<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-82575
THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE
AND MAY BE CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT
SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED NOVEMBER 16, 1999
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<S> <C>
PROSPECTUS SUPPLEMENT (COX COMMUNICATIONS LOGO)
(TO PROSPECTUS DATED AUGUST 9, 1999)
</TABLE>
PRIZES(SM)
COX COMMUNICATIONS, INC.
EXCHANGEABLE SUBORDINATED DEBENTURES DUE 2029
(EXCHANGEABLE FOR CASH BASED ON THE VALUE OF SPRINT PCS STOCK)
----------------------
We have summarized below the terms of the debt securities we are offering,
which we refer to as the PRIZES. For more detail, you should read "Description
of PRIZES" in this prospectus supplement.
- PRINCIPAL AMOUNT. Each PRIZES is being issued in an original principal
amount of $ . The minimum amount payable upon redemption or maturity
of a PRIZES, which we call the contingent principal amount, will initially
be equal to the original principal amount. The contingent principal amount
will be reduced if Sprint begins paying a regular cash dividend or if
there are other distributions on or in respect of the Sprint PCS stock. We
refer to Sprint PCS stock and any other publicly traded equity securities
that may be distributed on or in respect of the Sprint PCS stock (or into
which any of those securities may be converted or exchanged) collectively
as the reference shares. The last reported sale price of the Sprint PCS
stock on the NYSE on November 15, 1999 was $86.3125.
- REFERENCE SHARES. The maximum number of reference shares attributable to
each PRIZES will initially be one share, and the minimum number will
initially be shares, but on November , 2002 both of those numbers
will be redetermined, based on the then average price of Sprint PCS stock,
to be (a) one share, if that average price is less than or equal to
$ , (b) shares, if that average price is greater than or equal
to $ , or (c) that number of shares equal to $ divided by that
average price, if that average price is between $ and $ .
Following this redetermination, the minimum and maximum numbers of
reference shares will be identical. The maximum and minimum numbers of
reference shares, including those numbers as redetermined, and the related
dollar amounts, are subject to dilution adjustments as described in this
prospectus supplement.
- QUARTERLY INTEREST PAYMENTS. We will pay interest quarterly in an amount
equal to the sum of $ per PRIZES, reflecting a basic interest rate of
% per year on the original principal amount, through November , 2002,
and thereafter in an amount equal to $ per PRIZES, reflecting a basic
interest rate of % per year on the original principal amount, in each
case plus an amount equal to the amount of any regular cash dividend paid
on the maximum number of reference shares attributable to each PRIZES. We
will also distribute to holders of the PRIZES, based on the maximum number
of reference shares, as additional interest, any property or the cash
value of any property distributed on or in respect of the reference shares
(other than publicly traded equity securities which will themselves become
reference shares). We may, at our option, defer the payment of basic
interest at any time for periods not to exceed 20 consecutive quarterly
periods. The consequences of a deferral of basic interest are described in
this prospectus supplement. You should read "Certain United States Federal
Income Tax Considerations" in this prospectus supplement for a discussion
of selected United States federal income tax consequences relevant to the
PRIZES.
- MATURITY. The PRIZES will mature on November , 2029. At maturity you
will be entitled to receive the higher of (a) the then contingent
principal amount of the PRIZES or (b) the sum of the then current market
value of the maximum number of reference shares on the maturity date and
any deferred quarterly payments of basic interest (including any current
accrued interest thereon), plus, in either case, the final period
distribution as we define it in this prospectus supplement.
- OPTIONAL REDEMPTION. We may redeem the PRIZES at any time at the prices
set forth in this prospectus supplement.
- EXCHANGEABILITY. Each PRIZES is exchangeable, at your option, at any
time, for an amount of cash equal to 95% of the then market value of the
minimum number of reference shares.
- RANKING. The PRIZES are unsecured, subordinated obligations of Cox
Communications, Inc., ranking junior in right of payment to all of Cox's
existing and future senior indebtedness. As of September 30, 1999, we had
outstanding approximately $5.3 billion of debt senior, or effectively
senior, to the PRIZES.
INVESTING IN THE PRIZES INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE S-8.
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<CAPTION>
PER PRIZES TOTAL
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<S> <C> <C>
Public offering price(1)................................... $ $
Underwriting commission to be paid by Cox.................. $ $
Proceeds, before expenses, to Cox.......................... $ $
</TABLE>
(1) Plus accrued interest from November , 1999, if settlement occurs
after that date.
The underwriters may also purchase up to an additional PRIZES at the
public offering price within 30 days from the date of this prospectus supplement
to cover over-allotments.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the PRIZES or determined that this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The PRIZES will be ready for delivery in book-entry form only through The
Depository Trust Company on or about November , 1999.
----------------------
MERRILL LYNCH & CO. CREDIT SUISSE FIRST BOSTON
BANC OF AMERICA SECURITIES LLC
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
----------------------
The date of this prospectus supplement is , 1999.
- ---------------
(SM)Service mark of Merrill Lynch & Co., Inc.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
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PAGE
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Prospectus Supplement Summary............................... S-2
Cox Communications, Inc................................. S-2
Recent Developments..................................... S-3
The Offering -- Q&A..................................... S-4
Risk Factors................................................ S-8
Price Range and Dividend History of the Sprint PCS Stock.... S-12
Use of Proceeds............................................. S-12
Ratio of Earnings to Fixed Charges.......................... S-12
Description of PRIZES....................................... S-13
Certain United States Federal Income Tax Considerations..... S-26
Underwriting................................................ S-30
Legal Matters............................................... S-31
</TABLE>
<TABLE>
<S> <C>
PROSPECTUS
Cox Communications, Inc..................................... 2
The Cox Trusts.............................................. 3
Use of Proceeds............................................. 5
Ratio of Earnings to Fixed Charges.......................... 5
Description of Capital Stock................................ 6
Description of Debt Securities.............................. 9
Description of Junior Subordinated Debentures............... 20
Description of Trust Preferred Securities................... 28
Description of Preferred Securities Guarantees.............. 38
Relationship Among the Trust Preferred Securities, the
Corresponding Junior Subordinated Debentures and the
Preferred Securities Guarantees........................... 41
Description of Capital Securities........................... 42
Description of Capital Securities Guarantees................ 52
Relationship Among the Capital Securities, the Corresponding
Senior Debt Securities and the Capital Securities
Guarantees................................................ 55
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 56
Plan of Distribution........................................ 57
Legal Matters............................................... 58
Experts..................................................... 58
Where You Can Find More Information......................... 58
Information Incorporated by Reference....................... 58
</TABLE>
----------------------
Unless the context otherwise requires, references in this prospectus
supplement to "Cox," "we," "us" and "our" are to Cox Communications, Inc. and
its consolidated subsidiaries. References to "you" and "your" refer to
prospective investors in the PRIZES prior to the sale of the PRIZES and to
holders of the PRIZES after the sale of the PRIZES.
----------------------
FORWARD-LOOKING STATEMENTS
This prospectus supplement includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We
have based these statements on our current expectations or projections about
future events and on assumptions we have made. These forward-looking statements
are subject to certain risks and uncertainties which could cause actual results
or events to differ materially from those we anticipate or project. Prospective
purchasers should not place undue reliance on these forward-looking statements.
We undertake no obligation to update or revise any forward-looking statements as
a result of new information, future events or otherwise.
----------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not, and the underwriters are
not, making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus supplement and the accompanying prospectus, as well as
information we previously filed with the Securities and Exchange Commission and
incorporated by reference, is accurate as of the date on the front cover of this
prospectus supplement only. Our business, financial condition, results of
operations and prospects may have changed since that date.
S-1
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PROSPECTUS SUPPLEMENT SUMMARY
The following information supplements, and should be read together with,
the information contained or incorporated by reference in other parts of this
prospectus supplement and in the accompanying prospectus. This summary contains
a brief description of our business and highlights selected information from
this prospectus supplement and the accompanying prospectus to help you
understand the PRIZES. You should carefully read this prospectus supplement and
the accompanying prospectus to understand fully the terms of the PRIZES, as well
as the tax and other considerations that may be important to you in making a
decision about whether to invest in the PRIZES. You should pay special attention
to the "Risk Factors" and "Certain United States Federal Income Tax
Considerations" sections of this prospectus supplement to determine whether an
investment in the PRIZES is appropriate for you.
COX COMMUNICATIONS, INC.
Cox Communications, Inc. is one of the largest broadband communications
companies in the United States, delivering an array of integrated video, voice
and data services to both residential and commercial customers through its
extensive U.S. broadband network operations. Pro forma for Cox's pending cable
system acquisitions, Cox will serve approximately six million customers, making
it the nation's fifth largest cable company. Cox also has substantial
investments in cable television programming, telecommunications, technology and
broadband networks.
Cox's core strategy is to leverage its advanced broadband network by
offering new and advanced communications services to its residential and
commercial customers. We believe that we have a number of advantages that will
allow us to continue to implement this strategy successfully:
- highly clustered and regionally concentrated cable television systems;
- extensive experience and reputation as an industry leader in upgrading
the technological capabilities of our broadband networks; and
- a strong commitment to and reputation for superior customer service.
Cox's current service offerings include:
- multichannel video under the Cox Cable brand;
- high-speed Internet access via Cox@Home;
- local and long-distance telephone under the Cox Digital Telephone brand;
- advanced digital video programming services under the Cox Digital TV
brand; and
- commercial voice and data services via Cox Business Services.
In addition, Cox has sought to utilize its expertise and position as one of
the nation's premier cable television companies to invest in programming,
telecommunications and technology companies which are complementary to Cox's
business strategy. Cox believes that these investments have been vital to Cox's
growth as a communications industry leader.
Cox Enterprises, Inc., a privately-held corporation headquartered in
Atlanta, Georgia and one of the largest media companies in the United States,
owns approximately 68% of the outstanding equity of Cox as of September 30,
1999. In addition to Cox, Cox Enterprises publishes, owns or operates
newspapers, television and radio stations, Internet web sites and Manheim
Auctions, the world's largest auto auction operator.
Cox's principal executive offices are located at 1400 Lake Hearn Drive,
Atlanta, Georgia 30319. Cox's telephone number is (404) 843-5000.
S-2
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RECENT DEVELOPMENTS
In July 1999, Cox and Multimedia Cablevision, Inc., a subsidiary of Gannett
Co., Inc., entered into a definitive purchase agreement pursuant to which Cox
will purchase for $2.7 billion in cash Multimedia's cable television operations
serving 522,000 customers in Kansas, Oklahoma and North Carolina. Cox expects to
complete this transaction, which is subject to legal and regulatory review, by
the end of the first quarter of 2000.
Also in July 1999, Cox and AT&T Corp. entered into a definitive agreement
to exchange Cox's AT&T common stock for the stock of AT&T subsidiaries that own
cable television systems that serve approximately 495,000 customers and other
assets, including cash. In return for its 50.3 million shares of AT&T common
stock, Cox will receive the stock of AT&T subsidiaries that own: cable systems
serving Tulsa, Oklahoma (160,000 customers) and Baton Rouge, Louisiana (156,000
customers); the remaining 20% ownership interest in a partnership in which Cox
acquired an 80% interest through its acquisition of TCA Cable TV, Inc.; Peak
Cablevision LLC, which has 117,000 customers in Oklahoma, Arkansas, Utah and
Nevada; and approximately $750 million in other assets, including cash. Cox
expects to complete this transaction, which is subject to legal and regulatory
review, by the end of the first quarter of 2000.
In August 1999, Cox completed its merger with TCA Cable TV, Inc., a cable
television operator serving approximately 883,000 customers in Texas, Arkansas,
Louisiana and four other states. In connection with the merger, Cox also
acquired VPI Communications Inc., an affiliate of TCA, which is a leader in
cable advertising sales and provides turnkey advertising services to 82 cable
television system operators representing more than 3.5 million customers
nationwide. In connection with the merger, Cox paid $1.6 billion in cash and
issued 38.3 million shares of Cox Class A common stock to TCA shareholders.
Also in August 1999, Cox and MediaOne exchanged selected cable television
systems in Massachusetts, Rhode Island and Connecticut. In connection with the
transaction, Cox traded its cable television systems in Massachusetts, serving
approximately 54,000 customers for MediaOne properties in Enfield, Connecticut
and Westerly, Rhode Island, serving 51,000 customers, and cash.
Also in August 1999, Cox purchased cable television systems serving
communities near Gloucester, New Kent, West Point and King and Queen County,
Virginia, from First Commonwealth Communications, Inc. The cable television
systems, serving more than 11,000 customers, are contiguous to Cox's Hampton
Roads, Virginia cable operation.
In September 1999, Cox amended and restated its 364-day credit agreement
and its 5-year credit agreement providing for borrowings of up to $1.5 billion
and $1.2 billion, respectively. As of the date of this prospectus supplement,
Cox has not borrowed under either credit agreement.
In October 1999, Cox purchased cable systems serving more than 260,000
customers in Fairfax County and Fredericksburg, Virginia, from Media General,
Inc. in a cash transaction valued at $1.4 billion.
Also in October 1999, Cox purchased cable television systems from Cable
Plus Holding Company serving approximately 17,000 customers in Arizona and
Nevada.
Also in October 1999, Cox restructured its partnership with Time Warner
Entertainment Company L.P. As part of this restructuring, Cox acquired control
of the cable television system serving Fort Walton Beach, Florida and Time
Warner acquired control of the cable television system serving Staten Island,
New York. In connection with the restructuring, the Cox subsidiary that owns the
Fort Walton Beach system and the cable television system serving Pensacola,
Florida, received approximately $104 million in cash to be used for capital
expenditures and a reduction of indebtedness.
S-3
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THE OFFERING -- Q&A
WHAT ARE THE PRIZES?
The PRIZES are a series of our subordinated debt securities. Specific
features of the PRIZES are described in this prospectus supplement and general
terms of our debt securities are described in the accompanying prospectus.
WHAT IS SPRINT'S RELATIONSHIP TO THE PRIZES?
Sprint Corporation has no obligations whatsoever under the PRIZES. We refer
to Sprint Corporation, a Kansas corporation, as Sprint. We refer to Sprint's PCS
Common Stock -- Series 1, par value $1.00 per share, as Sprint PCS stock. In
describing the PRIZES, the Sprint PCS stock will initially comprise the
reference shares. The reference shares will also include any other publicly
traded equity securities that may be distributed on or in respect of the Sprint
PCS stock, or on or with respect to any publicly traded equity security into
which any of those securities may be converted or exchanged. In describing the
PRIZES, we refer to Sprint and any other company which may in the future become
an issuer of reference shares as the reference company.
WHAT CAN YOU TELL ME ABOUT SPRINT?
According to publicly available documents, Sprint is a domestic and
international long distance communications provider through its FON Group and a
domestic wireless mobile phone services provider through its PCS Group. Sprint's
PCS Group operates a digital PCS wireless network in the United States. Sprint's
PCS stock is a "tracking stock" intended to reflect the performance of Sprint's
domestic wireless personal communications services operations, while its FON
stock is a "tracking stock" intended to reflect the performance of all of
Sprint's other operations. The value of the PRIZES being offered is initially
based on the Sprint PCS stock and not on the Sprint FON stock. Sprint is
required to file reports and other information with the SEC. Copies of these
reports and other information may be inspected and copied at the SEC offices
specified under "Where You Can Find More Information" on page 58 in the
accompanying prospectus.
According to available public information, pursuant to a merger agreement
between MCI WorldCom, Inc. and Sprint, Sprint would be merged with and into MCI
WorldCom, Inc. Under this planned merger, holders of Sprint PCS stock would
receive one new share of WorldCom PCS tracking stock and 0.1547 shares of MCI
WorldCom stock for each share of Sprint PCS stock. This merger is subject to
many conditions, including regulatory approvals, and may never occur. Even if it
does occur, the ratio by which holders of Sprint PCS stock receive new stock may
be different from the ratio currently contemplated in the agreement.
This prospectus supplement relates only to the PRIZES we are offering and
does not relate to the Sprint PCS stock or other securities of Sprint. All
disclosures contained in this prospectus supplement regarding Sprint are derived
from the publicly available documents. We have not participated in the
preparation of Sprint's documents nor made any due diligence inquiry with
respect to the information provided in those documents. None of the underwriters
has made any due diligence inquiry with respect to the information provided in
Sprint's documents in connection with the offering of the PRIZES. Neither we nor
any of the underwriters represent that Sprint's publicly available documents or
any other publicly available information regarding Sprint are accurate or
complete. Neither we nor any of the underwriters can provide you with any
assurance that all events occurring prior to the date of this prospectus
supplement, including events that would affect the accuracy or completeness of
the publicly available documents described in the preceding paragraph that would
affect the trading price of the Sprint PCS stock, and therefore the issue price
of the PRIZES, have been publicly disclosed. Subsequent disclosure of any such
events or the disclosure of or failure to disclose material future events
concerning Sprint could affect the trading price of the PRIZES.
We, our affiliates and the underwriters do not make any representation to
you as to the performance of Sprint, the Sprint PCS stock or any other
securities of Sprint.
S-4
<PAGE> 7
WHAT NUMBER OF REFERENCE SHARES IS ATTRIBUTABLE TO EACH PRIZES?
As of the date of this prospectus supplement, the maximum number of
reference shares attributable to each PRIZES is one share, and the minimum
number is shares. On November , 2002 both of those numbers will be
redetermined based on the average of the closing prices of the Sprint PCS stock
on the NYSE on the 20 trading days preceding the fifth business day preceding
November , 2002. The maximum and minimum numbers of reference shares
attributable to each PRIZES on and after November , 2002 will be:
(a) one share, if that average price is less than or equal to $ ;
(b) shares, if that average price is greater than or equal to $ ; or
(c) the number of shares equal to $ divided by that average price, if
that average price is between $ and $ .
Following this redetermination, the minimum and maximum numbers of reference
shares will be identical through maturity. The maximum and minimum numbers of
reference shares, including those numbers as redetermined, and the related
dollar amounts of $ and $ , are subject to dilution adjustments as described
in this prospectus supplement. When we refer in this prospectus supplement to
the maximum or minimum number of reference shares at a particular time, we mean
those numbers in effect at that time.
WHEN WILL YOU RECEIVE QUARTERLY INTEREST PAYMENTS?
If you purchase the PRIZES, you are entitled to receive quarterly basic
interest payments of $ per PRIZES, reflecting a basic interest rate of % per
year on the original principal amount, through November , 2002, and thereafter
$ per PRIZES, reflecting a basic interest rate of % per year on the original
principal amount. When we refer in this prospectus supplement to the basic
interest on the PRIZES at a particular time, we mean the basic interest computed
at the basic interest rate in effect at that time.
Interest on the PRIZES will accrue from the date we issue the PRIZES. We
will pay this interest quarterly in arrears on February , May , August and
November of each year, beginning February , 2000, but subject to our right
to defer quarterly payments of basic interest. Our payment on February , 2000
will equal $ per PRIZES, which is calculated to equal an annual rate of
% on the original principal amount from the date we issue the PRIZES.
We will also distribute to you, based on the maximum number of reference
shares attributable to each PRIZES, (a) an amount equal to any regular cash
dividends paid during the preceding quarterly period on those reference shares,
and (b) as additional interest, any property, including cash (other than any
regular cash dividends), distributed on or in respect of those reference shares
(other than publicly traded equity securities, which will themselves become
reference shares). As of the date of this prospectus supplement, Sprint has
never paid a cash dividend on its Sprint PCS stock. If the additional interest
on the reference shares includes publicly traded securities (other than equity
securities), we will distribute those securities to you. Otherwise, we will
distribute to you the fair market value of any property comprising additional
interest as determined in good faith by our board of directors. We will
distribute any additional interest to you 20 business days after it is
distributed to us.
The contingent principal amount for each PRIZES will be increased during
each quarter, based on the contingent principal amount at the beginning of the
quarter, by an amount equal to interest accrued on that beginning contingent
principal amount at the basic interest rate on the PRIZES then in effect, and
will be reduced on the dates the following amounts are paid to holders of the
PRIZES by:
(a) the quarterly basic interest payment made on the PRIZES;
(b) any amounts paid on the PRIZES in respect of regular cash dividends
paid on the reference shares during the quarter; and
(c) any amounts paid on the PRIZES in respect of the fair market value of
any additional interest payments made during the quarter.
As a result, the quarterly computations of the contingent principal amount will
be made such that the yield to each date of computation (including all quarterly
basic interest, all amounts
S-5
<PAGE> 8
paid in respect of regular cash dividends on the reference shares, and the fair
market value of any additional interest payments) does not exceed a % annual
yield, if such date of computation is on or before November , 2002, or the
weighted average of a % annual yield through November , 2002, and of a %
annual yield thereafter, if such date of computation is after November , 2002.
In no event will the contingent principal amount be less than zero. Changes in
the contingent principal amount will not affect the amount to be paid to holders
of the PRIZES in respect of the quarterly payments of basic interest, amounts
relating to regular cash dividends on the reference shares, or additional
interest.
WHEN CAN WE DEFER PAYMENTS OF BASIC INTEREST?
We can defer quarterly basic interest payments on the PRIZES as many times
as we want, but only for up to 20 consecutive quarterly periods. We cannot defer
additional interest payments, or quarterly payments equal to regular cash
dividends paid on the maximum number of reference shares, at any time and we
cannot defer quarterly basic interest payments if an event of default (as
defined on page 14 in the accompanying prospectus) under the PRIZES has occurred
and is continuing. A deferral of basic interest payments cannot extend beyond
the maturity date of the PRIZES.
If we defer quarterly payments of basic interest, the contingent principal
amount of the PRIZES will increase during each quarter by the amount of the
deferred quarterly payments of basic interest, plus accrued interest thereon at
an annual rate equal to the basic interest rate then in effect, even if such
rate is lower than the rate in effect when the deferred amounts originally
accrued, compounded quarterly, and the early exchange ratio (as we define below)
will be 100% of the maximum number of reference shares for the quarter following
each deferral of a payment of quarterly basic interest. Once we have paid all
deferred quarterly basic interest, plus accrued interest thereon, together with
the quarterly basic interest payment for the current quarterly interest payment
period, the contingent principal amount will be reduced by the amount of that
payment of deferred quarterly basic interest plus accrued interest thereon, the
early exchange ratio will decrease to 95% of the minimum number of reference
shares, and we can again defer quarterly basic interest payments as described
above.
We have no current intention of deferring basic interest payments on the
PRIZES.
WHEN WILL THE PRIZES MATURE?
The PRIZES will mature on November , 2029, unless they have been
previously redeemed or exchanged.
If all of the reference shares cease to be outstanding as a result of a
tender offer, an exchange offer, a business combination or otherwise, the
maturity of the PRIZES will not be accelerated and the PRIZES will continue to
remain outstanding, you will continue to receive quarterly payments of basic
interest until the maturity date unless earlier redeemed by us, and you will
receive the contingent principal amount, if any, on redemption or at maturity.
WHAT WILL YOU RECEIVE AT MATURITY?
At maturity you will be entitled to receive the higher of (a) the
contingent principal amount of the PRIZES, or (b) the sum of the then current
market value of the maximum number of reference shares on the maturity date plus
any deferred quarterly payments of basic interest (including any current accrued
interest thereon), plus, in either case, the final period distribution. In
addition, if the distribution date for any distribution of additional interest
falls after the maturity date, we will make the distribution on the distribution
date.
DO WE HAVE THE RIGHT TO REDEEM THE PRIZES PRIOR TO THEIR MATURITY?
Yes. We may redeem at any time all but not some of the PRIZES at a
redemption price equal to the sum of (a) the higher of the contingent principal
amount of the PRIZES or the sum of the then current market value of the maximum
number of reference shares at the time of redemption plus any deferred quarterly
payments of basic interest (including any current accrued interest thereon),
plus, in either case, the final period distribution, and (b) an amount equal to
$ per PRIZES if we redeem prior to February , 2000, that amount
minus $ if we redeem prior to May , 2000 and that amount as further
successively reduced by $
if we redeem prior to each following quarterly
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<PAGE> 9
interest payment date through November , 2002. In addition, if the
distribution date for any distribution of additional interest falls after the
redemption date, we will make the distribution on the distribution date.
DO THE PRIZES HAVE ANTI-DILUTION PROTECTION FOR CHANGES IN THE REFERENCE SHARES?
Yes. If specific dilutive or anti-dilutive events occur with respect to the
reference shares, the number and type of the reference shares that will be used
to calculate the amount you will receive upon exchange, redemption or maturity
of the PRIZES, and the minimum and maximum numbers of such shares, including
such numbers as redetermined, will be adjusted to reflect those events. In
addition, the dollar amounts relating to the redetermination of maximum and
minimum numbers of reference shares (i.e., initially $
and $ ) will be reduced by the amount of all distributions on the reference
shares attributable to each PRIZES other than payments of basic interest. These
adjustments are described in this prospectus supplement under "Description of
PRIZES -- Dilution adjustments."
WHEN CAN YOU EXCHANGE THE PRIZES FOR CASH?
At any time or from time to time, you may exchange your PRIZES for an
amount of cash per PRIZES equal to a percentage (which we refer to as the early
exchange ratio) of the exchange market value of the reference shares
attributable to each PRIZES. The early exchange ratio will be equal to (a) 95%
of the exchange market value of the minimum number of reference shares, or (b)
during a deferral of the quarterly interest payments on the PRIZES or, if we so
elect, during the pendency of any tender or exchange offer for any of the
reference shares, 100% of the exchange market value of the maximum number of
reference shares.
WILL THE PRIZES BE LISTED ON A STOCK EXCHANGE?
We have agreed to use commercially reasonable efforts to have the PRIZES
listed on a national securities exchange, such as the New York Stock Exchange or
the American Stock Exchange, or included on a national quotation system, such as
Nasdaq.
We will make a public announcement prior to the date of any listing or the
date we learn that we will be unable to list the PRIZES. We cannot give you any
assurance that the PRIZES ultimately will be listed on the NYSE, Amex or Nasdaq.
Moreover, any listing of the PRIZES will not ensure that a liquid trading market
will develop for the PRIZES.
IN WHAT FORM WILL THE PRIZES BE ISSUED?
The PRIZES will be represented by one or more global securities that will
be deposited with and registered in the name of The Depository Trust Company,
New York, New York or its nominee. This means that you will not receive a
certificate for your PRIZES. We expect that the PRIZES will be ready for
delivery through DTC on or about November , 1999.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES TO YOU?
The PRIZES will be characterized as indebtedness of ours for United States
federal income tax purposes. Accordingly, you will be required to include, in
your income, interest with respect to the PRIZES.
Each PRIZES will constitute a contingent payment debt instrument. As a
result, you will be required to include amounts in income, as ordinary income,
in advance of the receipt of the cash attributable thereto. The amount of
interest income required to be included by you for each year will be in excess
of the quarterly interest payments you receive. Any gain recognized by you on
the sale or exchange of a PRIZES will be ordinary interest income; any loss will
be ordinary loss to the extent of the interest previously included in income,
and thereafter, capital loss. A summary of the United States federal income tax
consequences of ownership of the PRIZES is described in this prospectus
supplement under "Certain United States Federal Income Tax Considerations."
S-7
<PAGE> 10
RISK FACTORS
You should consider carefully, in addition to the other information
contained in this prospectus supplement and the accompanying prospectus, the
following factors before purchasing the PRIZES offered hereby.
RETURN ON THE PRIZES DEPENDS ON THE SPRINT PCS STOCK
The terms of the PRIZES differ from those of ordinary debt securities
because:
- the interest payments on the PRIZES may change depending upon the
dividend policy of Sprint or any other reference company;
- the PRIZES are exchangeable for cash in an amount based on the then
market value of the reference shares; and
- the contingent principal amount of the PRIZES will be adjusted to reflect
the accrual and payment of basic interest, payments on the PRIZES in
respect of regular cash dividends on the reference shares and
distributions of additional interest on the PRIZES in respect of
distributions of cash property on the reference shares, and otherwise in
the manner described in this prospectus supplement. Changes in the
contingent principal amount will not affect the amount of the quarterly
payments of basic interest, of amounts relating to regular cash dividends
on the reference shares, or of additional interest.
Accordingly, the return that a holder of the PRIZES will receive is not
comparable to that of an ordinary fixed income debt security issued by us.
The dividend policy of Sprint is entirely outside of our control. As of the
date of this prospectus supplement, Sprint has never paid a cash dividend on its
Sprint PCS stock. You should not expect that Sprint will commence paying
dividends in the future or, if commenced, that the dividend rate on the Sprint
PCS stock will remain the same during the period the PRIZES are outstanding.
It is impossible to predict whether the price of the Sprint PCS stock will
rise or fall. Trading prices of the Sprint PCS stock will be influenced by
Sprint's operating results and by complex and interrelated political, economic,
financial and other factors that can affect the capital markets generally, the
NYSE and the market segments of which Sprint is a part. In addition, the stock
market in general, and the stocks of telecommunications and technology companies
like Sprint in particular, have experienced significant volatility. These broad
market and industry fluctuations may adversely affect the trading price of the
Sprint PCS stock.
We currently beneficially own approximately 73.5 million shares of Sprint's
PCS Common Stock -- Series 2, $1.00 par value per share. The Series 2 Sprint PCS
stock converts automatically into Sprint PCS stock in a number of situations,
including generally upon a sale by us of the Series 2 Sprint PCS stock. Our
sales of the Series 2 Sprint PCS stock are subject to a Top Up Right Agreement
dated May 26, 1998 among France Telecom S.A., Deutsche Telekom AG,
Tele-Communications, Inc., Comcast Corporation and us. Under this agreement and
subject to a number of exceptions, we generally must offer France Telecom and
Deutsche Telekom the right to purchase a portion, approximating 18%, of any
Series 2 Sprint PCS stock that we sell. Our obligations under the Top Up Right
Agreement do not affect our obligations under the PRIZES.
