<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-82575
Registration No. 333-82575-02
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 9, 1999)
COX LOGO
13,000,000 FELINE PRIDES(SM)
(CONSISTING OF 11,700,000 INCOME PRIDES(SM) AND 1,300,000 GROWTH PRIDES(SM))
COX COMMUNICATIONS, INC.
7% CAPITAL SECURITIES
COX TRUST II
(liquidation amount $50 per capital security)
fully and unconditionally guaranteed to the extent provided in this prospectus
supplement by
Cox Communications, Inc.
----------------------
This is an offering of 13,000,000 FELINE PRIDES(SM) by Cox Communications,
Inc. and 1,300,000 separately offered and separately traded 7% capital
securities of Cox Trust II, a Delaware business trust wholly owned by us. The
FELINE PRIDES consist of units referred to as Income PRIDES and Growth PRIDES.
In addition to the separately offered and separately traded capital securities,
the trust is issuing 11,700,000 capital securities that will initially be held
as components of the Income PRIDES and will not be offered or traded separately
from the Income PRIDES, unless and until substitution is made as described in
this prospectus supplement.
The Income PRIDES and the Growth PRIDES have been approved for listing on
the New York Stock Exchange under the symbols "COX PrI" and "COX PrG,"
respectively, subject to official notice of issuance. The capital securities
will not initially be listed on an exchange.
INVESTING IN THE SECURITIES INVOLVES CERTAIN RISKS WHICH ARE DESCRIBED IN
THE "RISK FACTORS" SECTION OF THIS PROSPECTUS SUPPLEMENT BEGINNING ON PAGE S-12.
----------------------
PUBLIC OFFERING PRICE(1)
$50.00 per Income PRIDES
$43.114 per Growth PRIDES
$48.844 per Capital Security
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS
COMMISSION TO COX(2)
------------ ------------
<S> <C> <C>
Total............................................ $19,500,000 $$630,500,000
</TABLE>
(1) Plus, as applicable, accumulated distributions, interest and
contract adjustment payments, if any, from August 12, 1999, if
settlement occurs after that date
(2) Before expenses and after deducting $54,545,400 used to purchase the
treasury securities component of the 1,300,000 Growth PRIDES
The underwriters may also purchase up to an additional 1,950,000 FELINE
PRIDES, in any combination of Income PRIDES and Growth PRIDES, within 30 days
after the date of this prospectus supplement to cover over-allotments, if any.
The underwriters must purchase at least as many capital securities as Growth
PRIDES. If this option is exercised in full, the total underwriting commission
and proceeds to Cox will be $22,425,000 and $725,075,000, respectively.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The securities will be ready for delivery in New York, New York on or about
August 12, 1999.
----------------------
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
----------------------
BANC OF AMERICA SECURITIES LLC J.P. MORGAN & CO.
----------------------
The date of this prospectus supplement is August 9, 1999.
- ---------------
(SM) Service Mark of Merrill Lynch & Co., Inc.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary............................... S-2
Cox Communications, Inc. ............................... S-2
Recent Developments..................................... S-2
The Offering -- Q&A..................................... S-4
Explanatory Diagrams.................................... S-8
Risk Factors................................................ S-12
Use of Proceeds............................................. S-19
Price Range of Class A Common Stock......................... S-19
Dividend Policy............................................. S-19
Capitalization.............................................. S-20
Selected Financial Information and Other Data............... S-21
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. S-23
Cox Trust II................................................ S-25
Accounting Treatment........................................ S-26
Description of the FELINE PRIDES............................ S-26
Description of the Purchase Contracts....................... S-30
Provisions of the Purchase Contract Agreement and the Pledge
Agreement................................................. S-39
Description of the Capital Securities....................... S-42
Description of the Guarantee................................ S-53
Description of the Debentures............................... S-57
Effect of Obligations Under the Debentures and the
Guarantee................................................. S-63
Certain United States Federal Income Tax Consequences....... S-64
Underwriting................................................ S-72
Legal Opinions.............................................. S-73
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>
FORWARD-LOOKING STATEMENTS
This prospectus supplement includes forward-looking statements within the
meaning of Section 21E of the Securities and 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.
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PROSPECTUS SUPPLEMENT SUMMARY
You should read the following summary in conjunction with the more detailed
information contained in this prospectus supplement and the accompanying
prospectus. 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.
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 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 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.
RECENT DEVELOPMENTS
In March 1999, Cox signed a definitive agreement to purchase from First
Commonwealth Communications, Inc. cable television systems serving communities
near Gloucester, New Kent, West Point and King and Queen County, Virginia. The
cable television systems, serving more than 11,000 customers, are contiguous to
Cox's Hampton Roads, Virginia cable operation. Cox expects to complete this
transaction, which is subject to legal and regulatory review, during the third
quarter of 1999.
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Also in March 1999, Cox and MediaOne signed a definitive agreement to trade
selected cable television systems in Massachusetts, Rhode Island and
Connecticut. Under the terms of the agreement, Cox would trade 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. Cox expects to complete this transaction, which is
subject to legal and regulatory review, during third quarter of 1999.
In April 1999, Cox and Media General, Inc. entered into a purchase
agreement pursuant to which Cox will purchase for cash Media General's cable
systems serving more than 260,000 customers in Fairfax County and
Fredericksburg, Virginia. The transaction values the Media General cable systems
at $1.4 billion. Cox expects to complete this transaction which is subject to
legal and regulatory review, during the third quarter of 1999.
In May 1999, Cox entered into a definitive agreement to merge with TCA
Cable TV, Inc., a cable television operator serving approximately 883,000
customers in Texas, Arkansas, Louisiana and four other states. Through VPI
Communications Inc., TCA also is a leader in cable advertising sales, providing
turnkey advertising services to 82 multiple system operators representing more
than 3.5 million customers nationwide. Under the terms of the agreement, each
share of TCA common stock will be converted into the right to receive $31.25 in
cash and 0.7418 of a share of Cox Class A common stock. Alternatively, TCA
shareholders can elect to receive $62.50 in cash per TCA share or 1.4836 shares
of Cox Class A common stock per TCA share, subject in each case to proration in
the event that those elections would result in the payment by Cox of more than
$1.6 billion in cash or the issuance of more than 39.6 million shares of Cox
Class A common stock to TCA shareholders. Cox expects to complete this
transaction, which is subject to TCA shareholder and regulatory approvals,
during the third quarter of 1999.
Also in May 1999, Cox transferred its remaining interest in Cox
Communications PCS, L.P. to Sprint Corporation in exchange for 19,058,434 shares
of Sprint's PCS Common Stock-Series 2. Cox PCS is the partnership through which
Sprint conducts its operation in Los Angeles, San Diego and Las Vegas. As a
result of this transaction, Cox recognized a pre-tax gain of $908.5 million.
Concurrently with this transaction, Cox Enterprises transferred its remaining
interest in Cox PCS in exchange for 5,241,070 shares of Sprint's PCS Common
Stock-Series 2.
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 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); a 20% ownership interest in a partnership with 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.
Also 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
anticipates that this transaction will generate approximately $350 million in
tax benefits to Cox. Cox expects to complete this transaction, which is subject
to legal and regulatory review, by the end of the first quarter of 2000.
Total revenues for the three months ended June 30, 1999 were $509.9
million, a 28% increase over the three months ended June 30, 1998. Operating
cash flow increased 29% to $195.9 million for the second quarter of 1999.
Interest expense increased $17.7 million to $68.7 million primarily due to an
increase in the total debt outstanding. Equity in net losses of affiliated
companies was $29.6 million primarily due to losses associated with Cox PCS. Net
income for the current quarter was $505.8 million as compared to net loss of
$12.2 million for the second quarter of 1998.
Total revenues for the six months ended June 30, 1999 were $1,008.4
million, a 24% increase over revenues for the six months ended June 30, 1998.
Operating cash flow increased 28% to $384.4 million for
S-3
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the first six months of 1999. Interest expense increased $18.5 million to $122.7
million primarily due to an increase in the total debt outstanding. Equity in
net losses of affiliated companies was $76.0 million primarily due to losses
associated with Cox PCS. Net income for the first six months of 1999 was $757.0
million as compared to net loss of $114.2 million for the same period in 1998.
Concurrently with this offering of FELINE PRIDES, Cox is also offering
10,100,000 shares of its Class A common stock, for an aggregate offering of $350
million, and approximately $1,850 million aggregate principal amount of senior
debt securities. These offerings are not conditioned upon one another, and Cox
may vary the size or terminate one or more of these offerings based on market
conditions and other factors.
THE OFFERING -- Q&A
WHAT ARE FELINE PRIDES?
FELINE PRIDES consist of Income PRIDES and Growth PRIDES.
Income PRIDES contain two components:
(1) A purchase contract under which the investor agrees to purchase
shares of our Class A common stock, $1.00 par value per share, on August
16, 2002.
(2) A capital security under which the investor will be paid 7% of $50
per year through and including August 15, 2002 and at the reset rate after
that date, but which will be pledged to us to secure the investor's
obligations under the purchase contract. On August 16, 2002 the investor
will have two options:
- Pay cash to settle the purchase contract for $50 and release the
pledged capital securities, whose rate will have been reset at that
time, or
- Pay cash to settle the purchase contract by allowing the capital
securities to be sold on its behalf in a remarketing process.
Growth PRIDES contain two components:
(1) A purchase contract under which the investor agrees to purchase
shares of our Class A common stock, $1.00 par value per share, on August
16, 2002. The purchase contract also includes unsecured contract adjustment
payments of .25% of $50 per year paid quarterly.
(2) A zero-coupon treasury security which is a 1/20 undivided
beneficial interest in a zero-coupon U.S. treasury security (CUSIP No.
912820 BE 6) with a principal amount at maturity equal to $1,000 and
maturing on August 15, 2002. The zero-coupon treasury security will be
pledged to us to secure the investor's obligations under the purchase
contract.
WHAT PAYMENTS AM I ENTITLED TO AS A HOLDER OF INCOME PRIDES?
Holders of Income PRIDES will be entitled to receive cumulative cash
distributions on the related capital securities or on the treasury portfolio, as
applicable, at the rate of 7% of $50 per year through and including August 15,
2002, payable quarterly in arrears.
WHAT PAYMENTS AM I ENTITLED TO AS A HOLDER OF GROWTH PRIDES?
Holders of Growth PRIDES will be entitled to receive quarterly cash
distributions of contract adjustment payments payable by us at the rate of .25%
of $50 per year.
WHAT CONTRACT ADJUSTMENT PAYMENTS AM I ENTITLED TO?
Contract adjustment payments on the Growth PRIDES will be fixed at a rate
per year of .25% of $50 per purchase contract. Holders of Income PRIDES will not
be entitled to receive contract adjustment payments.
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WHAT ARE THE PAYMENT DATES FOR THE SECURITIES?
The current payments described above in respect of the Income PRIDES and
Growth PRIDES will be payable quarterly in arrears on February 16, May 16,
August 16 and November 16 of each year (each, a payment date), commencing
November 16, 1999, to holders of record on the business day preceding the
payment dates. Contract adjustment payments in respect of Growth PRIDES will be
payable through and including the earlier of August 16, 2002 or the most recent
quarterly date on or before any early settlement of the related purchase
contracts. In the case of capital securities that are components of Income
PRIDES, the payments will be payable through and including the most recent
quarterly date on or before the earlier of August 16, 2002 and the date the
liquidation amounts of the capital securities together with all accumulated and
unpaid distributions are paid in full.
WHAT IS THE SETTLEMENT RATE?
The settlement rate is the number of newly issued shares of Class A common
stock we are obligated to sell and you are obligated to buy upon settlement of a
purchase contract on August 16, 2002.
The settlement rate for each purchase contract will be as follows, subject
to adjustment under the circumstances described under "Description of Purchase
Contracts--Anti-Dilution Adjustments":
(a) If the applicable market value of our Class A common stock is
equal to or greater than $41.7984, the settlement rate will be 1.1962
shares of our Class A common stock per purchase contract.
(b) If the applicable market value of our Class A common stock is less
than $41.7984 but greater than $34.6875, the settlement rate will be equal
to $50 divided by the applicable market value.
(c) If the applicable market value is less than or equal to $34.6875,
the settlement rate, which is equal to $50 divided by $34.6875, will be
1.4414 shares of our Class A common stock per purchase contract.
WHAT IS REMARKETING?
The capital securities of Income PRIDES holders who have failed to notify
the purchase contract agent on or prior to the fifth business day before August
16, 2002 of their intention to pay cash to satisfy their obligations under the
related purchase contracts will be remarketed on the third business day
immediately preceding August 16, 2002.
The remarketing agent will use its reasonable efforts to remarket those
capital securities (bearing the reset rate) on that date for settlement on
August 16, 2002. The remarketing agent will use its best efforts to obtain a
price of approximately 100.5% of the aggregate stated liquidation amount of
those capital securities, plus any related accumulated and unpaid distributions.
The portion of the proceeds from the remarketing equal to the aggregate
stated liquidation amount of those capital securities will be automatically
applied to satisfy in full those Income PRIDES holders' obligations to purchase
our Class A common stock under the related purchase contracts. The remarketing
agent will deduct as a remarketing fee an amount not exceeding 25 basis points
(.25%) of the aggregate stated liquidation amount of the remarketed capital
securities from any amount of those proceeds in excess of the aggregate stated
liquidation amount of the remarketed capital securities plus any accumulated and
unpaid distributions. The remarketing agent will remit the remaining portion of
the proceeds, if any, for the benefit of that holder.
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WHAT HAPPENS IF THE REMARKETING AGENT DOES NOT SELL THE CAPITAL SECURITIES?
We will exercise our rights as a secured party to dispose of the capital
securities in accordance with applicable law and to satisfy in full, from the
proceeds of that disposition, your obligation to purchase Class A common stock
under the related purchase contracts if
- the remarketing agent cannot remarket the related capital securities of
your Income PRIDES, other than to us, at a price not less than 100% of
the aggregate stated liquidation amount of those capital securities plus
accumulated and unpaid distributions or
- the remarketing has not occurred because a condition precedent to the
remarketing has not been fulfilled.
IF I AM NOT A PARTY TO A PURCHASE CONTRACT, MAY I STILL PARTICIPATE IN A
REMARKETING OF MY CAPITAL SECURITIES?
Holders of capital securities that are not components of Income PRIDES may
elect, in the manner described below, to have their capital securities
remarketed by the remarketing agent.
BESIDES PARTICIPATING IN A REMARKETING, HOW ELSE WILL MY OBLIGATIONS UNDER THE
PURCHASE CONTRACTS BE SATISFIED?
- through the early delivery of cash to the purchase contract agent in the
manner described below, referred to as early settlement,
- in the case of Income PRIDES, by settling the related purchase contracts
with separate cash on the third business day prior to August 16, 2002
with prior notification to the purchase contract agent, or
- upon the termination of purchase contracts.
WHAT ARE THE CAPITAL SECURITIES?
The capital securities represent undivided beneficial ownership interests
in the assets of the trust.
WHAT DISTRIBUTIONS WILL I RECEIVE ON THE CAPITAL SECURITIES?
Distributions on the capital securities that are components of Income
PRIDES will constitute the distributions on the Income PRIDES. Distributions
will be payable initially at the annual rate of 7% of the liquidation amount of
$50 per capital security to, but excluding, August 16, 2002. If any capital
securities remain outstanding on and after August 16, 2002, the distributions on
these capital securities will be at the reset rate from August 16, 2002 to, but
excluding, August 16, 2004.
WHEN WILL I RECEIVE DISTRIBUTIONS ON THE CAPITAL SECURITIES?
