafter such holder
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.
Defeasance of Certain Covenants and Certain Events of Default. If the terms
of the Debt Securities of any series so provide, Capital Funding may omit to
comply with certain restrictive covenants in Section 801 (Company and
Guarantor May Consolidate, Etc., Only on Certain Terms), Section 1005
(Purchase of Securities by Company or Subsidiary) and Section 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 Capital Funding 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 Capital Funding 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 Capital Funding 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, Capital Funding
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, Capital Funding 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
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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 a Debt Securities so
provide, Capital Funding will be permitted at any time to withdraw any money
or U.S. Government Obligations deposited pursuant to the foregoing defeasance
provisions, provided that Capital Funding in substitution therefor
simultaneously deposits money and/or U.S. Government Obligations which would
then be sufficient to satisfy Capital Funding'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 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. Capital Funding, Ameritech, the Trustee and any agent of Capital
Funding, Ameritech 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 Capital Funding 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 Capital Funding 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 Capital
Funding 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 Capital Funding 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, the Debt Securities and the Guarantees 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.
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<PAGE>
CONCERNING THE TRUSTEE
Ameritech and Capital Funding maintain banking relationships in the ordinary
course of business with the Trustee. The Trustee also serves as indenture
trustee under a mortgage granted by Illinois Bell Telephone Company, a wholly-
owned subsidiary of Ameritech, in connection with its publicly issued First
Mortgage Bonds and under certain other unsecured indentures entered into with
other subsidiaries of Ameritech. The Trustee's parent has a commitment under a
revolving credit facility available to Ameritech.
Under the Indenture, the Trustee is required to transmit annual reports to
all Holders regarding its eligibility and qualifications as Trustee under the
Indenture and certain related matters. (Section 703).
PLAN OF DISTRIBUTION
Capital Funding 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, and
may include delayed delivery arrangements providing for payment and delivery
at a future date.
Offers to purchase Debt Securities may be solicited directly by Capital
Funding or by agents designated by Capital Funding 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 Capital Funding 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, Capital Funding
and Ameritech 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, 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, Capital Funding 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 Capital Funding and Ameritech, 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, Capital Funding, Ameritech or subsidiaries of Ameritech
in the ordinary course of business.
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EXPERTS
The consolidated financial statements and financial statement schedule of
Ameritech and its subsidiaries included and incorporated by reference in
Ameritech's Annual Report on Form 10-K for the year ended December 31, 1996
have been audited by Arthur Andersen LLP, independent public accountants, as
set forth in the reports of such firm. The consolidated financial statements
and financial statement schedule referred to above are incorporated by
reference herein in reliance upon the authority of Arthur Andersen LLP as
experts in giving said reports.
LEGAL OPINIONS
Certain matters relating to the legality of the Debt Securities and the
Guarantees to be offered hereby will be passed upon for Capital Funding and
Ameritech by Bruce B. Howat, Esq., Counsel & Secretary of Ameritech, 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. Howat, Winston & Strawn
and Mayer, Brown & Platt with respect to the Debt Securities and the Guarantees
may be conditioned upon, and subject to certain assumptions regarding, future
action to be taken by Capital Funding, Ameritech 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
Ameritech and certain of its subsidiaries. As of the date of this Prospectus,
Mr. Howat owned beneficially and had options to acquire shares of the 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 PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURI-
TIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CAPITAL FUNDING OR
AMERITECH SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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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 Securities............................................ S-2
Underwriting............................................................... S-4
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by
Reference................................................................. 2
Ameritech Corporation...................................................... 3
Ameritech Capital Funding Corporation...................................... 3
Ratios of Earnings to Fixed Charges of Ameritech........................... 3
Use of Proceeds............................................................ 3
Description of Debt Securities and
Guarantees................................................................ 4
Plan of Distribution....................................................... 15
Experts.................................................................... 16
Legal Opinions............................................................. 16
</TABLE>
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$650,000,000
AMERITECH CAPITAL
FUNDING CORPORATION
$200,000,000
6.125% NOTES DUE OCTOBER 15, 2001
$250,000,000
6.30% NOTES DUE OCTOBER 15, 2004
$200,000,000
6.875% DEBENTURES DUE OCTOBER 15, 2027
UNCONDITIONALLY GUARANTEED AS TO
PAYMENT OF PRINCIPAL AND INTEREST BY
AMERITECH CORPORATION
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LOGO
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GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
BANCAMERICA ROBERTSON STEPHENS
FIRST CHICAGO CAPITAL MARKETS, INC.
MORGAN STANLEY DEAN WITTER
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