We may, but are not required to, hold a number of shares of the Series 2
Sprint PCS stock equal to the number of the PRIZES outstanding until exchange,
maturity or redemption of the PRIZES and sell those shares to raise the proceeds
to pay the amount due upon exchange, maturity or redemption of the PRIZES.
Although we cannot assure you that these sales of the Series 2 Sprint PCS stock
will not adversely affect the market for the Sprint PCS stock or the amount due
upon exchange, maturity or redemption of the PRIZES, we have no reason to
believe that any of these sales will have this effect.
You should read Sprint's publicly available documents for a discussion of
the risks and uncertainties associated with Sprint, its PCS Group and the Sprint
PCS stock. In particular, you should note that under its Articles of
Incorporation, Sprint may be able to take action that would benefit its FON
Group and disadvantage its
S-8
<PAGE> 11
PCS Group. The number of shares of Sprint PCS stock attributable to the PRIZES
will not adjust for these actions.
FLUCTUATIONS IN THE MARKET VALUE OF THE PRIZES AND THE SPRINT PCS STOCK MAY
AFFECT OUR REPORTED EARNINGS
Applicable accounting rules require us to record any increase or decrease
in the market value of the PRIZES that results from changes in the market value
of Sprint PCS stock in our statement of operations. Any increase or decrease in
the market value of the PRIZES will be recorded as subtractions from, or
additions to, our reported net income. A significant increase in the market
value of Sprint PCS stock would significantly decrease our reported net income.
Similarly, a significant decrease in the market value of Sprint PCS stock would
significantly increase our reported net income, subject to the condition that
the PRIZES will not be reduced below the then current contingent principal
amount. These increases and decreases in reported investment income in our
statement of operations will be non-cash in nature and will be reflected on our
balance sheet as increases and decreases in long-term debt or other long-term
liabilities.
We currently record our investment in the Sprint PCS stock at its fair
value, with changes in fair value recorded in other comprehensive income.
Although we are not required to do so under the indenture, while the PRIZES
remain outstanding we may hold shares of Sprint PCS stock at least equal to the
number of PRIZES outstanding. If we do so, changes in the market value of these
shares of Sprint PCS stock would approximately offset any changes in long-term
debt or other long-term liabilities, resulting in no material effect on our
reported shareholders' equity.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), Accounting for Derivative Instruments
and Hedging Activities, which is required to be adopted in all fiscal quarters
of all fiscal years beginning after June 15, 2000 (January 1, 2001 for us). SFAS
133 will require us to split the value of the PRIZES into a debt component and a
derivative component. Any changes in the fair value of the derivative component
will be reflected as an increase or decrease in our reported net income. At the
date of initial adoption, SFAS 133 provides us a one-time ability to transfer
any of our available-for-sale securities, including shares of Sprint PCS stock,
to the trading category. Although we are not required to hold a number of Sprint
PCS shares equal to the number of PRIZES outstanding, if we do so and if we
elect to make this transfer from available-for-sale to trading, changes in the
fair value of the shares of Sprint PCS stock so transferred will be reflected as
an increase or decrease in our reported net income. Changes in the market value
of the Sprint PCS stock should at least partially offset changes in the fair
value of the derivative component of the PRIZES; however, there may be periods
with significant non-cash increases or decreases to our net income pertaining to
the PRIZES and the related shares of Sprint PCS stock.
SPRINT HAS NO OBLIGATIONS WITH RESPECT TO THE PRIZES
We are not affiliated with Sprint, other than as a holder of the Series 2
Sprint PCS stock and as a holder of preferred stock and warrants convertible
into shares of Series 2 PCS stock. As of the date of this prospectus supplement,
we do not have any material non-public information concerning Sprint. Although
we have no reason to believe the information concerning Sprint included or
referred to in this prospectus supplement is not reliable, neither we nor any of
the underwriters warrant that events have not occurred, which are not yet
publicly disclosed by Sprint, that would affect either the accuracy or
completeness of the information concerning Sprint included or referred to in
this prospectus supplement. Sprint is not involved in the offering of the PRIZES
and has no obligations with respect to the PRIZES, including any obligation to
take our interests (other than as a holder of the Sprint PCS stock) or your
interests into consideration for any reason or under any circumstance.
Pursuant to a merger agreement between MCI WorldCom, Inc. and Sprint,
Sprint would be merged with and into MCI WorldCom. Under this planned merger,
holders of Sprint PCS stock would receive one new share of WorldCom PCS tracking
stock and 0.1547 shares of MCI WorldCom stock for each share of Sprint PCS
stock. Under the anti-dilution provisions of the PRIZES, the amount of cash you
will receive
S-9
<PAGE> 12
upon exchange, maturity or redemption of a PRIZES will reflect this exchange of
Sprint PCS stock for WorldCom PCS stock and MCI WorldCom stock. This merger is
subject to many conditions, including regulatory approvals, and may never occur.
Even if it does occur, the ratio by which holders of Sprint PCS stock receive
new stock may be different from the ratio currently contemplated in the
agreement.
Sprint will not receive any of the proceeds of the offering of the PRIZES
and is not responsible for, and has not participated in, determining the timing
of, prices for or quantities of the PRIZES offered hereby. Sprint is not
involved with the administration, marketing or trading of the PRIZES nor in the
preparation of this prospectus supplement and has no obligations with respect to
the amount to be paid to holders of the PRIZES upon exchange, maturity or
redemption. Holders of the PRIZES will not be entitled to any rights with
respect to the Sprint PCS stock other than indirectly pursuant to the express
terms of the PRIZES.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET FOR THE PRIZES
We cannot predict how the PRIZES will trade in the secondary market or
whether such market will be liquid.
We have agreed to use commercially reasonable efforts to have the PRIZES
listed on a national securities exchange, such as the NYSE or Amex, or included
on a national quotation system, such as Nasdaq.
We will make a public announcement prior to the date of any listing or the
date we learn that we will be unable to list the PRIZES. We cannot give you any
assurance that the PRIZES ultimately will be listed on the NYSE, Amex or Nasdaq.
Moreover, any listing of the PRIZES will not ensure that a liquid trading market
will develop for the PRIZES.
THE MAXIMUM AND MINIMUM NUMBER OF REFERENCE SHARES ATTRIBUTABLE TO EACH PRIZES
WILL BE REDETERMINED, AND THE BASIC INTEREST RATE WILL BE REDUCED, ON NOVEMBER
, 2002
On November , 2002, the maximum and minimum number of reference shares
attributable to the PRIZES will be redetermined to be identical until maturity,
and such number may be as few as shares for each PRIZES, based on the
then average price of the reference shares. If that number is below one share,
the amount that you would receive thereafter on each quarterly interest payment
date if dividends on the reference shares were paid would be correspondingly
reduced. In addition, the amount that you would receive would be correspondingly
reduced as to any distributions of cash or property made by the reference issuer
on the reference shares which give rise to distributions of additional interest
on the PRIZES.
The basic interest rate on the PRIZES, which is initially % per year,
will be reduced on November , 2002 to be % per year. Since the basic
interest rate accrues on the original principal amount, the redetermination of
the maximum and minimum numbers of reference shares will not affect the
computation and payment of basic interest at that reduced rate.
BASIC INTEREST MAY BE DEFERRED
We can defer quarterly basic interest payments on the PRIZES as many times
as we want, but only for up to 20 consecutive quarterly periods. We cannot defer
payments in respect of regular cash dividends or additional interest
distributions at any time, and we cannot defer quarterly basic interest payments
if an event of default under the PRIZES has occurred and is continuing. A
deferral of basic interest payments cannot extend beyond the maturity date of
the PRIZES.
If we defer quarterly payments of basic interest, the contingent principal
amount of the PRIZES will be increased by the amount of the deferred quarterly
payments of basic interest, plus accrued interest thereon at an annual rate
equal to the basic interest rate then in effect, compounded quarterly at that
rate, and the early exchange ratio (as defined on page S-7) will be 100% of the
maximum number of reference shares for the quarter following each deferral of a
payment of quarterly basic interest. The basic interest rate will be reduced on
November , 2002, so any deferred amounts from periods prior to that date will
bear interest after that date at a rate which is significantly lower than the
rate in effect when such amounts originally accrued. Once we have paid all
deferred quarterly basic interest, plus accrued interest thereon, together with
the quar-
S-10
<PAGE> 13
terly basic interest payment for the current quarterly interest payment period,
the contingent principal amount will be reduced by the amount of that payment of
deferred quarterly basic interest plus accrued interest thereon, the early
exchange ratio will decrease to 95% of the minimum number of reference shares,
and we can again defer quarterly basic interest payments as described above.
THE NUMBER OF REFERENCE SHARES ATTRIBUTABLE TO EACH PRIZES WILL NOT ADJUST FOR
SOME DILUTIVE TRANSACTIONS INVOLVING THE REFERENCE SHARES
If specific dilutive or anti-dilutive events occur with respect to the
reference shares, the number and type of reference shares that will be used to
calculate the amount you will receive upon exchange, maturity or redemption of a
PRIZES, and the minimum and maximum numbers of reference shares, including such
numbers as redetermined, will be adjusted to reflect such events. These
adjustments will not take into account various other events, such as offerings
of the reference shares for cash or business acquisitions by a reference company
with the reference shares, that may adversely affect the price of the reference
shares and may adversely affect the trading price of and market value of the
PRIZES. We cannot assure you that a reference company will not make offerings of
the reference shares or other equity securities or enter into such business
acquisitions in the future. In addition to these adjustments, on November ,
2002 the dollar amounts relating to the redetermination of maximum and minimum
numbers of reference shares (i.e., initially $ and $ ) will be
reduced by the amount of all distributions attributable to each PRIZES other
than payments of basic interest. See "Description of PRIZES -- Dilution
adjustments" in this prospectus supplement.
THE PRIZES ARE UNSECURED, SUBORDINATED OBLIGATIONS THAT ARE SUBJECT TO EXISTING
AND FUTURE ADDITIONAL INDEBTEDNESS
Neither the PRIZES nor the indenture under which the PRIZES will be issued
will limit our or our subsidiaries' ability to incur additional indebtedness, or
to grant liens on assets to secure indebtedness, to pay dividends or to
repurchase shares of capital stock. The indenture does not contain any
provisions specifically intended to protect holders of the PRIZES in the event
of a sudden and significant decline in our credit quality or a highly leveraged
transaction involving us, including a change of control, or other similar
transaction that may adversely affect holders of the PRIZES.
THE PRIZES ARE SUBORDINATED OBLIGATIONS OF COX AND ARE NOT SECURED BY ANY OF OUR
ASSETS, INCLUDING THE SHARES OF THE SPRINT PCS STOCK THAT WE CURRENTLY OWN
Our obligations under the PRIZES are subordinated. The subordination
provisions in the indenture provide that we may not make payment on the PRIZES
during the continuance beyond any applicable grace period of any default in
payment in respect of our indebtedness ranking senior to the PRIZES, unless such
default is waived or cured. At September 30, 1999, we had approximately $5.3
billion of indebtedness ranking senior to the PRIZES, including indebtedness of
our subsidiaries which ranks effectively senior to the PRIZES.
POTENTIAL ADVERSE TAX CONSEQUENCES OF PURCHASING THE PRIZES
If you are considering purchasing the PRIZES, you should reach an
investment decision only after consulting with your advisors as to the
suitability of an investment in the PRIZES in light of your particular
circumstances. You should also consider the tax consequences of investing in the
PRIZES. The amount of interest income required to be included by you for each
year will be in excess of the quarterly interest payments you actually receive.
As a result, you will be required to include amounts in income as ordinary
income, in advance of the receipt of the related cash. Any gain recognized by
you on the sale or exchange of the PRIZES will be ordinary interest income; any
loss will be ordinary loss to the extent of the interest previously included in
income, and thereafter, capital loss. See "Certain United States Federal Income
Tax Considerations."
S-11
<PAGE> 14
PRICE RANGE AND DIVIDEND HISTORY OF THE SPRINT PCS STOCK
The Sprint PCS stock is listed and traded on the NYSE under the symbol
"PCS."
The following table sets forth, for the calendar quarters indicated (ended
March 31, June 30, September 30 and December 31), the range of high and low
sales prices of the Sprint PCS stock as reported on the NYSE Composite Tape
since its listing on November 23, 1998. To date, Sprint has never paid a cash
dividend on its Sprint PCS stock.
<TABLE>
<CAPTION>
SPRINT PCS
STOCK
-------------------
HIGH LOW
---- ----
<S> <C> <C>
1998:
Fourth quarter (beginning November 23)............. $23 3/8 $14 1/16
1999:
First quarter...................................... 48 5/16 20 7/8
Second quarter..................................... 60 3/4 41 1/2
Third quarter...................................... 78 3/16 52 15/16
Fourth quarter (through November 15)............... 87 66 7/8
</TABLE>
The last reported sales price of the Sprint PCS stock on the NYSE on
November 15, 1999 was $86.3125.
USE OF PROCEEDS
We estimate that the net proceeds from the offering, after deducting the
underwriting commission and other expenses, will be $ ($ if
the underwriters exercise their over-allotment option in full). We will use the
net proceeds from this offering to partially finance pending acquisitions, for
capital expenditures, to retire commercial paper indebtedness and for other
general corporate purposes. The weighted average interest rate on our commercial
paper borrowings as of September 30, 1999 was approximately 5.6%. For a
description of pending acquisitions, see "Prospectus Supplement Summary --
Recent Developments."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
- --------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
- ---- ---- ---- ---- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C>
3.0x 2.8x 1.5x 2.0x 12.3x 12.0x 9.3x
</TABLE>
Earnings for the years ended December 31, 1995, 1996, 1997 and 1998 and for
the nine months ended September 30, 1998 and 1999 include $188.8 million, $4.6
million, $116.6 million, $2.5 billion, $1.8 billion and $1.4 billion,
respectively, of net investment gains. There were no net investment gains in
1994.
For purposes of this computation, earnings are defined as income before
income taxes and, excluding losses and undistributed earnings on equity method
investments, minority interests and fixed charges excluding capitalized
interest. Fixed charges are the sum of: interest cost including capitalized
interest; estimated interest component of rent expense; and dividends on
subsidiary preferred stock.
S-12
<PAGE> 15
DESCRIPTION OF PRIZES
GENERAL
The following description of the PRIZES supplements and, to the extent
inconsistent with, supersedes the general terms of the debt securities in the
accompanying prospectus. The terms of the PRIZES include those stated in the
indenture, dated as of June 27, 1995, executed by Cox and The Bank of New York,
as trustee, under which the PRIZES will be issued and those terms made part of
that indenture by reference to the Trust Indenture Act of 1939, as amended. The
PRIZES are subject to those terms, and you should read the indenture and the
Trust Indenture Act for a statement of them. Although we have summarized
selected provisions of the indenture below, this summary is not complete and is
qualified in its entirety by reference to the indenture. A copy of the indenture
has been filed as an exhibit to the registration statement we have filed with
the SEC that provides for the offering of the debt securities.
The indenture does not limit the aggregate principal amount of indebtedness
which may be issued under it. The indenture also provides that debt securities
may be issued from time to time in one or more series. The PRIZES constitute a
separate series of debt securities under the indenture.
The PRIZES will be our unsecured, subordinated obligations limited to
PRIZES ( PRIZES if the underwriters exercise their over-allotment
option in full) and will mature on November , 2029.
REFERENCE SHARES
As of the date of this prospectus supplement, the maximum number of shares
attributable to each PRIZES is one share, and the minimum number is
shares. On , 2002 both of those numbers will be redetermined based
on the average of the closing prices of the Sprint PCS stock on the NYSE on the
20 trading days preceding the fifth business day preceding November , 2002.
The maximum and minimum numbers of reference shares attributable to each PRIZES
on and after November , 2002, will be (a) one share, if that average price is
less than or equal to $ , (b) shares, if that average price is
greater than or equal to $ , or (c) that number of shares equal to
$ divided by that average price, if that average price is between $
and $ . Following this redetermination, the minimum and maximum numbers of
reference shares will be identical through maturity. The maximum and minimum
numbers of reference shares, including those numbers as redetermined, and the
related dollar amounts of $ and $ are subject to dilution
adjustments as described in this prospectus supplement. The redetermination of
the minimum and maximum numbers of reference shares will be made based on such
numbers in effect immediately prior to the redetermination. When we refer in
this prospectus supplement to the maximum or minimum number of reference shares
at a particular time, we mean those numbers in effect at that time.
INTEREST
We will make quarterly basic interest payments in an amount equal to the
sum of $ per PRIZES, reflecting a basic interest rate of % per year on
the original principal amount, through November , 2002, and thereafter in an
amount equal to $ per PRIZES, reflecting a basic interest rate of % per
year on the original principal amount, in each case plus the amount of any
regular cash dividends paid on the maximum number of reference shares
attributable to each PRIZES.
Interest on the PRIZES will accrue from the date we issue the PRIZES. We
will pay this interest quarterly in arrears on February , May , August and
November of each year, beginning February , 2000, but subject to our right
to defer quarterly payments of basic interest. Our payment on February , 2000,
will equal $ per PRIZES, which is calculated to equal an annual rate of
% on the original principal amount from the date we issue the PRIZES. Holders
of the PRIZES are not expected to receive interest attributable to any cash
dividend on the reference shares for this payment period because Sprint has
never paid a cash dividend on its Sprint PCS stock. When we refer in this
prospectus supplement to the basic interest on the PRIZES at a particular time,
we mean the basic interest as computed at the basic rate in effect at that time.
S-13
<PAGE> 16
We will also distribute to you, based on the maximum number of reference
shares, as additional interest on the PRIZES, any property, including cash
(other than any regular cash dividends), distributed on or with respect to the
reference shares (other than publicly traded equity securities, which will
themselves become reference shares). If the additional interest on the reference
shares includes publicly traded securities (other than equity securities), we
will distribute those securities to you. We will not, however, distribute
fractional units of securities to you. We will pay you cash instead of
distributing the fractional units. Otherwise, we will distribute to you the fair
market value of any property comprising additional interest as determined in
good faith by our board of directors. We will distribute any additional interest
to holders of the PRIZES on the 20th business day after it is distributed to us.
The record date for any distribution of additional interest will be the 10th
business day after the date any cash or property is distributed to us.
The contingent principal amount for each PRIZES will be increased during
each quarter, based on the contingent principal amount at the beginning of the
quarter, by an amount equal to interest accrued on that beginning contingent
principal amount at the basic interest rate on the PRIZES then in effect, and
will be reduced on the dates the following amounts are paid to holders of the
PRIZES by:
(a) the quarterly basic interest payment made on the PRIZES,
(b) any amounts paid on the PRIZES in respect of regular cash dividends
paid on the reference shares during the quarter, and
(c) any amounts paid on the PRIZES in respect of the amount of the fair
market value of any additional interest payments made during the quarter.
As a result, the quarterly computations of the contingent principal amount will
be made such that the yield to each date of computation (including all quarterly
basic interest, all amounts paid in respect of regular cash dividends on the
reference shares, and the fair market value of any additional interest payments)
does not exceed a % annual yield, if such date of computation is on or
before November , 2002, or the weighted average of a % annual yield
through November , 2002, and of a % annual yield thereafter, if such
date of computation is after November , 2002. In no event will the
contingent principal amount be less than zero. Changes in the contingent
principal amount will not affect the amount to be paid to holders of PRIZES in
respect of the quarterly interest payments of basic interest, amounts relating
to regular cash dividends on the reference shares, or additional interest.
If basic interest or additional interest is payable on a date that is not a
business day (as defined at the end of this paragraph), payment will be made on
the next business day (and without any interest or other payment in respect of
this delay). A "business day" means any day that is not a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies in The
City of New York are authorized or obligated by law to close.
Principal, premium, if any, and interest or distributions on the PRIZES
will be payable at the office or agency we maintain for such purpose within the
City and State of New York or, at our option, payment of interest may be made by
check mailed to the holders of the PRIZES at their respective addresses set
forth in the register of holders of the PRIZES. Until we otherwise designate,
our office or agency in New York will be the office of the trustee maintained
for that purpose. The PRIZES will be issued in denominations of one PRIZES and
integral multiples thereof.
DEFERRAL OF INTEREST PAYMENTS
If no event of default has occurred and is continuing under the PRIZES, we
can, on one or more occasions, defer quarterly basic interest payments on the
PRIZES for up to 20 consecutive quarterly periods. If we terminate a deferral
period and subsequently elect to defer quarterly basic interest payments, we
will again be subject to the 20 consecutive quarterly period limitation.
Any deferral of basic interest payments cannot extend, however, beyond the
maturity date of the PRIZES. We can never defer distributions of additional
interest or quarterly payments equal to regular cash dividends paid on the
maximum number of reference shares.
S-14
<PAGE> 17
If we defer quarterly payments of basic interest, the contingent principal
amount of the PRIZES will increase during each quarter by the amount of the
deferred quarterly payments of basic interest, plus accrued interest thereon at
an annual rate equal to the basic rate of interest then in effect, even if such
rate is lower than the rate in effect when the deferred amounts originally
accrued, compounded quarterly, and the early exchange ratio will be 100% of the
maximum number of reference shares for the quarter following each deferral of a
payment of quarterly interest. Once we have paid all deferred quarterly basic
interest, plus accrued interest thereon, together with the quarterly basic
interest payment for the current quarterly interest payment period, the
contingent principal amount will be reduced by the amount of that payment of
deferred quarterly basic interest plus accrued interest thereon, the early
exchange ratio will decrease to 95% of the minimum number of reference shares,
and we can again defer quarterly basic interest payments as described above.
If we elect to defer basic interest on the PRIZES in any particular
quarter, we will give the trustee notice. We will also prepare a press release
and provide it to DTC for dissemination through the DTC broadcast facility. We
will give this notice one business day before the earlier of:
- the record date for the next date that interest on the PRIZES is payable;
or
- the date we are required to give notice to the NYSE (or any other
applicable self-regulatory organization) or to holders of the PRIZES as
of the record date or the date any quarterly interest payment is payable.
We refer to the last date on which we can give notice that we intend to
defer the payment of basic interest in respect of a quarterly payment of
interest as a deferral notice date.
We have no current intention of deferring basic interest payment on the
PRIZES.
PRINCIPAL AMOUNT
The original principal amount per PRIZES is equal to its initial purchase
price, or $ . The minimum amount payable upon redemption or maturity of a
PRIZES (which we refer to as the contingent principal amount) will initially be
equal to the original principal amount. The contingent principal amount for each
PRIZES will be increased during each quarter, based on the contingent principal
amount at the beginning of the quarter, by an amount equal to interest accrued
on that beginning contingent principal amount at the basic interest rate on the
PRIZES then in effect, and will be reduced on the dates the following amounts
are paid to holders of the PRIZES by: (a) the quarterly basic interest payment
made on the PRIZES, (b) any amounts paid on the PRIZES in respect of regular
cash dividends paid on the reference shares during the quarter, and (c) any
amounts paid on the PRIZES in respect of the amount of the fair market value of
any additional interest payments made during the quarter. In no event will the
contingent principal amount be less than zero.
If all of the reference shares cease to be outstanding as a result of a
tender offer, an exchange offer, a business combination or otherwise, the
maturity of the PRIZES will not be accelerated, the PRIZES will continue to
remain outstanding until the maturity date unless earlier redeemed by us, and
you will receive the contingent principal amount, if any, on the redemption date
or the maturity date.
At maturity you will be entitled to receive the higher of (a) the
contingent principal amount of the PRIZES or (b) the sum of the current market
value (as defined on page S-17) of the maximum number of reference shares plus
any deferred quarterly payments of basic interest (including any accrued
interest thereon), plus, in each case, the final period distribution. In
addition, if the distribution date for any distribution of additional interest
falls after the maturity date, we will make the distribution on the distribution
date.
A "final period distribution" means, in respect of (a) the maturity date, a
distribution determined in accordance with clauses (2), (3) and (4) below, and
(b) the redemption date, a distribution determined in accordance with clauses
(1), (2), (3) and (4) below. If the redemption date is in connection with a
rollover offering, the distribution determined in accordance with clause (4)
shall be all dividends and distributions on or in respect of the reference
shares which a holder of the maximum number of reference shares on
S-15
<PAGE> 18
the pricing date (defined below) would be entitled to receive.
(1) Unless (a) the redemption date of the PRIZES is also a quarterly
interest payment date or (b) quarterly interest has been deferred for
the then current quarterly dividend period, an amount equal to the
basic annual interest rate on the PRIZES accrued on the original
principal amount of the PRIZES from the most recent interest payment
date to the date of redemption, plus
(2) a distribution equal to the sum for the maximum number of reference
shares of all dividends and distributions on or in respect of the
reference shares declared by the applicable reference company and for
which the ex-date for the dividend or distribution falls during the
period from the date we issue the PRIZES to the most recent interest
payment date and which have not been distributed to holders of
reference shares prior to the most recent interest payment date, plus
(3) a distribution equal to the sum for the maximum number of reference
shares of all dividends and distributions on or in respect of the
reference shares which a holder of reference shares on the latest
ex-date for a dividend or distribution occurring during the period from
the most recent quarterly interest payment date to the date immediately
preceding the first trading day of the averaging period (as defined
below) is entitled to receive, plus
(4) a distribution equal to the sum of, for each successive day in the
averaging period that is anticipated on the first day of the averaging
period to be a trading day, the amounts determined in accordance with
the following formula:
E X (1 - 0.05n)
where:
E = all dividends and distributions on or in respect of the reference
shares which a holder of the maximum number of reference shares on the
applicable day would be entitled to receive, provided that the ex-date
for the dividend or distribution date that occurs on a day that is not
a scheduled trading day shall be deemed to have occurred on the
immediately preceding scheduled trading day; and
n = the number of scheduled trading days that have elapsed in the averaging
period with the first trading day of the averaging period being counted
as zero.
A holder of the PRIZES is only entitled to receive distributions determined
in accordance with clauses (2), (3) or (4) to the extent actually
distributed by the applicable reference company. Cash amounts paid by the
applicable reference company on reference shares as described in clauses
(2), (3) or (4) before the redemption date or the maturity date, as the
case may be, will be paid on the redemption date or the maturity date, as
the case may be. All other property distributed, or the cash value of the
property, will be distributed within 20 business days after it is
distributed to us.
EXCHANGE OPTION
You may at any time or from time to time exchange a PRIZES for an amount of
cash equal to a percentage of the exchange market value of the reference shares
attributable to each PRIZES (which we refer to as the early exchange ratio). The
early exchange ratio will be equal to (a) 95% of the exchange market value of
the minimum number of reference shares or (b) during a deferral of the quarterly
interest payments on the PRIZES or, if we so elect, during the pendency of any
tender or exchange offer for any of the reference shares, 100% of the exchange
market value of the maximum number of reference shares.
We will pay you the amount due upon exchange as soon as reasonably
practicable after you deliver an exchange notice to the trustee, but in no event
earlier than three trading days after the date of your notice or later than ten
trading days after the date of your notice.
The "exchange market value" means the closing price (as defined below) on
the trading day (as defined below) following the date you deliver an exchange
notice to the trustee, unless
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more than PRIZES have been delivered for exchange on that date. If more
than PRIZES have been delivered for exchange, then the exchange market
value shall be the average closing price on the five trading days following that
date.
If more than PRIZES are delivered for exchange on any one day, we will
give the trustee notice. We will also issue a press release prior to 9:00 a.m.
New York City time on the next trading day, and provide it to DTC for
dissemination through the DTC broadcast facility. Our failure to provide this
notice, however, will not affect the determination of exchange market value as
described above.
So long as the PRIZES are held through DTC, you may exercise your exchange
right through the relevant direct participant in the DTC ATOP system. If the
PRIZES are held in certificated form, you may exercise your exchange right as
follows:
- complete and manually sign an exchange notice in the form available from
the trustee and deliver this notice to the trustee at the office
maintained by the trustee for this purpose;
- surrender the PRIZES to the trustee;
- if required, furnish appropriate endorsement and transfer documents; and
- if required, pay all transfer or similar taxes.
Pursuant to the indenture, the date on which all of the foregoing
requirements have been satisfied is the redemption date with respect to the
PRIZES delivered for exchange.
We currently beneficially own approximately 73.5 million shares of Sprint's
PCS common stock -- Series 2. We may, but are not required to, hold a number of
shares of the Series 2 Sprint PCS stock equal to the number of the PRIZES
outstanding until maturity or redemption of the PRIZES and sell those shares to
raise the proceeds to pay the amount due upon exchange, maturity or redemption
of the PRIZES. Although we cannot assure you that these sales of the Series 2
Sprint PCS stock will not adversely affect the market for Sprint PCS stock or
the amount due upon exchange, maturity or redemption, we have no reason to
believe that any of these sales will have this effect.
REDEMPTION
We may redeem at any time all but not some of the PRIZES at a redemption
price equal to the sum of (a) the higher of the contingent principal amount of
the PRIZES or the sum of the current market value of the maximum number of
reference shares plus any deferred quarterly payment of interest (including any
accrued interest thereon), plus, in either case, the final period distribution,
and (b) an amount equal to $ per PRIZES if we redeem prior to the
first quarterly interest payment date on February , 2000, that amount
minus $ if we redeem prior to the second quarterly interest payment date
on May , 2000 and that amount as further successively reduced by $ if we
redeem prior to each following quarterly interest payment date through the
twelfth quarterly interest payment date on November , 2002. In addition, if
the distribution date for any distribution of additional interest falls after
the redemption date, we will make the distribution on the distribution date.