Distributions will be payable quarterly in arrears on each February 16, May
16, August 16, and November 16, commencing November 16, 1999, to holders of
record on the business day preceding each payment date.
WHAT IS THE RESET RATE?
The reset rate is the interest rate on the debentures, and therefore the
distribution rate on the capital securities, on and after August 16, 2002.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its capacity as the reset
agent, will determine the reset rate that the capital securities should bear in
order for a capital security to have an approximate market value of 100.5% of
$50 on the third business day immediately preceding August 16, 2002, except that
we may limit the reset rate to be no higher than the rate on the two-year
benchmark treasury plus 200 basis points (2%) and the reset rate may not exceed
the maximum rate permitted by applicable law.
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WHEN WILL THE INTEREST RATE ON THE DEBENTURES BE RESET?
Unless a tax event redemption has occurred, the interest rate on the
debentures will be reset on the third business day immediately preceding August
16, 2002.
WHEN MAY THE DEBENTURES AND THE TRUST SECURITIES BE REDEEMED?
The debentures and, thus, the trust securities, which include the capital
securities and the common securities representing undivided beneficial interests
in the assets of the trust, are redeemable at our option, in whole but not in
part, upon the occurrence and continuation of a tax event as described in this
prospectus supplement. Following any redemption of debentures and, thus, capital
securities prior to August 16, 2002, investors that own Income PRIDES will own a
portfolio of U.S. treasury securities as a component of their Income PRIDES.
WHAT ARE THE DEBENTURES?
The debentures will be our senior unsecured obligations and will rank
equally among themselves and with all of our other senior unsecured obligations.
WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES RELATED TO THE INCOME
PRIDES, GROWTH PRIDES AND CAPITAL SECURITIES?
Investors that purchase FELINE PRIDES and continue to hold the FELINE
PRIDES may be considered to have received consideration to assume the
obligations under the related purchase contract and to have paid that amount, in
addition to the purchase price, for the related capital securities or treasury
securities, but those investors should consult their tax advisors concerning the
tax consequences associated with the acquisition of the FELINE PRIDES.
The debentures may be issued with OID, in which case a beneficial owner of
Income PRIDES and capital securities will be required to include its pro rata
share of such OID in income on a constant yield to maturity basis. In addition,
a beneficial owner of Income PRIDES and capital securities will include in gross
income its proportionate share of the stated interest on the debentures when
that interest income is paid or accrued in accordance with the beneficial
owner's regular method of tax accounting. We intend to report the contract
adjustment payments as income to holders of Growth PRIDES, but holders should
consult their tax advisors concerning the possibility that the contract
adjustment payments may be treated as loans, purchase price adjustments, rebates
or option premiums rather than being includible in income on a current basis. A
beneficial owner of Growth PRIDES will be required to include in gross income
any OID with respect to the treasury securities as it accrues on a constant
yield to maturity basis. If a tax event redemption has occurred, a beneficial
owner of Income PRIDES will be required to include in gross income its allocable
share of OID on the treasury portfolio as it accrues on a constant yield to
maturity basis.
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EXPLANATORY DIAGRAMS
The following diagrams demonstrate some of the key features of the purchase
contracts, the Income PRIDES, the Growth PRIDES and the 7% capital securities,
and the transformation of Income PRIDES into Growth PRIDES and capital
securities.
FELINE PRIDES PURCHASE CONTRACT
- Income PRIDES and Growth PRIDES both include a purchase contract under
which the investor agrees to purchase shares of our Class A common stock,
$1.00 par value per share, on August 16, 2002. In addition, the purchase
contracts related to Growth PRIDES include unsecured contract adjustment
payments shown in the diagrams on the following pages.
(Purchase Contract Chart)
(1) For each of the percentage categories shown, the percentage of
shares to be delivered at maturity to an investor in Income PRIDES or
Growth PRIDES is determined by dividing the related number of shares to be
delivered, as indicated in the footnote for each category, by an amount
equal to $50 divided by $34.6875.
(2) If the applicable market value of our Class A common stock is less
than or equal to $34.6875, the number of shares to be delivered will be
calculated by dividing $50 by $34.6875. The applicable market value means
the average of the closing price per share of Class A common stock on each
of the twenty consecutive trading days ending on the third trading day
immediately preceding August 16, 2002.
(3) If the applicable market value of our Class A common stock is
between $34.6875 and $41.7984, the number of shares to be delivered will be
calculated by dividing $50 by the applicable market value.
(4) If the applicable market value of our Class A common stock is
greater than $41.7984, the number of shares to be delivered will be
calculated by dividing $50 by $41.7984.
(5) The last reported sales price of our Class A common stock on the
NYSE on August 9, 1999.
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INCOME PRIDES
- Income PRIDES consist of two components as described below:
(Income PRIDES Chart)
- The investor owns the capital security but will pledge it to us to secure
its obligations under the purchase contract.
GROWTH PRIDES
- Growth PRIDES consist of two components as described below:
(Growth PRIDES Chart)
- The investor owns the zero-coupon treasury security but will pledge it to
us to secure its obligations under the purchase contract. A treasury
security is defined as a 1/20th undivided beneficial interest in a
zero-coupon U.S. treasury security (CUSIP No. 912820 BE 6) with a
principal amount at maturity equal to $1,000 and maturing on August 15,
2002.
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CAPITAL SECURITIES
- Capital securities have the terms described below:
(Capital Securities Chart)
- The holder of capital securities that are components of Income PRIDES has
an option on August 16, 2002 to either:
- pay cash to settle the purchase contract for $50 and release the pledged
capital securities whose rates have been reset on August 16, 2002 or
- pay cash to settle the purchase contracts by allowing the capital
securities to be included in the remarketing process.
- The holder of capital securities that are separate and not components of
Income PRIDES has an option on August 16, 2002 to either:
- continue to hold the capital securities whose rate has been reset on
August 16, 2002 or
- deliver the capital securities to The Bank of New York, in its capacity
as our custodial agent, to be included in the remarketing process.
TRANSFORMING INCOME PRIDES INTO GROWTH PRIDES AND CAPITAL SECURITIES
- To create a Growth PRIDES, the investor separates an Income PRIDES into
its components -- the purchase contract and the capital security -- and
then combines the purchase contract with a specific zero-coupon treasury
security that matures concurrently with the maturity of the purchase
contract.
- The investor owns the zero-coupon treasury security but will pledge it to
us to secure its obligations under the purchase contract.
- The zero-coupon treasury security together with the purchase contract
constitute a Growth PRIDES. The capital securities, which are no longer a
component of the Income PRIDES, are tradeable as separate securities.
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(Flow Chart)
- The investor can also transform Growth PRIDES and capital securities into
Income PRIDES.
- The transformation of Income PRIDES into Growth PRIDES and capital
securities, and the transformation of Growth PRIDES and capital
securities into Income PRIDES, require minimum amounts of securities.
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RISK FACTORS
Your investment in the FELINE PRIDES will involve risks. You should
carefully consider the following discussion of risks as well as other
information contained in this prospectus supplement and the accompanying
prospectus.
YOU ASSUME THE RISK THAT THE MARKET VALUE OF OUR CLASS A COMMON STOCK MAY
DECLINE
Although as a holder of FELINE PRIDES you will be the beneficial owner of
the related capital securities, treasury portfolio or treasury securities, you
have an obligation under the purchase contract to buy our Class A common stock.
Prior to August 16, 2002, unless you pay cash to satisfy your obligation under
the purchase contract or the purchase contracts are terminated due to our
bankruptcy, insolvency or reorganization, either the proceeds derived from the
remarketing of the capital securities or the principal of the appropriate
applicable ownership interest of the treasury portfolio when paid at maturity,
in the case of Income PRIDES, or the principal of the related treasury
securities when paid at maturity, in the case of Growth PRIDES, will
automatically be used to purchase a specified number of shares of our Class A
common stock on your behalf. We cannot assure you that the market value of the
common stock you will receive on August 16, 2002 will be equal to or greater
than the effective price per share of $34 11/16 paid by you for our Class A
common stock on the date hereof. As a holder of FELINE PRIDES, if the applicable
market value of the Class A common stock is less than $34 11/16, the aggregate
market value of the Class A common stock issued to you under each purchase
contract on August 16, 2002 will be less than the price you paid for the FELINE
PRIDES and the market value per share of that Class A common stock will be less
than the effective price per share paid by you for such Class A common stock on
that date, in which case you will suffer an economic loss as of August 16, 2002.
Accordingly, you assume the risk that the market value of the Class A common
stock may decline, and that decline could be substantial.
THE OPPORTUNITY FOR EQUITY APPRECIATION PROVIDED BY AN INVESTMENT IN THE FELINE
PRIDES IS LESS THAN THAT PROVIDED BY A DIRECT INVESTMENT IN OUR CLASS A COMMON
STOCK
Your opportunity for equity appreciation afforded by investing in the
FELINE PRIDES is less than your opportunity for equity appreciation if you were
to directly invest in our Class A common stock. This opportunity is less because
the market value of the Class A common stock to be received by you under the
purchase contract on August 16, 2002, assuming that the market value is the same
as the applicable market value of such common stock, will only exceed the
effective price per share you paid if the applicable market value of the Class A
common stock exceeds $41.7984, which represents an appreciation of approximately
20.5% over $34.6875. This situation occurs because, in such event, you would
receive on August 16, 2002 only approximately 83%, the percentage equal to
$34.6875 divided by $41.7984, of the shares of Class A common stock that you
would have received if you had made a direct investment in the Class A common
stock on the date hereof. Therefore, you would receive on August 16, 2002 only
approximately 83% of the appreciation in the value of the Class A common stock
in excess of $41.7984.
THE TRADING PRICES FOR THE FELINE PRIDES WILL BE DIRECTLY AFFECTED BY THE
TRADING PRICES FOR OUR CLASS A COMMON STOCK
The trading prices of Income PRIDES and Growth PRIDES in the secondary
market will be directly affected by the trading prices of our Class A common
stock, the general level of interest rates and our credit quality. It is
impossible to predict whether the price of our Class A common stock or interest
rates will rise or fall. Trading prices of the Class A common stock will be
influenced by our operating results and prospects and by economic, financial and
other factors. In addition, general market conditions can affect the capital
markets generally, therefore affecting the price of our Class A common stock,
including the level of, and fluctuations in, the trading prices of stocks
generally and sales of substantial amounts of Class A common stock by us in the
market after the offering of the FELINE PRIDES or the perception that those
sales could occur. Fluctuations in interest rates may give rise to arbitrage
opportunities based upon changes in the relative value of the Class A common
stock underlying the purchase contracts and of
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the other components of the FELINE PRIDES. The arbitrage could, in turn, affect
the trading prices of the Income PRIDES, Growth PRIDES, capital securities and
Class A common stock.
LIMITED RIGHTS INCLUDING LIMITED VOTING RIGHTS
If you hold capital securities you will not be entitled to vote to appoint,
remove or replace or to increase or decrease the number of trustees of the
trust, and generally will have no voting rights except in limited circumstances.
If you hold FELINE PRIDES you will not be entitled to any rights with respect to
the Class A common stock, including, without limitation, voting rights and
rights to receive any dividends or other distributions on the Class A common
stock. You will only be entitled to rights as a holder of the Class A common
stock when we deliver shares of Class A common stock for FELINE PRIDES on August
16, 2002 or as a result of early settlement and only if the applicable record
date, if any, for the exercise of these rights occurs after that date. For
example, if an amendment is proposed to our certificate of incorporation and the
record date for determining the stockholders of record entitled to vote on that
amendment occurs prior to the delivery, you will not be entitled to vote on that
amendment.
DILUTION OF THE CLASS A COMMON STOCK MAY AFFECT THE SETTLEMENT RATE AND THE
FELINE PRIDES TRADING PRICES
The number of shares of Class A common stock you are entitled to receive
upon the settlement of your purchase contract and the trading prices of Income
PRIDES and Growth PRIDES may be adversely affected due to dilution of our Class
A common stock resulting from the issuance of additional Class A common stock or
other equity interests.
The number of shares of Class A common stock that you are entitled to
receive on August 16, 2002, or as a result of early settlement of a purchase
contract, is subject to adjustment for certain events arising from stock splits
and combinations, stock dividends and other actions by us that modify our
capital structure. We will not adjust the number of shares of Class A common
stock that you are entitled to receive on August 16, 2002, or as a result of
early settlement of a purchase contract, for other events, including most
offerings of Class A common stock for cash by us or in connection with
acquisitions. We are not restricted from issuing additional Class A common stock
during the term of the purchase contracts and have no obligation to consider
your interests for any reason.
If we issue additional shares of Class A common stock, the price of the
Class A common stock may be materially and adversely affected and, because of
the relationship of the number of shares to be received on August 16, 2002 to
the price of the Class A common stock, these events may adversely affect the
trading price of Income PRIDES or Growth PRIDES.
THE SECONDARY MARKET FOR THE FELINE PRIDES MAY BE ILLIQUID
We are unable to predict how Income PRIDES, Growth PRIDES or capital
securities will trade in the secondary market or whether that market will be
liquid or illiquid. There is currently no secondary market for either our Income
PRIDES or our Growth PRIDES. The Income PRIDES and the Growth PRIDES have been
approved for listing on the NYSE, subject to official notice of issuance. The
capital securities will not initially be listed; however, in the event that they
are separately traded to a sufficient extent that applicable exchange listing
requirements are met, we will endeavor to cause those securities to be listed on
the exchange on which the Income PRIDES and Growth PRIDES are then listed. We
have been advised by the underwriters that they presently intend to make a
market for the capital securities; however, they are not obligated to do so and
any market making may be discontinued at any time. There can be no assurance as
to the liquidity of any market that may develop for the Income PRIDES, the
Growth PRIDES or the capital securities, your ability to sell such securities or
whether a trading market, if it develops, will continue. In addition, in the
event that you were to substitute treasury securities for capital securities or
capital securities for treasury securities, thereby converting your Income
PRIDES to Growth PRIDES or your Growth PRIDES to Income PRIDES, as the case may
be, the liquidity of Income PRIDES, Growth PRIDES and capital securities could
be adversely affected. There can be no
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assurance that the Income PRIDES or Growth PRIDES will not be delisted from the
NYSE or that trading in the Income PRIDES or Growth PRIDES will not be suspended
as a result of your election to create Income PRIDES or Growth PRIDES through
the substitution of collateral, which could cause the number of Income PRIDES or
Growth PRIDES to fall below the requirement for listing securities on the NYSE
that at least 1,000,000 Income PRIDES or Growth PRIDES be outstanding at any
time.
YOUR RIGHTS TO THE PLEDGED SECURITIES WILL BE SUBJECT TO OUR SECURITY INTEREST
Your rights to the capital securities, treasury portfolio or treasury
securities (collectively, the pledged securities), as applicable, will be
subject to our security interest. Although you will be the beneficial owner of
the applicable pledged securities, those pledged securities will be pledged with
The Bank of New York, in its capacity as our collateral agent, to secure your
obligations under the related purchase contracts. Additionally, notwithstanding
the automatic termination of the purchase contracts, if we become the subject of
a case under the Bankruptcy Code, the delivery of the pledged securities to you
may be delayed by the imposition of the automatic stay of Section 362 of the
Bankruptcy Code.
POSSIBLE DISSOLUTION OF THE TRUST DUE TO AN INVESTMENT COMPANY EVENT
The dissolution of the trust due to an investment company event may affect
the Income PRIDES' market prices.