The "current market value" (other than in the case of a rollover offering,
which is described below) is defined as the average closing price per reference
share on the 20 trading days (which we refer to as the averaging period)
immediately prior to (but not including) the fifth business day preceding the
maturity date or the redemption date, as the case may be; provided, however,
that for purposes of determining the payment required upon redemption in
connection with a rollover offering, "current market value" means the closing
price per reference share on the trading day immediately preceding the date that
the rollover offering is priced (which we refer to as the pricing date) or, if
the rollover offering is priced after 4:00 p.m., New York City time on the
pricing date, the closing price per share on the pricing date, except that if
there is not a trading day immediately preceding the pricing date or (where
pricing occurs after 4:00, New York City time, on the pricing date) if the
pricing date is not a trading day, "current market value" means the market value
per reference share as of the redemption date as determined by a nationally
recognized independent investment banking firm retained by us.
A "rollover offering" means a refinancing of the PRIZES by way of either
(a) a sale of the reference shares or (b) a sale of securities that are
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priced by reference to the reference shares, in either case, by means of a
completed public offering or offerings by us and which is expected to yield net
proceeds which are sufficient to pay the redemption amount for all of the
PRIZES. The trustee will notify you if we elect to redeem your PRIZES in
connection with a rollover offering not less than 30 nor more than 60 business
days prior to the redemption date. We will also issue a press release prior to
4:00 p.m., New York City time, on the business day immediately before the day on
which the closing price of the reference shares is to be measured for the
purpose of determining the current market value in connection with a rollover
offering. The notice will state we are firmly committed to price the rollover
offering, will specify the date on which the rollover offering is to be priced
(including whether the rollover offering will be priced during trading on the
pricing date or after the close of trading on the pricing date) and
consequently, whether the closing price for the reference shares by which the
current market value will be measured will be the closing price on the trading
date immediately preceding the pricing date or the closing price on the pricing
date. We will provide that press release to DTC for dissemination through the
DTC broadcast facility.
The "closing price" of any security on any date of determination means the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of that security (regular way) on the NYSE on that date or, if that
security is not listed for trading on the NYSE on that date, as reported in the
composite transactions for the principal United States securities exchange on
which that security is so listed, or if that security is not so listed on a
United States national or regional securities exchange, as reported by the
Nasdaq National Market, or if that security is not so reported, the last quoted
bid price for that security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization. In the event that no such
quotation is available for any day, our board of directors will be entitled to
determine the closing price on the basis of those quotations that it in good
faith considers appropriate. To the extent that trading of reference shares
normal way continues past 4:00 p.m., New York City time, "closing price" shall
be deemed to refer to the price at the time that is then customary for
determining the trading day's index levels for stocks traded on the primary
national securities exchange or automated quotation system on which the
reference shares are then traded or quoted. All references to 4:00 p.m., New
York City time, in the definition of "current market value" shall thereafter be
deemed to refer to the then customary determination time.
A "trading day" is defined as a day on which the security, the closing
price of which is being determined, (a) is not suspended from trading on any
national or regional securities exchange or association or over-the-counter
market at the close of business and (b) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of that security.
We will give you 30 business days' notice before the redemption of the
PRIZES and will irrevocably deposit with the trustee sufficient funds to pay the
redemption amount. Distributions to be paid on or before the redemption date of
the PRIZES will be payable to the holders on the record dates for the related
dates of distribution.
Once notice of redemption is given and funds are irrevocably deposited,
interest on the PRIZES will cease to accrue on and after the date of redemption
and all rights of the holders of the PRIZES will cease, except for the right of
the holders to receive the redemption amount (but without interest on that
redemption amount).
If the redemption date is not a business day, then the redemption amount
will be payable on the next business day (and without any interest or other
payment in respect of that delay).
If we improperly withhold or refuse to pay the redemption amount for the
PRIZES, interest on the PRIZES will continue to accrue at an annual rate equal
to the basic rate of interest then in effect, even if such rate is lower than
the rate in effect when the amount owed originally accrued, from the original
redemption date to the actual date of payment. In this case, the actual payment
date will be considered the redemption date for purposes of calculating the
redemption amount. The final period distribution will be deemed paid on the
original redemption date to the extent paid as set forth in the definition of
final period distribution above.
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In compliance with applicable law (including the United States federal
securities laws), we and our affiliates may, at any time, purchase outstanding
PRIZES by tender offer, in the open market or by private agreement.
SUBORDINATION
The PRIZES are unsecured and junior in right of payment to all of our
senior indebtedness (as we define below). This means that we may not pay the
principal of, or premium, if any, or interest or distribution on, the PRIZES and
may not repurchase, redeem or otherwise retire any PRIZES (collectively, "pay
the PRIZES") if:
- any principal, premium, if any, or interest in respect of senior
indebtedness is not paid within any applicable grace period (including at
maturity); or
- any other default on senior indebtedness occurs and the maturity of such
senior indebtedness is accelerated in accordance with its terms;
unless, in either case, the default has been cured or waived and any such
acceleration has been rescinded or such senior indebtedness has been paid in
full in cash. During the continuance of any default (other than a default
described in the bullet points above) with respect to any senior indebtedness
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, we may not pay
the PRIZES for a period (a "Payment Blockage Period") commencing upon the
receipt by us and the trustee of written notice of such default from the
representative of any designated senior indebtedness specifying an election to
effect a Payment Blockage Period (a "Blockage Notice") and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the trustee and us from the person or persons who gave such
Blockage Notice, (ii) by repayment in full in cash of such designated senior
indebtedness or (iii) because the default giving rise to such Blockage Notice is
no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence, but subject to the provisions described in the
second sentence of this paragraph, unless the holders of such designated senior
indebtedness or their representative have accelerated the maturity of such
designated senior indebtedness, we may resume payments on the PRIZES after the
end of such Payment Blockage Period. Not more than one Blockage Notice may be
given in any consecutive 360-day period, irrespective of the number of defaults
with respect to any number of issues of senior indebtedness during such period.
Upon any payment or distribution of our assets to creditors upon a total or
partial liquidation or dissolution or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to us or our property,
the holders of our senior indebtedness will be entitled to receive payment in
full in cash of such senior indebtedness before you are entitled to receive any
payment on the PRIZES, and until the senior indebtedness is paid in full, any
payment or distribution to which you would otherwise be entitled but for the
subordination provisions of the indenture will be made to holders of senior
indebtedness as their interests may appear, except that you may receive shares
of stock and any debt securities that are subordinated to senior indebtedness to
at least the same extent as the PRIZES.
Because of this subordination, if we become insolvent, our creditors who
hold senior indebtedness may receive more, ratably, than holders of the PRIZES.
After all senior indebtedness is paid in full, the holders of the PRIZES
will assume rights similar to the holders of senior indebtedness to receive any
remaining payments or distributions applicable to senior indebtedness until all
amounts owing on the PRIZES are paid in full.
"Senior indebtedness" means the principal of, premium, if any, and interest
on, and any other payment due pursuant to, any of the following, whether
outstanding on the date the PRIZES are issued or incurred by us in the future:
- all of our indebtedness for money borrowed, including any indebtedness
secured by a mortgage or other lien which is (1) given to secure all or
part of the purchase price of property subject to the mortgage or lien,
whether given to the vendor of that property or to another lender, or (2)
existing on property at the time we acquire it;
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- all of our indebtedness evidenced by notes, debentures, bonds or other
securities sold by us for money;
- all of our lease obligations which are capitalized on our books in
accordance with generally accepted accounting principles;
- all indebtedness of others of the kinds described in the first two bullet
points above and all lease obligations of others of the kind described in
the third bullet point above that we, in any manner, assume or guarantee
or that we in effect guarantee through an agreement to purchase, whether
that agreement is contingent or otherwise; and
- all renewals, extensions or refundings of indebtedness of the kinds
described in the first, second or fourth bullet point above and all
renewals or extensions of leases of the kinds described in the third or
fourth bullet point above;
unless, in the case of any particular indebtedness, lease, renewal, extension or
refunding, the instrument or lease creating or evidencing it or the assumption
or guarantee relating to it expressly provides that such indebtedness, lease,
renewal, extension or refunding is not superior in right of payment to
subordinated debt securities. Our senior debt securities issued under the
indenture constitute senior indebtedness for purposes of the PRIZES.
"Senior indebtedness" does not include:
- any indebtedness of ours or of any restricted subsidiary of ours to us or
another restricted subsidiary;
- any guarantee by us or any restricted subsidiary of indebtedness of ours
or another restricted subsidiary;
- any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities);
- letters of credit, performance bonds and similar obligations issued in
favor of governmental or franchising authorities as a term of a cable
television franchise or other governmental franchise, license, permit or
authorization held by us or any of our subsidiaries; and
- any indebtedness of ours (and any accrued and unpaid interest in respect
thereof) that is by its terms subordinate or junior in any respect to any
other indebtedness or obligation of ours.
"Designated senior indebtedness" means any senior indebtedness which, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof, are committed to
lend up to, at least $50 million and is specifically designated by us in the
instrument evidencing or governing such senior indebtedness as "designated
senior indebtedness" for purposes of the indenture and has been designated as
"designated senior indebtedness" for purposes of the indenture in an officers'
certificate received by the trustee.
The PRIZES do not limit our ability or that of our subsidiaries to incur
additional indebtedness, including indebtedness that ranks senior in priority of
payment to the PRIZES. As of September 30, 1999, we had outstanding
approximately $5.3 billion of debt senior, or effectively senior, to the PRIZES.
AMOUNT PAYABLE UPON BANKRUPTCY
Upon dissolution, winding-up, liquidation or reorganization, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership or other
similar proceedings in respect of Cox, holders of the PRIZES should be entitled
to a claim against us in an amount equal to the higher of (a) the contingent
principal amount of the PRIZES or (b) the sum of the then current market value
(without giving effect to the provisions relating to rollover offerings) of the
reference shares plus any deferred quarterly payments of interest (including any
accrued interest thereon), plus, in either case, the final period distribution
determined as if the date of such event was the maturity date of the PRIZES.
Because of the subordination provisions contained in the indenture, the amount
holders of the PRIZES actually receive in such circumstances is likely to be
substantially less than the amount of their claim.
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DILUTION ADJUSTMENTS
For purposes of this prospectus supplement, "reference company" means
Sprint and any other issuer of a reference share.
A "reference share" means, collectively:
- initially, one share of Sprint PCS stock; and
- after the issuance of the PRIZES, each share or fraction of a share of
publicly traded equity securities received by a holder of a reference
share in respect of that reference share, and, to the extent the
reference share remains outstanding after any of the following events but
without duplication, including the reference share, in each case directly
or as the result of successive applications of this paragraph upon any of
the following events:
(1) the distribution on or in respect of a reference share in
reference shares;
(2) the combination of reference shares into a smaller number of
shares or other units;
(3) the subdivision of outstanding shares or other units of reference
shares;
(4) the conversion or reclassification of reference shares by issuance
or exchange of other securities;
(5) any consolidation or merger of a reference company, or any
surviving entity or subsequent surviving entity of a reference company
(which we refer to as a reference company successor), with or into another
entity (other than a merger or consolidation in which the reference company
is the continuing corporation and in which the reference company common
stock outstanding immediately prior to the merger or consolidation is not
exchanged for cash, securities or other property of the reference company
or another corporation);
(6) any statutory exchange of securities of the reference company or
any reference company successor with another corporation (other than in
connection with a merger or acquisition and other than a statutory exchange
of securities in which the reference company is the continuing corporation
and in which the reference company common stock outstanding immediately
prior to the statutory exchange is not exchanged for cash, securities or
other property of the reference company or another corporation); and
(7) any liquidation, dissolution or winding up of the reference
company or any reference company successor.
For purposes of the foregoing:
- a conversion or redemption by Sprint of all shares of Sprint PCS stock
pursuant to Article Sixth, Section 7.1 of its Articles of Incorporation
shall be deemed a consolidation or merger, with the Sprint PCS Group
deemed to be the reference company, with Sprint deemed to be the
reference company successor if Sprint FON stock or any other common stock
of Sprint is issued in exchange for the Sprint PCS stock or with the
relevant acquiror of the Sprint PCS Group assets deemed to be the
reference company successor if common stock other than Sprint FON stock
is issued in exchange for the Sprint PCS stock.
- a redemption by Sprint pursuant to Article Sixth, Section 7.2 of its
Articles of Incorporation of all of the outstanding shares of Sprint PCS
stock in exchange for common stock of one or more wholly-owned
subsidiaries that collectively hold all of the assets and liabilities
attributed to its PCS Group shall be deemed an exchange of shares of
Sprint PCS stock for shares of common stock of the relevant subsidiary or
subsidiaries.
Pursuant to the planned merger between MCI WorldCom, Inc. and Sprint,
holders of Sprint PCS stock would receive one new share of WorldCom PCS tracking
stock and 0.1547 shares of MCI WorldCom stock for each share of Sprint PCS
stock. If the merger occurs, the reference shares will become one share of
WorldCom PCS tracking stock and 0.1547 shares of MCI WorldCom common stock.
As described above under "Interest," we will pay as additional interest to
holders of the PRIZES any property received in distribution on a reference
share, unless it is also a reference share, in which case it shall become part
of a reference share. Upon any distribution of fractional shares or
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units of securities, other than fractional reference shares, we will pay the
holders cash in lieu of distribution of such fractional shares or other units.
A "reference share offer" means any tender offer or exchange offer made for
all or a portion of a class or series of reference shares of a reference
company.
A "reference share offer" shall include a conversion or redemption by
Sprint of less than all shares of Sprint PCS stock pursuant to Article Sixth,
Section 7.1 of its Articles of Incorporation.
If a reference share offer is made, we may, at our option, either:
- during the pendency of the offer, increase the early exchange ratio to
100%; or
- make a reference share offer adjustment.
A "reference share offer adjustment" means including as part of a reference
share each share of publicly traded equity securities, if any, deemed to be
distributed on or in respect of a reference share as average transaction
consideration less the reference share proportionate reduction (as defined
below).
The average transaction consideration deemed to be received by a holder of
one reference share in a reference share offer will be equal to (a) the
aggregate consideration actually paid or distributed to all holders of reference
shares that participated in the reference share offer, divided by (b) the total
number of reference shares outstanding immediately prior to the expiration of
the reference share offer and entitled to participate in that reference share
offer.
The "reference share proportionate reduction" means a proportionate
reduction in the number of reference shares which are the subject of the
applicable reference share offer and attributable to one PRIZES calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C> <C>
R = X
------
N
</TABLE>
where:
R = the fraction by which the number of reference shares of the class of
reference shares subject to the reference share offer and attributable
to one PRIZES will be reduced.
X = the aggregate number of reference shares of the class or series of
reference shares subject to the reference share offer accepted in the
reference share offer.
N = the aggregate number of reference shares of the class or series of
reference shares subject to the reference share offer outstanding
immediately prior to the expiration of the reference share offer.
If we elect to make a reference share offer adjustment, we will distribute
as additional interest on each PRIZES the average transaction consideration
deemed to be received on the reference shares of the class or series subject to
the reference share offer and attributable to each PRIZES immediately prior to
giving effect to the reference share proportionate reduction relating to that
reference share offer (other than average transaction consideration that is
publicly traded equity securities which will themselves become reference shares
as a result of a reference share offer adjustment).
If we elect to make a reference share offer adjustment, and during the
pendency of the reference share offer another reference share offer is commenced
in relation to the reference shares that are the subject of the then existing
reference share offer, we can change our original election by electing to
increase the early exchange ratio to 100% during the pendency of the new
reference share offer, or we can continue to elect to make a reference share
offer adjustment. We will similarly be entitled to change our election for each
further reference share offer made during the pendency of any reference share
offer for the same class of reference shares. For the purposes of these
adjustments, a material change to the terms of an existing reference share offer
will be deemed to be a new reference share offer.
If we elect to increase the early exchange ratio to 100% in connection with
a reference share offer, no reference share offer adjustment will be made and we
cannot change our election if any further reference share offer is made.
We will give the trustee notice of our election in the event of any
reference share offer. We will
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also prepare a press release and provide it to DTC for dissemination through the
DTC broadcast facility. We will give this notice no later than 10 business days
before the scheduled expiration of the reference share offer.
In addition to the above adjustments, on November , 2002 we will
reduce the two dollar amounts used to redetermine the maximum and minimum
numbers of reference shares (i.e., initially $ and $ ) by the
aggregate amount of the payments made on or prior to such date in relation to
regular cash dividends on the reference shares and as additional interest. No
adjustment will be made to these numbers for any payments of basic interest on
the PRIZES. CALCULATIONS IN RESPECT OF THE PRIZES
We will be responsible for making all calculations called for under the
PRIZES. These calculations include, but are not limited to, determination of:
- the contingent principal amount of the PRIZES;
- the current market value of the reference shares;
- the exchange market value of the reference shares;
- the final period distribution on the PRIZES;
- the cash value of any property distributed on the reference shares;
- the reduced or redetermined maximum and minimum numbers of reference
shares;
- the average transaction consideration in a reference share offer;
- the composition of a reference share; and
- the amount of accrued interest payable upon redemption or at maturity of
the PRIZES.
We will make all these calculations in good faith and, absent manifest
error, our calculations are final and binding on holders of the PRIZES. We will
provide a schedule of our calculations to the trustee and the trustee is
entitled to rely upon the accuracy of our calculations without independent
verification.
BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The PRIZES will be represented by one or more global securities that will
be deposited with and registered in the name of DTC or its nominee. This means
that we will not issue certificates to you for the PRIZES. Each global security
will be issued to DTC which will keep a computerized record of its participants
(for example, a broker) whose clients have purchased the PRIZES. Each
participant will then keep a record of its clients. Unless it is exchanged in
whole or in part for a certificated security, a global security may not be
transferred. However, DTC, its nominees and their successors may transfer a
global security as a whole to one another.
Beneficial interests in a global security will be shown on, and transfers
of the global security will be made only through, records maintained by DTC and
its participants. DTC has provided us with the following information: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the United States Federal Reserve System, a "clearing corporation" within the
meaning of be New York Uniform Commercial Code and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its participants (which we refer to as direct
participants) deposit with DTC. DTC also records the settlement among direct
participants of securities transactions, such as transfers and pledges, in
deposited securities through computerized records for direct participants'
accounts. This eliminates the need to exchange certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on file
with the SEC.
DTC is owned by a number of its direct participants and by the NYSE, the
Amex and the National Association of Securities Dealers, Inc.
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<PAGE> 26
When you purchase any of the PRIZES through the DTC system, the purchases
must be made by or through a direct participant who will receive credit for the
PRIZES on DTC's records. Since you do not actually own the PRIZES, you are the
beneficial owner. Your ownership interest will only be recorded on the direct
(or indirect) participants' records. DTC has no knowledge of your individual
ownership of the PRIZES. DTC's records only show the identity of the direct
participants and the amount of the PRIZES held by or through them. You will not
receive a written confirmation of your purchase or sale or any periodic account
statement directly from DTC. You will receive these from your direct (or
indirect) participant. As a result, the direct (or indirect) participants are
responsible for keeping accurate account of the holdings of their customers like
you.
Payments on the PRIZES will be wired to DTC's nominee. We will treat DTC's
nominee as the owner of the global security for all purposes. Accordingly, we,
the trustee and any paying agent will have no direct responsibility or liability
to pay amounts due on the global security to you or any other beneficial owners
in the global security.
Any redemption notices will be sent by us directly to DTC, who will in turn
inform the direct participants, who will then contact you as a beneficial
holder.
It is DTC's current practice, upon receipt of any payment of distributions
or liquidation amount, to credit direct participants' accounts on the payment
date based on their holdings of beneficial interests in the global securities as
shown on DTC's records. In addition, DTC's current practice is to assign any
consenting or voting rights to direct participants whose accounts are credited
with the PRIZES on a record date, by using an omnibus proxy. Payments by
participants to owners of beneficial interests in the global securities, and
voting by participants, will be based on the customary practices between the
participants and owners of beneficial interests, as is the case with the PRIZES
held for the account of customers registered in "street name". However, payments
will be the responsibility of the participants and not of DTC, us or the
trustee.
PRIZES represented by a global security will be exchangeable for
certificated securities with the same terms in authorized denominations only if:
- DTC is unwilling or unable to continue as depositary or if DTC ceases to
be a clearing agency registered under applicable law and a successor
depositary is not appointed by us within 90 days; or
- we decide to discontinue use of the book-entry transfer system through
DTC (or any successor depositary).
If the book-entry-only loan is discontinued, the trustee will keep the
registration books for the PRIZES at its corporate office and follow the
practices and procedures discussed above.
DTC has advised us that its management is aware that some computer
applications, systems, and the like for processing data that are dependent upon
calendar dates, including dates before, on and after January 1, 2000, may
encounter Year 2000 problems. DTC has informed its participants and other
members of the financial community that it has developed and is implementing a
program so that its systems, as the same relate to the timely payment of
distributions (including principal and interest payments) to security holders,
book-entry deliveries and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent upon
other parties including but not limited to issuers and their agents, as well as
third party vendors from whom DTC licenses software and hardware, and third
party vendors on whom DTC relies for information or the provision of services,
including telecommunication and electrical utility service providers, among
others. DTC has informed its participants and other members of the financial
community that it is contacting (and will continue to contact) third party
vendors from whom DTC acquires services to:
- impress upon them the importance of such services being Year 2000
compliant; and
S-24
<PAGE> 27
- determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services.
In addition, DTC is in the process of developing contingency plans as it
deems appropriate. According to DTC, the foregoing information with respect to
DTC has been provided to its participants and other members of the financial
community for informational purposes only and is not intended to serve as a
representation, warranty or contract modification of any kind.
S-25
<PAGE> 28
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In this section, we summarize certain of the material United States federal
income tax consequences of purchasing, holding and disposing of PRIZES. Except
where we state otherwise, this summary deals only with PRIZES held as capital
assets (as defined in the Internal Revenue Code of 1986, as amended) by a U.S.
Holder (as defined below) who purchases PRIZES for cash at their original
offering price upon original issuance.
We do not address all of the tax consequences that may be relevant to a
U.S. Holder. We also do not address any of the tax consequences to holders that
are Non-U.S. Holders (as defined below) or to holders that may be subject to
special tax treatment such as financial institutions, real estate investment
trusts, personal holding companies, tax-exempt organizations, regulated
investment companies, insurance companies, S corporations, brokers and dealers
in securities or currencies and certain U.S. expatriates. Further, we do not
address:
- the United States federal income tax consequences to shareholders in, or
partners or beneficiaries of, an entity that is a holder of PRIZES;
- the United States federal estate, gift or alternative minimum tax
consequences of the purchase, ownership or disposition of PRIZES;
- persons who hold PRIZES in a straddle or as part of a hedging,
conversion, constructive sale or other integrated transaction or whose
functional currency is not the United States dollar; or
- any state, local or foreign tax consequences of the purchase, ownership
or disposition of PRIZES.
Accordingly, you should consult your own tax advisor regarding the tax
consequences of purchasing, owning and disposing of PRIZES in light of your own
circumstances.
A U.S. Holder is a beneficial owner of PRIZES who or which is:
- a citizen or individual resident of the United States, as defined in
Section 7701(b) of the Internal Revenue Code;
- a corporation or partnership, including any entity treated as a
corporation or partnership for United States federal income tax purposes,
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia unless, in the case of a partnership,
Treasury regulations are enacted that provide otherwise;
- an estate if its income is subject to United States federal income
taxation regardless of its source; or
- a trust if (1) a United States court can exercise primary supervision
over its administration and (2) one or more United States persons have
the authority to control all of its substantial decisions.
Notwithstanding the preceding sentence, certain trusts in existence on August
20, 1996, and treated as a U.S. Holder prior to such date, may also be treated
as U.S. Holders.
A Non-U.S. Holder is a PRIZES holder other than a U.S. Holder. Prospective
investors that are Non-U.S. Holders are urged to consult their own tax advisors
regarding the United States federal income tax consequences of an investment in
PRIZES, including potential application of United States withholding taxes.
This summary is based on the Internal Revenue Code, Treasury regulations
(proposed and final) issued under the Internal Revenue Code, and administrative
and judicial interpretations thereof, all as they currently exist as of the date
of this prospectus supplement and any of which may change at any time, possibly
on a retroactive basis. Any such changes may affect this summary.
S-26
<PAGE> 29
No statutory, administrative or judicial authority directly addresses the
treatment of PRIZES or instruments similar to PRIZES for United States federal
income tax purposes. No rulings have been sought or are expected to be sought
from the IRS with respect to any of the United States federal income tax
consequences discussed below, and no assurance can be given that the IRS will
not take contrary positions. As a result, no assurance can be given that the IRS
will agree with the tax consequences described herein.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF PRIZES IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES, INCLUDING
THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
ACCRUAL OF INTEREST ON THE PRIZES
For United States federal income tax purposes, the PRIZES will be treated
as debt instruments that are subject to the special regulations governing
contingent payment debt instruments, which we refer to as the CPDI regulations.
Pursuant to these regulations, U.S. Holders of the PRIZES will be required to
accrue interest income on the PRIZES, in the amounts described below, regardless
of whether the U.S. Holder uses the cash or accrual method of tax accounting.
Accordingly, U.S. Holders will be required to include interest in taxable income
in each year in excess of any interest payments actually received in that year.
The CPDI regulations provide that a U.S. Holder must accrue an amount of
ordinary interest income, as original issue discount, for each accrual period
prior to and including the PRIZES' maturity date that equals:
(a) the product of (i) the PRIZES' adjusted issue price (as defined
below) as of the beginning of the accrual period; and (ii) the
PRIZES' comparable yield to maturity (as defined below) adjusted
for the length of the accrual period;
(b) divided by the number of days in the accrual period; and
(c) multiplied by the number of days during the accrual period that
the U.S. Holder held the PRIZES.
A PRIZES' issue price is the first price to the public at which a
substantial amount of the PRIZES is sold, excluding sales to bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. Its adjusted issue price is the
PRIZES' issue price increased by any interest income previously accrued,
determined without regard to any adjustments to interest accruals described
below and decreased by the amount of any projected payments, as defined below,
with respect to the PRIZES.
The term "comparable yield" means the annual yield we would pay, as of the
issue date, on a fixed-rate debt security with no contingent payments, but with
terms and conditions otherwise comparable to those of the PRIZES. We have
determined that the PRIZES' comparable yield is %, compounded quarterly.
The CPDI regulations require that we provide to U.S. Holders, solely for
United States federal income tax purposes, a schedule of the projected amounts
of payments, which we refer to as projected payments, on the PRIZES. This
schedule must produce the comparable yield. Based on our determination
S-27
<PAGE> 30
of the comparable yield, the PRIZES' schedule of projected payments, assuming a
principal amount of $ or with respect to each integral multiple
thereof, consists of:
- a payment of $ on February , 2000; plus
- payments of stated interest equal to $ on other quarterly
interest payment dates through 2002; plus
- payments of stated interest equal to $ on all other quarterly
interest payment dates thereafter; plus
- a payment of a projected amount at the maturity date of the PRIZES,
excluding the stated quarterly interest on the PRIZES payable on such
date, equal to $ .
For United States federal income tax purposes, a U.S. Holder must use the
comparable yield and the schedule of projected payments in determining its
interest accruals, and the adjustments thereto described below, in respect of
the PRIZES, unless such U.S. Holder timely discloses and justifies the use of
other estimates to the Internal Revenue Service.
THE COMPARABLE YIELD AND THE SCHEDULE OF PROJECTED PAYMENTS ARE NOT
PROVIDED FOR ANY PURPOSE OTHER THAN THE DETERMINATION OF U.S. HOLDERS' INTEREST
ACCRUALS AND ADJUSTMENTS THEREOF IN RESPECT OF THE PRIZES FOR UNITED STATES
FEDERAL INCOME TAX PURPOSES AND DO NOT CONSTITUTE A PROJECTION OR REPRESENTATION
REGARDING THE ACTUAL AMOUNTS PAYABLE ON THE PRIZES.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
ADJUSTMENTS TO INTEREST ACCRUALS ON THE PRIZES
If, during any taxable year, a U.S. Holder were to receive actual payments
with respect to the PRIZES for that taxable year, including, in the case of the
taxable year which includes the maturity date of the PRIZES, the amount of cash
received at maturity, that in the aggregate exceed the total amount of projected
payments for that taxable year, the U.S. Holder will incur a "net positive
adjustment" under the CPDI regulations equal to the amount of such excess. The
U.S. Holder will treat this adjustment as additional interest income for the
taxable year. For this purpose, the payments in a taxable year include the fair
market value of property received in that year.
If a U.S. Holder were to receive in a taxable year actual payments with
respect to the PRIZES for that taxable year that in the aggregate were less than
the amount of projected payments for that taxable year, the U.S. Holder will
incur a "net negative adjustment" under the CPDI regulations equal to the amount
of such deficit. This adjustment will (a) reduce the U.S. Holder's interest
income on the PRIZES for that taxable year, and (b) to the extent of any excess
after the application of (a), give rise to an ordinary loss to the extent of the
U.S. Holder's interest income on the PRIZES during prior taxable years, reduced
to the extent such interest was offset by prior net negative adjustments.
SALE, EXCHANGE OR REDEMPTION OF THE PRIZES
Generally, the sale, exchange or redemption of the PRIZES, including
exchanges at the U.S. Holder's option and redemptions by us, prior to their
maturity date will result in taxable gain or loss to the U.S. Holder equal to
the difference between (a) the amount of cash plus the fair market value of any
other property received by the U.S. Holder, and (b) the U.S. Holder's adjusted
tax basis in the PRIZES. A U.S. Holder's adjusted tax basis in the PRIZES equals
the holder's original basis in the PRIZES:
- increased by the interest income previously included by the U.S. Holder
with respect to the PRIZES, determined without regard to any adjustments
to interest accruals described above; and
- decreased by the amount of all prior projected payments with respect to
the PRIZES.
S-28
<PAGE> 31
Any gain upon sale or exchange of the PRIZES will be ordinary interest
income. Any loss will be ordinary loss to the extent of the interest previously
included in income by the U.S. Holder with respect to the PRIZES and,
thereafter, capital loss. The distinction between capital loss and ordinary loss
is potentially significant in several respects. For example, limitations apply
to a U.S. Holder's ability to offset capital losses against ordinary income.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Payments of principal, premium, if any, and interest (including original
issue discount) on, and the proceeds of disposition of, the PRIZES may be
subject to information reporting and United States federal backup withholding
tax at the rate of 31% if the U.S. Holder thereof fails to supply an accurate
taxpayer identification number or otherwise fails to comply with applicable
United States information reporting or certification requirements. Any amounts
so withheld will be allowed as a credit against such U.S. Holder's United States
federal income tax liability.
S-29
<PAGE> 32
UNDERWRITING
GENERAL
Based on the terms and conditions of an underwriting agreement, we have
agreed to sell to each of the underwriters named below, and each of the
underwriters has severally agreed to purchase from us, the number of PRIZES set
forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PRIZES
- ----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Credit Suisse First Boston Corporation......................
Banc of America Securities LLC..............................
Goldman, Sachs & Co.........................................
J.P. Morgan Securities Inc..................................
Morgan Stanley & Co. Incorporated...........................
--------
Total..........................................
========
</TABLE>
The underwriters are obligated to purchase all of the PRIZES, if any of the
PRIZES are purchased. In the event of default by an underwriter, the
underwriting agreement provides that, in certain circumstances, the purchase
commitments of the non-defaulting underwriters may be increased or the
underwriting agreement may be terminated.
We have agreed with the underwriters to indemnify them against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute with respect to payments which the underwriters may be
required to make.
Certain of the underwriters and their affiliates have in the past and may
in the future engage in transactions with, or perform services for, us or our
affiliates in the ordinary course of their businesses.
We will pay all of our expenses, estimated to be $ , associated
with the offer and sale of the PRIZES.
COMMISSIONS AND DISCOUNTS
The underwriters will offer the PRIZES directly to the public initially at
$ per PRIZES. The underwriters may also offer the PRIZES to certain
securities dealers at the above-mentioned offering price less a concession of
$ per PRIZES. The underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per PRIZES to certain dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
We have agreed to pay to the underwriters an underwriting commission of
$ per PRIZES, or a total of $ .
OVER-ALLOTMENT OPTION
The underwriters have an option to purchase up to additional PRIZES at
the public offering price to cover over-allotments. The underwriters can
exercise this option for a period of 30 days after the date of this prospectus
supplement. If the underwriters exercise this option, each underwriter will have
a firm commitment, subject to some conditions, to purchase approximately the
same percentage of any additional PRIZES as the percentage of the PRIZES
initially offered that such underwriter has agreed to purchase.
S-30
<PAGE> 33
The following table shows the per PRIZES and total public offering price,
underwriting commission to be paid by us to the underwriters and proceeds before
expenses to us. This information is presented assuming either no exercise or
full exercise by the underwriters of their over-allotment option.
<TABLE>
<CAPTION>
PER WITHOUT WITH
PRIZES OPTION OPTION
------ ------- ------
<S> <C> <C> <C>
Public offering price....................................... $ $ $
Underwriting commission to be paid by Cox................... $ $ $
Proceeds, before expenses, to Cox........................... $ $ $
</TABLE>
LISTING
Before this offering, there has been no established public trading market
for the PRIZES.
We have agreed to use commercially reasonable efforts to have the PRIZES
listed on a national securities exchange, such as the NYSE or Amex, or included
on a national quotation system, such as Nasdaq.
We will make a public announcement prior to the date of any listing or the
date we learn that we will be unable to list the PRIZES. We cannot give you any
assurance that the PRIZES ultimately will be listed on the NYSE, Amex or Nasdaq.
Moreover, any listing of the PRIZES will not ensure that a liquid trading market
will develop for the PRIZES.
The underwriters advised us that they intend to make a market in the
PRIZES. However, the underwriters are not obligated to do so and may discontinue
market making at any time without notice. We cannot give any assurance about the
liquidity of the trading market for the PRIZES.
NO SALES OF SIMILAR SECURITIES
We have agreed that for 45 days after the date of this prospectus
supplement we will not directly or indirectly offer, sell, offer to sell, grant
any option for the sale of or otherwise dispose of any of the PRIZES, any
securities convertible into or exchangeable for the PRIZES or any securities
substantially similar to the PRIZES without the prior written consent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated. However, this restriction shall not
affect our ability to take any of these actions in connection with any exchanges
or redemption of the PRIZES or in connection with any reference share offer.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the sale of the PRIZES, SEC rules permit the
underwriters to engage in transactions that stabilize the price of the PRIZES.
These transactions may include purchases for the purpose of fixing or
maintaining the price of the PRIZES. The underwriters may also engage in
transactions with respect to the Sprint PCS stock for the purpose of stabilizing
the price of the PRIZES.
The underwriters may create a short position in the PRIZES in connection
with the offering. That means they may sell a larger number of the PRIZES than
is shown on the cover page of this prospectus supplement. If they create a short
position, the underwriters may purchase PRIZES in the open market to reduce the
short position.
If the underwriters purchase PRIZES to stabilize the price or to reduce
their short position, the price of the PRIZES could be higher than it might be
if they had not made such purchases. The underwriters make no representation or
prediction about any effect that these purchases may have on the price of the
PRIZES.
The underwriters may suspend any of these activities at any time.
LEGAL MATTERS
Certain legal matters with respect to the PRIZES will be passed upon for us
by Dow, Lohnes & Albertson, PLLC, and for the underwriters by Brown & Wood LLP
and Skadden, Arps, Slate, Meagher & Flom LLP.
S-31
<PAGE> 34
PROSPECTUS
$8,000,000,000
COX COMMUNICATIONS, INC.
CLASS A COMMON STOCK
PREFERRED STOCK
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
DEBT SECURITIES
COX TRUST I
COX TRUST II
TRUST PREFERRED SECURITIES
CAPITAL SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED
TO THE EXTENT PROVIDED IN THIS PROSPECTUS BY
COX COMMUNICATIONS, INC.
------------------------
This prospectus is part of a shelf registration statement which Cox and the
Cox Trusts have filed with the Securities and Exchange Commission. Under the
shelf registration statement, Cox may offer shares of Class A common stock, par
value $1.00 per share, shares of preferred stock, par value $1.00 per share,
stock purchase contracts to purchase shares of Class A common stock, stock
purchase units and unsecured debentures, notes, bonds or other evidences of
indebtedness, and the Cox Trusts may offer trust preferred securities or capital
securities, all of which securities combined will have an aggregate initial
public offering price of $8.0 billion, including the U.S. dollar equivalent if
the initial public offering is denominated in one or more foreign currencies,
foreign currency units or composite currencies.
Under the shelf registration process, Cox and the Cox Trusts may sell the
securities from time to time in one or more separate offerings, in amounts, at
prices and on terms to be determined at the time of sale. Cox's debt securities
may be issuable in global form, in registered form without coupons attached, or
in bearer form with or without coupons attached.
Cox's Class A common stock is listed on the New York Stock Exchange under
the symbol "COX."
This prospectus provides a general description of the securities Cox and
the Cox Trusts may offer. Each time Cox sells shares of a particular series of
preferred stock, a particular series of debt securities, stock purchase
contracts or stock purchase units, or a Cox Trust sells trust preferred
securities or capital securities, it will provide a prospectus supplement which
will contain the specific terms of the securities being offered at that time.
Unless otherwise specified in the prospectus supplement, the debt securities
will be senior debt securities of Cox.
The prospectus supplement may add, update or change information contained
in this prospectus. You should read both this prospectus and the prospectus
supplement in conjunction with the additional information described under the
headings "Where You Can Find More Information" and "Information Incorporated by
Reference."
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is August 9, 1999.
<PAGE> 35
FORWARD-LOOKING STATEMENTS
This prospectus supplement includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We
have based these statements on our current expectations or projections about
future events and on assumptions we have made. These forward-looking statements
are subject to certain risks and uncertainties which could cause actual results
or events to differ materially from those we anticipate or project. Prospective
purchasers should not place undue reliance on these forward-looking statements.
We undertake no obligation to update or revise any forward-looking statements as
a result of new information, future events or otherwise.
---------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus or any prospectus supplement. Neither Cox nor the
Cox Trusts has authorized anyone else to provide you with different information.
Cox and the Cox Trusts are offering these securities only in states where the
offer is permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of those documents. Cox's business, financial condition,
results of operations and prospects may have changed since that date.
1
<PAGE> 36
COX COMMUNICATIONS, INC.
Cox is one of the largest broadband communications companies in the United
States. Cox has extensive broadband network operations in the United States as
well as investments in cable television programming, telecommunications, and
technology and broadband networks.
Cox's basic strategy is to leverage its advanced broadband network by
offering new and advanced communications services to both residences and
businesses. We believe that we have a number of advantages that will allow us to
implement this strategy successfully, including:
- ownership of highly clustered and regionally concentrated cable
television systems; and
- a strong commitment to and reputation for superior customer service.
These services include:
- multichannel video;
- digital video;
- high-speed Internet access;
- local and long-distance telephone services; and
- commercial local exchange carrier operations.
Cox also has invested in programming, telecommunications and technology
companies that complement its business strategy. Cox believes that its
investments have been vital to its growth into a communications industry leader.
Cox Enterprises, Inc., a privately held corporation based in Georgia and
one of the largest media companies in the U.S., controls approximately 72.7% of
the outstanding equity of Cox as of June 30, 1999. In addition to Cox, Cox
Enterprises publishes, owns or operates newspapers, television and radio
stations, Internet web site and Manheim Auctions, the world's largest auto
auction operator.
Cox's principal executive offices are located at 1400 Lake Hearn Drive,
Atlanta, Georgia 30319. Its telephone number is (404) 843-5000.
2
<PAGE> 37
THE COX TRUSTS
Each Cox Trust is a statutory business trust created under Delaware law
pursuant to:
1. a declaration of trust executed by Cox, as sponsor for the Cox
Trust, and by the initial trustees of such Cox Trust; and
2. the filing of a certificate of trust with the Delaware Secretary of
State.
Each Cox Trust exists for the exclusive purposes of:
- issuing and selling either capital securities or trust preferred
securities representing undivided beneficial interests in the assets
of such Cox Trust and trust common securities representing undivided
beneficial interests in the assets of such Cox Trust;
- using the proceeds from the sale of such trust securities to acquire a
series of corresponding senior debt securities or junior subordinated
debentures of Cox; and
- engaging in only those other activities necessary, advisable or
incidental to these purposes.
Cox's senior debt securities or junior subordinated debentures, as the case may
be, will be the sole assets of a Cox Trust and, accordingly, payments under the
corresponding senior debt securities or junior subordinated debentures will be
the sole revenues of that Cox Trust.
All of the trust common securities of a Cox Trust will be owned by Cox and
will rank equally, and payments will be made on trust common securities pro
rata, with the capital securities or the trust preferred securities, as the case
may be, of such Cox Trust, except that upon the occurrence and continuance of an
event of default under the applicable declaration of trust resulting from an
event of default under the applicable indenture, the rights of Cox as the trust
common securities holder to payments in respect of distributions and payments
upon liquidation, redemption or otherwise will be subordinated to the rights of
the holders of capital securities or trust preferred securities, as the case may
be, of such Cox Trust. See "Description of Trust Preferred
Securities--Subordination of Trust Common Securities" and "Description of
Capital Securities--Subordination of Trust Common Securities." Cox will acquire
trust common securities of each Cox Trust in an aggregate liquidation amount
equal to at least 3% of the total capital of that Cox Trust. Each Cox Trust will
terminate on the date specified in the applicable prospectus supplement, but may
dissolve earlier as provided in the applicable declaration of trust.
Each Cox Trust's business and affairs are conducted by its trustees who are
appointed by Cox as the trust common securities holder. Unless otherwise
specified in the applicable prospectus supplement, the issuer trustees for each
Cox Trust will be The Bank of New York, as property trustee, The Bank of New
York (Delaware), as Delaware trustee, and three individual trustees, which are
referred to as administrative trustees, who are officers or employees of Cox.
The Bank of New York, as property trustee, will act as sole indenture trustee
under each declaration of trust. The Bank of New York will also act as indenture
trustee under any capital securities guarantee, any preferred securities
guarantee, the senior debt indenture and the junior subordinated debenture
indenture. See "Description of Capital Securities Guarantees," "Description of
Preferred Securities Guarantees," "Description of Debt Securities" and
"Description of Junior Subordinated Debentures." The trust common securities
holder of a Cox Trust or, if an event of default under the declaration of trust
has occurred and is continuing, the holders of a majority in liquidation amount
of the capital securities or the trust preferred securities, as the case may be,
of such Cox Trust will be entitled to appoint, remove or replace such Cox
Trust's property trustee and the Delaware trustee. In no event will the holders
of capital securities or trust preferred securities have the right to vote to
appoint, remove or replace the administrative trustees; such voting rights will
be vested exclusively in Cox as the trust common securities holder. The duties
and obligations of the trustees will be governed by the applicable declaration
of trust.
3
<PAGE> 38
Cox, as issuer of the corresponding senior debt securities or junior
subordinated debentures, will pay all fees, expenses, debts and obligations,
other than payments in respect of trust securities, related to each Cox Trust
and the offering of the capital securities or trust preferred securities, as the
case may be, and will pay, directly or indirectly, all ongoing costs, expenses
and liabilities of each Cox Trust, other than payments in respect of trust
securities.
The principal executive office of each Cox Trust is c/o Cox Communications,
Inc., 1400 Lake Hearn Drive, Atlanta, Georgia 30319.
4
<PAGE> 39
USE OF PROCEEDS
Unless otherwise stated in the accompanying prospectus supplement, Cox
intends to use the net proceeds from the sale of any offered securities for
general corporate purposes, which may include additions to working capital,
repayment or redemption of existing indebtedness and financing of capital
expenditures and acquisitions. Cox may borrow additional funds from time to time
from public and private sources on both a long-term and short-term basis and may
sell commercial paper to fund its future capital and working capital
requirements in excess of internally generated funds.
The proceeds from the sale of either capital securities or trust preferred
securities by a Cox Trust will be invested in either senior debt securities or
junior subordinated debentures of Cox. Except as may otherwise be described in
the related prospectus supplement, Cox expects to use the net proceeds from the
sale of such senior debt securities or junior subordinated debentures to the
applicable Cox Trust for general corporate purposes. Any specific allocation of
the proceeds to a particular purpose that has been made at the date of any
prospectus supplement will be described therein.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
Cox for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
- --------------------------------- -------------------
1994 1995 1996 1997 1998 1998 1999
- ---- ---- ---- ---- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
3.1x 2.8x 1.5x 2.0x 12.3x 0.9x 8.8x
</TABLE>
Earnings for the years ended December 31, 1995, 1996, 1997 and 1998 and for
the three months ended March 31, 1999 include $188.8 million, $4.6 million,
$116.6 million, $2.5 billion and $419.5 million, respectively, of net investment
gains.
For purposes of this computation, earnings are defined as income before
income taxes and, excluding losses and undistributed earnings on equity method
investments, minority interests and fixed charges excluding capitalized
interest. Fixed charges are the sum of:
- interest cost including capitalized interest;
- estimated interest component of rent expense; and
- dividends on subsidiary preferred stock.
While Cox has a series of preferred stock outstanding, the holders of such
preferred stock are entitled to dividends only when, and to the extent that,
Cox's board of directors declares such dividends. Cox's board has never declared
a dividend on its preferred stock and does not intend to do so in the
foreseeable future. Accordingly, the data in the above table also represents
Cox's combined ratio of earnings to fixed charges and preferred stock dividends
for the periods presented.
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DESCRIPTION OF CAPITAL STOCK
The following description of Cox's capital stock sets forth general terms
and provisions of the particular issuance of capital stock to which any
prospectus supplement may relate and reflects a two-for-one stock split
effective on May 21, 1999. The prospectus supplement will describe the
particular terms of any sale of capital stock and the extent, if any, to which
such general provisions will not apply to such sale. The following description
also sets forth selected provisions of Cox's certificate of incorporation, as
amended, and bylaws. This description is a summary only and is qualified in its
entirety by Cox's certificate of incorporation and bylaws, which are
incorporated as exhibits to the registration statement of which this prospectus
is a part.
Cox's certificate of incorporation authorizes it to issue 650,000,000
shares of Class A common stock, 60,000,000 shares of Class C common stock and
10,000,000 shares of preferred stock.
As of June 30, 1999, there were outstanding 527,548,343 shares of Class A
common stock and 27,597,792 shares of Class C common stock. In addition,
10,284,386 shares of Class A common stock were reserved for issuance pursuant to
Cox's employee benefit plans, 27,597,792 shares of Class A common stock were
reserved for issuance to the holders of Class C common stock and approximately
4,675,016 shares of Class A common stock were reserved for issuance to the
holders of Cox's Series A preferred stock according to the terms outlined under
"Series A Convertible Preferred Stock" below.
COMMON STOCK
Except with respect to voting, transfer and convertibility, shares of Class
A common stock and shares of Class C common stock are identical in all respects.
Class A common stockholders are entitled to one vote per share, while Class C
common stockholders are entitled to ten votes per share. The shares of Class C
common stock are subject to significant transfer restrictions.
Voting. The Class A common stockholders and the Class C common
stockholders vote together as a single class on all actions, except that the
affirmative vote of the holders of a majority of outstanding shares of Class A
common stock and Class C common stock voting separately as a class is required:
- to approve any amendment to Cox's certificate of incorporation that would
alter or change the powers, preferences or special rights of such class
in a way that adversely affects the holders of such class; and
- to approve such other matters as may require a class vote under the
Delaware General Corporation Law.
Dividends and Other Distributions. Each share of common stock is equal in
respect of dividends and other distributions in cash, stock or property,
including distributions upon Cox's liquidation or a sale of all or substantially
all of Cox's assets. However, in the case of dividends or other distributions
payable on either class of common stock in shares of such stock, including
distributions pursuant to stock splits or dividends, only Class A common stock
will be distributed with respect to outstanding Class A common stock and only
Class C common stock will be distributed with respect to outstanding Class C
common stock. Neither of the Class A common stock nor the Class C common stock
will be split, divided or combined unless each other class is proportionately
split, divided or combined.
Cox has never declared or paid cash dividends on its Class A common stock
and currently intends to retain any future earnings for use in developing and
operating its businesses. Accordingly, Cox does not expect to pay cash dividends
on the Class A common stock in the foreseeable future.
Restrictions on Transfer of Class C Common Stock; Convertibility of Class C
Common Stock into Class A Common Stock. Cox Holdings, Inc. and Cox DNS, Inc.
hold all of the shares of Class C common stock currently outstanding. Cox
Holdings and Cox DNS are wholly owned subsidiaries of Cox Enterprises. Shares of
the Class C common stock are convertible at any time, or from time to time, at
the Class C stock holder's option, into Class A common stock on a
share-for-share basis. Shares of Class C
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common stock will be converted automatically into shares of Class A common stock
on a share-for-share basis:
- at any time Cox's board of directors and the holders of a majority of the
shares of Class C common stock then outstanding approve conversion of all
shares of Class C common stock into Class A common stock;
- if the Class A common stock is precluded from trading on any national
securities exchange or national quotation system as a result of the Class
C common stock's existence;
- upon election by Cox's board of directors in connection with their
approval of any sale or lease of all or substantially all of Cox's assets
or any merger, consolidation, liquidation or dissolution of Cox; or
- upon election by Cox's board of directors, after the board has determined
there has been a material adverse change in the outstanding Class A
common stock's liquidity, marketability or market value due to its
exclusion from a national exchange or quotation system or due to federal
or state legal requirements, in either case because of the Class C common
stock's existence.
Liquidation, Dissolution or Winding Up. In the event of any liquidation,
dissolution or winding up of Cox, whether voluntary or not, the Class A common
stock holders and the Class C common stock holders shall be entitled to share
ratably, according to their respective interests, in Cox's assets which remain
after payment, or provision of payment, of Cox's debts and other liabilities and
the preferential amounts due to the holders of any stock ranking prior to the
common stock in the distribution of assets.
PREFERRED STOCK
Cox may issue preferred stock with such designations, powers, preferences
and other rights and qualifications, limitations and restrictions as Cox's board
of directors may authorize, without further action by Cox's shareholders,
including but not limited to:
- the distinctive designation of each series and the number of shares that
will constitute the series;
- the voting rights, if any, of shares of the series;
- the dividend rate on the shares of the series, any restriction,
limitation or condition upon the payment of dividends, whether dividends
will be cumulative and the dates on which dividends are payable;
- the prices at which, and the terms and conditions on which, the shares of
the series may be redeemed, if the shares are redeemable;
- the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares in the series;
- any preferential amount payable upon shares of the series in the event of
the liquidation, dissolution or winding up of Cox or the distribution of
its assets; and
- the prices or rates of conversion at which, and the terms and conditions
on which, the shares of such series may be converted into other
securities, if such shares are convertible.
SERIES A CONVERTIBLE PREFERRED STOCK
In October 1998, Cox completed the acquisition of a cable television system
located in Las Vegas, Nevada, and certain related businesses previously owned by
Prime South Diversified, Inc. Cox issued shares of Series A preferred stock as
part of the consideration for the acquisition.
Dividends. Series A preferred stock holders are entitled to dividends only
when, and to the extent that, Cox's board of directors declares such dividends.
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Voting. Series A preferred stock holders are entitled to one vote per
share, and such holders vote together with the holders of Class A common stock
and Class C common stock on all matters upon which the Class A common stock and
Class C common stock holders are entitled to vote.
Conversion. Shares of the Series A preferred stock are convertible into
shares of Class A common stock at the preferred stockholders' option only after
October 1, 2003, a change in control of Cox or notification of liquidation,
whichever event occurs first. Shares of the Series A preferred stock are
convertible into shares of Class A common stock according to a formula based
upon 20.0% of the fair value of Cox's Las Vegas cable system and the average
closing price of the Class A common stock over a specified ten-day period.
Shares of the Series A preferred stock will convert automatically into shares of
Class A common stock, if the Las Vegas cable system makes a distribution on its
capital stock or upon the sale of all or substantially all of Cox's assets,
according to the formula described above. Cox anticipates that appreciation
realized upon conversion of the Series A preferred stock into Class A common
stock will be accounted for as contingent purchase price in accordance with APB
Opinion No. 16, "Business Combinations."
TRANSFER AGENT
The transfer agent and registrar for the Class A common stock is First
Chicago Trust Company of New York.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description of the terms of the debt securities sets forth
selected general terms and provisions of the particular issuance of debt
securities to which any prospectus supplement may relate. The prospectus
supplement will describe the particular terms of any debt securities and the
extent, if any, to which such general provisions will not apply to those debt
securities.
The debt securities will be issued from time to time in series under an
indenture, dated as of June 27, 1995, between Cox and The Bank of New York, as
trustee. A copy of the indenture is incorporated by reference as an exhibit to
the registration statement of which this prospectus is a part.
The indenture does not limit the aggregate principal amount of debt
securities Cox may issue, and the indenture provides that Cox may issue debt
securities from time to time in one or more series. The following summary of
selected provisions of the indenture and the debt securities does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the indenture, including the definitions of selected terms
which it contains as well as those terms which the Trust Indenture Act of 1939,
as amended, requires be incorporated.
Cox refers you to the prospectus supplement for the following terms and
other possible terms of each series of debt securities in respect of which this
prospectus is being delivered, to the extent such terms are applicable to such
debt securities:
- the classification, specific designation, date, aggregate principal
amount, purchase price and denomination of the debt securities;
- currency or units based on or relating to currencies in which such debt
securities are denominated and/or in which principal, premium, if any,
and/or interest will or may be payable;
- the formula, if any, upon which Cox may determine from time to time the
principal amount of debt securities outstanding;
- any date of maturity, which may be fixed or extendible;
- the interest rate or rates or the method by which the interest rate or
rates will be determined, if any;
- the dates on which any interest will be payable, Cox's right, if any, to
extend or defer the interest period and the duration of extensions or
deferrals;
- the place or places where the principal of, premium, if any, and interest
on the debt securities will be payable;
- any repayment, redemption, prepayment or sinking fund provisions and any
provisions related to the purchase of debt securities at the option of
the holders;
- whether the debt securities will be issuable in global form, and, if so,
the identity of the depositary, or in registered and/or bearer form and,
if bearer securities are issuable, any restrictions applicable to the
exchange of one form for another and to the offer, sale and delivery of
bearer securities;
- the terms, if any, on which debt securities may be converted into or
exchanged for stock or other securities of Cox or other entities or for
cash, any specific terms relating to the adjustment of the conversion or
exchange terms, and the period during which debt securities may be so
converted or exchanged;
- any applicable United States federal income tax consequences, including
whether and under what circumstances Cox will pay additional amounts on
debt securities held by a person who is not a U.S. person, as defined in
the prospectus supplement, in respect of any tax, assessment or
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governmental charge withheld or deducted and, if so, whether Cox will
have the option to redeem debt securities rather than pay such additional
amounts;
- the subordination provisions, if any, relating to the debt securities;
and
- any other specific terms of the debt securities, including any additional
events of default or covenants provided for with respect to debt
securities, and any terms which may be required by or advisable under
applicable laws or regulations.
Holders may present debt securities for exchange, and holders of registered
debt securities may present them for transfer, in the manner, at the places and
subject to the restrictions set forth in the debt securities and the prospectus
supplement. Cox will provide these services without charge, other than any tax
or other governmental charge payable in that connection, but subject to the
limitations provided in the indenture. Debt securities in bearer form and the
coupons, if any, pertaining to such debt securities will be transferable by
delivery.
Debt securities will bear interest at a fixed rate or a floating rate. Debt
securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate will be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any discounted debt securities or to certain debt
securities issued at par, which are treated as having been issued at a discount
for United States federal income tax purposes, will be described in the
accompanying prospectus supplement.
Cox may issue debt securities from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on any
interest payment date, to be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors. Holders of
these debt securities may receive a payment of principal on any principal
payment date, or a payment of interest on any interest payment date, that is
greater or less than the amount of principal or interest otherwise payable on
those dates, depending upon the value of the applicable currency, commodity,
equity index or other factor on those dates. Information as to the methods Cox
will use to determine the amount of principal or interest payable on any date,
the currencies, commodities, equity indices or other factors to which the amount
payable on that date is linked and certain additional tax considerations will be
set forth in the applicable prospectus supplement.
Unless Cox indicates otherwise in the accompanying prospectus supplement,
the debt securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiples of $1,000. Unless
Cox specifies otherwise in the prospectus supplement, the principal amount of
the debt securities will be payable at the corporate trust office of the trustee
in New York, New York. Holders may present the debt securities for transfer or
exchange at that office unless Cox specifies otherwise in the prospectus
supplement, subject to the limitations provided in the indenture and without any
service charge, but Cox may require payment of a sum sufficient to cover any tax
or other governmental charges payable.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under the indenture and has been
appointed by Cox as registrar and paying agent with regard to the debt
securities. The trustee is a depositary for funds and performs other services
for, and transacts other banking business with, Cox in the normal course of
business.
RANKING
Unless Cox specifies otherwise in a prospectus supplement for a particular
series of debt securities, all series of debt securities will be senior
indebtedness of Cox and will be direct, unsecured obligations, ranking equally
with all of Cox's other unsecured and unsubordinated obligations.
Cox conducts most of its operations through its subsidiaries. Therefore,
Cox's rights and the rights of Cox's creditors, including debt securities
holders, to participate in the assets of any subsidiary upon such
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subsidiary's liquidation or recapitalization will be subject to the prior claims
of the subsidiary's creditors, except to the extent Cox may be a creditor with
recognized claims against the subsidiary.
CERTAIN COVENANTS
The indenture contains covenants, including, among others, the following:
Limitation on liens. Cox will not, and will not permit any restricted
subsidiary to, create, incur or assume any lien, other than permitted liens on
restricted property incurred to secure the payment of Indebtedness of Cox or any
restricted subsidiary, if, immediately after the creation, incurrence or
assumption of such lien, the aggregate outstanding principal amount of all
Indebtedness of Cox and its restricted subsidiaries that is secured by liens
other than permitted liens on restricted property would exceed the greater of:
- $200 million or
- 15% of the aggregate outstanding principal amount of all Indebtedness of
Cox and the restricted subsidiaries, whether or not so secured,
unless effective provision is made such that, at Cox's determination, the debt
securities together with any other Indebtedness of equal ranking, whether then
existing or later created, are secured equally and ratably with, or prior to,
such Indebtedness, but only for as long as such Indebtedness is so secured.
Limitation on Indebtedness of restricted subsidiaries. Cox will not permit
any restricted subsidiary to incur any Indebtedness if, immediately after the
incurrence or assumption of such Indebtedness, the aggregate outstanding
principal amount of all indebtedness of the restricted subsidiaries would exceed
the greater of:
- $200 million; or
- 15% of the aggregate outstanding principal amount of all Indebtedness of
Cox and the restricted subsidiaries;
provided that, in any event, a restricted subsidiary may incur Indebtedness to
extend, renew or replace its own Indebtedness to the extent that the principal
amount of the Indebtedness so incurred does not exceed the level of the
principal amount of the Indebtedness immediately prior to such extension,
renewal or replacement plus any premium, accrued and unpaid interest or
capitalized interest payable on the previous amount.
Designation of subsidiaries. Cox may designate a restricted subsidiary as
an unrestricted subsidiary or designate an unrestricted subsidiary as a
restricted subsidiary at any time, provided that:
- immediately after giving effect to such designation, the restricted
group's leverage ratio is not greater than 7:1 and Cox and the restricted
subsidiaries are in compliance with the "Limitation on liens" and
"Limitation on Indebtedness of restricted subsidiaries" covenants; and
- Cox delivers an officers' certificate with respect to such designation,
to the trustee, within 75 days after the end of Cox's fiscal quarter in
which it made such designation, or, in the case of a designation made
during the last fiscal quarter of Cox's fiscal year, within 120 days
after the end of such fiscal year. The officers' certificate shall state
the effective date of such designation.