If an investment company event occurs, we will dissolve the trust, except
in the limited circumstances described below, and distribute the debentures to
you in a total principal amount equal to the aggregate stated liquidation amount
of any capital securities that you may hold. We will only dissolve and
distribute the debentures to you if we are unable to avoid the investment
company event within a 90-day period by taking some ministerial action or
pursuing some other reasonable measure that will have no adverse effect on the
trust, us or you, and will involve no material cost to us. In addition, we will
have the right to dissolve the trust at any time.
There can be no assurance as to the impact on the market prices for Income
PRIDES if we dissolve the trust and distribute the debentures to holders of
capital securities in exchange for those capital securities. Because Income
PRIDES will consist of debentures and related purchase contracts if we dissolve
the trust as a result of an investment company event or otherwise, you are also
making an investment decision with regard to the debentures if you purchase
Income PRIDES and should carefully review all the information regarding the
debentures contained in this prospectus supplement and the accompanying
prospectus.
TAX EVENT REDEMPTION
The occurrence of a tax event redemption, described below, may affect the
market prices of Income PRIDES, due to the substitution of the treasury
portfolio for the redeemed capital securities as collateral for your obligations
under the related purchase contract.
We have the option to redeem the debentures and, thus, the trust
securities, on not less than 30 days or more than 60 days prior written notice,
in whole but not in part, at any time before August 16, 2002 if a tax event
occurs and continues under the circumstances described below. If a tax event
occurs, we may redeem the debentures at a redemption price per debenture equal
to the redemption amount, as defined under "Description of the Debentures--Tax
Event Redemption," plus accrued and unpaid interest. If we redeem all of the
debentures, the trust must redeem all of the trust securities and pay the
redemption price in cash to the holders of the trust securities.
If the tax event redemption occurs before August 16, 2002, the redemption
price payable to you due to liquidation of any interest you may have in the
trust as a holder of Income PRIDES will be distributed to the collateral agent,
who in turn will apply an amount equal to the redemption amount of the
redemption price to purchase the treasury portfolio on your behalf.
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The treasury portfolio will be substituted for the capital securities and
will be pledged with the collateral agent to secure your obligations to purchase
our Class A common stock under the purchase contracts related to the Income
PRIDES. If you do not hold capital securities in the form of Income PRIDES, you
will receive redemption payments directly. There can be no assurance as to the
impact on the market prices for the Income PRIDES if we substitute the treasury
portfolio as collateral in replacement of any capital securities so redeemed. A
tax event redemption will be a taxable event to the beneficial owners of the
capital securities.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE FELINE PRIDES ARE UNCLEAR
No statutory, judicial or administrative authority directly addresses the
treatment of the FELINE PRIDES or instruments similar to the FELINE PRIDES for
United States federal income tax purposes. As a result, some United States
federal income tax consequences of the purchase, ownership and disposition of
FELINE PRIDES are not entirely clear.
THE PURCHASE CONTRACT AGREEMENT WILL NOT BE QUALIFIED UNDER THE TRUST INDENTURE
ACT AND THE OBLIGATIONS OF THE PURCHASE CONTRACT AGENT WILL BE LIMITED
You, as a holder of FELINE PRIDES, will not have the benefits of the
protection of the Trust Indenture Act of 1939.
The purchase contract agreement between us and the purchase contract agent
will not be qualified as an indenture under the Trust Indenture Act and the
purchase contract agent will not be required to qualify as a trustee under the
Trust Indenture Act, although the capital securities constituting a part of the
Income PRIDES will be issued pursuant to the declaration, which will be
qualified under the Trust Indenture Act. Accordingly, if you hold FELINE PRIDES
you will not have the benefit of the protections of the Trust Indenture Act. The
protections generally afforded the holder of a security issued under an
indenture that has been qualified under the Trust Indenture Act include:
- disqualification of the indenture trustee for conflicting interests;
- provisions preventing a trustee that is also a creditor of the issuer
from improving its own credit position at the expense of the security
holders immediately prior to or after a default under the indenture; and
- the requirement that the indenture trustee deliver reports at least
annually with respect to specific matters concerning the indenture
trustee and the securities.
RIGHTS UNDER THE GUARANTEE
Except as described below, you as a holder of capital securities, will not
be able to exercise directly any other rights with respect to the debentures.
The guarantee will be qualified as an indenture under the Trust Indenture
Act. The guarantee trustee, The Bank of New York, will act as indenture trustee
under the guarantee for the purposes of compliance with the provisions of the
Trust Indenture Act. The guarantee trustee will hold the guarantee for your
benefit if you hold any of the capital securities.
If you hold any of the capital securities, the guarantee will guarantee
you, generally on a senior unsecured basis, the payment of the following:
- any accumulated and unpaid distributions that are required to be paid on
the capital securities, to the extent the trust has funds available for
this purpose;
- the redemption price, including all accumulated and unpaid distributions
to the date of redemption, of capital securities that we may have
redeemed upon the occurrence of a tax event redemption, to the extent the
trust has funds available for this purpose; and
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- upon a voluntary or involuntary dissolution of the trust, other than in
connection with the distribution of debentures to you, the lesser of (a)
the total of the liquidation amount and all accumulated and unpaid
distributions on the capital securities to the date of payment to the
extent the trust has funds available for this purpose or (b) the amount
of assets of the trust remaining available for distribution to holders of
the capital securities in liquidation of the trust.
The holders of a majority in liquidation amount of the capital securities
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee or to direct the
exercise of any trust or power conferred upon the guarantee trustee under the
guarantee. Notwithstanding the above, but only under limited circumstances,
holders of the capital securities may institute a legal proceeding directly
against us to enforce their rights under the guarantee without first instituting
a legal proceeding against the trust, the guarantee trustee or any other person
or entity.
If we were to default on our obligation to pay amounts payable on the
debentures or otherwise, the trust would lack funds for the payment of
distributions or amounts payable on redemption of the capital securities or
otherwise, and, in that event, holders of the capital securities would not be
able to rely upon the guarantee for payment of these amounts. Instead, they
would rely on the enforcement
- by the property trustee of its rights as registered holder of the
debentures against us pursuant to the terms of the indenture and the
debentures or
- by that holder of the property trustee's or that holder's own rights
against us to enforce payments on the debentures.
The declaration provides that each holder of capital securities, by its
acceptance, agrees to the provisions of the guarantee and the indenture.
ENFORCEMENT OF SPECIFIC RIGHTS BY HOLDERS OF CAPITAL SECURITIES
Except as described below, you, as holder of capital securities, will not
be able to exercise directly any other rights with respect to the debentures.
If a declaration event of default were to occur and be continuing, holders
of capital securities would rely on the enforcement by the property trustee of
its rights as registered holder of the debentures against us. In addition, the
holders of a majority in liquidation amount of the capital securities would have
the right to direct the time, method, and place of conducting any proceeding for
any remedy available to the property trustee or to direct the exercise of any
trust or power conferred upon the property trustee under the declaration,
including the right to direct the property trustee to exercise the remedies
available to it as the holder of the debentures.
The indenture provides that the debt trustee must give holders of
debentures notice of all defaults or events of default within 30 days after
occurrence. However, except in the cases of a default or an event of default in
payment on the debentures, the debt trustee will be protected in withholding the
notice if its responsible officers in good faith determine that withholding of
the notice is in the interest of such holders.
If the property trustee were to fail to enforce its rights under the
debentures in respect of an indenture event of default after a holder of record
of capital securities had made a written request, such holder of record of
capital securities may, to the extent permitted by applicable law, institute a
legal proceeding against us to enforce the property trustee's rights under the
debentures. In addition, if we were to fail to pay interest or principal on the
debentures on the date that interest or principal is otherwise payable, and this
failure to pay were continuing, holders of capital securities may directly
institute a proceeding for enforcement of payment of the principal of or
interest on the debentures having a principal amount equal to the aggregate
stated liquidation amount of their capital securities (a direct action) after
the respective due date specified in the debentures. In connection with a direct
action, we would have the right under the indenture to set off any payment made
to that holder by us.
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LIMITED RIGHTS OF ACCELERATION
The property trustee, as holder of the debentures, may accelerate payment
of the principal and accrued and unpaid interest on the debentures only upon the
occurrence and continuation of an indenture event of default. An indenture event
of default is generally limited to payment defaults, breaches of specific
covenants and specific events of bankruptcy, insolvency and reorganization
relating to us or specified subsidiaries of ours. Accordingly, there is no right
to acceleration upon default of our payment obligations under the guarantee.
TRADING PRICE OF THE CAPITAL SECURITIES
The capital securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest with respect to the underlying debentures.
If you are an accrual basis taxpayer and dispose of your capital securities
between record dates for payments of distributions you will be required to
include accrued but unpaid interest on the debentures through the date of
disposition in income as ordinary interest income, i.e., interest or, possibly,
OID, and to add that amount to your adjusted tax basis in your proportionate
share of the underlying debentures deemed disposed of. To the extent the selling
price is less than your adjusted tax basis, you will recognize a loss.
COX IS CONTROLLED BY A PRINCIPAL STOCKHOLDER WHOSE INTERESTS MAY BE DIFFERENT
THAN YOUR INTERESTS
As of June 30, 1999, Cox Enterprises owned approximately 72.7% of the
outstanding equity and 81.1% of the voting power of Cox. Cox Enterprises
therefore controls substantially all actions to be taken by the Cox
stockholders, including the election of all the directors to the Cox board.
After giving effect to the TCA merger and this offering, assuming that Cox
issues approximately 39.6 million shares pursuant to the TCA merger agreement
and sells 10.1 million shares in this offering, Cox Enterprises will own
approximately 66.7% of the equity and 76.3% of the voting power of Cox. This
voting control may have the effect of discouraging offers to acquire Cox because
the consummation of any such acquisition would require the consent of Cox
Enterprises. The interests of Cox Enterprises, which operates businesses in
other industries, including broadcasting and newspapers, may from time to time
diverge from the interests of other Cox stockholders, particularly with regard
to new business opportunities.
REGULATION OF THE CABLE TELEVISION INDUSTRY
The cable television industry is subject to extensive regulation on the
federal, state and local levels, and many aspects of such regulations are
currently the subject of judicial proceedings and administrative or legislative
proposals. The Cable Television Consumer Protection and Competition Act of 1992,
referred to as the 1992 Cable Act, has significantly expanded the scope of cable
television regulation. In particular, under the 1992 Cable Act, the Federal
Communications Commission adopted regulations that limit Cox's ability to set
rates for basic service and the installation, sale, and lease of equipment used
by subscribers to receive basic service, such as converter boxes and remote
control units, in communities that are not subject to effective competition as
defined by federal law. The FCC's regulations, as they now stand, limit our
ability to increase revenues by increasing rates for regulated services where
franchise authorities have elected to regulate basic cable and equipment rates.
In addition, it is possible that, in accordance with further review by the
franchising authorities, certain future rate reductions or refunds may be
required. We believe that the regulation of the cable television industry,
including the rates charged for regulated services under present FCC rules,
remains a matter of interest to Congress, the FCC and other regulatory
authorities. There can be no assurance as to what, if any, future actions such
legislative and regulatory authorities may take or the effect thereof on us.
Cable communications companies operate under franchises granted by local
authorities that are subject to renewal and renegotiation from time to time.
There can be no assurance as to future franchise renewals.
COMPETITION IN THE CABLE TELEVISION INDUSTRY
Cable communications systems generally operate pursuant to franchises
granted on a non-exclusive basis. In addition, the 1992 Cable Act prohibits
franchising authorities from unreasonably denying requests for additional
franchises and permits franchising authorities to operate cable systems.
Well-financed
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businesses from outside the cable industry, such as the public utilities that
own certain of the poles on which cable is attached, may become competitors for
franchises or providers of competing services. In addition, we face competition
from other cable television operators. We cannot predict the extent to which
such competition will materialize or, if such competition materializes, the
extent of its effect on us.
The cable television clusters we own compete with other communications and
entertainment media, including conventional off-air television broadcasting
services, newspapers, movie theatres, live sporting events, interactive online
computer services, home video products and direct broadcast satellite, referred
to as DBS, service whereby signals are transmitted by satellite to receiving
facilities located on customer premises. Several companies have launched DBS
services that compete with us for multichannel video entertainment customers, as
well as online computer services.
The Telecommunication Act of 1996, referred to as the 1996 Telecom Act,
makes it easier for local exchange telephone companies, referred to as LECs, and
others to provide a wide variety of video services competitive with services
provided by cable systems and to provide cable services directly to subscribers.
Various LECs currently are providing video services within and outside their
telephone service areas through a variety of distribution methods, including
both the deployment of broadband wire facilities and the use of wireless
transmission facilities. We cannot predict the likelihood of success of video
service ventures by LECs or the impact on Cox of such competitive ventures.
Other new technologies, including Internet-based services, may become
competitive with services that cable communications systems can offer. The FCC
and some local jurisdictions are considering proposals by various Internet
service providers, referred to as ISPs, to deliver their services directly to
cable operators' customers through access to cable operators' broadband
communications facilities. In June 1999, an ISP petitioned the FCC to issue a
declaratory ruling that ISPs are entitled to access to cable system facilities
under the commercial use channel provisions of the Communications Act of 1934,
and legislation has been introduced in Congress which would provide ISPs with
such access. In the same month, a federal district court held in connection with
Tele-Communications, Inc.'s application to transfer two franchises to AT&T that
a franchising authority may require access to cable modem services by third
party ISPs as a condition to approval of a franchise transfer. AT&T has appealed
the decision. Although the decision is not binding on other courts and has no
legal effect in other areas of the country, it could support attempts by other
franchising authorities to require cable operators to provide access to third
party ISPs in other circumstances, including franchise renewal. In July, 1999,
the franchising authority for Broward County, Florida, passed an ordinance which
requires cable modem access by ISPs. The ordinance has been challenged in
federal district court. Legislation is pending in the United States House of
Representatives which would require cable operators to open their networks to
unaffiliated ISPs, including a bill which would permit the FCC to require cable
operators that utilize cable system facilities to provide interconnection with
the Internet to offer such interconnection on terms and conditions that are
fair, reasonable and non-discriminatory. Another bill would make it unlawful for
a cable operator to require its cable modem customers to purchase its affiliated
Internet access services as a condition of subscribing to high speed transport
service.
Additionally, legislation is pending in Congress which would facilitate
regional Bell operating companies to provide data services in competition with
ISPs. Neither the states nor the FCC would have the authority to regulate the
rates, charges, terms or conditions of any high-speed data service or Internet
access services or to regulate the facilities used in the provision of such
services.
We cannot predict if such proposals will be adopted, the eventual outcome
of such litigation, or whether such proposals or litigation will have a material
impact on the business and operations of Cox. Moreover, advances in
communications technology as well as changes in the marketplace and the
regulatory and legislative environment are constantly occurring. Thus, it is not
possible to predict the effect that ongoing or future developments might have on
the cable communications industry or on our operations.
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USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Growth PRIDES will
be used to purchase the underlying treasury securities to be transferred to
holders of the Growth PRIDES, and the remainder will be paid to us. All of the
proceeds from the sale of the capital securities that are not components of
Income PRIDES, all of the proceeds from the sale of the common securities and
substantially all of the proceeds from the sale of the Income PRIDES will be
invested by the trust in our debentures. The remainder of the proceeds from the
sale of the Income PRIDES will be paid to us.
We currently anticipate using all of the net proceeds from the sale of the
debentures (net of purchase of the common securities), the Income PRIDES and the
Growth PRIDES, estimated to be approximately $629.7 million, after deducting the
underwriting commission and other expenses, 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 June 30, 1999 was approximately 5.2%. For
a description of pending acquisitions, see "Prospectus Supplement
Summary--Recent Developments."