Mergers or sales of assets. The indenture provides that Cox may not merge
with or into or consolidate with another entity or lease, convey or transfer all
or substantially all of its assets to another entity unless either:
- Cox is the surviving corporation; or
- the resulting, surviving or transferee entity is a corporation organized
under the laws of a state of the United States or the District of
Columbia and expressly assumes all of Cox's obligations under the debt
securities and the indenture; and
- immediately after and giving effect to such transaction, no event of
default has occurred.
The indenture does not contain any provisions affording debt securities
holders any additional protection in the event that Cox enters into a
highly-leveraged transaction.
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DEFINITIONS
Indebtedness means, without duplication, with respect to any entity:
- any indebtedness of such entity for borrowed money or evidenced by a
note, debenture or similar instrument, including a purchase money
obligation which was given in connection with the acquisition of any
property or assets, including securities;
- any guarantee by such entity of any indebtedness of others as described
in the preceding clause; and
- any amendment, extension, renewal or refunding of any such indebtedness
or guarantee.
The term Indebtedness excludes:
- any indebtedness of Cox or of any its restricted subsidiaries to Cox or
another restricted subsidiary;
- any guarantee by Cox or any restricted subsidiary of indebtedness of Cox
or another restricted subsidiary;
- trade accounts payable; and
- letters of credit, performance bonds and similar obligations issued in
favor of governmental or franchising authorities as a term of a cable
television franchise or other governmental franchise, license, permit or
authorization held by such entity or any of its subsidiaries.
Leverage ratio with respect to the restricted group means, as of the date
of and after giving effect to any designation of an unrestricted subsidiary as a
restricted subsidiary, or any designation of a restricted subsidiary as an
unrestricted subsidiary, in each case in accordance with the "Designation of
subsidiaries" covenant, the ratio of:
- the aggregate outstanding principal amount of all Indebtedness of the
restricted group as of such date;
to
- the product of four times the restricted group cash flow for the most
recent full fiscal quarter for which financial information is available
on such date.
Permitted liens means:
1. Any lien which arises out of a judgment or award against Cox or any
restricted subsidiary, with respect to which Cox or such restricted
subsidiary, at the time, shall be prosecuting an appeal or proceeding
for review, or with respect to which the period within which such
appeal or proceeding for review may be initiated shall not have
expired, and with respect to which:
- Cox or such restricted subsidiary shall have secured a stay of
execution pending such appeal or proceeding for review; or
- Cox or such restricted subsidiary shall have posted a bond or
established adequate reserves, in accordance with generally
accepted accounting principles, for the payment of such judgment or
award;
2. Any lien upon any real or personal property or interest in such
property belonging to Cox or a restricted subsidiary and existing at
the time the property or interest was acquired, or securing payment
of Indebtedness which Cox or the restricted subsidiary incurred to
finance some or all of the purchase price of, or cost of construction
of or improvements on, any such property or interest therein;
provided that:
- the outstanding principal amount of the Indebtedness secured by
such lien does not at any time exceed 100% of the greater of the
purchase price for or the fair value of such real or personal
property or interest;
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- such lien does not encumber or constitute a charge against any
other restricted property owned by the restricted group, except
that in the case of construction or improvement, the lien may
extend to unimproved real property on which the property so
constructed or the improvement is located; and
- the indebtedness secured by such lien would be permitted to be
incurred under the covenant described under "Limitation on
Indebtedness of restricted subsidiaries;" and
3. Any lien representing the extension, renewal or replacement, or
successive extensions, renewals or replacements, of liens referred to
in paragraph (2) above, provided that the principal of the
Indebtedness thus secured does not exceed
- the principal of the Indebtedness secured immediately prior to such
extension, renewal or replacement,
plus
- any accrued and unpaid interest or capitalized interest payable;
and such extension, renewal or replacement shall be limited to
- all or a part of the property or interest subject to the lien so
extended, renewed or replaced,
plus
- improvements and construction on such property.
The outstanding principal amount of Indebtedness secured by a lien
permitted by paragraph (2) or (3) above or, if less, the fair value of the
property or interest thus secured, shall be included in the calculation of the
aggregate outstanding principal amount of Indebtedness secured by liens on
restricted property, for purposes of determining whether a lien, other than a
permitted lien, may be incurred in compliance with the covenant described under
"Limitation on liens."
Principal property means, as of any date of determination, any property or
assets which any restricted subsidiary owns other than:
- any such property which, in the good faith opinion of Cox's board of
directors, is not of material importance to the business conducted by Cox
and its restricted subsidiaries taken as a whole; and
- any shares of any class of stock or any other security of any
unrestricted subsidiary.
Restricted group means, as of any date of determination, Cox and the
restricted subsidiaries as of such date and after giving effect to any
designation being made on such date in accordance with the "Designation of
subsidiaries" covenant.
Restricted group cash flow for any period means the restricted group's net
income for such period,
plus
the sum, without duplication, of the aggregate of each of the following
items of Cox and the restricted subsidiaries for such period, to the extent
taken into account as charges to restricted group net income for such period:
- interest expense;
- income tax expense;
- depreciation and amortization expense and other noncash charges;
- extraordinary items; and
- after-tax losses on sales of assets outside of the ordinary course of
business, which otherwise are not included in extraordinary items in
accordance with generally accepted accounting principles;
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minus
the sum, without duplication, of the aggregate of each of the following
items of Cox and the restricted subsidiaries for such period, to the extent
taken into account as credits to restricted group net income for such period:
- noncash credits;
- extraordinary items; and
- after-tax gains on sales of assets outside of the ordinary course of
business, which otherwise are not included in extraordinary items in
accordance with generally accepted accounting principles.
For purposes of this definition:
- Restricted group net income for any period means the aggregate of the net
income or loss of Cox and its restricted subsidiaries for such period,
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that the net income or loss of any entity
accounted for by the equity method of accounting, and the net income or
loss of any unrestricted subsidiary, shall be excluded. However, the net
income of any such entity or unrestricted subsidiary shall be included to
the extent of the amount of dividends or distributions such entity or
unrestricted subsidiary pays to Cox or a restricted subsidiary during
such period; and
- if Cox or any restricted subsidiary consummated any acquisition or
disposition of assets during the period for which restricted group cash
flow is being calculated, or consummated any acquisition or disposition
of assets subsequent to such period and on or prior to the date as of
which the leverage ratio is to be determined, then, in each such case,
the restricted group cash flow for such period shall be calculated on a
pro forma basis, instead of as a pooling of interests, if applicable, as
if such acquisition or disposition had occurred at the beginning of such
period.
Restricted property means, as of any date of determination, any principal
property and any shares of stock of a restricted subsidiary which Cox or a
restricted subsidiary owns.
DEFAULTS
An event of default with respect to debt securities of any series is
defined in the indenture as:
1. a default in the payment of interest when due on the debt securities
of that series which continues for 30 days;
2. a default in the payment of principal of any debt security of that
series when due, whether at its stated maturity, upon redemption,
upon required repurchase, by declaration or otherwise;
3. Cox's failure to comply with its obligations under "-- Certain
Covenants -- Mergers or sales of assets" above;
4. Cox's failure to comply, within 60 days after notice provided in
accordance with the terms of the indenture, with any of its other
covenants or agreements contained in the indenture with respect to
that series of debt securities, including its obligations under the
covenants described above under "-- Certain Covenants -- Limitation
on liens," "-- Limitation on Indebtedness of restricted subsidiaries"
or "-- Designation of subsidiaries," provided that this provision
does not apply to defaults in covenants for which the indenture
specifically provides otherwise;
5. Indebtedness of Cox or any restricted subsidiary is not paid within
any applicable grace period after final maturity or is accelerated by
its holders because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds 5% of the aggregate
outstanding principal amount of all Indebtedness of Cox and the
restricted subsidiaries;
6. certain events of bankruptcy, insolvency or reorganization of Cox or
a restricted subsidiary;
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7. failure to make a sinking fund payment when due on the debt
securities of that series; or
8. any other events of default specified for that series of debt
securities.
Except as described in the second to last sentence of this paragraph, if an
event of default occurs and is continuing with respect to a particular series of
debt securities, the trustee or the holders of at least 25% in principal amount
of the outstanding debt securities of such series may declare the principal of
and accrued but unpaid interest on all the debt securities of such series to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately. If an event of default relating to specific events
of bankruptcy, insolvency or reorganization of Cox occurs and is continuing, the
principal of and interest on all the debt securities will become and be
immediately due and payable without any declaration or other act on the part of
the trustee or any holders of the debt securities. Under some circumstances, the
holders of a majority in principal amount of the outstanding debt securities of
a series may rescind any acceleration and its consequences with respect to the
debt securities of that series.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request or direction of any of the holders of the debt securities of any
series, unless such holders have offered to the trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right to
receive payment of principal, premium, if any, or interest when due, no debt
security holder may pursue any remedy with respect to the indenture or the debt
securities of its series unless:
- that holder has previously given the trustee notice that an event of
default is continuing;
- holders of at least 25% in principal amount of the outstanding debt
securities of such series have requested the trustee to pursue the
remedy;
- those holders have offered the trustee reasonable security or indemnity
against any loss, liability or expense;
- the trustee has not complied with such request within 60 days of
receiving it with an offer of security or indemnity; and
- the holders of a majority in principal amount of the outstanding debt
securities of such series have not given the trustee a direction
inconsistent with such request within such 60-day period.
Subject to some restrictions, the holders of a majority in principal amount
of the outstanding debt securities of any series are given the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee, or of exercising any trust or power conferred on the trustee.
The trustee, however, may refuse to follow any direction that conflicts with law
or the indenture or that the trustee determines is unduly prejudicial to the
rights of any other holder of a debt security of the same series, or that would
involve the trustee in personal liability.
The indenture provides that if a default occurs and is continuing with
respect to a particular series of debt securities and is known to the trustee,
the trustee must mail notice of the default within 90 days after it occurs to
each holder of the debt securities of such series. Except in the case of a
default in the payment of principal of, premium, if any, or interest on any debt
security, the trustee may withhold notice if and so long as a committee of its
trust officers determines that withholding notice is in the interests of the
holders of the debt securities of such series. In addition, Cox must deliver to
the trustee, within 120 days after the end of each fiscal year, an officers'
certificate indicating whether the signers thereof know of any default that
occurred during the previous year. Cox also is required to deliver to the
trustee, within 30 days after its occurrence, written notice of any events which
would constitute certain defaults, their status and what action Cox is taking or
proposes to take.
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Prior to the acceleration of the maturity of the debt securities of any
series, the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series may on behalf of all the debt
securities and any related coupons of that series waive any past default or
event of default, except:
- a default in the payment of the principal of, and premium, if any, or
interest on, any of the debt securities or in the payment of any related
coupon; and
- a default that cannot be waived without the consent of each holder
affected.
A waiver will serve to end such default, to cure any event of default, and to
restore Cox, the trustee and holders of the affected debt securities to their
former positions and rights. No such waiver will extend to any subsequent or
other default.
AMENDMENTS AND WAIVERS
Subject to specific exceptions, the indenture may be amended with respect
to a series of debt securities with the consent of the holders of a majority in
principal amount then outstanding of the debt securities of that series,
including consents obtained in connection with a tender offer or exchange for
the debt securities. Any past default or compliance with any provisions also may
be waived with such a consent of the holders of a majority in principal amount
then outstanding of the debt securities of such series. However, without the
consent of each holder of an outstanding debt security of that series, no
amendment may, among other things:
- reduce the amount of debt securities of that series whose holders must
consent to an amendment;
- reduce the rate of, or extend the time for, payment of interest on any
debt security of that series;
- reduce the principal of or extend the stated maturity of any debt
security of that series;
- reduce the premium payable upon the redemption of any debt security of
that series, or change the time at which any debt security of that series
may or shall be redeemed;
- make any debt securities of that series payable in a currency other than
that stated in the debt securities of such series;
- release any security that may have been granted in respect of the debt
securities; or
- make any change (1) affecting the rights of holders of a majority in
principal amount of the outstanding debt securities of that series to
direct the time, method and place of conducting proceedings for any
remedy available to the trustee, (2) in the amendment provisions which
requires each holder's consent, or (3) in the waiver provisions.
Without the consent of any of the debt securities holders, Cox and the
trustee may amend the indenture:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption by a successor entity of Cox's obligations
under the indenture;
- to provide for uncertificated debt securities in addition to or in place
of certificated debt securities;
- to add guarantees with respect to the debt securities;
- to secure the debt securities;
- to add to the covenants for the benefit of holders of all or any series
of the debt securities and to make a default of that additional covenant
an event of default under the indenture for all or any series of debt
securities;
- to surrender any right or power conferred upon Cox;
- to convey, transfer, assign, mortgage or pledge any property to or with
the trustee, or to make such other provisions in regard to matters or
questions arising under the indenture as shall not adversely affect the
interests of any holders of debt securities;
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- to make any change that does not adversely affect the rights of any debt
securities holder;
- to provide for a successor or separate trustee with respect to the debt
securities of one or more series; or
- to comply with any SEC requirement in connection with the qualification
of the indenture under the Trust Indenture Act.
The indenture does not require the debt securities holders to give consent
approving of the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the indenture becomes effective, Cox is required
to mail to holders of the debt securities of the affected series a notice
briefly describing such amendment. However, Cox's failure to give such notice to
all holders of the debt securities of such series, or any defect in such notice,
will not impair or affect the validity of the amendment.
DEFEASANCE
Cox at any time may terminate all its obligations with respect to a
particular series of debt securities, and under the indenture, with respect to
the legal defeasance of such series, except for specific obligations including:
- those respecting the defeasance trust;
- to register the transfer or exchange of the debt securities;
- to replace mutilated, destroyed, lost or stolen debt securities; and
- to maintain a registrar and paying agent in respect of the debt
securities.
Cox at any time may terminate its obligations with respect to a series of
debt securities under the covenants described under "-- Certain Covenants,"
other than the covenants described under "-- Mergers or sales of assets," and
any other restrictive covenants described in the accompanying prospectus
supplement relating to that series, as well as the operation of the
cross-acceleration provision and the bankruptcy provisions described under
"-- Defaults" above.
Cox may exercise its legal defeasance option notwithstanding its prior
exercise of the covenant defeasance option. If Cox exercises its legal
defeasance option with respect to a particular series of debt securities,
payment of the debt securities of that series may not be accelerated because of
an event of default with respect thereto. If Cox exercises its covenant
defeasance option with respect to a particular series of debt securities,
payment of the debt securities of such series may not be accelerated because of
an event of default as specified in paragraphs (4), (5) or (6) under
"-- Defaults" above, with respect to restricted subsidiaries only, or paragraph
(8) above, except to the extent that any of the agreements or covenants
referenced in such paragraphs remain applicable.
In order to exercise either defeasance option with respect to a particular
series of debt securities, Cox must deposit irrevocably in trust, with the
trustee, money or U.S. Government obligations, which trust will be known as the
defeasance trust. Through the payment of interest and principal on the debt
securities in accordance with their terms the defeasance trust will provide
money in an amount sufficient to pay all the principal, including any mandatory
sinking fund payments, of, premium, if any, on, and interest on the debt
securities of that series, to redemption or maturity, as the case may be. Cox
also must comply with other specified conditions, including delivery to the
trustee of an opinion of counsel to the effect that:
- holders of the debt securities of that series will not recognize income
gain or loss for United States federal income tax purposes as a result of
such deposit and defeasance;
- holders of the debt securities of that series will be subject to United
States federal income tax on the same amount, in the same manner and at
the same times as would have been the case if such deposit and defeasance
had not occurred;
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- in the case of legal defeasance only, that opinion of counsel must be
based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law; and
- the creation of the defeasance trust will not violate the Investment
Company Act of 1940, as amended.
In addition, Cox must deliver to the trustee an officers' certificate
stating that Cox did not make such deposit with the intent of preferring the
debt securities holders over other of Cox's creditors, or with the intent of
defeating, hindering, delaying or defrauding its creditors or the creditors of
others.
TRANSFER
Holders may transfer or exchange the debt securities in accordance with the
indenture. Unless Cox indicates otherwise in the applicable prospectus
supplement, Cox will issue the debt securities in registered form and they will
be transferable only upon the surrender of such debt securities for registration
of transfer. Cox may require payment of a sum sufficient to cover any tax,
assessment or other governmental charge payable in connection with certain
transfers or exchanges. Cox is not required to transfer or exchange any debt
security selected for redemption. In addition, Cox is not required to transfer
or exchange any debt security for a period of 15 days before a selection of debt
securities to be redeemed or before any interest payment date.
GOVERNING LAW
The indenture provides that it and the debt securities will be governed by,
and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
GLOBAL SECURITIES
Cox may issue the registered debt securities of a series in the form of one
or more fully registered global securities which will be deposited with a
depositary, or with a nominee for the depositary, as identified in the
prospectus supplement relating to such series. A registered global security will
be registered in the name of the depositary or its nominee. If registered debt
securities are issued in global form, one or more registered global securities
will be issued in a denomination or aggregate denominations equal to the portion
of the aggregate principal amount of outstanding registered debt securities of
the series to be represented by those registered global securities. Unless and
until it is exchanged in whole for debt securities in definitive registered
form, a registered global security may not be transferred except as a whole by
the depositary:
- to its nominee;
- by its nominee to such depositary or another such nominee; or
- by the depositary or any of its nominees to a successor of that
depositary or the successor's nominee.
The specific terms of the depositary arrangement with respect to any
portion of a series of debt securities to be represented by a registered global
security will be described in the prospectus supplement relating to such series.
Cox anticipates that the following provisions will apply to all depositary
arrangements.
Ownership of beneficial interests in a registered global security will be
limited to persons, who will be referred to as participants, who have accounts
with the depositary for such registered global security, or persons that may
hold interests through participants. Upon the issuance of a registered global
security, the depositary will credit the participants' accounts, on its
book-entry registration and transfer system, with the respective principal
amounts of the debt securities represented by such registered global security
and beneficially owned by those participants. The accounts to be credited shall
be designated by any dealers,
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underwriters or agents participating in the distribution of those debt
securities, or by Cox if it offers and sells such debt securities directly.
Ownership of beneficial interests in such registered global security will be
shown on, and the transfer of those ownership interests will be effected only
through, records maintained by the depositary with respect to participants'
interests, and on the records of participants with respect to interests of
persons holding through participants. The laws of some states may require that
some purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability of those purchasers to own,
transfer or pledge beneficial interests in registered global securities.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of that registered global security, that depositary or
that nominee, as the case may be, will be considered the sole owner or holder of
the debt securities represented by such registered global security for all
purposes under the indenture. Except as set forth below, owners of beneficial
interests in a registered global security will not be entitled to have the debt
securities 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 of the debt securities under the indenture.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for such registered
global security and, if such person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights a holder possesses under the indenture. Cox understands that under
existing industry practices, if Cox requests any action of holders or if an
owner of a beneficial interest in a registered global security desires to give
or take any action which a holder is entitled to give or take under the
indenture, as the case may be, the depositary for such registered global
security would authorize the participants holding the relevant beneficial
interests to give or take that action, and such participants would authorize
beneficial owners owning through such participants to give or take that action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Principal, premium, if any, and interest payments on debt securities
represented by a registered global security registered in the name of a
depositary or its nominee will be made to such depositary or its nominee, as the
case may be, as the registered owner of such registered global security. None of
Cox, the trustee, the registrar or any other agent of Cox, of the trustee or of
the registrar will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in such registered global security, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Cox expects that the depositary for any debt securities represented by a
registered global security, or its nominee, upon receipt of any payment of
principal, premium or interest in respect of the registered global security,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests as shown on the records
of such depositary or its nominee. Cox also expects that payments by
participants to owners of beneficial interests in the registered global security
held through such participants will be governed by standing customer
instructions and customary practices, and will be the responsibility of those
participants, as is now the case with the securities held for the accounts of
customers in bearer form or registered in street name.
If the depositary for any debt securities represented by a registered
global security is at any time unwilling or unable to continue as depositary, or
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, as amended, and Cox does not appoint a successor depositary registered as
a clearing agency under the Exchange Act within 90 days, Cox will issue such
debt securities in definitive form in exchange for such registered global
security. In addition, Cox may at any time and in its sole discretion determine
not to have any of the debt securities of a series represented by one or more
registered global securities and, in such event, will issue such debt securities
in definitive form in exchange for all of the registered global securities
representing such debt securities. Any debt securities issued in definitive form
in exchange for a registered global security will be registered in such name or
names as the depositary shall instruct the trustee or the registrar. Cox expects
that such instructions, with respect to ownership of beneficial interests in the
registered global security, will be based upon directions received by the
depositary from participants.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
GENERAL
The junior subordinated debentures will be issued in one or more series
under a junior subordinated debenture indenture, as supplemented from time to
time, between Cox and The Bank of New York, as the debenture trustee. The junior
subordinated debenture indenture has been qualified under the Trust Indenture
Act, and is subject to, and governed by, the Trust Indenture Act and is included
as an exhibit to the registration statement of which this prospectus is a part.
This summary of certain terms and provisions of the junior subordinated
debentures and the junior subordinated debenture indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of such junior subordinated debentures and the junior
subordinated debenture indenture, including the definitions therein of certain
terms, and those terms made a part of the junior subordinated debenture
indenture by the Trust Indenture Act.
The applicable prospectus supplement will describe the specific terms of
each series of junior subordinated debentures offered thereby, including:
- the specific title and designation, aggregate principal amount, including
any limit on the principal amount, purchase price and denominations of
those junior subordinated debentures;
- the date or dates on which the principal of those junior subordinated
debentures is payable or the method of determining the same, if
applicable;
- the rate or rates, which may be fixed or variable, at which those junior
subordinated debentures will bear interest, if any, or the method of
determining the same, if applicable;
- the date or dates from which interest, if any, shall accrue or the method
of determining the same, if applicable, the interest payment dates, if
any, on which interest will be payable or the manner of determining the
same, if applicable, and the record dates for the determination of
holders to whom interest is payable on those junior subordinated
debentures;
- the duration of the maximum consecutive period that Cox may elect to
defer payments of interest on those junior subordinated debentures;
- any redemption, repayment or sinking fund provisions;
- whether those junior subordinated debentures are convertible into or
exchangeable for Class A common stock or other securities or rights of
Cox or other issuers, or a combination of the foregoing and, if so, the
applicable conversion or exchange terms and conditions;
- any applicable material United States federal income tax consequences;
and
- any other specific terms pertaining to those junior subordinated
debentures, whether in addition to, or modification or deletion of, the
terms described herein.
RANKING
Each series of junior subordinated debentures will rank equally with all
other series of junior subordinated debentures to be issued by Cox and sold to
other trusts or other entities to be established by Cox that are similar to the
Cox Trusts and will be unsecured and will rank subordinate and junior in right
of payment, to the extent and in the manner set forth in the junior subordinated
debenture indenture, to all senior indebtedness of Cox as defined in the junior
subordinated debenture indenture. The junior subordinated debenture indenture
will not limit the amount of secured or unsecured debt, including senior
indebtedness, that may be incurred by Cox or its subsidiaries. See
"-- Subordination." As of June 30, 1999, the aggregate principal amount of
senior indebtedness as defined in the junior subordinated debenture indenture
was approximately $3.5 billion.
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FORM, REGISTRATION AND TRANSFER
The junior subordinated debentures will be issued in fully registered form.
Until any dissolution of the applicable Cox Trust, the junior subordinated
debentures will be held in the name of the property trustee in trust for the
benefit of the holders of the related trust securities. If the junior
subordinated debentures are distributed to the holders of the related trust
securities, the junior subordinated debentures will be issued to such holders in
the same form as the trust securities were held. Accordingly, any depositary
arrangements for such junior subordinated debentures are expected to be
substantially similar to those in effect for the trust preferred securities. See
"Description of Trust Preferred Securities -- Global Trust Preferred
Securities."
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of and premium, if any, on and interest on the junior subordinated
debentures will be made at the office of the debenture trustee in The City of
New York or at the office of such paying agent or paying agents as Cox may
designate from time to time, except that at the option of Cox payment of any
interest may be made, except in the case of a global certificate representing
junior subordinated debentures, by:
1. check mailed to the address of the person entitled thereto as such
address shall appear in the applicable securities register for
junior subordinated debentures or
2. transfer to an account maintained by the person entitled thereto as
specified in such securities register, provided that proper
transfer instructions have been received by the relevant record
date.
Payment of any interest on any junior subordinated debenture will be made to the
person in whose name such junior subordinated debenture is registered at the
close of business on the record date for such interest, except in the case of
defaulted interest. Cox may at any time designate additional paying agents or
rescind the designation of any paying agent; provided, however, Cox will at all
times be required to maintain a paying agent in each place of payment for the
junior subordinated debentures.
Any moneys deposited with the debenture trustee or any paying agent, or
then held by Cox in trust, for the payment of the principal of and premium, if
any, on or interest on any junior subordinated debentures and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of Cox, be repaid to Cox and
the holder of such junior subordinated debentures shall thereafter look, as a
general unsecured creditor, only to Cox for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no debenture event of default has occurred and is continuing,
Cox will have the right under the junior subordinated debenture indenture to
defer the payment of interest on the junior subordinated debentures at any time
or from time to time up to the maximum period specified in the applicable
prospectus supplement for the deferral of interest. Each of these deferral
periods is referred to in this prospectus as an extension period. An extension
period must end on an interest payment date and may not extend beyond the stated
maturity of such junior subordinated debentures. At the end of an extension
period, Cox must pay all interest then accrued and unpaid, together with
interest on the accrued and unpaid interest, to the extent permitted by
applicable law. During an extension period, interest will continue to accrue and
holders of junior subordinated debentures, and holders of the related trust
securities that are outstanding, will be required to accrue such deferred
interest income for United States federal income tax purposes prior to the
receipt of cash attributable to such income, regardless of the method of
accounting used by the holders.
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Prior to the termination of any extension period, Cox may extend such
extension period, provided that such extension does not
- cause such extension period to exceed the maximum extension period,
- end on a date other than an interest payment date, or
- extend beyond the stated maturity of the related junior subordinated
debentures.
Upon the termination of any extension period, or any extension of the related
extension period, and the payment of all amounts then due, Cox may begin a new
extension period, subject to the limitations described above. No interest shall
be due and payable during an extension period except at the end thereof. Cox
must give the debenture trustee notice of its election to begin or extend an
extension period at least five business days prior to the earlier of:
- the date cash distributions on the related trust securities would have
been payable except for the election to begin or extend such extension
period or
- the date the applicable Cox Trust is required to give notice to any
securities exchange or to holders of its trust preferred securities of
the record date or the date cash distributions are payable, but in any
event not less than five business days prior to such record date.
The debenture trustee shall give notice of Cox's election to begin or
extend an extension period to the holders of the trust preferred securities.
Subject to the foregoing limitations, there is no limitation on the number of
times that Cox may begin or extend an extension period.
RESTRICTIONS ON CERTAIN PAYMENTS
Cox will covenant that if at any time:
1. there shall have occurred any event of which Cox has actual
knowledge that is, or with the giving of notice or the lapse of
time, or both, would be, a debenture event of default;
2. Cox shall be in default with respect to any of its payment
obligations under the preferred securities guarantee; or
3. Cox shall have given notice of its election to exercise its right
to begin or extend an extension period as provided in the junior
subordinated debenture indenture and shall not have rescinded such
notice, and such extension period, or any extension thereof, shall
have commenced and be continuing,
then it will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of Cox's
capital stock;
- make any payment of principal of or premium, if any, on or interest on or
repay or repurchase or redeem any debt securities of Cox, including other
junior subordinated debentures, that rank equally with or junior in right
of payment to the junior subordinated debentures; or
- make any guarantee payments with respect to any guarantee by Cox of the
debt securities of any subsidiary of Cox, including under any guarantees
to be issued by Cox with respect to securities of other Cox trusts or
entities to be established by Cox similar to the Cox Trusts, if such
guarantee ranks equally with or junior in right of payment to the junior
subordinated debentures
other than:
- dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, Class A common stock and Class C
common stock of Cox;
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- any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan
in the future, or the redemption or repurchase of any such rights
pursuant thereto;
- payments under the preferred securities guarantee;
- as a result of reclassification of Cox's capital stock or the exchange
or conversion of one class or series of Cox's capital stock for another
class or series of Cox's capital stock;
- the purchase of fractional interests in shares of Cox's capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged; and
- purchases of Class A and Class C common stock related to the issuance of
Class A and Class C common stock or rights under any of Cox's benefit
plans for its directors, officers, or employees or any of Cox's dividend
reinvestment plans.
So long as the trust securities remain outstanding, Cox also will covenant:
- to maintain 100% direct or indirect ownership of the related trust common
securities, provided that any permitted successor of Cox under the junior
subordinated debenture indenture may succeed to Cox's ownership of such
trust common securities;
- to use its best efforts to cause each Cox Trust
- to remain a business trust, except in connection with the distribution
of junior subordinated debentures to the holders of related trust
securities in liquidation of such Cox Trust, the conversion, exchange or
redemption of all of such trust securities, or certain mergers,
consolidations or amalgamations, each as permitted by the declaration of
trust,
- to otherwise continue to be classified as a grantor trust for United
States federal income tax purposes;
- to use its reasonable best efforts to cause each holder of its trust
securities to be treated as owning an undivided beneficial interest in
the related junior subordinated debentures; and
- not to cause, as sponsor of the Cox Trusts, or to permit, as the trust
common securities holder, the dissolution, liquidation or winding-up of
any Cox Trust, except as provided in the declaration of trust.
MODIFICATION OF JUNIOR SUBORDINATED DEBENTURE INDENTURE
From time to time, Cox and the debenture trustee may, without the consent
of the holders of the junior subordinated debentures, amend, waive or supplement
the junior subordinated debenture indenture for specified purposes, including,
among other things, curing ambiguities or adding provisions, provided that any
such action does not materially adversely affect the interests of the holders of
the junior subordinated debentures, and maintaining the qualification of the
junior subordinated debenture indenture under the Trust Indenture Act. The
junior subordinated debenture indenture will permit Cox and the debenture
trustee, with the consent of the holders of a majority in principal amount of
all outstanding junior subordinated debentures affected thereby, to modify the
junior subordinated debenture indenture in a manner affecting the rights of the
holders of junior subordinated debentures; provided, however, that no such
modification may, without the consent of the holder of each outstanding junior
subordinated debenture so affected:
- change the stated maturity or reduce the principal of any such junior
subordinated debentures;
- change the interest rate or the manner of calculation of the interest
rate or extend the time of payment of interest on any such junior
subordinated debentures except pursuant to Cox's right under the junior
subordinated debenture indenture to defer the payment of interest as
provided therein (see "-- Option to Extend Interest Payment Date");
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- change any of the conversion, exchange or redemption provisions
applicable to any such junior subordinated debentures;
- change the currency in respect of which payments of principal of or any
premium or interest on any such junior subordinated debentures are to be
made;
- change the right of holders of trust securities to bring a direct action
in respect of any required payments or conversion or exchange rights;
- impair or affect the right of any holder of any such junior subordinated
debentures to institute suit for the payment of the principal thereof or
premium, if any, or interest thereon or for the conversion or exchange of
any such junior subordinated debentures in accordance with their terms;
- change the subordination provisions adversely to the holders of the
junior subordinated debentures; or
- reduce the percentage of principal amount of junior subordinated
debentures the holders of which are required to consent to any such
modification of the junior subordinated debenture indenture.
DEBENTURE EVENTS OF DEFAULT
The following described events with respect to any series of junior
subordinated debentures will constitute a debenture event of default, whatever
the reason for such debenture event of default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body, unless such event is specifically deleted
or modified in or pursuant to the supplemental indenture, board resolution or
officers' certificate establishing the terms of such series pursuant to the
junior subordinated debenture indenture:
1. failure for 30 days to pay any interest on that series of junior
subordinated debentures when due, subject to any permitted
deferral; provided that, during any extension period for such
series of junior subordinated debentures, failure to pay interest
on such series of junior subordinated debentures will not
constitute a debenture event of default; or
2. failure to pay any principal of or premium, if any, on that series
of junior subordinated debentures when due, whether at maturity,
upon any redemption, by declaration of acceleration of maturity or
otherwise; or
3. if applicable, failure by Cox to deliver the required securities or
other rights upon an appropriate conversion or exchange election by
holders of that series of junior subordinated debentures or the
related trust preferred securities; or
4. failure to observe or perform any other agreement or covenant
contained in the junior subordinated debenture indenture in respect
of that series of junior subordinated debentures for 90 days after
written notice to Cox from the debenture trustee or the holders of
at least 25% in aggregate outstanding principal amount of that
series of junior subordinated debentures; or
5. certain events in bankruptcy, insolvency or reorganization of Cox.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures of any series have, subject to certain
exceptions, the right to direct the time, method and place of conducting any
proceeding for any remedy available to the debenture trustee in respect of such
junior subordinated debentures. The debenture trustee or the holders of at least
25% in aggregate outstanding principal amount of the junior subordinated
debentures of any series may declare the principal of and any accrued interest
on such junior subordinated debentures due and payable immediately upon a
debenture event of default, other than a debenture event of default referred to
in paragraph (5) above, which shall result in the immediate acceleration of the
junior subordinated debentures. The holders of a majority in aggregate
outstanding principal amount of the junior subordinated debentures of any series
may annul such
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declaration and waive the default in respect of such junior subordinated
debentures if the default, other than the non-payment of the principal and
interest of the junior subordinated debentures which has become due solely by
such acceleration, has been cured and a sum sufficient to pay all matured
installments of interest and premium, if any, and principal due otherwise than
by acceleration has been deposited with the debenture trustee.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures of any series may, on behalf of the holders of
all of the junior subordinated debentures of such series, waive any past
default, except:
- a default in the payment of the principal of or premium, if any, on or
interest on the junior subordinated debentures, unless that default has
been cured and a sum sufficient to pay all matured installments of
interest and premium, if any, and principal due otherwise than by
acceleration has been deposited with the debenture trustee; or
- a default in respect of a covenant or provision which under the junior
subordinated debenture indenture cannot be modified or amended without
the consent of the holder of each outstanding junior subordinated
debenture of such series.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
To the extent any action under the junior subordinated debenture indenture
is entitled to be taken by the holders of at least a specified percentage of
junior subordinated debentures, holders of the corresponding trust preferred
securities may take such action if such action is not taken by the property
trustee of the related Cox Trust. Notwithstanding the foregoing, if a debenture
event of default has occurred and is continuing and is attributable either to:
- the failure of Cox to pay the principal of or premium, if any, on or
interest on the junior subordinated debentures on the due date or
- the failure by Cox to deliver the required securities or other rights
upon an appropriate conversion or exchange right election,
a holder of the related trust preferred securities may institute a legal
proceeding directly against Cox for enforcement of payment to such holder of the
principal of or premium, if any, on or interest on such junior subordinated
debentures having a principal amount equal to the liquidation amount of the
trust preferred securities held by such holder or for enforcement of such
conversion or exchange rights, as the case may be, which is referred to as a
direct action. Cox may not amend the junior subordinated debenture indenture to
remove the foregoing right to bring a direct action without the prior written
consent of the holders of all of the trust preferred securities outstanding. If
the right to bring a direct action is removed, the applicable Cox Trust may
become subject to the reporting obligations under the Exchange Act.
Notwithstanding any payments made to a holder of trust preferred securities by
Cox in connection with a direct action, Cox shall remain obligated to pay the
principal of and premium, if any, on and interest on the related junior
subordinated debentures, and Cox shall be subrogated to the rights of the holder
of such trust preferred securities with respect to payments on the trust
preferred securities to the extent of any payments made by Cox to such holder in
any direct action.
The holders of the trust preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the related junior subordinated debentures unless an
event of default has occurred and is continuing under the applicable declaration
of trust. See "Description of Trust Preferred Securities -- Events of Default;
Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
Cox shall not consolidate with or merge into any other person or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to any person, and no person shall consolidate with or merge into
Cox or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to Cox, unless:
- in case Cox consolidates with or merges into another person or conveys or
transfers its properties and assets as an entirety or substantially as an
entirety to any person, the successor person is organized under the laws
of the United States or any State or the District of Columbia, and such
successor person expressly assumes Cox's obligations under the junior
subordinated debentures and the preferred securities guarantee;
- immediately after giving effect thereto, no debenture event of default,
and no event which, after notice or lapse of time or both, would become a
debenture event of default, shall have occurred and be continuing; and
- certain other conditions as prescribed in the junior subordinated
debenture indenture are met.
SATISFACTION AND DISCHARGE
The junior subordinated debenture indenture will cease to be of further
effect, except as to Cox's obligations to pay all other sums due pursuant to the
junior subordinated debenture indenture and to provide the required officers'
certificates and opinions of counsel, and Cox will be deemed to have satisfied
and discharged the junior subordinated debenture indenture, when, among other
things, all junior subordinated debentures not previously delivered to the
debenture trustee for cancellation
- have become due and payable, or
- will become due and payable at maturity or upon redemption within one
year, or
- if redeemable at the option of Cox, are to be called for redemption
within one year under arrangements satisfactory to the debenture trustee
for the giving of notice of redemption by the debenture trustee in the
name, and at the expense, of Cox,
and Cox deposits or causes to be deposited with the debenture trustee funds, in
trust, for the purpose and in an amount sufficient to pay and discharge the
entire indebtedness on the junior subordinated debentures not previously
delivered to the debenture trustee for cancellation, for the principal and
premium, if any, and interest to the date of the deposit or to the stated
maturity thereof, as the case may be.
SUBORDINATION
The junior subordinated debentures will rank subordinate and junior in
right of payment to all senior indebtedness to the extent provided in the junior
subordinated debenture indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of Cox, the holders of senior indebtedness
will first be entitled to receive payment in full of such senior indebtedness
before the holders of junior subordinated debentures will be entitled to receive
or retain any payment in respect thereof.
In the event of the acceleration of the maturity of junior subordinated
debentures, the holders of all senior indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
senior indebtedness before the holders of junior subordinated debentures will be
entitled to receive or retain any payment in respect of the junior subordinated
debentures.
No payments on account of principal or premium, if any, or interest in
respect of the junior subordinated debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to senior
indebtedness, or an event of default with respect to any senior indebtedness
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resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
Indebtedness shall mean:
1. every obligation of Cox for money borrowed;
2. every obligation of Cox evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses;
3. every reimbursement obligation of Cox with respect to letters of credit,
banker's acceptances or similar facilities issued for the account of
Cox;
4. every obligation of Cox issued or assumed as the deferred purchase price
of property or services, excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business;
5. every capital lease obligation of Cox which generally accepted
accounting principles require to be classified and accounted for as a
capital lease on Cox's balance sheet;
6. all indebtedness of Cox, whether incurred on or prior to the date of the
date of the junior subordinated debenture indenture or thereafter
incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements;
7. letters of credit, performance bonds and similar obligations issued in
favor of governmental or franchising authorities as a term of a cable
television franchise or other governmental franchise, license, permit or
authorization held by such entity or any of its subsidiaries;
8. every obligation of the type referred to in paragraphs (1) through (7)
of another person and all dividends of another person the payment of
which, in either case, Cox has guaranteed or is responsible or liable
for, directly or indirectly, as obligor or otherwise; and
9. obligations of the type referred to in paragraphs (1) through (8) of
another person secured by any lien on any property or asset of Cox,
whether or not such obligation is assumed by Cox; and all deferrals,
renewals, extensions and refundings of, and amendments, modifications
and supplements to, any of the foregoing obligations.
Indebtedness ranking on a parity with the junior subordinated debentures
shall mean
1. Indebtedness, whether outstanding on the date of execution of the
junior subordinated debenture indenture or thereafter created,
assumed or incurred, to the extent such Indebtedness specifically
by its terms ranks equally with and not prior to the junior
subordinated debentures in the right of payment upon the happening
of the dissolution, winding-up, liquidation or reorganization of
Cox, and
2. all other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with Cox that is a financing
vehicle of Cox, which is referred to as a financing entity, in
connection with the issuance by such financing entity of equity
securities or other securities guaranteed by Cox pursuant to an
instrument that ranks equally with or junior in right of payment to
the preferred securities guarantee.
The securing of any Indebtedness otherwise constituting indebtedness ranking on
a parity with the junior subordinated debentures shall not prevent such
Indebtedness from constituting indebtedness ranking on a parity with the junior
subordinated debentures.
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Indebtedness ranking junior to the junior subordinated debentures shall
mean any Indebtedness, whether outstanding on the date of execution of the
junior subordinated debenture indenture or thereafter created, assumed or
incurred, to the extent such Indebtedness by its terms ranks junior to and not
equally with or prior to:
- the junior subordinated debentures; and
- any other Indebtedness ranking equally with the junior subordinated
debentures in right of payment upon the happening of the dissolution,
winding-up, liquidation or reorganization of Cox.
The securing of any Indebtedness otherwise constituting indebtedness ranking
junior to the junior subordinated debentures shall not be deemed to prevent such
Indebtedness from constituting Indebtedness ranking junior to the junior
subordinated debentures.
Senior indebtedness shall mean all Indebtedness, whether outstanding on the
date of execution of the junior subordinated debenture indenture or thereafter
created, assumed or incurred, except indebtedness ranking on a parity with the
junior subordinated debentures or indebtedness ranking junior to the junior
subordinated debentures.
GOVERNING LAW
The junior subordinated debenture indenture and the junior subordinated
debentures will be governed by and construed in accordance with the laws of the
State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The debenture trustee shall be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to the foregoing, the debenture trustee will not be under
any obligation to exercise any of the powers vested in it by the junior
subordinated debenture indenture at the request of any holder of junior
subordinated debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby. The
debenture trustee will not be required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the debenture trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The trust preferred securities will be issued by a Cox Trust under the
declaration of trust of such Cox Trust and will represent beneficial interests
in the assests of such Cox Trust. The holders of such beneficial interests will
be entitled to a preference over the trust common securities of such Cox Trust
with respect to the payment of distributions and amounts payable on redemption
of the trust preferred securities or the liquidation of such Cox Trust under the
circumstances described under "-- Subordination of Trust Common Securities." The
declaration of trust has been qualified under the Trust Indenture Act and is
subject to, and governed by, the Trust Indenture Act. This summary of certain
terms and provisions of the trust preferred securities and the declaration of
trust does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions of such trust preferred
securities and such declaration of trust, including the definitions therein of
certain terms, and those made a part of such declaration of trust by the Trust
Indenture Act.
Reference is made to the applicable prospectus supplement for a description
of the specific terms of the trust preferred securities offered thereby,
including:
- the particular Cox Trust issuing such trust preferred securities;
- the specific designation, number and purchase price of such trust
preferred securities;
- the annual distribution rate or method of calculation of the distribution
rate for such trust preferred securities and, if applicable, the dates
from which and upon which such distributions shall
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accumulate and be payable and the record dates therefor, and the maximum
extension period for which such distributions may be deferred;
- the liquidation amount per trust preferred security which shall be paid
out of the assets of such Cox Trust to the holders thereof upon voluntary
or involuntary dissolution, winding-up and liquidation of such Cox Trust;
- the obligation or right, if any, of such Cox Trust to purchase or redeem
its trust preferred securities and the price or prices at which, the date
or dates on which or period or periods within which and the terms and
conditions upon which, such trust preferred securities shall or may be
purchased or redeemed, in whole or in part, pursuant to such obligation
or right;
- the terms and conditions, if any, upon which such trust preferred
securities may be converted or exchanged, in addition to the
circumstances described herein, into other securities or rights, or a
combination of the foregoing, including the name of the issuer of such
securities or rights, the initial conversion or exchange price or rate
per trust preferred security and the date or dates on which or period or
periods within which such conversion or exchange may be effected;
- if applicable, any securities exchange upon which such trust preferred
securities shall be listed;
- whether such trust preferred securities are issuable in book-entry form
only and, if so, the identity of the depositary and disclosure relating
to the depositary arrangements; and
- any other rights, preferences, privileges, limitations or restrictions of
such trust preferred securities consistent with the declaration of trust
or with law which may differ from those described in this prospectus.
Certain material United States federal income tax considerations applicable to
any offering of trust preferred securities will also be described in the
applicable prospectus supplement.
GENERAL
The trust preferred securities of a Cox Trust will rank equally, and
payments will be made thereon pro rata, with the trust common securities of that
Cox Trust except as described under "-- Subordination of Trust Common
Securities." The proceeds from the sale of trust preferred securities and trust
common securities by a Cox Trust will be used by such Cox Trust to purchase an
aggregate principal amount of junior subordinated debentures of Cox equal to the
aggregate liquidation amount of such trust preferred securities and trust common
securities. Legal title to such junior subordinated debentures will be held by
the property trustee of the Cox Trust for the benefit of the holders of the
related trust securities. In addition, Cox will execute a preferred securities
guarantee for the benefit of the holders of the related trust preferred
securities. The preferred securities guarantee will not guarantee payment of
distributions or amounts payable on redemption of the trust preferred securities
or liquidation of a Cox Trust when such Cox Trust does not have funds legally
available for the payment thereof. See "Description of Preferred Securities
Guarantees."
The revenue of a Cox Trust available for distribution to holders of its
trust preferred securities will be limited to payments received under the
related junior subordinated debentures which such Cox Trust purchased with the
proceeds from the sale of its trust securities. If Cox fails to make a required
payment in respect of such junior subordinated debentures, the applicable Cox
Trust will not have sufficient funds to make the related payments, including
distributions, in respect of its trust preferred securities. Each of the Cox
Trusts is a separate legal entity and the assets of one are not available to
satisfy the obligations of any other.
DEFERRAL OF DISTRIBUTIONS
So long as no debenture event of default has occurred and is continuing,
Cox will have the right to defer the payment of interest on the junior
subordinated debentures at any time or from time to time for up to the maximum
extension period specified in the applicable prospectus supplement, provided
that an
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extension period must end on an interest payment date and may not extend beyond
the stated maturity of such junior subordinated debentures. If Cox elects to
exercise such right, distributions on the related trust preferred securities
will be deferred during any such extension period. Distributions to which
holders of the trust preferred securities are entitled during any extension
period will continue to accumulate additional distributions thereon. Cox has no
current intention to exercise its right to defer payments of interest on the
junior subordinated debentures Cox may issue and, accordingly, distributions on
the related trust preferred securities.
REDEMPTION
Upon the repayment at the stated maturity or redemption, in whole or in
part, prior to the stated maturity of the junior subordinated debentures, the
proceeds from such repayment or redemption shall be applied by the property
trustee to redeem an aggregate liquidation amount of the related trust
securities equal to the aggregate principal amount of such junior subordinated
debentures so repaid or redeemed, upon not less than 30 nor more than 60 days
prior written notice, at a redemption price equal to such aggregate liquidation
amount plus accumulated distributions to the redemption date. Any redemption of
trust securities shall be made and the applicable redemption price shall be
payable on the redemption date only to the extent that the applicable Cox Trust
has funds legally available for the payment thereof. See "-- Subordination of
Trust Common Securities."
If less than all of the junior subordinated debentures are to be redeemed
prior to the stated maturity thereof, then the proceeds of such redemption shall
be used to redeem the related trust securities on a pro rata basis among the
trust preferred securities and the trust common securities of the applicable Cox
Trust except as described under "-- Subordination of Trust Common Securities."
If less than all of the trust preferred securities held in book-entry form, if
any, are to be redeemed, such trust preferred securities will be redeemed in
accordance with the procedures of The Depository Trust Company. See "-- Global
Trust Preferred Securities."
REDEMPTION PROCEDURES
If a Cox Trust gives a notice of redemption in respect of its trust
preferred securities, then, by 12:00 noon, New York City time, on the redemption
date, to the extent funds are legally available,
- with respect to trust preferred securities held by The Depository Trust
Company or its nominee, the property trustee will deposit, or cause the
paying agent to deposit, irrevocably with The Depository Trust Company
funds sufficient to pay the applicable redemption price, and
- with respect to trust preferred securities held in certificated form, the
property trustee will irrevocably deposit with the paying agent funds
sufficient to pay the applicable redemption price and will give such
paying agent irrevocable instructions and authority to pay the applicable
redemption price to the holders thereof upon surrender of their
certificates evidencing the trust preferred securities.
If notice of redemption shall have been given and funds irrevocably
deposited as required, then, upon the date of such deposit, all rights of the
holders of the trust preferred securities called for redemption will cease,
except the right of such holders to receive the applicable redemption price, but
without interest thereon, and such trust preferred securities will cease to be
outstanding. In the event that any redemption date is not a business day, then
the applicable redemption price payable on that date will be paid on the next
succeeding day that is a business day, without any interest or other payment in
respect of any such delay, with the same force and effect as if made on that
date. In the event that payment of the applicable redemption price is improperly
withheld or refused and not paid either by the applicable Cox Trust or by
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Cox pursuant to the preferred securities guarantee as described under
"Description of Preferred Securities Guarantees,"
- distributions on the related trust preferred securities will continue to
accumulate from the redemption date originally established by such Cox
Trust to the date such applicable redemption price is actually paid, and
- the actual payment date will be the redemption date for purposes of
calculating the applicable redemption price.
Subject to applicable law, including, without limitation, United States
federal securities law, Cox or its subsidiaries may at any time and from time to
time purchase outstanding trust preferred securities by tender, in the open
market or by private agreement.
LIQUIDATION OF A COX TRUST AND DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Cox will have the right at any time to dissolve a Cox Trust and cause the
related junior subordinated debentures to be distributed to the holders of the
trust securities of such Cox Trust in liquidation of such Cox Trust after
satisfaction, or reasonable provision for satisfaction, of liabilities to
creditors of such Cox Trust as required by applicable law. Such right is subject
to Cox having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of the trust preferred
securities of such Cox Trust.
The applicable Cox Trust shall automatically dissolve upon the first to
occur of:
1. certain events of bankruptcy, dissolution or liquidation of Cox;
2. the distribution of the related junior subordinated debentures to
the holders of the trust securities of such Cox Trust, if Cox, as
sponsor, has given written direction to the property trustee to
dissolve such Cox Trust, which direction is optional and, except as
described above, wholly within the discretion of Cox, as sponsor;
3. the redemption of all of the trust securities of such Cox Trust;
4. expiration of the term of such Cox Trust; and
5. the entry of an order for the dissolution of such Cox Trust by a
court of competent jurisdiction.
If a dissolution occurs as described in paragraph (1), (2), (4) or (5)
above, the applicable Cox Trust shall be liquidated by the issuer trustees as
expeditiously as the issuer trustees determine to be possible by distributing,
after satisfaction, or reasonable provision for satisfaction, of liabilities to
creditors of such Cox Trust as provided by applicable law, to the holders of the
trust securities and the related junior subordinated debentures, unless such
distribution is determined by the property trustee not to be practicable, in
which event such holders will be entitled to receive out of the assets of such
Cox Trust legally available for distribution to holders, after satisfaction of
liabilities to creditors of such Cox Trust as provided by applicable law, an
amount equal to the aggregate of the liquidation amount per trust security
specified in the applicable prospectus supplement plus accumulated distributions
thereon to the date of payment. If the liquidation distribution can be paid only
in part because the applicable Cox Trust has insufficient assets legally
available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by such Cox Trust on its trust securities shall be paid
on a pro rata basis, except that if a debenture event of default has occurred
and is continuing, the trust preferred securities of such Cox Trust shall have a
priority over the trust common securities of such Cox Trust in respect of such
amounts. See "-- Subordination of Trust Common Securities."
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After a date is fixed for any distribution of junior subordinated
debentures to holders of the related trust securities:
- such trust securities will no longer be deemed to be outstanding;
- each registered global certificate, if any, representing such trust
securities will be exchanged for a registered global certificate
representing the junior subordinated debentures to be delivered upon such
distribution; and
- any trust securities in certificated form will be deemed to represent
junior subordinated debentures having a principal amount equal to the
liquidation amount of such trust securities, and bearing accrued interest
in an amount equal to the accumulated distributions on such trust
securities until such certificates are presented to the administrative
trustees or their agent for cancellation, whereupon Cox will issue to
such holder, and the debenture trustee will authenticate, junior
subordinated debentures in certificated form.
There can be no assurance as to the market prices for the trust preferred
securities or the junior subordinated debentures that may be distributed in
exchange for such trust preferred securities if a dissolution and liquidation of
the applicable Cox Trust were to occur. Accordingly, the trust preferred
securities that an investor may purchase, or the junior subordinated debentures
that the investor may receive on dissolution and liquidation of the applicable
Cox Trust, may trade at a discount to the price that the investor paid to
purchase such trust preferred securities.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of distributions on, and the applicable redemption price of, trust
securities shall be made pro rata among the trust preferred securities and the
trust common securities of the applicable Cox Trust based on their respective
liquidation amounts; provided, however, that if on any distribution date or
redemption date a debenture event of default has occurred and is continuing, no
payment of any distribution on, or applicable redemption price of, any of the
trust common securities of the applicable Cox Trust, and no other payment on
account of the redemption, liquidation or other acquisition of such trust common
securities, shall be made unless payment in full in cash of all accumulated
distributions on all of the outstanding trust preferred securities of such Cox
Trust for all distribution periods terminating on or prior thereto, or in the
case of payment of the applicable redemption price, the full amount of such
redemption price, shall have been made or provided for, and all funds available
to the property trustee shall first be applied to the payment in full in cash of
all distributions on, or applicable redemption price of, such trust preferred
securities then due and payable.
Upon the occurrence and continuance of an event of default under the
declaration of trust, Cox, as the trust common securities holder of the
applicable Cox Trust, will be deemed to have waived any right to act with
respect to such event of default until the effect of such event of default shall
have been cured, waived or otherwise eliminated. Until any such event of default
has been so cured, waived or otherwise eliminated, the property trustee shall
act solely on behalf of the holders of the trust preferred securities of such
Cox Trust and not on behalf of Cox as the trust common securities holder, and
only the holders of such trust preferred securities will have the right to
direct the property trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
The occurrence of an event of default under the junior subordinated
debenture indenture will constitute an event of default under the declaration of
trust. Within ten business days after the occurrence of an event of default
under the declaration of trust actually known to the property trustee, the
property trustee shall transmit notice of such event of default to the holders
of the trust preferred securities of the applicable Cox Trust, the
administrative trustees and Cox, as sponsor, unless such event of default shall
have been cured or waived.
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For a discussion of the limited circumstances in which holders of trust
preferred securities may bring a direct action against Cox, see "Description of
Junior Subordinated Debentures -- Enforcement of Certain Rights by Holders of
Trust Preferred Securities."
REMOVAL OF TRUSTEES
Unless a debenture event of default has occurred and is continuing, any
issuer trustee may be removed at any time by Cox as the trust common securities
holder of the applicable Cox Trust. If a debenture event of default has occurred
and is continuing, the property trustee and the Delaware trustee may be removed
at such time only by the holders of a majority in liquidation amount of the
outstanding trust preferred securities of the applicable Cox Trust. In no event
will the holders of the trust preferred securities have the right to vote to
appoint, remove or replace the administrative trustees, which voting rights are
vested exclusively in Cox as the trust common securities holder. No resignation
or removal of an issuer trustee, and no appointment of a successor trustee,
shall be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the applicable declaration of trust.
MERGER OR CONSOLIDATION OF TRUSTEES
Any person into which the property trustee, the Delaware trustee or any
administrative trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such issuer trustee shall be a party, or
any person succeeding to all or substantially all the corporate trust business
of such issuer trustee, shall be the successor of such issuer trustee under the
declaration of trust, provided such person shall be otherwise qualified and
eligible.
MERGERS, CONVERSIONS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF A COX
TRUST
The applicable Cox Trust may not merge with or into, convert into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to any
corporation or other person, except as described below or as otherwise described
under "-- Liquidation a Cox Trust and Distribution of Junior Subordinated
Debentures." A Cox Trust may, at the request of Cox, as sponsor, with the
consent of the administrative trustees but without the consent of the holders of
its trust preferred securities, merge with or into, convert into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to a trust organized as
such under the laws of any State; provided that:
- such successor entity either
- expressly assumes all of the obligations of such Cox Trust with respect
to the trust securities of such Cox Trust, or
- substitutes for the trust securities of such Cox Trust other securities
having substantially the same terms as such trust securities so long as
the successor securities rank the same as such trust securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise;
- Cox expressly appoints a trustee of such successor entity possessing the
same powers and duties as the property trustee with respect to the
related junior subordinated debentures;
- the successor securities are listed, or any successor securities will be
listed upon notification of issuance, on each national securities
exchange or other organization on which the trust securities of such Cox
Trust are then listed, if any;
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the trust securities,
including any successor securities, of such Cox Trust or the
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related junior subordinated debentures to be downgraded or placed under
surveillance or review by any nationally recognized statistical rating
organization;
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities,
including any successor securities, of such Cox Trust in any material
respect, other than any dilution of such holders' interests in the new
entity;
- such successor entity has a purpose substantially identical to that of
such Cox Trust;
- prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, Cox has received an opinion
from independent counsel to such Cox Trust experienced in such matters to
the effect that
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities,
including any successor securities, of such Cox Trust in any material
respect, other than any dilution of such holders' interests in the new
entity, and
- following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither such Cox Trust nor
such successor entity will be required to register as an investment
company under the Investment Company Act of 1940, as amended; and
- Cox or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of
such successor entity under the successor securities at least to the
extent provided by the preferred securities guarantee and the common
securities guarantee for the benefit of the owner of the common
securities of such Cox Trust.
Notwithstanding the foregoing, such Cox Trust shall not, except with the consent
of each holder of its trust securities, consolidate, amalgamate, merge with or
into, or be replaced by or convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause such Cox Trust or the successor entity not to be classified as
a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF A DECLARATION OF TRUST
Except as provided below and under "-- Mergers, Conversions,
Consolidations, Amalgamations or Replacements of a Cox Trust" and "Description
of Preferred Securities Guarantees -- Amendments and Assignment" and as
otherwise required by law and the applicable declaration of trust, the holders
of trust preferred securities will have no voting rights.
The declaration of trust may be amended from time to time by Cox, the
property trustee and the administrative trustees, without the consent of the
holders of the trust securities of the applicable Cox Trust,
- to cure any ambiguity, correct or supplement any provisions in such
declaration of trust that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions
arising under such declaration of trust, which shall not be inconsistent
with the other provisions of such declaration of trust, or
- to modify, eliminate or add to any provisions of such declaration of
trust to such extent as shall be necessary to ensure that such Cox Trust
will be classified for United States federal income tax purposes as a
grantor trust at all times that any of its trust securities are
outstanding or to ensure that such Cox Trust will not be required to
register as an investment company under the Investment Company Act;
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provided, however, that in each case, such action shall not adversely affect in
any material respect the interests of the holders of such trust securities.