PRICE RANGE OF CLASS A COMMON STOCK
Our Class A common stock is listed for trading on the New York Stock
Exchange under the symbol "COX." The following table sets forth on a per share
basis the high and low sales prices for consolidated trading in our Class A
common stock as reported on the New York Stock Exchange Composite Tape for the
quarters indicated. All of our Class A common stock market prices have been
adjusted for the two-for-one split of all classes of our capital stock effective
on May 21, 1999.
<TABLE>
<CAPTION>
CLASS A
COMMON STOCK
-----------------
HIGH LOW
------- -------
<S> <C> <C>
1997
Quarter ended March 31, 1997................................ $11.625 $ 9.813
Quarter ended June 30, 1997................................. 13.938 9.063
Quarter ended September 30, 1997............................ 14.094 12.469
Quarter ended December 31, 1997............................. 20.031 13.843
1998
Quarter ended March 31, 1998................................ $21.469 $17.188
Quarter ended June 30, 1998................................. 24.750 20.813
Quarter ended September 30, 1998............................ 28.438 20.750
Quarter ended December 31, 1998............................. 35.375 23.532
1999
Quarter ended March 31, 1999................................ $41.282 $32.000
Quarter ended June 30, 1999................................. 44.438 32.781
Third Quarter through August 9, 1999........................ 40.750 34.250
</TABLE>
As of June 30, 1999, there were 5,021 holders of record of our Class A
common stock. This number excludes beneficial owners of Class A common stock
held in street name.
DIVIDEND POLICY
We have never paid any dividends on our stock, and we do not anticipate
paying any cash dividends on our stock in the foreseeable future. The current
policy of our board of directors is to retain earnings to finance the operations
and expansion of our business. Any future determination to pay dividends will
depend on our results of operations, financial condition, capital requirements,
contractual restrictions and other factors deemed relevant by our board of
directors.
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CAPITALIZATION
The following table sets forth the capitalization of Cox as of March 31,
1999 (i) on a historical basis; (ii) as adjusted to give effect to (a) the
issuance of 10.1 million shares of Class A common stock, for an aggregate
offering of $350.3 million, less offering costs of $12.6 million, (b) the sale
of the 13 million FELINE PRIDES for an aggregate offering of $650 million, less
offering costs of $20.3 million and $15.0 million allocated to the fair value of
forward contracts embedded in these securities, and (c) the sale of $1,850
million aggregate principal amount of senior debt securities, less offering
costs of $13.0 million; and (iii) on a pro forma basis to give effect to the
consummation of the pending acquisitions of TCA, the cable television systems of
Media General, certain cable television systems from AT&T, and anticipated
financing transactions for the remaining purchase price of the pending
acquisitions for net proceeds of approximately $483.7 million.
This table should be read in conjunction with, and is qualified by
reference to, the "Selected Financial Information and Other Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and notes thereto included or incorporated
by reference in this prospectus supplement and the accompanying prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------------------------------------------------------------
PRO FORMA COX
ADJUSTMENTS AS ADJUSTMENTS PRO FORMA
COX FOR THE ADJUSTED FOR FOR THE AND AS
HISTORICAL OFFERINGS THE OFFERINGS ACQUISITIONS ADJUSTED
---------- ------------------ --------------- ------------ ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
CASH................................... $ 90.4 $2,804.4 $ 2,894.8 $(2,890.0) $ 4.8
========= ======== ========= ========= =========
DEBT
Commercial paper..................... $ 837.6 $ -- $ 837.6 $ (644.7) $ 192.9
Medium-term notes.................... 463.4 -- 463.4 -- 463.4
Floating Rate Reset Notes due 2009... 147.5 -- 147.5 -- 147.5
Notes and Debentures................. 1,615.7 1,837.0 3,452.7 190.0 3,642.7
6.15% Reset Put securities due August
2033............................... 248.2 -- 248.2 -- 248.2
Capitalized lease obligations........ 70.7 -- 70.7 -- 70.7
Amounts due to Cox Enterprises....... 112.7 -- 112.7 -- 112.7
--------- -------- --------- --------- ---------
Total debt.................... 3,495.8 1,837.0 5,332.8 (454.7) 4,878.1
--------- -------- --------- --------- ---------
MINORITY INTEREST:
Minority interest in unconsolidated
subsidiaries......................... -- -- -- 120.5 120.5
Cox-obligated capital securities of
subsidiary trust-FELINE PRIDES....... -- 614.7 614.7 -- 614.7
Cox-obligated preferred securities -
other................................ -- -- -- 483.7 483.7
SHAREHOLDERS' EQUITY
Series A preferred
stock -- liquidation preference of
$22.1375 per share, par value $1.00
per share.......................... 4.8 -- 4.8 -- 4.8
Class A common stock, par value $1.00
per share.......................... 527.5 10.1 537.6 39.6 577.2
Class C common stock, par value $1.00
per share.......................... 27.6 -- 27.6 -- 27.6
Additional paid-in capital........... 1,879.8 342.6 2,222.4 1,660.4 3,882.8
Retained earnings.................... 1,601.5 -- 1,601.5 953.6 2,555.1
Accumulated other comprehensive
income............................. 2,815.5 -- 2,815.5 (464.5) 2,351.0
--------- -------- --------- --------- ---------
Total shareholders' equity.... 6,856.7 352.7 7,209.4 2,189.1 9,398.5
--------- -------- --------- --------- ---------
Total capitalization.......... $10,352.5 $2,804.4 $13,156.9 $ 2,338.6 $15,495.5
========= ======== ========= ========= =========
</TABLE>
S-20
<PAGE> 22
SELECTED FINANCIAL INFORMATION AND OTHER DATA
We are providing the following financial information and other data to aid
you in your analysis of the financial aspects of the transactions as described.
You should read this information in conjunction with the historical consolidated
financial statements of Cox and the related notes contained in our annual,
quarterly and other reports and other information that Cox has filed with the
SEC. All per share amounts reflected below have been restated to reflect Cox's
two-for-one stock split effective on May 21, 1999.
The following selected consolidated financial information for each of the
three years in the period ended December 31, 1998 has been derived from Cox's
audited historical consolidated financial statements and the consolidated
financial information for the three months ended March 31, 1998 and 1999 has
been derived from Cox's unaudited historical consolidated financial statements.
The following selected unaudited pro forma and as adjusted combined condensed
financial information give effect to the offerings and the other financings and
pending acquisitions of TCA, the cable television systems of Media General and
certain cable television systems from AT&T, including AT&T's unconsolidated
investment in Peak Cablevision. Pursuant to the purchase agreement, AT&T has
agreed to acquire all of the remaining interest in Peak prior to closing the
purchase transaction with Cox.
Operating cash flow under "Other Operating and Financial Data" is not a
generally accepted accounting principle measure of performance. However,
operating cash flow is a commonly used financial analysis tool for measuring and
comparing cable television companies in several areas such as operating
performance and leverage. Cox defines operating cash flow as operating income
before depreciation and amortization. Operating cash flow should not be
considered as an alternative to net income as an indicator of Cox's performance
or as an alternative to cash flows from operating activities as a measure of
liquidity.
Using the fourth quarter annualized operating cash flow, the multiple of
debt to operating cash flow was 4.6x and 5.1x at December 31, 1997 and 1998,
respectively. In addition, operating cash flow is annualized to calculate the
multiple of debt to operating cash flow for the three months ended March 31,
1998 and 1999.
<TABLE>
<CAPTION>
PRO FORMA
AND AS PRO FORMA
ADJUSTED THREE MONTHS AND AS ADJUSTED
YEAR ENDED ENDED THREE MONTHS
YEAR ENDED DECEMBER 31, DECEMBER 31, MARCH 31, ENDED MARCH 31,
------------------------------ --------------- -------------------- ---------------
1996 1997 1998 1998 1998 1999 1999
-------- -------- -------- --------------- -------- --------- ---------------
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues................. $1,460.3 $1,610.4 $1,716.8 $2,583.2 $ 415.8 $ 498.5 $693.8
Operating income......... 221.7 205.3 201.4 187.8 43.5 65.2 63.9
Net income (loss)........ (51.6) (136.5) 1,270.7 (3.5) (101.9) 251.2 229.6
Basic net income (loss)
per share.............. $ (0.10) $ (0.25) $ 2.33 $ (0.01) $ (0.19) $ 0.45 $ 0.38
Diluted net income (loss)
per share.............. (0.10) (0.25) 2.30 (0.01) (0.19) 0.45 0.38
OTHER OPERATING AND
FINANCIAL DATA:
Operating cash flow...... $ 556.9 $ 609.8 $ 659.1 $1,028.0 $ 149.1 $ 188.5 $270.4
Operating cash flow
margin................. 38.1% 37.9% 38.4% 39.8% 35.9% 37.8% 39.0%
Multiple of debt to
operating cash flow.... 5.2x 5.2x 6.2x -- 5.2x 4.6x 4.5x
Cash flows provided by
operating activities... $ 309.1 $ 554.5 $ 665.5 -- $ 191.5 $ 175.9 --
Cash flows provided by
(used in) investing
activities............. (552.2) (1,108.0) (1,600.4) -- (124.9) 514.9 --
Cash flows provided by
(used in) financing
activities............. 246.2 539.3 937.2 -- (64.3) (630.9) --
</TABLE>
S-21
<PAGE> 23
<TABLE>
<CAPTION>
PRO FORMA
AND AS ADJUSTED
DECEMBER 31, MARCH 31, MARCH 31,
------------------------------- -------------------- ----------------
1996 1997 1998 1998 1999 1999
-------- -------- --------- -------- --------- ----------------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $5,784.6 $6,556.6 $12,878.1 $6,623.5 $14,727.0 $21,095.8
Total debt (including amounts due to
Cox Enterprises).................... 2,881.0 3,148.8 4,090.8 3,082.9 3,495.8 4,878.1
</TABLE>
The table below includes certain customer data of Cox. A basic service
customer is counted as a home with one or more television sets connected to a
cable television system. New services include Cox Digital Television, Cox@Home
and Cox Digital Telephone. Each basic customer and each new service is a revenue
generating unit. In certain locations, a household may purchase more than one
new service, each of which is counted as a separate revenue generating unit. A
home is deemed to be passed if it can be connected to the distribution system
without any further extension of the distribution plant. Basic penetration
represents basic customers as a percentage of homes passed by cable. Premium
service units include single or multi-channel services offered for a monthly fee
per service.
Cox's customer data excludes basic customers and homes passed related to
TWC Cable Partners, a joint venture owned 50% by Cox and 50% by Time Warner. TWC
operates cable television systems in Staten Island, New York and Fort Walton
Beach, Florida. Cox currently manages the Fort Walton Beach cable television
system which had basic customers of 66,568, 68,586, 71,213 and 72,215,
respectively, at December 31, 1996, 1997 and 1998 and March 31, 1999.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31, 1999
--------------------------------- ----------------------
1996 1997 1998 HISTORICAL PRO FORMA
--------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
CUSTOMER DATA:
Basic customers............................... 3,259,384 3,235,338 3,741,608 3,783,367 5,331,697
New services.................................. -- 18,941 169,731 230,380 301,822
--------- --------- --------- --------- ---------
Revenue Generating Units...................... 3,259,384 3,254,279 3,911,339 4,013,747 5,633,519
Homes passed.................................. 5,016,749 5,023,870 5,923,428 5,952,482 8,233,680
Basic penetration............................. 65.0% 64.4% 63.2% 63.6% 64.8%
Premium service units......................... 2,000,673 1,865,184 2,206,833 2,205,439 3,621,979
</TABLE>
S-22
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our historical
consolidated financial statements for the three-month period ended March 31,
1999 and 1998.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
The results of operations discussed below include the June 1998 acquisition
of the Tucson and Sierra Vista, Arizona cable television system and the October
1998 acquisition of the Las Vegas, Nevada cable television system.
Total revenues for the three months ended March 31, 1999 were $498.5
million, a 20% increase over revenues of $415.8 million for the three months
ended March 31, 1998. Basic customers were 3,783,367, a 2.8% increase over
customers at March 31, 1998 after adjusting for acquisitions made in 1998.
Complete basic revenues for the first quarter of 1999 increased 24% over
1998 to $351.3 million due to basic and digital customer growth at existing
cable television systems, the acquisitions made in 1998 and rate increases
implemented primarily during the fourth quarter of 1998. As of March 31, 1999,
Cox Digital TV had launched in eight markets and had 99,596 customers. The rate
increases are the result of channel additions, increased programming costs and
the pass-through of inflation adjustments.
Premium service revenues for the first quarter of 1999 increased 14% over
1998 to $52.1 million due to the acquisitions made in 1998. Pay-per-view
revenues were $24.4 million, up from $10.4 million for the same period in 1998
due to the acquisitions made in 1998 and the Holyfield/Lewis, Tyson/Botha and De
La Hoya/ Quartey national boxing events during the first quarter of 1999.
Advertising revenues increased 46% to $36.4 million due to the acquisitions made
in 1998 and growth in local and national advertising sales during 1999.
Data revenues for the first quarter of 1999 increased to $9.8 million from
$2.8 million primarily as a result of Cox's residential data service, Cox@Home.
As of March 31, 1999, Cox@Home had launched in nine markets with 88,890
customers. Telephony revenues for the first quarter of 1999 increased to $16.2
million from $5.0 million due to growth in both residential and commercial
telephony. As of March 31, 1999, our residential telephone offering had launched
in six markets with 41,894 customers.
Programming costs were $128.8 million for the first quarter of 1999, an
increase of 36% over the same period in 1998 due to basic and digital customer
growth at the existing cable televisions systems, acquisitions made in 1998,
programming rate increases instituted on January 1, 1999 and the channel
additions and pay-per-view events discussed above. Plant operations expenses
increased 19% to $39.1 million due to the acquisitions made in 1998 and
increased maintenance and costs related to new services. Marketing costs
increased 20% to $26.6 million for the first quarter of 1999 due to the
acquisitions made in 1998 and costs associated with rollout of digital video,
high-speed data and telephony services. General and administrative expenses for
the first quarter of 1999 increased 32% to $115.5 million due to the
acquisitions made in 1998 and costs associated with digital video, high-speed
data and telephony services in newly launched markets.
Operating cash flow (operating income before depreciation and
amortization), a non-GAAP measure of performance, is a commonly used financial
analysis tool for measuring and comparing cable television companies in several
areas, such as liquidity, operating performance and leverage. Operating cash
flow increased 26% to $188.5 million for the first quarter of 1999. The
operating cash flow margin (operating cash flow as a percentage of revenues) for
the first quarter of 1999, was 37.8%, an increase from 35.9% in the first
quarter of 1998.
Depreciation was $96.6 million for the first quarter of 1999 compared to
$87.0 million for the same period in 1998 due to the acquisitions made in 1998
and the continued upgrade and rebuild of the broadband network. Amortization was
$26.7 million for the first quarter of 1999 compared to $18.6 million
S-23
<PAGE> 25
for the first quarter of 1998 due to the acquisitions made in 1998. Operating
income for the first quarter of 1999 was $65.2 million, an increase of 50%
compared to the same period in 1998.
Interest expense increased to $54.0 million for the first quarter of 1999
compared to $53.1 million for the same period in 1998 due to an increase in
total debt outstanding and offset by more favorable average interest rates
during 1999. Equity in net losses of affiliated companies was $46.5 million
primarily due to losses associated with Cox PCS. Net gain on investments of
$419.5 million was primarily due to the gain of $433.1 million as a result of
the sale of Telewest Communications plc.
Net income for the first quarter of 1999 was $251.2 million as compared to
a net loss of $101.9 million for the first quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
Uses of Cash
As part of our ongoing strategic plan, we have invested, and will continue
to invest, significant amounts of capital to enhance the reliability and
capacity of our broadband cable network in preparation for the offering of new
services and to make investments in affiliated companies primarily focused on
telephony, programming and communications-related activities.