A declaration of trust may be amended by the issuer trustees and Cox
- with the consent of holders of a majority in liquidation amount of the
outstanding trust securities of the applicable Cox Trust, and
- upon receipt by the issuer trustees of an opinion of counsel experienced
in such matters to the effect that such amendment or the exercise of any
power granted to the issuer trustees in accordance with such amendment
will not affect such Cox Trust's status as a grantor trust for United
States federal income tax purposes or such Cox Trust's exemption from
status as an investment company under the Investment Company Act;
provided, however, that, without the consent of each holder of such trust
securities, such declaration of trust may not be amended to:
- change the distribution rate or manner of calculation of the distribution
rate, amount, timing or currency or otherwise adversely affect the method
of any required payment;
- change the purpose of the applicable Cox Trust;
- authorize the issuance of any additional beneficial interests in such Cox
Trust;
- change the conversion, exchange or redemption provisions;
- change the conditions precedent for Cox to elect to dissolve such Cox
Trust and distribute the related junior subordinated debentures to the
holders of such trust securities;
- change the liquidation distribution or other provisions relating to the
distribution of amounts payable upon the dissolution and liquidation of
such Cox Trust;
- affect the limited liability of any holder of such trust securities; or
- restrict the right of a holder of such trust securities to institute suit
for the enforcement of any required payment on or after the due date
therefor or for the conversion or exchange of such trust securities in
accordance with their terms.
So long as any junior subordinated debentures are held by the property
trustee, the issuer trustees shall not:
- direct the time, method and place of conducting any proceeding for any
remedy available to such trustee, or execute any trust or power conferred
on the trustee, with respect to the junior subordinated debentures;
- waive certain past defaults under the junior subordinated debenture
indenture;
- exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of such junior subordinated debentures; or
- consent to any amendment, modification or termination of the junior
subordinated debenture indenture or such junior subordinated debentures
where such consent shall be required, without, in each case, obtaining
the prior approval of the holders of a majority in liquidation amount of
all outstanding trust preferred securities of the applicable Cox Trust;
provided, however, that where a consent under the junior subordinated debenture
indenture would require the consent of each holder affected thereby, no such
consent shall be given by the property trustee without the prior approval of
each holder of the related trust preferred securities. The issuer trustees shall
not revoke any action previously authorized or approved by a vote of the holders
of trust preferred securities except by subsequent vote of such holders. The
property trustee shall notify each holder of trust preferred securities of any
notice of default with respect to the related junior subordinated debentures. In
addition to obtaining approvals of holders of trust preferred securities
referred to above, prior to taking any of the
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foregoing actions, the issuer trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the applicable Cox Trust will not
be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
Any required approval of holders of trust preferred securities may be given
at a meeting of such holders convened for such purpose or pursuant to written
consent. The administrative trustees will cause a notice of any meeting at which
holders of trust preferred securities are entitled to vote to be given to each
holder of record of trust preferred securities in the manner set forth in the
applicable declaration of trust.
Notwithstanding that holders of trust preferred securities are entitled to
vote or consent under any of the circumstances referred to above, any trust
preferred securities that are owned by Cox or any affiliate of Cox shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
GLOBAL TRUST PREFERRED SECURITIES
If specified in the applicable prospectus supplement, trust preferred
securities may be represented by one or more global certificates deposited with,
or on behalf of, The Depository Trust Company, or other depositary identified in
such prospectus supplement, or a nominee thereof, in each case for credit to an
account of a participant in The Depository Trust Company or other depositary.
The identity of the depositary and the specific terms of the depositary
arrangements with respect to the trust preferred securities to be represented by
one or more global certificates will be described in the applicable prospectus
supplement. However, unless otherwise specified in the applicable prospectus
supplement, The Depository Trust Company will be the depositary and the
depositary arrangements described with respect to the debt securities will apply
to such trust preferred securities as well, except all references to Cox shall
include the Cox Trusts and all references to the applicable indenture will refer
to the applicable declaration of trust. See "Description of Debt
Securities -- Global Securities."
PAYMENT AND PAYING AGENT
Payments in respect of any global certificate representing trust preferred
securities shall be made to Cede & Co. as nominee of The Depository Trust
Company, or other applicable depositary or its nominee, which shall credit the
relevant accounts at The Depository Trust Company or such other depositary on
the applicable payment dates, while payments in respect of trust preferred
securities in certificated form shall be made by check mailed to the address of
the holder entitled thereto as such address shall appear on the register. The
paying agent shall initially be the property trustee and any co-paying agent
chosen by the property trustee and acceptable to the administrative trustees and
Cox. The paying agent shall be permitted to resign as paying agent upon 30 days
prior written notice to the property trustee, the administrative trustees and
Cox. In the event that the property trustee shall no longer be the paying agent,
the administrative trustees shall appoint a successor, which shall be a bank or
trust company acceptable to the administrative trustees and Cox, to act as
paying agent.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the trust
preferred securities.
Registration of transfers of trust preferred securities will be effected
without charge by or on behalf of the applicable Cox Trust, but upon payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. A Cox Trust will not be required to register or cause to
be registered the transfer of its trust preferred securities after they have
been converted, exchanged, redeemed or called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of
an event of default under the applicable declaration of trust, will undertake to
perform only such duties as are specifically set forth in such declaration of
trust and, during the continuance of such event of default, must exercise the
same
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degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to the foregoing, the property
trustee will not be under any obligation to exercise any of the powers vested in
it by such declaration of trust at the request of any holder of the related
trust securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby. If no such event of
default has occurred and is continuing and the property trustee is required to
decide between alternative causes of action, construe ambiguous provisions in
such declaration of trust or is unsure of the application of any provision of
such declaration of trust, and the matter is not one on which holders of trust
preferred securities or trust common securities are entitled under such
declaration of trust to vote, then the property trustee shall take such action
as is directed by Cox and if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the related trust
securities and will have no liability except for its own bad faith, negligence
or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the applicable Cox Trust in such a way that:
- such Cox Trust will not be deemed to be an investment company required to
be registered under the Investment Company Act;
- such Cox Trust will be classified as a grantor trust for United States
federal income tax purposes; and
- the related junior subordinated debentures will be treated as
indebtedness of Cox for United States federal income tax purposes.
Cox and the administrative trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the applicable Cox
Trust or the applicable declaration of trust, that the administrative trustees
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the related trust securities.
Holders of trust preferred securities will not have any preemptive or
similar rights.
A Cox Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
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DESCRIPTION OF PREFERRED SECURITIES GUARANTEES
A preferred securities guarantee will be executed and delivered by Cox
concurrently with the issuance by a Cox Trust of its trust preferred securities
for the benefit of the holders from time to time of such trust preferred
securities and will be held for such holders by The Bank of New York, as
preferred securities guarantee trustee. Each preferred securities guarantee has
been qualified as an indenture under the Trust Indenture Act and is subject to,
and governed by, the Trust Indenture Act. This summary of certain terms and
provisions of a preferred securities guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all of the
provisions of such preferred securities guarantee, including the definitions
therein of certain terms, and those made a part of such preferred securities
guarantee by the Trust Indenture Act.
GENERAL
Cox will irrevocably agree to pay in full, to the extent set forth herein,
the guarantee payments to the holders of the related trust preferred securities,
as and when due, regardless of any defense, right of set-off or counterclaim
that the applicable Cox Trust may have or assert other than the defense of
payment. The following payments, which are referred to as guarantee payments,
with respect to trust preferred securities, to the extent not paid by or on
behalf of the applicable Cox Trust, will be subject to the preferred securities
guarantee:
- any accumulated distributions required to be paid on such trust preferred
securities, to the extent that such Cox Trust has funds legally available
therefor at such time;
- the applicable redemption price with respect to such trust preferred
securities called for redemption, to the extent that such Cox Trust has
funds legally available therefor at such time; or
- upon a voluntary or involuntary dissolution and liquidation of such Cox
Trust, other than in connection with the distribution of the related
junior subordinated debentures to holders of such trust preferred
securities or the redemption, conversion or exchange of the trust
preferred securities, the lesser of
- the amounts due upon the dissolution and liquidation of such Cox Trust,
to the extent that such Cox Trust has funds legally available therefor
at the time, and
- the amount of assets of such Cox Trust remaining available for
distribution to holders of its trust preferred securities after
satisfaction of liabilities to creditors of such Cox Trust as required
by applicable law.
Cox's obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by Cox to the holders of the trust preferred
securities entitled thereto or by causing the applicable Cox Trust to pay such
amounts to such holders.
Cox will, through the preferred securities guarantee, the declaration of
trust, the related junior subordinated debentures and junior subordinated
debenture indenture, taken together, fully, irrevocably and unconditionally
guarantee all of the applicable Cox Trust's obligations under its trust
preferred securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of a Cox
Trust's obligations under its trust preferred securities.
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RANKING
Unless otherwise specified in the applicable prospectus supplement, each
preferred securities guarantee will constitute an unsecured obligation of Cox
and will rank
- subordinate and junior in right of payment to all other liabilities of
Cox, including all senior debt securities, any subordinated debt
securities and the junior subordinated debentures, except those made
ratable or subordinate by their terms, and
- senior to all capital stock now or hereafter issued by Cox and to any
guarantee now or hereafter entered into by Cox in respect of any of its
capital stock.
The declaration of trust will provide that each holder of trust preferred
securities by acceptance thereof agrees to the subordination provisions and
other terms of the related preferred securities guarantee. The preferred
securities guarantee will rank subordinate to, or equally with, all other
guarantees to be issued by Cox with respect to securities of other trusts or
other entities to be established by Cox that are similar to a Cox Trust.
The preferred securities guarantees will not limit the amount of secured or
unsecured debt, including senior indebtedness as defined in the junior
subordinated debenture indenture, that may be incurred by Cox or any of its
subsidiaries.
PREFERRED SECURITIES GUARANTEE OF PAYMENT
Each preferred securities guarantee will constitute a guarantee of payment
and not of collection. In other words, the guaranteed party may institute a
legal proceeding directly against Cox to enforce its rights under such preferred
securities guarantee without first instituting a legal proceeding against any
other person or entity. A preferred securities guarantee will not be discharged
except by payment of the related preferred securities guarantee payments in full
to the extent not paid by the applicable Cox Trust or upon distribution of its
trust preferred securities to the holders of the related junior subordinated
debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the related trust preferred securities, in which case
no approval will be required, the applicable preferred securities guarantee may
not be amended without the prior approval of the holders of a majority of the
liquidation amount of such outstanding trust preferred securities. The manner of
obtaining any such approval will be as set forth under "Description of Trust
Preferred Securities -- Voting Rights; Amendment of a Declaration of Trust." All
guarantees and agreements contained in a preferred securities guarantee shall
bind the successors, assigns, receivers, trustees and representatives of Cox and
shall inure to the benefit of the holders of the related trust preferred
securities then outstanding.
EVENTS OF DEFAULT
An event of default under a preferred securities guarantee will occur upon
the failure of Cox to perform any of its payment or other obligations
thereunder, provided that, except with respect to a default in respect of any
preferred securities guarantee payment, Cox shall have received notice of such
default and shall not have cured such default within 60 days of such receipt.
The holders of a majority in liquidation amount of the related trust preferred
securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the preferred securities
guarantee trustee in respect of the applicable preferred securities guarantee or
to direct the exercise of any trust or power conferred upon the preferred
securities guarantee trustee under such preferred securities guarantee.
If the preferred securities guarantee trustee fails to enforce a preferred
securities guarantee, any holder of the related trust preferred securities may
institute a legal proceeding directly against Cox to enforce its rights under
such preferred securities guarantee without first instituting a legal proceeding
against the applicable Cox Trust, the preferred securities guarantee trustee or
any other person or entity.
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TERMINATION
A preferred securities guarantee will terminate and be of no further force
and effect upon:
- full payment of the applicable redemption price of the related trust
preferred securities;
- full payment of all amounts due upon the dissolution and liquidation of
the applicable Cox Trust; or
- the conversion or exchange of all of the related trust preferred
securities, whether upon distribution of junior subordinated debentures
to the holders of such trust preferred securities or otherwise.
A preferred securities guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the related trust
preferred securities must restore payment of any sums paid under such trust
preferred securities or such preferred securities guarantee.
GOVERNING LAW
Each preferred securities guarantee will be governed by and construed in
accordance with the laws of the State of New York.
INFORMATION CONCERNING THE PREFERRED SECURITIES GUARANTEE TRUSTEE
The preferred securities guarantee trustee, other than during the
occurrence and continuance of a default by Cox in performance of a preferred
securities guarantee, will undertake to perform only such duties as are
specifically set forth in the preferred securities guarantee and, during the
continuance of such default, must exercise the same degree of care and skill as
a prudent person would exercise or use in the conduct of his or her own affairs.
Subject to the foregoing, the preferred securities guarantee trustee will not be
under any obligation to exercise any of the powers vested in it by a preferred
securities guarantee at the request of any holder of the related trust preferred
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
LIMITED PURPOSE OF COX TRUST
The trust preferred securities will represent preferred beneficial
interests in the applicable Cox Trust, and each Cox Trust exists for the sole
purpose of issuing and selling its trust securities, using the proceeds from the
sale of its trust securities to acquire the related junior subordinated
debentures of Cox and engaging in only those other activities necessary,
advisable or incidental thereto.
RIGHTS UPON DISSOLUTION
Unless the junior subordinated debentures are distributed to holders of the
related trust securities, upon any voluntary or involuntary dissolution and
liquidation of the applicable Cox Trust, after satisfaction of the liabilities
of creditors of such Cox Trust as required by applicable law, the holders of
such trust securities will be entitled to receive, out of assets held by such
Cox Trust, the liquidation distribution in cash. See "Description of Trust
Preferred Securities -- Liquidation of a Cox Trust and Distribution of Junior
Subordinated Debentures." Upon any voluntary or involuntary liquidation or
bankruptcy of Cox, the property trustee, as holder of the junior subordinated
debentures, would be a creditor of Cox, subordinated in right of payment to all
senior indebtedness as set forth in the junior subordinated debenture indenture,
but entitled to receive payment in full of principal and premium, if any, and
interest in respect of such junior subordinated debentures, before any
stockholders of Cox receive payments or distributions.
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RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE PREFERRED SECURITIES GUARANTEES
Full and Unconditional Guarantee. Cox will irrevocably guarantee payments
of distributions and other amounts due on the trust preferred securities to the
extent the applicable Cox Trust has funds available for the payment of the
distributions as and to the extent set forth under "Description of Preferred
Securities Guarantees." Taken together, Cox's obligations under the junior
subordinated debentures, the securities resolution, the junior subordinated
debenture indenture, the declaration of trust and the preferred securities
guarantee agreement provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the trust preferred securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes the full
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
applicable Cox Trust's obligations under the trust preferred securities.
If and to the extent that Cox does not make payments on the junior
subordinated debentures, the applicable Cox Trust will not pay distributions or
other amounts due on its trust preferred securities. A preferred securities
guarantee does not cover payment of distributions when such Cox Trust does not
have sufficient funds to pay the distributions. In that event, the remedy for a
holder of trust preferred securities is to institute a legal proceeding directly
against Cox for enforcement of payment of the distributions to such holder.
Sufficiency of Payments. As long as all payments are made when due on the
junior subordinated debentures, those payments will be sufficient to cover
distributions and other payments due on the trust preferred securities. This is
primarily because:
- the aggregate principal amount of the junior subordinated debentures will
be equal to the sum of the aggregate stated liquidation amount of the
trust preferred securities and trust common securities;
- the interest rate and interest and other payment dates on the junior
subordinated debentures will match the distribution rate and distribution
and other payment dates for the trust preferred securities;
- Cox, as borrower, has promised to pay any and all costs, expenses and
liabilities of the applicable Cox Trust except such Cox Trust's
obligations under its trust preferred securities; and
- the declaration of trust provides that the applicable Cox Trust will not
engage in any activity that is not consistent with the limited purposes
of such Cox Trust.
Cox has the right to set-off any payment Cox is otherwise required to make
under the junior subordinated debenture indenture if and to the extent Cox has
already made, or is concurrently making, a payment under the applicable
preferred securities guarantee agreement.
Enforcement Rights of Holders of Trust Preferred Securities. A holder of a
trust preferred security may institute a legal proceeding directly against Cox
to enforce its rights under the applicable preferred securities guarantee
agreement without first instituting a legal proceeding against the preferred
securities guarantee trustee, the applicable Cox Trust or anyone else.
Cox's default or event of default under any other senior or subordinated
indebtedness would not necessarily constitute a trust event of default. However,
in the event of payment defaults under, or acceleration of, Cox's senior or
subordinated indebtedness, the subordination provisions of the applicable
securities resolution will provide that no payments may be made in respect of
the junior subordinated debentures until the senior or subordinated indebtedness
has been paid in full or any payment default thereunder has been cured or
waived. Cox's failure to make required payments on any junior subordinated
debentures would constitute a trust event of default.
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Limited Purpose of a Cox Trust. The applicable Cox Trust's trust preferred
securities evidence undivided beneficial ownership interests in the assets of
the applicable Cox Trust, and each Cox Trust exists for the sole purposes of
issuing its trust preferred securities and trust common securities, investing
the proceeds in junior subordinated debentures and engaging in only those other
activities necessary, convenient or incidental to those purposes. A principal
difference between the rights of a holder of a trust preferred security and a
holder of a corresponding junior subordinated debenture is that a holder of a
junior subordinated debenture is entitled to receive from Cox the principal
amount of and interest accrued on the corresponding junior subordinated
debentures, while a holder of trust preferred securities is entitled to receive
distributions from the applicable Cox Trust, or from Cox under the preferred
securities guarantee agreement, if and to the extent the applicable Cox Trust
has funds available for the payment of the distributions.
Rights Upon Dissolution. Upon any voluntary or involuntary dissolution of
a Cox Trust involving the liquidation of the junior subordinated debentures, the
holders of the trust preferred securities will be entitled to receive the
liquidation distribution in cash, out of assets of such Cox Trust and after
satisfaction of creditors of such Cox Trust as provided by applicable law. If
Cox becomes subject to any voluntary or involuntary liquidation or bankruptcy,
the property trustee, as holder of the junior subordinated debentures, would be
one of Cox's junior subordinated creditors. The property trustee would be
subordinated in right of payment to all of Cox's senior indebtedness and
subordinated indebtedness, but it would be entitled to receive payment in full
of principal and interest before Cox's stockholders receive payments or
distributions. Cox is the guarantor under the preferred securities guarantee
agreements and pursuant to the junior subordinated debenture indenture, as
borrower, has agreed to pay all costs, expenses and liabilities of the
applicable Cox Trust other than the applicable Cox Trust's obligations to the
holders of the trust preferred securities. Accordingly, in the event of Cox's
liquidation or bankruptcy the positions of a holder of trust preferred
securities and of a holder of junior subordinated debentures are expected to be
substantially the same relative to Cox's other creditors and to Cox's
stockholders.
DESCRIPTION OF CAPITAL SECURITIES
The capital securities will be issued by a Cox Trust under a declaration of
trust and will represent beneficial interests in such Cox Trust. The holders of
such beneficial interests will be entitled to a preference over the trust common
securities of such Cox Trust with respect to the payment of distributions and
amounts payable on redemption of the capital securities or the liquidation of
such Cox Trust under the circumstances described under "-- Subordination of
Trust Common Securities." The declaration of trust has been qualified under the
Trust Indenture Act and is subject to, and governed by, the Trust Indenture Act.
This summary of certain terms and provisions of the capital securities and the
declaration of trust does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of such capital
securities and such declaration of trust, including the definitions therein of
certain terms, and those made a part of such declaration of trust by the Trust
Indenture Act.
Reference is made to the applicable prospectus supplement for a description
of the specific terms of the capital securities offered thereby, including:
- the particular Cox Trust issuing such capital securities;
- the specific designation, number and purchase price of such capital
securities;
- the annual distribution rate or method of calculation of the distribution
rate for such capital securities and, if applicable, the dates from which
and upon which such distributions shall accumulate and be payable and the
record dates therefor, and the maximum extension period for which such
distributions may be deferred;
- the liquidation amount per capital security which shall be paid out of
the assets of such Cox Trust to the holders thereof upon voluntary or
involuntary dissolution, winding-up and liquidation of such Cox Trust;
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- the obligation or right, if any, of such Cox Trust to purchase or redeem
its capital securities and the price or prices at which, the date or
dates on which or period or periods within which and the terms and
conditions upon which, such capital securities shall or may be purchased
or redeemed, in whole or in part, pursuant to such obligation or right;
- the terms and conditions, if any, upon which such capital securities may
be converted or exchanged, in addition to the circumstances described
herein, into other securities or rights, or a combination of the
foregoing, including the name of the issuer of such securities or rights,
the initial conversion or exchange price or rate per capital security and
the date or dates on which or period or periods within which such
conversion or exchange may be effected;
- if applicable, any securities exchange upon which such capital securities
shall be listed;
- whether such capital securities are issuable in book-entry form only and,
if so, the identity of the depositary and disclosure relating to the
depositary arrangements; and
- any other rights, preferences, privileges, limitations or restrictions of
such capital securities consistent with the declaration of trust or with
law which may differ from those described in this prospectus.
Certain material United States federal income tax considerations applicable to
any offering of capital securities will also be described in the applicable
prospectus supplement.
GENERAL
The capital securities of a Cox Trust will rank equally, and payments will
be made thereon pro rata, with the trust common securities of that Cox Trust
except as described under "-- Subordination of Trust Common Securities." The
proceeds from the sale of capital securities and trust common securities by a
Cox Trust will be used by such Cox Trust to purchase an aggregate principal
amount of senior debt securities of Cox equal to the aggregate liquidation
amount of such capital securities and trust common securities. Legal title to
such senior debt securities will be held by the property trustee of the Cox
Trust for the benefit of the holders of the related trust securities. In
addition, Cox will execute a capital securities guarantee for the benefit of the
holders of the related capital securities. The capital securities guarantee will
not guarantee payment of distributions or amounts payable on redemption of the
capital securities or liquidation of a Cox Trust when such Cox Trust does not
have funds legally available for the payment thereof. See "Description of
Capital Securities Guarantees."
The revenue of a Cox Trust available for distribution to holders of its
capital securities will be limited to payments received under the related senior
debt securities which such Cox Trust purchased with the proceeds from the sale
of its trust securities. If Cox fails to make a required payment in respect of
such senior debt securities, the applicable Cox Trust will not have sufficient
funds to make the related payments, including distributions, in respect of its
capital securities. Each of the Cox Trusts is a separate legal entity and the
assets of one are not available to satisfy the obligations of any other.
DEFERRAL OF DISTRIBUTIONS
If so specified in the related prospectus supplement, so long as no event
of default with respect to the senior debt securities has occurred and is
continuing, Cox will have the right to defer the payment of interest on the
senior debt securities, at any time or from time to time, for up to the maximum
extension period specified in such prospectus supplement, provided that an
extension period must end on an interest payment date and may not extend beyond
the stated maturity of such senior debt securities. If Cox elects to exercise
such right, distributions on the related capital securities will be deferred
during any such extension period. Distributions to which holders of the capital
securities are entitled during any extension period will continue to accumulate
additional distributions thereon.
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REDEMPTION
Upon the repayment at the stated maturity or redemption, in whole or in
part, prior to the stated maturity of the senior debt securities, the proceeds
from such repayment or redemption shall be applied by the property trustee to
redeem an aggregate liquidation amount of the related securities equal to the
aggregate principal amount of such senior debt securities so repaid or redeemed,
upon not less than 30 nor more than 60 days prior written notice, at a
redemption price equal to such aggregate liquidation amount plus accumulated
distributions to the redemption date. Any redemption of trust securities shall
be made and the applicable redemption price shall be payable on the redemption
date only to the extent that the applicable Cox Trust has funds legally
available for the payment thereof. See "-- Subordination of Trust Common
Securities."
If less than all of the senior debt securities are to be redeemed prior to
the stated maturity thereof, then the proceeds of such redemption shall be used
to redeem the related trust securities on a pro rata basis among the capital
securities and the trust common securities of the applicable Cox Trust except as
described under "-- Subordination of Trust Common Securities." If less than all
of the capital securities held in book-entry form, if any, are to be redeemed,
such capital securities will be redeemed in accordance with the procedures of
The Depository Trust Company. See "-- Global Capital Securities."
REDEMPTION PROCEDURES
If a Cox Trust gives a notice of redemption in respect of its capital
securities, then, by 12:00 noon, New York City time, on the redemption date, to
the extent funds are legally available,
- with respect to capital securities held by The Depository Trust Company
or its nominee, the property trustee will deposit, or cause the paying
agent to deposit, irrevocably with The Depository Trust Company funds
sufficient to pay the applicable redemption price, and
- with respect to capital securities held in certificated form, the
property trustee will irrevocably deposit with the paying agent funds
sufficient to pay the applicable redemption price and will give such
paying agent irrevocable instructions and authority to pay the applicable
redemption price to the holders thereof upon surrender of their
certificates evidencing the capital securities.
If notice of redemption shall have been given and funds irrevocably
deposited as required, then, upon the date of such deposit, all rights of the
holders of the capital securities called for redemption will cease, except the
right of such holders to receive the applicable redemption price, but without
interest thereon, and such capital securities will cease to be outstanding. In
the event that any redemption date is not a business day, then the applicable
redemption price payable on that date will be paid on the next succeeding day
that is a business day, without any interest or other payment in respect of any
such delay, with the same force and effect as if made on that date. In the event
that payment of the applicable redemption price is improperly withheld or
refused and not paid either by the applicable Cox Trust or by Cox pursuant to
the capital securities guarantee as described under "Description of Capital
Securities Guarantees,"
- distributions on the related capital securities will continue to
accumulate from the redemption date originally established by such Cox
Trust to the date such applicable redemption price is actually paid, and
- the actual payment date will be the redemption date for purposes of
calculating the applicable redemption price.
Subject to applicable law, including, without limitation, United States
federal securities law, Cox or its subsidiaries may at any time and from time to
time purchase outstanding capital securities by tender, in the open market or by
private agreement.
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LIQUIDATION OF A COX TRUST AND DISTRIBUTION OF SENIOR DEBT SECURITIES
Cox will have the right at any time to dissolve a Cox Trust and cause the
related senior debt securities to be distributed to the holders of the trust
securities of such Cox Trust in liquidation of such Cox Trust after
satisfaction, or reasonable provision for satisfaction, of liabilities to
creditors of such Cox Trust as required by applicable law. Such right is subject
to Cox having received an opinion of counsel to the effect that such
distribution will not be a taxable event to holders of the capital securities of
such Cox Trust.
The applicable Cox Trust shall automatically dissolve upon the first to
occur of:
1. certain events of bankruptcy, dissolution or liquidation of Cox;
2. the distribution of the related senior debt securities to the
holders of the trust securities of such Cox Trust, if Cox, as
sponsor, has given written direction to the property trustee to
dissolve such Cox Trust, which direction is optional and, except as
described above, wholly within the discretion of Cox, as sponsor;
3. the conversion, exchange or redemption of all of the trust
securities of such Cox Trust;
4. expiration of the term of such Cox Trust; and
5. the entry of an order for the dissolution of such Cox Trust by a
court of competent jurisdiction.
If a dissolution occurs as described in paragraph (1), (2), (4) or (5)
above, the applicable Cox Trust shall be liquidated by the issuer trustees as
expeditiously as the issuer trustees determine to be possible by distributing,
after satisfaction, or reasonable provision for satisfaction, of liabilities to
creditors of such Cox Trust as provided by applicable law, to the holders of the
trust securities and the related senior debt securities, unless such
distribution is determined by the property trustee not to be practicable, in
which event such holders will be entitled to receive out of the assets of such
Cox Trust legally available for distribution to holders, after satisfaction of
liabilities to creditors of such Cox Trust as provided by applicable law, an
amount equal to the aggregate of the liquidation amount per trust security
specified in the applicable prospectus supplement plus accumulated distributions
thereon to the date of payment. If the liquidation distribution can be paid only
in part because the applicable Cox Trust has insufficient assets legally
available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by such Cox Trust on its trust securities shall be paid
on a pro rata basis, except that if an event of default with respect to the
senior debt securities has occurred and is continuing, the capital securities of
such Cox Trust shall have a priority over the trust common securities of such
Cox Trust in respect of such amounts. See "-- Subordination of Trust Common
Securities."
After a date is fixed for any distribution of senior debt securities to
holders of the related trust securities:
- such trust securities will no longer be deemed to be outstanding;
- each registered global certificate, if any, representing such trust
securities will be exchanged for a registered global certificate
representing the senior debt securities to be delivered upon such
distribution; and
- any trust securities in certificated form will be deemed to represent
senior debt securities having a principal amount equal to the liquidation
amount of such trust securities, and bearing accrued interest in an
amount equal to the accumulated distributions on such trust securities
until such certificates are presented to the administrative trustees or
their agent for cancellation, whereupon Cox will issue to such holder,
and the trustee will authenticate, senior debt securities in certificated
form.
There can be no assurance as to the market prices for the capital
securities or the senior debt securities that may be distributed in exchange for
such capital securities if a dissolution and liquidation of
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the applicable Cox Trust were to occur. Accordingly, the capital securities that
an investor may purchase, or the senior debt securities that the investor may
receive on dissolution and liquidation of the applicable Cox Trust, may trade at
a discount to the price that the investor paid to purchase such capital
securities.
SUBORDINATION OF TRUST COMMON SECURITIES
Payment of distributions on, and the applicable redemption price of, trust
securities shall be made pro rata among the capital securities and the trust
common securities of the applicable Cox Trust based on their respective
liquidation amounts; provided, however, that if on any distribution date or
redemption date an event of default with respect to the senior debt securities
has occurred and is continuing, no payment of any distribution on, or applicable
redemption price of, any of the trust common securities of the applicable Cox
Trust, and no other payment on account of the redemption, liquidation or other
acquisition of such trust common securities, shall be made unless payment in
full in cash of all accumulated distributions on all of the outstanding capital
securities of such Cox Trust for all distribution periods terminating on or
prior thereto, or in the case of payment of the applicable redemption price, the
full amount of such redemption price, shall have been made or provided for, and
all funds available to the property trustee shall first be applied to the
payment in full in cash of all distributions on, or applicable redemption price
of, such capital securities then due and payable.