During the three months ended March 31, 1999, Cox made capital expenditures
of $224.8 million. These expenditures were primarily directed at upgrading and
rebuilding its broadband network for the delivery of high-speed data and
telephony. Capital expenditures for 1999 are expected to range between $925
million and $975 million.
Investments in affiliated companies during the three months ended March 31,
1999 consisted primarily of debt and equity funding to GEMS Television and
NextLink Nevada. Funding requirements for the remainder of 1999 for investments
in affiliated companies are expected to be approximately $11.5 million.
During the three months ended March 31, 1999, net repayments of $350.0
million and $205.9 million were made for revolving credit borrowings and
commercial paper borrowings, respectively.
Sources of Cash
Cox generated $175.9 million from operating activities during the three
months ended March 31, 1999. Proceeds from the sale of investments of $742.6
million related primarily to the sale of Telewest.
Cox Enterprises continues to perform day-to-day cash management services
for Cox with settlements of balances between Cox and Cox Enterprises occurring
periodically bearing interest at 50 basis points (.5%) above Cox Enterprise's
current commercial paper borrowing rate.
Recently Issued Accounting Pronouncements
In 1998, SFAS No. 133 "Accounting for Derivative Financial Instruments and
Hedging Activities" was issued. This statement requires that all derivatives be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. In addition, all hedging relationships
must be designated, reassessed and documented pursuant to the provisions of SFAS
No. 133. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999. Management is in the process of assessing the impact of SFAS No. 133 on
the consolidated financial statements.
S-24
<PAGE> 26
COX TRUST II
Cox Trust II is a statutory business trust formed under Delaware law
according to (1) a declaration of trust, executed by the sponsor and some of the
trustees and (2) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on July 21, 1999. This declaration will be
amended and restated in its entirety substantially in the form filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus form a part. The declaration will be qualified as an
indenture under the Trust Indenture Act.
Although upon issuance of the capital securities, a holder of Income PRIDES
will be the beneficial owner of the related capital securities, those capital
securities will be pledged with the collateral agent to secure the obligations
of the holders under the related purchase contracts. We will directly or
indirectly acquire common securities in an aggregate liquidation amount equal to
3% of the total capital of the trust.
The trust exists for the exclusive purposes of
(a) issuing the trust securities representing undivided beneficial
ownership interests in the assets of the trust,
(b) investing the proceeds of the trust securities in the debentures,
and
(c) engaging in only those activities necessary, appropriate,
convenient or incidental to the purposes specified in (a) and (b) above.
The trust has a term of approximately seven years, but may dissolve earlier
as provided in the declaration.
The number of the trustees is initially five. Three of the trustees (the
administrative trustees) are persons who are our employees or officers or who
are affiliated with us. Under the declaration, the fourth trustee will be a
financial institution that is unaffiliated with us. This trustee will serve as
property trustee under the declaration and as indenture trustee for the purposes
of compliance with the provisions of the Trust Indenture Act (the property
trustee). Initially, The Bank of New York, a New York banking corporation, will
be the property trustee until removed or replaced by the holder of the common
securities. The fifth trustee will be a financial institution that is
unaffiliated with us and that is resident in the State of Delaware (the Delaware
trustee) for purposes of the Delaware Business Trust Act (the Trust Act).
Initially, The Bank of New York (Delaware), a Delaware banking corporation, will
be the Delaware trustee until removed or replaced by the holder of the common
securities. For purposes of compliance with the provisions of the Trust
Indenture Act, The Bank of New York will also act as the guarantee trustee.
The property trustee will hold title to the debentures for the benefit of
the holders of the trust securities and the property trustee will have the power
to exercise all rights, powers and privileges under the indenture as the holder
of the debentures. In addition, the property trustee will maintain exclusive
control of a segregated noninterest bearing bank account (the property account)
to hold all payments made in respect of the debentures for the benefit of the
holders of the trust securities. The property trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the trust securities out of funds from the property account. The
guarantee trustee will hold the guarantee for the benefit of the holders of the
capital securities.
We, as the direct or indirect holder of all the common securities, will
have the right to appoint, remove or replace any trustee and to increase or
decrease the number of trustees. However, the number of trustees shall be at
least two, at least one of which shall be an administrative trustee. We will pay
all fees and expenses related to the trust and the offering of the trust
securities.
The rights of the holders of the capital securities, including economic
rights, rights to information and voting rights, are provided in the
declaration, the Trust Act and the Trust Indenture Act.
The office of the Delaware trustee currently is The Bank of New York
(Delaware), 23 White Clay Center, Route 273, Newark, Delaware 19711. The
principal place of business of the trust is c/o Cox Communications, Inc., 1400
Lake Hearn Drive, Atlanta, Georgia 30319 and its telephone number is (404)
343-5000.
S-25
<PAGE> 27
ACCOUNTING TREATMENT
The financial statements of the trust will be reflected in our consolidated
financial statements, with the capital securities shown on our balance sheet
under the caption "Cox-obligated capital securities of subsidiary trust." The
financial statement footnotes to our consolidated financial statements will
reflect that the sole asset of the trust will be the debentures. Distributions
on the capital securities will be reflected as a charge to our consolidated
income, identified as minority interest, whether paid or accrued.
The present value of the Growth PRIDES contract adjustment payments are
initially charged to equity, with an offsetting credit to liabilities.
Subsequent contract adjustment payments are allocated between this liability
account and interest expense based on a constant rate calculation over the life
of the transaction.
The FELINE PRIDES purchase contracts are forward transactions in our Class
A common stock. Upon settlement of a purchase contract, we will receive $50 on
that purchase contract and will issue the requisite number of shares of Class A
common stock. The $50 we receive will be credited to shareholders' equity
allocated between the Class A common stock and paid-in-capital accounts.
Before the issuance of shares of Class A common stock upon settlement of
the purchase contracts, the FELINE PRIDES will be reflected in our earnings per
share calculations using the treasury stock method. Under this method, the
number of shares of Class A common stock used in calculating earnings per share
is deemed to be increased by the excess, if any, of the number of shares
issuable upon settlement of the purchase contracts over the number of shares
that could be purchased by us in the market, at the average market price during
the period, using the proceeds receivable upon settlement. Consequently, we
anticipate that there will be no dilutive effect on our earnings per share
except during periods when the average market price of our Class A common stock
is above $41.7984.
DESCRIPTION OF THE FELINE PRIDES
The summaries of the provisions of documents described below are not
necessarily complete, and in each instance reference is made to the copies of
those documents, including the definitions of terms, which are filed as exhibits
to the registration statement of which this prospectus supplement and the
accompanying prospectus form a part. Wherever particular sections of, or terms
defined in, those documents are referred to in this prospectus supplement, those
sections or defined terms are incorporated by reference.
Each FELINE PRIDES will be issued under the purchase contract agreement
between us and the purchase contract agent. The FELINE PRIDES will consist of
11,700,000 units referred to as Income PRIDES, and 1,300,000 units referred to
as Growth PRIDES.
Each Income PRIDES will initially consist of a unit comprised of
(a) a purchase contract under which the holder will purchase from us
on August 16, 2002, for an amount in cash equal to $50, a number of newly
issued shares of our Class A common stock equal to the settlement rate
described below and
(b) beneficial ownership of a 7% capital security, having a stated
liquidation amount per capital security equal to $50, representing an
undivided beneficial ownership interest in the assets of the trust, which
will consist solely of the debentures, or
(1) in the case of a distribution of the debentures upon the
dissolution of the trust as a result of an investment company event, as
described below, or otherwise, debentures having a principal amount
equal to $50 or
(2) upon the occurrence of a tax event redemption prior to August
16, 2002, the appropriate applicable ownership interest in the treasury
portfolio. Applicable ownership interest means, with respect to an
Income PRIDES and the U.S. treasury securities in the treasury
portfolio, (A) a 1/20, or 5%, undivided beneficial ownership interest in
a $1,000 principal or
S-26
<PAGE> 28
interest amount of a principal or interest strip in a U.S. treasury
security which matures on or prior to August 15, 2002 and (B) for each
scheduled interest payment date on the debentures that occurs after the
tax event redemption date, a .0875% undivided beneficial ownership
interest in a $1,000 face amount of the U.S. treasury security which is
a principal or interest strip maturing on that date.
Each Growth PRIDES will initially consist of a unit comprised of
(a) a purchase contract under which
(1) the holder will purchase from us on August 16, 2002, for an
amount in cash equal to $50, a number of newly issued shares of our
Class A common stock equal to the settlement rate described below and
(2) we will pay the holder contract adjustment payments at the rate
of .25% of $50 per year and
(b) a 1/20 undivided beneficial interest in a zero-coupon U.S.
treasury security.
The purchase price of each Income PRIDES and Growth PRIDES will generally
be allocated between the related purchase contract and the related capital
security, in the case of Income PRIDES, or interest in a treasury security, in
the case of Growth PRIDES, in proportion to their respective fair market values
at the time of purchase. We will take the position that $48.844 of the purchase
price of an Income PRIDES will be allocated to the related capital security and
$41.958 of the purchase price of a Growth PRIDES will be allocated to the
interest in a treasury security, and that in each case $1.156 of the purchase
price will be allocated to the related purchase contract. This position
generally will be binding on each beneficial owner of each Income PRIDES, but
not on the IRS. As long as FELINE PRIDES are in the form of Income PRIDES or
Growth PRIDES, the related capital securities or the appropriate applicable
ownership interest of the treasury portfolio or treasury securities, as
applicable, will be pledged to the collateral agent to secure your obligation to
purchase our Class A common stock under the related purchase contracts.
SUBSTITUTION OF PLEDGED SECURITIES
Each holder of an Income PRIDES, unless a tax event redemption has
occurred, will have the right, at any time on or prior to the fifth business day
immediately preceding August 16, 2002, to substitute for the related capital
securities held by the collateral agent treasury securities in an aggregate
principal amount at maturity equal to the aggregate stated liquidation amount of
those capital securities.
The treasury securities will be pledged with the collateral agent to secure
the holder's obligation to purchase our Class A common stock under the related
purchase contracts. Because treasury securities are issued in integral multiples
of $1,000, holders of Income PRIDES may make the substitution only in integral
multiples of 20 Income PRIDES. However, if a tax event redemption has occurred
prior to August 16, 2002, and the treasury portfolio has become a component of
the Income PRIDES, holders of Income PRIDES may make those substitutions only in
integral multiples of 8,000 Income PRIDES, but obtaining the release of the
treasury portfolio, rather than the capital securities, at any time on or prior
to the second business day immediately preceding August 16, 2002.
FELINE PRIDES with respect to which treasury securities have been
substituted for the related capital securities or the appropriate applicable
ownership interest of the treasury portfolio, as the case may be, as collateral
to secure that holder's obligation under the related purchase contracts will be
referred to as Growth PRIDES.
To create 20 Growth PRIDES, unless a tax event redemption has occurred, you
must
(a) deposit with the collateral agent a treasury security having a
principal amount at maturity of $1,000 and
S-27
<PAGE> 29
(b) transfer 20 Income PRIDES to the purchase contract agent
accompanied by a notice stating that you have deposited a treasury security
with the collateral agent and are requesting that the purchase contract
agent instruct the collateral agent to release to you the 20 capital
securities relating to the 20 Income PRIDES.
(c) deliver cash in an amount equal to the contract adjustment
payments that would have accrued since the last payment date through the
date of substitution on the Growth PRIDES being created by you.
Upon that deposit and the receipt of an instruction from the purchase
contract agent, the collateral agent will effect the release of the related 20
capital securities from the pledge under the pledge agreement free and clear of
our security interest to the purchase contract agent, which will
(a) cancel the 20 Income PRIDES,
(b) transfer to you the 20 related capital securities and
(c) deliver to you 20 Growth PRIDES.
The substituted treasury security will be pledged with the collateral agent
to secure your obligation to purchase our Class A common stock under the related
purchase contracts. The related capital securities released to you will trade
separately from the resulting Growth PRIDES. Contract adjustment payments will
be payable by us on those Growth PRIDES on each payment date from the later of
August 12, 1999 and the last payment date on which contract adjustment payments
were paid. In addition, OID for United States federal income tax purposes will
accrue on the related treasury securities. Distributions on any capital
securities, up to but not including August 16, 2002, including after a
substitution of collateral resulting in the creation of Growth PRIDES, will
continue to be payable quarterly by the trust at the rate of 7% of $50 per year.
Each holder of a Growth PRIDES, unless a tax event redemption has occurred,
will have the right, at any time on or prior to the fifth business day
immediately preceding August 16, 2002, to substitute for the related treasury
securities held by the collateral agent capital securities in an aggregate
stated liquidation amount equal to the aggregate principal amount at stated
maturity of those treasury securities, thereby creating Income PRIDES.
The capital securities will be pledged with the collateral agent to secure
the holder's obligation to purchase our Class A common stock under the related
purchase contract. Because treasury securities are issued in integral multiples
of $1,000, holders of Growth PRIDES may make those substitutions only in
integral multiples of 20 Growth PRIDES. However, if a tax event redemption has
occurred and the treasury portfolio has become a component of the Income PRIDES,
holders of Growth PRIDES may make that substitution only in integral multiples
of 8,000 Growth PRIDES, at any time on or prior to the second business day
immediately preceding August 16, 2002.
To create 20 Income PRIDES, unless a tax event redemption has occurred, you
must
(a) deposit with the collateral agent 20 capital securities and
(b) transfer 20 Growth PRIDES certificates to the purchase contract
agent accompanied by a notice stating that you have deposited 20 capital
securities with the collateral agent and are requesting that the purchase
contract agent instruct the collateral agent to release to you the treasury
security relating to those Growth PRIDES.
Upon the deposit and receipt of an instruction from the purchase contract
agent, the collateral agent will effect the release of the related treasury
security from the pledge under the pledge agreement free and clear of our
security interest to the purchase contract agent, which will
(a) cancel the 20 Growth PRIDES,
(b) transfer to you the related treasury security and
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(c) deliver to you 20 Income PRIDES.
The substituted capital securities will be pledged with the collateral
agent to secure your obligation to purchase our Class A common stock under the
related purchase contacts. Cumulative cash distributions, payable quarterly at a
rate of 7% of $50 per year on those Income PRIDES, will be payable by us on
those Income PRIDES on each payment date from the later of August 12, 1999 and
the last payment date on which those cumulative cash distributions, if any, were
paid.
Holders who elect to substitute pledged securities, creating or recreating
Growth PRIDES or Income PRIDES, shall be responsible for any fees or expenses
payable in connection with substitution.
RECREATING INCOME PRIDES OR GROWTH PRIDES
On or prior to the fifth business day immediately preceding August 16,
2002, a holder of Growth PRIDES or Income PRIDES may, unless a tax event
redemption has occurred, recreate Income PRIDES or Growth PRIDES by
(a) depositing with the collateral agent 20 capital securities or a
treasury security and
(b) transferring 20 Growth PRIDES or Income PRIDES, as applicable, to
the purchase contract agent accompanied by a notice stating that the Growth
PRIDES or Income PRIDES holder has deposited 20 capital securities or a
treasury security with the collateral agent and requesting that the
purchase contract agent instruct the collateral agent to release to that
holder the related treasury security or capital securities, as applicable.
Upon the deposit and receipt of instructions from the purchase contract
agent, the collateral agent will effect the release of the related treasury
security or capital securities, as applicable, from the pledge of the pledge
agreement free and clear of our security interest to the purchase contract
agent, which will
(a) cancel the 20 Growth PRIDES or Income PRIDES, as applicable,
(b) transfer to you the treasury security or capital securities, as
applicable, and
(c) deliver to you 20 Income PRIDES or 20 Growth PRIDES, as
applicable.