Upon the occurrence and continuance of an event of default under the
declaration of trust, Cox, as the trust common securities holder of the
applicable Cox Trust, will be deemed to have waived any right to act with
respect to such event of default until the effect of such event of default shall
have been cured, waived or otherwise eliminated. Until any such event of default
has been so cured, waived or otherwise eliminated, the property trustee shall
act solely on behalf of the holders of the capital securities of such Cox Trust
and not on behalf of Cox as the trust common securities holder, and only the
holders of such capital securities will have the right to direct the property
trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE
The occurrence of an event of default under the indenture relating to the
senior debt securities will constitute an event of default under the declaration
of trust. Within ten business days after the occurrence of an event of default
under the declaration of trust actually known to the property trustee, the
property trustee shall transmit notice of such event of default to the holders
of the capital securities of the applicable Cox Trust, the administrative
trustees and Cox, as sponsor, unless such event of default shall have been cured
or waived.
The applicable prospectus supplement will contain a discussion of the
limited circumstances in which holders of capital securities may bring a direct
action against Cox.
REMOVAL OF TRUSTEES
Unless an event of default with respect to the senior debt securities has
occurred and is continuing, any issuer trustee may be removed at any time by Cox
as the trust common securities holder of the applicable Cox Trust. If such an
event of default has occurred and is continuing, the property trustee and the
Delaware trustee may be removed at such time only by the holders of a majority
in liquidation amount of the outstanding capital securities of the applicable
Cox Trust. In no event will the holders of the capital securities have the right
to vote to appoint, remove or replace the administrative trustees, which voting
rights are vested exclusively in Cox as the trust common securities holder. No
resignation or removal of an issuer trustee, and no appointment of a successor
trustee, shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the applicable declaration of
trust.
MERGER OR CONSOLIDATION OF TRUSTEES
Any person into which the property trustee, the Delaware trustee or any
administrative trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person
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resulting from any merger, conversion or consolidation to which such issuer
trustee shall be a party, or any person succeeding to all or substantially all
the corporate trust business of such issuer trustee, shall be the successor of
such issuer trustee under the applicable declaration of trust, provided such
person shall be otherwise qualified and eligible.
MERGERS, CONVERSIONS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF A COX
TRUST
The applicable Cox Trust may not merge with or into, convert into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to any
corporation or other person, except as described below or as otherwise described
under "-- Liquidation of a Cox Trust and Distribution of Senior Debt
Securities." A Cox Trust may, at the request of Cox, as sponsor, with the
consent of the administrative trustees but without the consent of the holders of
its capital securities, merge with or into, convert into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to a trust organized as
such under the laws of any State; provided that:
- such successor entity either
- expressly assumes all of the obligations of such Cox Trust with respect
to the trust securities of such Cox Trust, or
- substitutes for the trust securities of such Cox Trust other securities
having substantially the same terms as such trust securities so long as
the successor securities rank the same as such trust securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise;
- Cox expressly appoints a trustee of such successor entity possessing the
same powers and duties as the property trustee with respect to the
related senior debt securities;
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the trust securities,
including any successor securities, of such Cox Trust or the related
senior debt securities to be downgraded or placed under surveillance or
review by any nationally recognized statistical rating organization;
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities,
including any successor securities, of such Cox Trust in any material
respect, other than any dilution of such holders' interests in the new
entity;
- such successor entity has a purpose substantially identical to that of
such Cox Trust;
- prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, Cox has received an opinion
from independent counsel to such Cox Trust experienced in such matters to
the effect that
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities,
including any successor securities, of such Cox Trust in any material
respect, other than any dilution of such holders' interests in the new
entity, and
- following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither such Cox Trust nor
such successor entity will be required to register as an investment
company under the Investment Company Act of 1940, as amended; and
- Cox or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of
such successor entity under the successor securities at least to the
extent provided by the capital securities guarantee and the common
securities guarantee for the benefit of the owner of the common
securities of such Cox Trust.
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Notwithstanding the foregoing, such Cox Trust shall not, except with the consent
of each holder of its trust securities, consolidate, amalgamate, merge with or
into, or be replaced by or convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause such Cox Trust or the successor entity not to be classified as
a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF A DECLARATION OF TRUST
Except as provided below and under "-- Mergers, Conversions,
Consolidations, Amalgamations or Replacements of a Cox Trust" and "Description
of Capital Securities Guarantee -- Amendments and Assignment" and as otherwise
required by law and the declaration of trust, the holders of capital securities
will have no voting rights.
The declaration of trust may be amended from time to time by Cox, the
property trustee and the administrative trustees, without the consent of the
holders of the trust securities of the applicable Cox Trust,
- to cure any ambiguity, correct or supplement any provisions in the
declaration of trust that may be inconsistent with any other provision,
or to make any other provisions with respect to matters or questions
arising under the declaration of trust, which shall not be inconsistent
with the other provisions of such declaration of trust, or
- to modify, eliminate or add to any provisions of such declaration of
trust to such extent as shall be necessary to ensure that such Cox Trust
will be classified for United States federal income tax purposes as a
grantor trust at all times that any of its trust securities are
outstanding or to ensure that such Cox Trust will not be required to
register as an investment company under the Investment Company Act;
provided, however, that in each case, such action shall not adversely affect in
any material respect the interests of the holders of such trust securities.
A declaration of trust may be amended by the issuer trustees and Cox
- with the consent of holders of a majority in liquidation amount of the
outstanding trust securities of the applicable Cox Trust, and
- upon receipt by the issuer trustees of an opinion of counsel experienced
in such matters to the effect that such amendment or the exercise of any
power granted to the issuer trustees in accordance with such amendment
will not affect such Cox Trust's status as a grantor trust for United
States federal income tax purposes or such Cox Trust's exemption from
status as an investment company under the Investment Company Act;
provided, however, that, without the consent of each holder of such trust
securities, such declaration of trust may not be amended to:
- change the distribution rate or manner of calculation of the distribution
rate, amount, timing or currency or otherwise adversely affect the method
of any required payment;
- change the purpose of the applicable Cox Trust;
- authorize the issuance of any additional beneficial interests in such Cox
Trust;
- change the conversion, exchange or redemption provisions;
- change the conditions precedent for Cox to elect to dissolve such Cox
Trust and distribute the related senior debt securities to the holders of
such trust securities;
- change the liquidation distribution or other provisions relating to the
distribution of amounts payable upon the dissolution and liquidation of
such Cox Trust;
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- affect the limited liability of any holder of such trust securities; or
- restrict the right of a holder of such trust securities to institute suit
for the enforcement of any required payment on or after the due date
therefor or for the conversion or exchange of such trust securities in
accordance with their terms.
So long as any senior debt securities are held by the property trustee, the
issuer trustees shall not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee under the indenture, or execute any trust
or power conferred on such trustee, with respect to the senior debt
securities;
- waive certain past defaults under the indenture;
- exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of such senior debt securities; or
- consent to any amendment, modification or termination of the indenture or
such senior debt securities where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of a
majority in liquidation amount of all outstanding capital securities of
the applicable Cox Trust;
provided, however, that where a consent under the indenture would require the
consent of each holder affected thereby, no such consent shall be given by the
property trustee without the prior approval of each holder of the related
capital securities. The issuer trustees shall not revoke any action previously
authorized or approved by a vote of the holders of capital securities except by
subsequent vote of such holders. The property trustee shall notify each holder
of capital securities of any notice of default with respect to the related
senior debt securities. In addition to obtaining approvals of holders of capital
securities referred to above, prior to taking any of the foregoing actions, the
issuer trustees shall obtain an opinion of counsel experienced in such matters
to the effect that the applicable Cox Trust will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
Any required approval of holders of capital securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. The property trustee will cause a notice of any meeting at which
holders of capital securities are entitled to vote to be given to each holder of
record of capital securities in the manner set forth in the applicable
declaration of trust.
Notwithstanding that holders of capital securities are entitled to vote or
consent under any of the circumstances referred to above, any capital securities
that are owned by Cox or any affiliate of Cox shall, for purposes of such vote
or consent, be treated as if they were not outstanding.
GLOBAL CAPITAL SECURITIES
If specified in the applicable prospectus supplement, capital securities
may be represented by one or more global certificates deposited with, or on
behalf of, The Depository Trust Company, or other depositary identified in such
prospectus supplement, or a nominee thereof, in each case for credit to an
account of a participant in The Depository Trust Company or other depositary.
The identity of the depositary and the specific terms of the depositary
arrangements with respect to the capital securities to be represented by one or
more global certificates will be described in the applicable prospectus
supplement. However, unless otherwise specified in the applicable prospectus
supplement, The Depository Trust Company will be the depositary and the
depositary arrangements described with respect to the debt securities will apply
to such capital securities as well, except all references to Cox shall include
the Cox Trusts and all references to the indenture will refer to the applicable
declaration of trust. See "Description of Debt Securities -- Global Securities."
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PAYMENT AND PAYING AGENT
Payments in respect of any global certificate representing capital
securities shall be made to Cede & Co. as nominee of The Depository Trust
Company, or other applicable depositary or its nominee, which shall credit the
relevant accounts at The Depository Trust Company or such other depositary on
the applicable payment dates, while payments in respect of capital securities in
certificated form shall be made by check mailed to the address of the holder
entitled thereto as such address shall appear on the register. The paying agent
shall initially be the property trustee and any co-paying agent chosen by the
property trustee and acceptable to the administrative trustees and Cox. The
paying agent shall be permitted to resign as paying agent upon 30 days prior
written notice to the property trustee, the administrative trustees and Cox. In
the event that the property trustee shall no longer be the paying agent, the
administrative trustees shall appoint a successor, which shall be a bank or
trust company acceptable to the administrative trustees and Cox, to act as
paying agent.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as registrar and transfer agent for the
capital securities.
Registration of transfers of capital securities will be effected without
charge by or on behalf of the applicable Cox Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. A Cox Trust will not be required to register or cause to
be registered the transfer of its capital securities after they have been
converted, exchanged, redeemed or called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, other than during the occurrence and continuance of
an event of default under the declaration of trust, will undertake to perform
only such duties as are specifically set forth in the declaration of trust and,
during the continuance of such event of default, must exercise the same degree
of care and skill as a prudent person would exercise or use in the conduct of
his or her own affairs. Subject to the foregoing, the property trustee will not
be under any obligation to exercise any of the powers vested in it by such
declaration of trust at the request of any holder of the related trust
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby. If no such event of default has
occurred and is continuing and the property trustee is required to decide
between alternative causes of action, construe ambiguous provisions in the
declaration of trust or is unsure of the application of any provision of the
declaration of trust, and the matter is not one on which holders of capital
securities or trust common securities are entitled under the declaration of
trust to vote, then the property trustee shall take such action as is directed
by Cox and if not so directed, shall take such action as it deems advisable and
in the best interests of the holders of the related trust securities and will
have no liability except for its own bad faith, negligence or willful
misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the applicable Cox Trust in such a way that:
- such Cox Trust will not be deemed to be an investment company required to
be registered under the Investment Company Act;
- such Cox Trust will be classified as a grantor trust for United States
federal income tax purposes; and
- the related senior debt securities will be treated as indebtedness of Cox
for United States federal income tax purposes.
Cox and the administrative trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the applicable Cox
Trust or the declaration of trust, that the administrative
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trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the related trust securities.
Holders of capital securities will not have any preemptive or similar
rights.
A Cox Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
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DESCRIPTION OF CAPITAL SECURITIES GUARANTEES
A capital securities guarantee will be executed and delivered by Cox
concurrently with the issuance by a Cox Trust of capital securities for the
benefit of the holders from time to time of such capital securities and will be
held for such holders by The Bank of New York, as capital securities guarantee
trustee. Each capital securities guarantee has been qualified as an indenture
under the Trust Indenture Act and is subject to, and governed by, the Trust
Indenture Act. This summary of certain terms and provisions of the capital
securities guarantee does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of such capital
securities guarantee, including the definitions therein of certain terms, and
those made a part of such capital securities guarantee by the Trust Indenture
Act.
GENERAL
Cox will irrevocably agree to pay in full on a senior basis, to the extent
set forth herein, the guarantee payments to the holders of the related capital
securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the applicable Cox Trust may have or assert other than the
defense of payment. The following payments, which are referred to as guarantee
payments, with respect to capital securities, to the extent not paid by or on
behalf of the applicable Cox Trust, will be subject to the capital securities
guarantee:
- any accumulated distributions required to be paid on such capital
securities, to the extent that such Cox Trust has funds legally available
therefor at such time;
- the applicable redemption price with respect to such capital securities
called for redemption, to the extent that such Cox Trust has funds
legally available therefor at such time; or
- upon a voluntary or involuntary dissolution and liquidation of such Cox
Trust, other than in connection with the distribution of the related
senior debt securities to holders of such capital securities or the
redemption, conversion or exchange of the capital securities, the lesser
of
- the amounts due upon the dissolution and liquidation of such Cox Trust,
to the extent that such Cox Trust has funds legally available therefor
at the time, and
- the amount of assets of such Cox Trust remaining available for
distribution to holders of its capital securities after satisfaction of
liabilities to creditors of such Cox Trust as required by applicable
law.
Cox's obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by Cox to the holders of the capital securities
entitled thereto or by causing the applicable Cox Trust to pay such amounts to
such holders.
Cox will, through the capital securities guarantee, the declaration of
trust, the related senior debt securities and the indenture, taken together,
fully, irrevocably and unconditionally guarantee all of the applicable Cox
Trust's obligations under its capital securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guarantee
of a Cox Trust's obligations under its capital securities.
RANKING
Each capital securities guarantee will constitute an unsecured obligation
of Cox and will rank equally in right of payment with all other senior
indebtedness of Cox.
CAPITAL SECURITIES GUARANTEE OF PAYMENT
The capital securities guarantee will constitute a guarantee of payment and
not of collection. In other words, the guaranteed party may institute a legal
proceeding directly against Cox to enforce its rights
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under such capital securities guarantee without first instituting a legal
proceeding against any other person or entity. A capital securities guarantee
will not be discharged except by payment of the related capital securities
guarantee payments in full to the extent not paid by the applicable Cox Trust or
upon distribution of its capital securities to the holders of the related senior
debt securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of the related capital securities, in which case no
approval will be required, a capital securities guarantee may not be amended
without the prior approval of the holders of a majority of the liquidation
amount of such outstanding capital securities. The manner of obtaining any such
approval will be as set forth under "Description of Capital Securities -- Voting
Rights; Amendment of a Declaration of Trust." All guarantees and agreements
contained in a capital securities guarantee shall bind the successors, assigns,
receivers, trustees and representatives of Cox and shall inure to the benefit of
the holders of the related capital securities then outstanding.
EVENTS OF DEFAULT
An event of default under a capital guarantee will occur upon the failure
of Cox to perform any of its payment or other obligations thereunder, provided
that, except with respect to a default in respect of any capital securities
guarantee payment, Cox shall have received notice of such default and shall not
have cured such default within 60 days of such receipt. The holders of a
majority in liquidation amount of the related capital securities will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the capital securities guarantee trustee in respect of the
applicable capital securities guarantee or to direct the exercise of any trust
or power conferred upon the capital securities guarantee trustee under such
capital securities guarantee.
If the capital securities guarantee trustee fails to enforce a capital
securities guarantee, any holder of the related capital securities may institute
a legal proceeding directly against Cox to enforce its rights under such capital
securities guarantee without first instituting a legal proceeding against the
applicable Cox Trust, the capital securities guarantee trustee or any other
person or entity.
TERMINATION
A capital securities guarantee will terminate and be of no further force
and effect upon:
- full payment of the applicable redemption price of the related capital
securities;
- full payment of all amounts due upon the dissolution and liquidation of
the applicable Cox Trust; or
- the conversion or exchange of all of the related capital securities,
whether upon distribution of senior debt securities to the holders of
such capital securities or otherwise.
A capital securities guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the related capital
securities must restore payment of any sums paid under such capital securities
or such capital securities guarantee.
GOVERNING LAW
Each capital securities guarantee will be governed by and construed in
accordance with the laws of the State of New York.
INFORMATION CONCERNING THE CAPITAL SECURITIES GUARANTEE TRUSTEE
The capital securities guarantee trustee, other than during the occurrence
and continuance of a default by Cox in performance of a capital securities
guarantee, will undertake to perform only such duties as are specifically set
forth in the capital securities guarantee and, during the continuance of such
default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his
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or her own affairs. Subject to the foregoing, the capital securities guarantee
trustee will not be under any obligation to exercise any of the powers vested in
it by a capital securities guarantee at the request of any holder of the related
capital securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
LIMITED PURPOSE OF COX TRUST
The capital securities will represent preferred beneficial interests in the
applicable Cox Trust, and each Cox Trust exists for the sole purpose of issuing
and selling its trust securities, using the proceeds from the sale of its trust
securities to acquire the related senior debt securities of Cox and engaging in
only those other activities necessary, advisable or incidental thereto.
RIGHTS UPON DISSOLUTION
Unless the senior debt securities are distributed to holders of the related
trust securities, upon any voluntary or involuntary dissolution and liquidation
of the applicable Cox Trust, after satisfaction of the liabilities of creditors
of such Cox Trust as required by applicable law, the holders of such trust
securities will be entitled to receive, out of assets held by such Cox Trust,
the liquidation distribution in cash. See "Description of Capital
Securities -- Liquidation of a Cox Trust and Distribution of Senior Debt
Securities."
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RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE CORRESPONDING SENIOR DEBT SECURITIES
AND THE CAPITAL SECURITIES GUARANTEES
Full and Unconditional Guarantee. Cox will irrevocably guarantee payments
of distributions and other amounts due on the capital securities to the extent
the applicable Cox Trust has funds available for the payment of the
distributions as and to the extent set forth under "Description of Capital
Securities Guarantees." Taken together, Cox's obligations under the senior debt
securities, the securities resolution, the indenture, the declaration of trust
and the capital securities guarantee agreement provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of distributions and
other amounts due on the capital securities. No single document standing alone
or operating in conjunction with fewer than all of the other documents
constitutes the full guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee of the applicable Cox Trust's obligations under the capital
securities.
If and to the extent that Cox does not make payments on the senior debt
securities, the applicable Cox Trust will not pay distributions or other amounts
due on its capital securities. A capital securities guarantee does not cover
payment of distributions when such Cox Trust does not have sufficient funds to
pay the distributions. In that event, the remedy for a holder of trust preferred
securities is to institute a legal proceeding directly against Cox for
enforcement of payment of the distributions to such holder.
Sufficiency of Payments. As long as all payments are made when due on the
senior debt securities, those payments will be sufficient to cover distributions
and other payments due on the capital securities. This is primarily because:
- the aggregate principal amount of the senior debt securities will be
equal to the sum of the aggregate stated liquidation amount of the
capital securities and trust common securities;
- the interest rate and interest and other payment dates on the senior debt
securities will match the distribution rate and distribution and other
payment dates for the capital securities;
- Cox, as borrower, has promised to pay any and all costs, expenses and
liabilities of the applicable Trust except such Cox Trust's obligations
under its capital securities; and
- the declaration of trust will provides that the applicable Cox Trust will
not engage in any activity that is not consistent with the limited
purposes of such Cox Trust.
Cox has the right to set-off any payment Cox is otherwise required to make
under the indenture if and to the extent Cox has already made, or is
concurrently making, a payment under the capital securities guarantee agreement.
Enforcement Rights of Holders of Capital Securities. A holder of a capital
security may institute a legal proceeding directly against Cox to enforce its
rights under the applicable capital securities guarantee agreement without first
instituting a legal proceeding against the capital securities guarantee trustee,
the applicable Cox Trust or anyone else.
Limited Purpose of a Cox Trust. The applicable Cox Trust's capital
securities evidence undivided beneficial ownership interests in the assets of
the applicable Cox Trust, and the applicable Cox Trust exists for the sole
purposes of issuing its capital securities and trust common securities,
investing the proceeds in senior debt securities and engaging in only those
other activities necessary, convenient or incidental to those purposes. A
principal difference between the rights of a holder of a trust preferred
security and a holder of a corresponding senior debt security is that a holder
of a senior debt security is entitled to receive from Cox the principal amount
of and interest accrued on the corresponding senior debt security, while a
holder of capital securities is entitled to receive distributions from the
applicable Cox Trust, or from Cox under the capital securities guarantee
agreement, if and to the extent the applicable Cox Trust has funds available for
the payment of the distributions.
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Rights Upon Dissolution. Upon any voluntary or involuntary dissolution of
a Cox Trust involving the liquidation of the senior debt securities, the holders
of the capital securities will be entitled to receive the liquidation
distribution in cash, out of assets of such Cox Trust and after satisfaction of
creditors of such Cox Trust as provided by applicable law. If Cox becomes
subject to any voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the debt securities, would be one of Cox's creditors. Cox
is the guarantor under the capital securities guarantee agreements and pursuant
to the indenture, as borrower, has agreed to pay all costs, expenses and
liabilities of the applicable Cox Trust other than the applicable Cox Trust's
obligations to the holders of the capital securities. Accordingly, in the event
of Cox's liquidation or bankruptcy the positions of a holder of capital
securities and of a holder of senior debt securities are expected to be
substantially the same relative to Cox's other creditors and to Cox's
stockholders.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Cox may issue stock purchase contracts, representing contracts obligating
holders to purchase from Cox, and Cox to sell to the holders, a specified number
of shares of Class A common stock at a future date or dates. The price per share
of Class A common stock may be fixed at the time the stock purchase contracts
are issued or may be determined by reference to a specific formula set forth in
the stock purchase contracts. The stock purchase contracts may be issued
separately or as a part of units, which are referred to as stock purchase units,
consisting of a stock purchase contract and, as security for the holder's
obligations to purchase the Class A common stock under stock purchase contracts,
either:
- senior debt securities, subordinated debt securities or junior
subordinated debt securities of Cox,
- debt obligations of third parties, including U.S. Treasury securities, or
- preferred securities or capital securities of a Cox Trust.
The stock purchase contracts may require Cox to make periodic payments to
the holders of the stock purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The stock purchase contracts may require
holders to secure their obligations thereunder in a specified manner and in
certain circumstances Cox may deliver newly issued prepaid stock purchase
contracts, which are referred to as prepaid securities, upon release to a holder
of any collateral securing such holder's obligations under the original stock
purchase contract.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units and, if applicable, prepaid
securities. The description in the prospectus supplement will not purport to be
complete and will be qualified in its entirety by reference to the stock
purchase contracts, the collateral arrangements and depositary arrangements, if
applicable, relating to such stock purchase contracts or stock purchase units
and, if applicable, the prepaid securities and the document pursuant to which
such prepaid securities will be issued.
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PLAN OF DISTRIBUTION
Cox and the Cox Trusts may sell securities to one or more underwriters or
dealers for public offering and sale by them, or it may sell the securities to
investors directly or through agents. The accompanying prospectus supplement
will set forth the terms of the offering and the method of distribution and will
identify any firms acting as underwriters, dealers or agents in connection with
the offering, including:
- the name or names of any underwriters;
- the purchase price of the securities and the proceeds to Cox or the Cox
Trusts from the sale;
- any underwriting discounts and other items constituting underwriters'
compensation;
- any public offering price;
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any securities exchange or market on which the securities offered in the
prospectus supplement may be listed.
Only those underwriters identified in such prospectus supplement are deemed
to be underwriters in connection with the securities offered in the prospectus
supplement.
Cox and the Cox Trusts may distribute the securities from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
prices determined as the prospectus supplement specifies. Cox may sell
securities through forward contracts or similar arrangements. In connection with
the sale of the securities, underwriters, dealers or agents may be deemed to
have received compensation from Cox in the form of underwriting discounts or
commissions and also may receive commissions from securities purchasers for whom
they may act as agent. Underwriters may sell the securities to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters or commissions from the
purchasers for whom they may act as agent. Some of the underwriters, dealers or
agents who participate in the securities distribution may engage in other
transactions with, and perform other services for, Cox and its subsidiaries in
the ordinary course of business.
Any underwriting or other compensation which Cox pays to underwriters or
agents in connection with the securities offering, and any discounts,
concessions or commissions which underwriters allow to dealers, will be set
forth in the prospectus supplement. Underwriters, dealers and agents
participating in the securities distribution may be deemed to be underwriters,
and any discounts and commissions they receive and any profit they realize on
the resale of the securities may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters and their controlling
persons, dealers and agents may be entitled, under agreements entered into with
Cox and the Cox Trusts, to indemnification against and contribution toward
specific civil liabilities, including liabilities under the Securities Act.
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LEGAL MATTERS
Dow, Lohnes & Albertson, PLLC, of Washington, D.C., and Richards, Layton &
Finger, P.A., of Wilmington, Delaware, will pass upon the validity of the
securities offered in the applicable prospectus supplement for Cox and the Cox
Trusts, respectively. Unless otherwise specified in the applicable prospectus
supplement, Brown & Wood LLP, of New York, New York, will pass upon certain
matters for any underwriters.
EXPERTS
The consolidated financial statements of Cox and Cox Communications PCS,
L.P. and subsidiaries incorporated in this prospectus by reference from Cox's
Annual Report on Form 10-K for the year ended December 31, 1998 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated by reference into this prospectus, and have been
so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of TCA Cable TV, Inc. and
subsidiaries as of and for the year ended October 31, 1998 have been
incorporated by reference in this prospectus in reliance on the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
Cox is subject to the informational requirements of the Exchange Act and
files reports, proxy statements and other information with the SEC. Cox's SEC
filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You also may read and copy any document Cox files at the
SEC's public reference rooms in Washington, D.C., New York and Chicago or obtain
copies of such materials by mail. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference rooms and their copy charges, as well as the
Public Reference Section's charges for mailing copies of the documents Cox has
filed.
You can also inspect and copy any of Cox's SEC filings at the offices of
the New York Stock Exchange, Inc., located at 20 Broad Street, New York, New
York, 10005.
INFORMATION INCORPORATED BY REFERENCE
Cox files periodic reports with the SEC. SEC rules permit Cox to
incorporate these filings by reference into this prospectus. By incorporating
Cox's SEC filings by reference, the following documents are made a part of this
prospectus:
- Cox's annual report on Form 10-K for the year ended December 31, 1998;
- Cox's quarterly report on Form 10-Q for the quarter ended March 31, 1998;
- Amendment no. 1 to Cox's current report on Form 8-K, dated July 7, 1999;
- Amendment no. 1 to Cox's current report on Form 8-K, dated May 12, 1999;
- Cox's current report on Form 8-K, dated July 27, 1999;
- Cox's current report on Form 8-K, dated July 7, 1999;
- Cox's current report on Form 8-K, dated May 17, 1999;
- Cox's current report on Form 8-K, dated May 12, 1999;
- Cox's current report on Form 8-K, dated April 22, 1999;
- Cox's current report on Form 8-K, dated January 8, 1999;
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- Cox's definitive proxy statement for the 1999 annual meeting of
stockholders, dated March 29, 1999; and
- Cox's registration statement on Form 8-A.
All documents which Cox will file with the SEC, pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, after the date of the initial filing of
the registration statement and prior to the termination of the securities
offering shall be deemed to be incorporated by reference in, and to be a part
of, this prospectus from the date such documents are filed. Cox's SEC file
number for Exchange Act documents is 1-6590. Cox will provide without charge, to
any person who receives a copy of this prospectus and the accompanying
prospectus supplement, upon such recipient's written or oral request, a copy of
any document this prospectus incorporates by reference, other than exhibits to
such incorporated documents, unless such exhibits are specifically incorporated
by reference in such incorporated document. Requests should be directed to:
Dallas S. Clement,
Vice President and Treasurer
Cox Communications, Inc.
1400 Lake Hearn Drive
Atlanta, Georgia 30319
Telephone: (404) 843-5000
Any statement contained in this prospectus or in a document incorporated by
reference in, or deemed to be incorporated by reference in, this prospectus
shall be deemed to be modified or superseded, for purposes of this prospectus,
to the extent that a statement contained in
- the prospectus,
- the accompanying prospectus supplement, or
- any other subsequently filed document which also is incorporated by
reference in, or is deemed to be incorporated by reference in, this
prospectus,
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.
Cox has not included or incorporated by reference separate financial
statements of the Cox Trusts into this prospectus. Cox does not consider such
financial statements to be material to holders of the trust preferred securities
of the Cox Trusts because:
- all of the voting securities of the Cox Trusts will be owned, directly or
indirectly, by Cox, a reporting company under the Exchange Act;
- each of the Cox Trusts is a special purpose entity, has no operating
history, has no independent operations and is not engaged in, and does
not propose to engage in, any activity other than issuing securities
representing undivided beneficial interests in the assets of such Cox
Trust and investing the proceeds thereof in junior subordinated
debentures issued by Cox; and
- Cox's obligations described in this prospectus and in any accompanying
prospectus supplement under the declaration of trust of a Cox Trust, the
preferred securities guarantee issued by Cox with respect to the trust
preferred securities issued by such Cox Trust, the debt securities or
junior subordinated debentures of Cox purchased by the Cox Trusts and the
applicable indenture pursuant to which such debt securities or junior
subordinated debentures are issued, taken together, constitute direct
obligations of Cox and a full and unconditional guarantee of the trust
preferred securities of each such Cox Trust.
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(COX LOGO)
PRIZES(SM)
COX COMMUNICATIONS, INC.
EXCHANGEABLE SUBORDINATED DEBENTURES DUE 2029
(EXCHANGEABLE FOR CASH BASED ON THE VALUE OF SPRINT PCS STOCK)
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
BANC OF AMERICA SECURITIES, LLC
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
, 1999
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(SM)Service mark of Merrill Lynch & Co., Inc.
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