If, however, a tax event redemption has occurred prior to August 16, 2002
and the treasury portfolio has become a component of the Income PRIDES, holders
of Growth PRIDES or Income PRIDES, as applicable, may make those substitutions
(by using, in the case of the Growth PRIDES, the appropriate applicable
ownership interest of the treasury portfolio rather than the capital securities)
at any time on or prior to the second business day immediately preceding August
16, 2002, but only in integral multiples of 8,000 Growth PRIDES or Income
PRIDES, as applicable.
Holders of Income PRIDES wishing to recreate Growth PRIDES will also be
required to deliver cash in an amount equal to the contract adjustment payments
that would have accrued since the last payment date through the date of
substitution on the Growth PRIDES being recreated by those holders.
The substituted capital securities, the appropriate applicable ownership
interest of the treasury portfolio or a treasury security will be pledged with
the collateral agent to secure your obligation to purchase our Class A common
stock under the related purchase contracts.
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CURRENT PAYMENTS
Holders of Income PRIDES are entitled to receive cash distributions at a
rate of 7% of $50 per year from and after August 12, 1999 through and including
August 15, 2002, payable quarterly in arrears. The quarterly payments on the
Income PRIDES will consist of cumulative cash distributions on the related
capital securities or the treasury portfolio, as applicable, payable at the rate
of 7% of $50 per year.
Each holder of Growth PRIDES will be entitled to receive quarterly contract
adjustment payments payable by us at the rate of .25% of $50 per year. In
addition, OID will accrue on the related treasury securities.
The ability of the trust to make the quarterly distributions on the capital
securities is solely dependent upon the receipt of corresponding interest
payments from us on the debentures.
Our obligations with respect to the debentures will be senior and unsecured
and will rank equally in right of payment with all of our other senior unsecured
indebtedness. Our obligations with respect to the contract adjustment payments
will be subordinated and junior in right of payment to our senior indebtedness.
VOTING AND OTHER RIGHTS
Holders of capital securities, in that capacity, will not be entitled to
vote to appoint, remove or replace, or to increase or decrease the number of
administrative trustees and will generally have no voting rights except in
limited circumstances. Holders of purchase contracts relating to the Income
PRIDES or Growth PRIDES, in that capacity, will have no voting or other rights
in respect of our Class A common stock.
LISTING OF THE SECURITIES
The Income PRIDES and the Growth PRIDES have been approved for listing on
the NYSE under the symbols "COX PrI" and "COX PrG," respectively, subject to
official notice of issuance. If capital securities are separately traded to a
sufficient extent that the applicable listing requirements are satisfied, we
will endeavor to cause such securities to be listed on the exchange on which the
Income PRIDES and Growth PRIDES are then listed, including, if applicable, the
NYSE.
NYSE SYMBOL OF COMMON STOCK
Our Class A common stock is listed on the NYSE under the symbol "COX."
MISCELLANEOUS
We or our affiliates may from time to time purchase any of the securities
offered in this prospectus supplement which are then outstanding by tender, in
the open market or by private agreement.
DESCRIPTION OF THE PURCHASE CONTRACTS
GENERAL
Each purchase contract underlying a FELINE PRIDES, unless earlier
terminated, or earlier settled at your option, will obligate you to purchase,
and us to sell, on August 16, 2002, for an amount in cash equal to $50, a number
of newly issued shares of our Class A common stock equal to the settlement rate.
The settlement rate, which is the number of newly issued shares of our
Class A common stock issuable upon settlement of a purchase contract on August
16, 2002, will be calculated for the FELINE PRIDES, subject to adjustment under
certain circumstances, as follows:
(a) if the applicable market value is equal to or greater than the
threshold appreciation price of $41.7984, which is 20.5% above $34.6875,
the last reported sale price of the Class A common stock
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on August 9, 1999, the settlement rate, which is equal to $50 divided by
$41.7984, will be 1.1962; accordingly, if, between the date of this
prospectus supplement and the period during which the applicable market
value is measured, the market price for the Class A common stock increases
to an amount that is higher than $41.7984, the aggregate market value of
the shares of Class A common stock issued upon settlement of each purchase
contract, assuming that this market value is the same as the applicable
market value of the Class A common stock, will be higher than $50, and if
the market price equals $41.7984, the aggregate market value of those
shares, assuming that this market value is the same as the applicable
market value of the Class A common stock, will equal $50;
(b) if the applicable market value is less than $41.7984 but greater
than $34.6875, the settlement rate will be equal to $50 divided by the
applicable market value; accordingly, if the market price for the Class A
common stock increases between the date of this prospectus supplement and
the period during which the applicable market value is measured but that
market price is less than $41.7984, the aggregate market value of the
shares of Class A common stock issued upon settlement of each purchase
contract, assuming that this market value is the same as the applicable
market value of the Class A common stock, will equal $50; and
(c) if the applicable market value is less than or equal to $34.6875,
the settlement rate, which is equal to $50 divided by $34.6875, will be
1.4414; accordingly, if the market price for the Class A common stock
decreases between the date of this prospectus supplement and the period
during which the applicable market value is measured, the aggregate market
value of the shares of Class A common stock issued upon settlement of each
purchase contract, assuming that the market value is the same as the
applicable market value of the Class A common stock, will be less than $50,
and if the market price stays the same, the aggregate market value of those
shares, assuming that this market value is the same as the applicable
market value of the Class A common stock, will equal $50.
The applicable market value means the average of the closing prices per
share of Class A common stock on each of the twenty consecutive trading days
ending on the third trading day immediately preceding August 16, 2002.
The closing price of the Class A common stock on any date of determination
means the closing sale price or, if no closing price is reported, the last
reported sale price of the Class A common stock on the NYSE on that date. If the
Class A common stock is not listed for trading on the NYSE on any date, the
closing price of the Class A common stock on any date of determination means the
closing sales price as reported in the composite transactions for the principal
U.S. securities exchange on which the Class A common stock is so listed, or if
the Class A common stock is not so listed on a U.S. national or regional
securities exchange, as reported by the Nasdaq stock market, or, if the Class A
common stock is not so reported, the last quoted bid price for the Class A
common stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization or, if that bid price is not available,
the market value of the Class A common stock on that date as determined by a
nationally recognized independent investment banking firm retained by us for
this purpose.
A trading day is a day on which the Class A common stock (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 the Class A common stock.
No fractional shares of Class A common stock will be issued by us pursuant
to the purchase contracts. In place of fractional shares otherwise issuable,
calculated on an aggregate basis, in respect of the purchase contracts you are
settling, you will be entitled to receive an amount of cash equal to the
fractional share times the applicable market value.
On the business day immediately preceding August 16, 2002, unless
(a) you have settled the related purchase contracts prior to August
16, 2002 through the early delivery of cash to the purchase contract agent,
in the manner described under "--Early Settlement,"
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(b) in the case of Income PRIDES, you have settled the related
purchase contracts with separate cash on the business day immediately
preceding August 16, 2002 having given prior notice in the manner described
under "--Notice to Settle with Cash,"
(c) you have had the capital securities related to your purchase
contracts remarketed in the manner described in this prospectus supplement,
or
(d) an event described under "--Termination" below has occurred, then
(1) in the case of Income PRIDES, unless a tax event redemption has occurred, we
will exercise our rights as a secured party to dispose of the capital securities
in accordance with applicable law and (2) in the case of Growth PRIDES or Income
PRIDES, if a tax event redemption has occurred, the principal amount of the
related treasury securities or the appropriate applicable ownership interest of
the treasury portfolio, as applicable, when paid at maturity, will automatically
be applied to satisfy in full your obligation to purchase Class A common stock
under the related purchase contracts. The Class A common stock will then be
issued and delivered to you or your designee, upon presentation and surrender of
the certificate evidencing the FELINE PRIDES and payment by you of any transfer
or similar taxes payable in connection with the issuance of the Class A common
stock to any person other than you. Where a holder of either Income PRIDES or
Growth PRIDES effects the early settlement of the related purchase contracts
through the delivery of cash or, in the case of Income PRIDES, settles the
related purchase contracts with cash on the business day immediately preceding
August 16, 2002, the related capital securities or treasury securities, as the
case may be, will be released to the holder as described in this prospectus
supplement. The funds received by the collateral agent on the business day
immediately preceding August 16, 2002, upon cash settlement of a purchase
contract, will be promptly invested in overnight permitted investments and paid
to us on August 16, 2002. Any funds received by the collateral agent in respect
of the interest earned from the overnight investment in permitted investments
will be distributed to the purchase contract agent for payment to the holders.
Prior to the date on which shares of Class A common stock are issued in
settlement of purchase contracts, the Class A common stock underlying the
related purchase contracts will not be deemed to be outstanding for any purpose
and the holders of those purchase contracts will not have any voting rights,
rights to dividends or other distributions, rights or privileges of a
stockholder of Cox by virtue of holding the purchase contracts.
As a holder of an Income PRIDES or Growth PRIDES, you will, by acceptance
and under the terms of the purchase contract agreement and the related purchase
contracts, be deemed to have
(a) irrevocably agreed to be bound by the terms of the related
purchase contracts and the pledge agreement for so long as you remain a
holder of that FELINE PRIDES and
(b) duly appointed the purchase contract agent as your
attorney-in-fact to enter into and perform the related purchase contracts
on your behalf and in your name.
In addition, as a beneficial owner of Income PRIDES or Growth PRIDES, you,
by acceptance of the interest, will be deemed to have agreed to treat for United
States federal, state and local income and franchise tax purposes,
(a) yourself as the owner of the related capital securities, the
appropriate applicable ownership interest of the treasury portfolio or the
treasury securities, as the case may be, and
(b) the debentures as indebtedness that we have issued.
REMARKETING
Under the remarketing agreement and subject to the terms of the remarketing
underwriting agreement between the remarketing agent, the purchase contract
agent, us and the trust, unless a tax event redemption has occurred, the capital
securities of Income PRIDES holders who have failed to notify the purchase
contract agent on or prior to the fifth business day immediately preceding
August 16, 2002 of
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their intention to settle the related purchase contracts with separate cash on
the business day immediately preceding August 16, 2002, will be remarketed on
the third business day immediately preceding August 16, 2002.
The remarketing agent will use its reasonable efforts to remarket those
capital securities on that date at a price of approximately 100.5% of the
aggregate stated liquidation amount of those capital securities, plus
accumulated and unpaid distributions. The portion of the proceeds from that
remarketing equal to the aggregate stated liquidation amount of those capital
securities will automatically be applied to satisfy in full those Income PRIDES
holders' obligations to purchase Class A common stock under the related purchase
contracts. In addition, after deducting as the remarketing fee an amount not
exceeding 25 basis points (.25%) of the aggregate stated liquidation amount of
the remarketed capital securities from any amount of those proceeds in excess of
the aggregate stated liquidation amount of the remarketed capital securities
plus any accumulated and unpaid distributions, the remarketing agent will remit
the remaining portion of the proceeds, if any, for the benefit of that holder.
Income PRIDES holders whose capital securities are so remarketed will not
otherwise be responsible for the payment of any remarketing fee.
If, despite using its reasonable efforts, the remarketing agent cannot
remarket the related capital securities of those holders of Income PRIDES at a
price not less than 100% of the aggregate stated liquidation amount of those
capital securities plus accumulated and unpaid distributions, or if the
remarketing does not occur because a condition precedent to the remarketing has
not been fulfilled, and thus resulting in a failed remarketing, we will exercise
our rights as a secured party to dispose of the capital securities in accordance
with applicable law and satisfy in full, from the proceeds of that disposition,
that holder's obligation to purchase Class A common stock under the related
purchase contracts. However, if we exercise those rights as a secured creditor,
any accumulated and unpaid distributions on those capital securities will be
paid in cash by us to the holders of record of those capital securities. We will
cause a notice of the failed remarketing to be published on the second business
day immediately preceding August 16, 2002 by publication in a daily newspaper in
the English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal. In addition, we will request, not later
than ten nor more than 15 calendar days prior to the remarketing date, that the
depository notify its participants holding capital securities, Income PRIDES and
Growth PRIDES of the remarketing and of the procedures that must be followed if
a capital security holder wishes to exercise its right to put its capital
security to us as described in this prospectus supplement. If required by
applicable law we will endeavor to ensure that a registration statement with
regard to the full amount of the capital securities to be remarketed shall be
effective in a form that will enable the remarketing agent to rely on it in
connection with the remarketing process. It is currently anticipated that
Merrill Lynch, Pierce, Fenner & Smith Incorporated will be the remarketing
agent.
EARLY SETTLEMENT
A holder of Income PRIDES may settle the related purchase contracts (unless
a tax event redemption has occurred) on or prior to the fifth business day
immediately preceding August 16, 2002 by presenting and surrendering the FELINE
PRIDES certificate evidencing those Income PRIDES at the offices of the purchase
contract agent. The holder should also present the form of election to settle
early on the reverse side of that certificate completed and executed as
indicated, accompanied by payment to us in immediately available funds of an
amount equal to $50 times the number of purchase contracts being settled.
However, if a tax event redemption has occurred prior to August 16, 2002 and the
treasury portfolio has become a component of the Income PRIDES, holders of those
Income PRIDES may settle early only in integral multiples of 8,000 Income
PRIDES, and the related appropriate applicable ownership interest of the
treasury portfolio, at any time on or prior to the second business day
immediately preceding August 16, 2002.
A holder of Growth PRIDES may settle the related purchase contracts on or
prior to the second business day immediately preceding August 16, 2002 by
presenting and surrendering the FELINE PRIDES certificate evidencing the Growth
PRIDES at the offices of the purchase contract agent with the form of election
to settle early on the reverse side of that certificate completed and executed
as indicated,
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accompanied by payment to us in immediately available funds of an amount equal
to $50 times the number of purchase contracts being settled.
So long as the FELINE PRIDES are evidenced by one or more global security
certificates deposited with the depositary, procedures for early settlement will
also be governed by standing arrangements between the depositary and the
purchase contract agent.
Upon early settlement of the purchase contracts related to any Income
PRIDES or Growth PRIDES:
(a) as a holder of FELINE PRIDES, you will receive 1.1962 newly issued
shares of Class A common stock per Income PRIDES or Growth PRIDES,
regardless of the market price of the Class A common stock on the date of
the early settlement. The number of newly issued shares of Class A common
stock in both cases will be subject to adjustment under the circumstances
described in "--Anti-Dilution Adjustments" below;
(b) the capital securities, the appropriate applicable ownership
interest of the treasury portfolio or the treasury securities, related to
the Income PRIDES or Growth PRIDES, as applicable, will then be transferred
to you free and clear of our security interest;
(c) your right to receive future contract adjustment payments, if any,
will terminate; and
(d) no adjustment will be made to or for you on account of any amounts
accrued in respect of contract adjustment payments.
If the purchase contract agent receives a FELINE PRIDES certificate,
accompanied by the completed election to settle early form and the requisite
amount of immediately available funds, from you by 5:00 p.m., New York City
time, on a business day, that day will be considered the early settlement date.
If the purchase contract agent receives those documents after 5:00 p.m., New
York City time, on a business day or at any time on a day that is not a business
day, the next business day will be considered the settlement date.
Upon early settlement of purchase contracts in the manner described above,
presentation and surrender of the FELINE PRIDES certificate evidencing the
related Income PRIDES or Growth PRIDES and payment of any transfer or similar
taxes payable by the holder in connection with the issuance of the related Class
A common stock to any person other than the holder of the Income PRIDES or
Growth PRIDES, we will cause the shares of Class A common stock being purchased
to be issued, and the related capital securities, the appropriate applicable
ownership interest of the treasury portfolio or the treasury securities, as the
case may be, securing those purchase contracts to be released from the pledge
under the pledge agreement and transferred, within three business days following
the settlement date, to you or your designee.
NOTICE TO SETTLE WITH CASH
If you want to settle the purchase contract underlying a FELINE PRIDES with
separate cash on the business day immediately preceding August 16, 2002, you
must notify the purchase contract agent by presenting and surrendering the
FELINE PRIDES certificate evidencing those FELINE PRIDES. You must present the
certificates at the offices of the purchase contract agent with the form of
"Notice to Settle by Separate Cash" on the reverse side of the certificate
completed and executed as indicated. You must present the documents on or prior
to 5:00 p.m., New York City time, on the second business day immediately
preceding August 16, 2002 if you are a Growth PRIDES holder or if you are an
Income PRIDES holder and a tax event redemption has occurred. If you are an
Income PRIDES holder, you must present the document on the fifth business day
immediately preceding August 16, 2002.
If you have given notice of your intention to settle the related purchase
contract with separate cash but failed to deliver the cash on the business day
immediately preceding August 16, 2002, then we will exercise our right as a
secured party to dispose of, in accordance with applicable law, the related
capital securities, the applicable ownership interest of the treasury portfolio
or the treasury securities, as the case
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may be, to satisfy in full from the proceeds of that disposition your obligation
to purchase Class A common stock under the related purchase contract.
CONTRACT ADJUSTMENT PAYMENTS
Contract adjustment payments in respect of Growth PRIDES will be fixed at a
rate per year of .25% of $50 per purchase contract. Contract adjustment payments
that are not paid when due will continue to accrue at the rate per year of 7.25%
compounded quarterly, until paid. Contract adjustment payments payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
Contract adjustment payments will accrue from August 12, 1999 and will be
payable quarterly in arrears on February 16, May 16, August 16, and November 16
of each year, commencing November 16, 1999.
Contract adjustment payments will be payable to the holders of purchase
contracts as they appear on the books and records of the purchase contract agent
on the relevant record dates.
As long as the Growth PRIDES remain in book-entry only form, the record
dates will be one business day prior to the relevant payment dates. Those
distributions will be paid through the purchase contract agent who will hold
amounts received in respect of the contract adjustment payments for your benefit
relating to those Growth PRIDES. Subject to any applicable laws and regulations,
each of those payments will be made as described under "--Book-Entry System." If
the Growth PRIDES do not remain in book-entry only form, we shall have the right
to select relevant record dates, which shall be more than one business day but
less than 60 business days prior to the relevant payment dates.
If any date on which contract adjustment payments are to be made on the
purchase contracts related to the Growth PRIDES is not a business day, then
payment of the contract adjustment payments payable on that date will be made on
the next succeeding day which is a business day, and no interest or payment will
be paid in respect of the delay. However, if that business day is in the next
succeeding calendar year, that payment shall be made on the immediately
preceding business day, in each case with the same force and effect as if made
on that payment date. A business day shall mean any day other than a Saturday,
Sunday or any other day on which banking institutions and trust companies in The
City of New York are permitted or required by any applicable law to close.
Our obligations with respect to contract adjustment payments will be
subordinated and junior in right of payment to our obligations under any senior
indebtedness.
ANTI-DILUTION ADJUSTMENTS
The formula for determining the settlement rate will be subject to
adjustment, without duplication, upon the occurrence of events, including:
(a) the payment of dividends and distributions of our Class A common
stock on our Class A common stock;
(b) the issuance to all holders of our Class A common stock of rights,
warrants or options, other than pursuant to any dividend reinvestment
plans, entitling them, for a period of up to 45 days, to subscribe for or
purchase our Class A common stock at less than the current market price;
(c) subdivisions, splits and combinations of our Class A common stock;
(d) distributions to all holders of our Class A common stock of our
evidences of indebtedness, shares of capital stock, securities, cash or
property, excluding any dividend or distribution covered by clause (a) or
(b) above and any dividend or distribution paid exclusively in cash;
(e) distributions consisting exclusively of cash to all holders of our
Class A common stock in an aggregate amount that, together with
- other all-cash distributions made within the preceding 12 months and
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- any cash and the fair market value, as of the expiration of the tender
or exchange offer referred to below, of consideration payable in
respect of any tender or exchange offer by us or a subsidiary of ours
for our Class A common stock concluded within the preceding 12 months,
exceeds 15% of our aggregate market capitalization on the date of that
distribution; the aggregate market capitalization being the product of
the current market price of the Class A common stock multiplied by the
number of shares of Class A common stock then outstanding; and
(f) the successful completion of a tender or exchange offer made by us
or any subsidiary of ours for our Class A common stock which involves an
aggregate consideration that, together with
- any cash and the fair market value of consideration payable in respect
of any tender or exchange offer by us or a subsidiary of ours for our
Class A common stock concluded within the preceding 12 months and
- the aggregate amount of any all-cash distributions to all holders of
our Class A common stock made within the preceding 12 months, exceeds
15% of our aggregate market capitalization on the expiration of the
tender or exchange offer.
The current market price per share of Class A common stock on any day means
the average of the daily closing prices for the five consecutive trading days
selected by us commencing not more than 30 trading days before, and ending not
later than, the earlier of the day in question and the day before the ex date
with respect to the issuance or distribution requiring that computation. For
purposes of this paragraph, the term ex date, when used with respect to any
issuance or distribution, shall mean the first date on which the Class A common
stock trades regular way on that exchange or in that market without the right to
receive the issuance or distribution.
In the case of reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which our Class A common
stock is converted into the right to receive securities, cash or property, each
purchase contract then outstanding would, without the consent of the holders of
the related Income PRIDES or Growth PRIDES, become a contract to purchase only
the kind and amount of securities, cash and property receivable upon
consummation of the transaction by a holder of the number of shares of Class A
common stock which would have been received by the holder of the related Income
PRIDES or Growth PRIDES immediately prior to the date of consummation of that
transaction if that holder had then settled that purchase contract.
If at any time (1) we make a distribution of property to our Class A common
stockholders which would be taxable to those stockholders as a dividend for
United States federal income tax purposes, which includes generally
distributions of our evidences of indebtedness or assets, but generally not
stock dividends or rights to subscribe to capital stock and (2) according to the
settlement rate adjustment provisions of the purchase contract agreement, the
settlement rate is increased, that increase may give rise to a taxable dividend
to holders of FELINE PRIDES.
In addition, we may make increases to the settlement rate as our board of
directors deems advisable to avoid or diminish any income tax to holders of our
capital stock resulting from any dividend, distribution of capital stock,
distribution of rights to acquire capital stock or from any event treated
similarly for income tax purposes or for any other reasons.
Adjustments to the settlement rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the settlement rate shall be required
unless that adjustment would require an increase or decrease of at least one
percent in the settlement rate. However, any adjustments which by reason of the
above are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
We will be required to provide an officer's certificate to the purchase
contract agent setting forth the adjusted settlement rate and its calculation
and, within ten business days following the adjustment of the settlement rate,
to provide written notice to the holders of FELINE PRIDES of the occurrence of
that
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event and a statement specifying in reasonable detail the method by which the
adjustment to the settlement rate was determined and the revised settlement
rate.
Each adjustment to the settlement rate will result in a corresponding
adjustment to the number of shares of Class A common stock issuable upon early
settlement of a purchase contract.
TERMINATION OF PURCHASE CONTRACTS
The purchase contracts, our related rights and obligations and those of the
holders of the FELINE PRIDES, including the right and obligation to purchase
Class A common stock and the right to receive accrued contract adjustment
payments, in respect of Growth PRIDES, will automatically terminate upon the
occurrence of particular events of our bankruptcy, insolvency or reorganization.
Upon termination, the collateral agent will release the related capital
securities or the appropriate applicable ownership interest of the treasury
portfolio and the treasury securities held by it to the purchase contract agent
for distribution to the holders. The release will be subject in the case of the
treasury portfolio to the purchase contract agent's disposition of the subject
securities for cash and the payment of the cash to the holders to the extent
that the holders would otherwise have been entitled to receive less than $1,000
principal amount at maturity of any security. Upon termination, however, the
release and distribution may be subject to a delay. If we become the subject of
a case under the Bankruptcy Code, a delay may occur as a result of the automatic
stay under the Bankruptcy Code and continue until the automatic stay has been
lifted. We expect any delay to be limited.
PLEDGED SECURITIES AND PLEDGE AGREEMENT
The capital securities related to the Income PRIDES, or the treasury
portfolio if a tax event redemption has occurred prior to August 16, 2002 and
the treasury securities related to the Growth PRIDES (collectively, the pledged
securities) will be pledged to the collateral agent, for our benefit. According
to the pledge agreement, the pledged securities will secure the obligations of
holders of FELINE PRIDES to purchase our Class A common stock under the related
purchase contracts. Your rights to the related pledged securities will be
subject to our security interest created by the pledge agreement. You will not
be permitted to withdraw the pledged securities related to the Income PRIDES or
Growth PRIDES from the pledge arrangement except
(a) to substitute treasury securities for the related capital
securities or the appropriate applicable ownership interest of the treasury
portfolio,
(b) to substitute capital securities or the appropriate applicable
ownership interest of the treasury portfolio for the related treasury
securities or
(c) upon the termination or early settlement of the related purchase
contracts.
Subject to the security interest and the terms of the purchase contract
agreement and the pledge agreement, (1) each holder of Income PRIDES, unless a
tax event redemption has occurred, will be entitled through the purchase
contract agent and the collateral agent to all of the proportional rights and
preferences of the related capital securities, including distribution, voting,
redemption, repayment and liquidation rights and (2) each holder of Growth
PRIDES or Income PRIDES, if a tax event redemption has occurred, will retain
beneficial ownership of the related treasury securities or the appropriate
applicable ownership interest of the treasury portfolio, pledged in respect of
the related purchase contracts. We will have no interest in the pledged
securities other than our security interest.
Except as described in "Description of the Purchase Contracts--General,"
the collateral agent will, upon receipt of distributions on the pledged
securities, distribute those payments to the purchase contract agent, which will
in turn distribute them, together with contract adjustment payments received
from us in respect of Growth PRIDES, to the persons in whose names the related
Income PRIDES or Growth PRIDES are registered at the close of business on the
record date immediately preceding the date of the distribution.
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BOOK-ENTRY SYSTEM
The Depository Trust Company will act as securities depositary for the
FELINE PRIDES. The FELINE PRIDES will be issued only as fully-registered
securities registered in the name of Cede & Co. (the depositary's nominee). One
or more fully-registered global security certificates, representing the total
aggregate number of FELINE PRIDES, will be issued and deposited with the
depositary and will bear a legend regarding the restrictions on exchanges and
registration of transfer referred to below.
The laws of some jurisdictions require that some purchasers of securities
take physical delivery of securities in definitive form. Those laws may impair
the ability to transfer beneficial interests in the FELINE PRIDES so long as the
FELINE PRIDES are represented by global security certificates.
The depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934.
The depositary holds securities that its participants deposit with the
depositary. The depositary also facilitates the settlement among participants of
securities transactions, including transfers and pledges, in deposited
securities through electronic computerized book-entry changes in participants'
accounts, thus eliminating the need for physical movement of securities
certificates. Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. The
depositary is owned by a number of its direct participants and by the NYSE, the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc., collectively referred to as participants. Access to the
depositary system is also available to others, including securities brokers and
dealers, banks and trust companies that clear transactions through or maintain a
direct or indirect custodial relationship with a direct participant either
directly or indirectly, collectively referred to as indirect participants. The
rules applicable to the depositary and its participants are on file with the
Securities and Exchange Commission.
No FELINE PRIDES represented by global security certificates may be
exchanged in whole or in part for FELINE PRIDES registered, and no transfer of
global security certificates in whole or in part may be registered, in the name
of any person other than the depositary or any nominee of the depositary,
unless, however, the depositary has notified us that it is unwilling or unable
to continue as depositary for the global security certificates, has ceased to be
qualified to act as required by the purchase contract agreement or there is a
continuing default by us in respect of our obligations under one or more
purchase contracts. All FELINE PRIDES represented by one or more global security
certificates or any portion of them will be registered in those names as the
depositary may direct.
As long as the depositary or its nominee is the registered owner of the
global security certificates, the depositary or that nominee will be considered
the sole owner and holder of the global security certificates and all FELINE
PRIDES represented by those certificates for all purposes under the FELINE
PRIDES and the purchase contract agreement. Except in the limited circumstances
referred to above, owners of beneficial interests in global security
certificates will not be entitled to have the global security certificates or
the FELINE PRIDES represented by those certificates registered in their names,
will not receive or be entitled to receive physical delivery of FELINE PRIDES
certificates in exchange and will not be considered to be owners or holders of
the global security certificates or any FELINE PRIDES represented by those
certificates for any purpose under the FELINE PRIDES or the purchase contract
agreement. All payments on the FELINE PRIDES represented by the global security
certificates and all related transfers and deliveries of capital securities,
treasury portfolio, treasury securities and Class A common stock will be made to
the depositary or its nominee as their holder.
Ownership of beneficial interests in the global security certificates will
be limited to participants or persons that may hold beneficial interests through
institutions that have accounts with the depositary or its nominee. Ownership of
beneficial interests in global security certificates will be shown only on, and
the
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transfer of those ownership interests will be effected only through, records
maintained by the depositary or its nominee with respect to participants'
interests or by the participant with respect to interests of persons held by the
participants on their behalf.
Procedures for settlement of purchase contracts on August 16, 2002 or upon
early settlement will be governed by arrangements among the depositary,
participants and persons that may hold beneficial interests through participants
designed to permit the settlement without the physical movement of certificates.
Payments, transfers, deliveries, exchanges and other matters relating to
beneficial interests in global security certificates may be subject to various
policies and procedures adopted by the depositary from time to time.
Neither we or any of our agents, nor the purchase contract agent or any of
its agents will have any responsibility or liability for any aspect of the
depositary's or any participant's records relating to, or for payments made on
account of, beneficial interests in global security certificates, or for
maintaining, supervising or reviewing any of the depositary's records or any
participant's records relating to those beneficial ownership interests.
The information in this section concerning the depositary and its
book-entry system has been obtained from sources that we and the trust believe
to be reliable, but neither we nor the trust take responsibility for its
accuracy.
PROVISIONS OF THE PURCHASE CONTRACT
AGREEMENT AND THE PLEDGE AGREEMENT
OVERVIEW
Distributions on the FELINE PRIDES will be payable, purchase contracts and
documents related to them will be settled and transfers of the FELINE PRIDES
will be registrable at the office of the purchase contract agent in the Borough
of Manhattan, The City of New York. In addition, in the event that the FELINE
PRIDES do not remain in book-entry form, payment of distributions on the FELINE
PRIDES may be made, at our option, by check mailed to the address of the person
entitled to it as shown on the security register.
Shares of our Class A common stock will be delivered on August 16, 2002 or
earlier upon early settlement or, if the purchase contracts have terminated, the
related pledged securities will be delivered potentially after a delay as a
result of the imposition of the automatic stay under the Bankruptcy Code, in
either case upon presentation and surrender of the FELINE PRIDES certificate at
the office of the purchase contract agent. We expect any delay to be limited.
If you fail to present and surrender the FELINE PRIDES certificate
evidencing the Income PRIDES or Growth PRIDES to the purchase contract agent on
August 16, 2002, the shares of Class A common stock issuable in settlement of
the related purchase contract will be registered in the name of the purchase
contract agent. The shares of Class A common stock, together with any related
distributions, will be held by the purchase contract agent as agent for your
benefit, until the FELINE PRIDES certificate is presented and surrendered or you
provide satisfactory evidence that the certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the purchase
contract agent and us.
If the purchase contracts have terminated prior to August 16, 2002, the
related pledged securities have been transferred to the purchase contract agent
for distribution to you and you fail to present and surrender the FELINE PRIDES
certificate evidencing your Income PRIDES or Growth PRIDES to the purchase
contract agent, the related pledged securities delivered to the purchase
contract agent and related payments shall be held by the purchase contract agent
as agent for your benefit, until the FELINE PRIDES certificate is presented or
you provide the evidence and indemnity described above.
The purchase contract agent will have no obligation to invest or to pay
interest on any amounts held by the purchase contract agent pending
distribution.
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No service charge will be made for any registration of transfer or exchange
of the FELINE PRIDES, except for any related tax or other governmental charge
that may be imposed.
MODIFICATION
The purchase contract agreement and the pledge agreement will contain
provisions permitting us and the purchase contract agent or collateral agent
with the consent of the holders of not less than a majority of the purchase
contracts at the time outstanding, to modify the terms of the purchase
contracts, the purchase contract agreement and the pledge agreement. However,
we, the purchase contract agent or collateral agent may not, without the consent
of the holder of each outstanding purchase contract,
(a) change any payment date,
(b) change the amount or type of pledged securities related to the
purchase contract, impair the right of the holder of any pledged securities
to receive distributions on the pledged securities except for the rights of
holders of Income PRIDES to substitute treasury securities for the related
capital securities or treasury portfolio or the rights of holders of Growth
PRIDES to substitute capital securities or treasury portfolio for the
related treasury securities or otherwise adversely affect the holder's
rights in or to those pledged securities,
(c) change the place or currency of payment or reduce any contract
adjustment payments,
(d) impair the right to institute suit for the enforcement of the
purchase contract,
(e) reduce the amount of Class A common stock purchasable under the
purchase contract, increase the price to purchase Class A common stock on
settlement of the purchase contract, change the purchase contract
settlement date or otherwise adversely affect the holder's rights under the
purchase contract or
(f) reduce the above-stated percentage of outstanding purchase
contracts the consent of whose holders is required for the modification or
amendment of the provisions of the purchase contracts, the purchase
contract agreement or the pledge agreement.
However, if any amendment or proposal referred to above would adversely affect
only the Income PRIDES or the Growth PRIDES, then only the affected class of
holder will be entitled to vote on that amendment or proposal and that amendment
or proposal shall not be effective except with the consent of the holders of not
less than a majority of that class.
NO CONSENT TO ASSUMPTION
You, by your acceptance of the Income PRIDES or Growth PRIDES, will, under
the terms of the purchase contract agreement and the Income PRIDES or Growth
PRIDES, be deemed expressly to have withheld any consent to the assumption,
i.e., affirmance, of the related purchase contracts by us or our trustee if we
become the subject of a case under the Bankruptcy Code.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
We will covenant in the purchase contract agreement that we will not merge
or consolidate with any entity or sell, assign, transfer, lease or convey all or
substantially all of our properties and assets to any person, firm or
corporation unless we are the continuing corporation or the successor
corporation is a corporation organized under the laws of the United States of
America or one of its states or the District of Columbia and that corporation
expressly assumes our obligations under the purchase contracts, the debentures,
the guarantee, the purchase contract agreement and the pledge agreement, and we
are not or the successor corporation is not, immediately after such merger,
consolidation, sale, assignment, transfer, lease or conveyance, in default in
the performance of any of these obligations.
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TITLE
We, the purchase contract agent and the collateral agent may treat the
registered owner of any FELINE PRIDES as its absolute owner for the purpose of
making payment and settling the related purchase contracts and for all other
purposes.
REPLACEMENT OF FELINE PRIDES CERTIFICATES
In the case that physical certificates have been issued, we will replace
any mutilated FELINE PRIDES certificate at the expense of the holder upon
surrender of that certificate to the purchase contract agent. We will replace
any FELINE PRIDES certificates that become destroyed, lost or stolen at the
expense of the holder upon delivery to us and the purchase contract agent of
satisfactory evidence of its destruction, loss or theft. In the case of a
destroyed, lost or stolen FELINE PRIDES certificate, an indemnity satisfactory
to the purchase contract agent and us may be required at the expense of the
holder of the FELINE PRIDES evidenced by that certificate before a replacement
will be issued.
Notwithstanding the above, we will not be obligated to issue any Income
PRIDES or Growth PRIDES on or after the business day immediately preceding
August 16, 2002, after early settlement or after the purchase contracts have
terminated. The purchase contract agreement will provide that, in place of the
delivery of a replacement FELINE PRIDES certificate following August 16, 2002,
the purchase contract agent, upon delivery of the evidence and indemnity
described above, will deliver the Class A common stock issuable pursuant to the
purchase contracts included in the Income PRIDES or Growth PRIDES evidenced by
that certificate. If the purchase contracts have terminated prior to August 16,
2002, the purchase contract agent will transfer the the capital securities, the
appropriate applicable ownership interest of the treasury portfolio or the
treasury securities, as the case may be, included in the Income PRIDES or Growth
PRIDES evidenced by that certificate.
GOVERNING LAW
The purchase contract agreement, the pledge agreement and the purchase
contracts will be governed by, and construed in accordance with, the laws of the
State of New York.
INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT
The First National Bank of Chicago will be the purchase contract agent. The
purchase contract agent will act as your agent. The purchase contract agreement
will not obligate the purchase contract agent to exercise any discretionary
actions in connection with a default under the terms of the Income PRIDES and
Growth PRIDES or the purchase contract agreement.
The purchase contract will contain provisions limiting the liability of the
purchase contract agent. The purchase contract agreement will contain provisions
under which the purchase contract agent may resign or be replaced. That
resignation or replacement would be effective upon the acceptance of appointment
by a successor.
INFORMATION CONCERNING THE COLLATERAL AGENT
The Bank of New York will be the collateral agent. The collateral agent
will act solely as our agent and will not assume any obligation or relationship
of agency or trust for or with you except for the obligations owed by a pledgee
of property to the owner under the pledge agreement and applicable law.
The pledge agreement will contain provisions limiting the liability of the
collateral agent. The pledge agreement will contain provisions under which the
collateral agent may resign or be replaced. That resignation or replacement
would be effective upon the acceptance of appointment by a successor.
The Bank of New York maintains commercial banking relationships with us.
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MISCELLANEOUS
The purchase contract agreement will provide that we will pay all fees and
expenses related to
(a) the offering of the FELINE PRIDES,
(b) the retention of the collateral agent and
(c) the enforcement by the purchase contract agent of the rights of
the holders of the FELINE PRIDES.
Should you elect to substitute the related pledged securities, creating
Growth PRIDES or Income PRIDES or recreating Income PRIDES or Growth PRIDES, you
shall be responsible for any fees or expenses payable in connection with that
substitution, as well as any commissions, fees or other expenses incurred in
acquiring the pledged securities to be substituted, and we shall not be
responsible for any of those fees or expenses.
DESCRIPTION OF THE CAPITAL SECURITIES
The capital securities will be issued according to the terms of the
declaration. The declaration will be qualified as an indenture under the Trust
Indenture Act. The property trustee, The Bank of New York, an independent
trustee, will act as indenture trustee for the capital securities under the
declaration for purposes of compliance with the provisions of the Trust
Indenture Act. The terms of the capital securities will include those stated in
the declaration and those made part of the declaration by the Trust Indenture
Act. The following summary of provisions of the capital securities and the
declaration is not necessarily complete, and reference is made to the copy of
the declaration including the definitions, which is filed as an exhibit to the
registration statement of which this prospectus supplement and the accompanying
prospectus form a part, the Trust Act and the Trust Indenture Act. Whenever
particular defined terms are referred to in this prospectus supplement, those
defined terms are incorporated in this prospectus supplement by reference. The
following description of the terms of the capital securities supplements and, to
the extent inconsistent with, replaces the description of the general terms of
the capital securities contained in the accompanying prospectus, which we
request that you read.
OVERVIEW
The declaration authorizes the administrative trustees to issue on behalf
of the trust the trust securities, which represent undivided beneficial
ownership interests in the assets of the trust. We will own directly or
indirectly all of the common securities. The common securities rank on a parity,
and related payments will be made on a proportionate basis, with the capital
securities. However, upon the occurrence and during the continuance of an
indenture event of default, the rights of the holders of the common securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the capital securities. The declaration does not permit the issuance by the
trust of any securities other than the trust securities or the incurrence of any
indebtedness by the trust.
Under the declaration, the property trustee will own the debentures
purchased by the trust for the benefit of the holders of the trust securities.
The payment of distributions out of money held by the trust, and payments upon
redemption of the capital securities or liquidation of the trust, are guaranteed
by us to the extent described under "Description of the Guarantee." The
guarantee, when taken together with our obligations under the debentures and the
indenture and our obligations under the declaration, including the obligations
to pay costs, expenses, debts and liabilities of the trust other than with
respect to the capital securities, provides a full and unconditional guarantee
of amounts due on the capital securities. The Bank of New York, the guarantee
trustee, will hold the guarantee for the benefit of the holders of the capital
securities. The guarantee does not cover payment of distributions when the trust
does not have sufficient available funds to pay those distributions. In that
case, except in the limited circumstances in which the
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holder may take direct action, the remedy of a holder of capital securities is
to vote to direct the property trustee to enforce the property trustee's rights
under the debentures.
DISTRIBUTIONS
Distributions on the capital securities will be fixed initially at a rate
per year of 7% of the stated liquidation amount of $50 per capital security.
Distributions on the capital securities that remain outstanding on and after
August 16, 2002 will be reset on the third business day immediately preceding
August 16, 2002. Distributions in arrears for more than one quarter will bear
interest at the rate of 7% per year through and including August 15, 2002 and at
the reset rate afterwards, compounded quarterly. The term distributions as used
here includes any interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the capital securities will be cumulative and will accrue
from August 12, 1999 and will be payable quarterly in arrears on February 16,
May 16, August 16, and November 16 of each year, commencing November 16, 1999,
when, as and if funds are available for payment. Distributions will be made by
the property trustee, except as otherwise described below.
The trust must pay distributions on the capital securities on the dates
payable to the extent that it has funds available in the property account for
the payment of those distributions. The trust's funds available for distribution
to you as a holder of the capital securities will be limited to payments
received from us on the debentures. We guarantee the payment of distributions
out of moneys held by the trust to the extent specified under "Description of
the Guarantee."
Distributions on the capital securities will be payable to holders,
including the collateral agent, as they appear on the books and records of the
trust on the relevant record dates. As long as the capital securities remain in
book-entry only form, the record dates will be one business day prior to the
relevant payment dates. Distributions will be paid through the property trustee,
who will hold amounts received in respect of the debentures in the property
account for your benefit. Subject to any applicable laws and regulations and the
provisions of the declaration, each payment will be made as described under
"--Book-Entry Only Issuance--The Depository Trust Company" below. With respect
to capital securities not in book-entry form, the administrative trustees shall
have the right to select relevant record dates, which shall be more than one
business day but less than 60 business days prior to the relevant payment dates.
If any date on which distributions on the capital securities are to be made
is not a business day, payment of the distributions payable on that date will be
made on the next succeeding day that is a business day, without any interest or
other payment in respect of any delay, but if that business day is in the next
succeeding calendar year, the payment shall be made on the immediately preceding
business day, in each case with the same force and effect as if made on that
record date.
MARKET RATE RESET
The applicable quarterly distribution rate on the capital securities and
the interest rate on the related debentures that remain outstanding on and after
August 16, 2002 will be reset on the third business day immediately preceding
August 16, 2002 to the reset rate.
The reset rate will be equal to the sum of the reset spread and the rate on
the two-year benchmark treasury in effect on the third business day immediately
preceding August 16, 2002 and will be determined by the reset agent as the rate
the capital securities should bear for a capital security to have an approximate
market value on the third business day immediately preceding August 16, 2002 of
100.5% of $50. However, we may limit the reset rate to be no higher than the
rate on the two-year benchmark treasury on August 16, 2002 plus 200 basis points
(2%). The market value of the capital securities may be less than 100.5% if the
reset spread is limited to a maximum of 2%.
The two-year benchmark treasury shall mean direct obligations of the United
States, which may be obligations traded on a when-issued basis only, having a
maturity comparable to the remaining term to
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maturity of the capital securities, as agreed upon by us and the reset agent.
The rate for the two-year benchmark treasury will be the bid side rate displayed
at 10:00 A.M., New York City time, on the third business day immediately
preceding August 16, 2002 in the Telerate system. If the Telerate system is (a)
no longer available on the third business day immediately preceding August 16,
2002 or (b) in the opinion of the reset agent, after consultation with us, no
longer an appropriate system from which to obtain that rate, another nationally
recognized quotation system as, in the opinion of the reset agent, after
consultation with the us, is appropriate. If that rate is not so displayed, the
rate for the two-year benchmark treasury shall be, as calculated by the reset
agent, the yield to maturity for the two-year benchmark treasury, expressed as a
bond equivalent on the basis of a year of 365 or 366 days, and applied on a
daily basis. It shall be computed by taking the arithmetic mean of the secondary
market bid rates, as of 10:30 A.M., New York City time, on the third business
day immediately preceding August 16, 2002, of three leading United States
government securities dealers selected by the reset agent, after consultation
with us. These dealers may include the reset agent or its affiliate.
We currently anticipate that Merrill Lynch, Pierce, Fenner & Smith
Incorporated will be the investment banking firm acting as the reset agent.
On the tenth business day immediately preceding August 16, 2002, the
two-year benchmark treasury to be used to determine the reset rate on August 16,
2002, will be selected. On that date, the reset agent will establish the reset
spread to be added to the rate on the two-year benchmark treasury in effect on
the third business day immediately preceding August 16, 2002, and we will
announce the reset spread and the two-year benchmark treasury. We will cause a
notice of the reset spread and the two-year benchmark treasury to be published
on the business day following the reset announcement date by publication in a
daily newspaper in the English language of general circulation in The City of
New York, which is expected to be The Wall Street Journal. We will request, not
later than seven nor more than 15 calendar days prior to the reset announcement
date, that the depositary notify its participants holding capital securities,
Income PRIDES or Growth PRIDES of the reset announcement date and of the
procedures that must be followed if any owner of FELINE PRIDES wants to settle
the related purchase contract with cash on the business day immediately
preceding August 16, 2002.
OPTIONAL REMARKETING
Under the remarketing agreement and subject to the terms of the remarketing
underwriting agreement, on or prior to the fifth business day immediately
preceding August 16, 2002, but no earlier than the payment date immediately
preceding August 16, 2002, holders of capital securities which are not
components of Income PRIDES may elect to have their capital securities
remarketed by delivering their capital securities along with a notice of such
election to the custodial agent. The custodial agent will hold these capital
securities in an account separate from the collateral account in which the
pledged securities will be held. Holders of capital securities electing to have
their capital securities remarketed will also have the right to withdraw that
election on or prior to the fifth business day immediately preceding August 16,
2002.
On the fourth business day immediately preceding August 16, 2002, the
custodial agent will deliver these separate capital securities to the
remarketing agent for remarketing. The remarketing agent will use its reasonable
efforts to remarket these capital securities on that date at a price of
approximately 100.5% of the aggregate stated liquidation amount of these capital
securities, plus accumulated and unpaid distributions. The portion of the
proceeds from that remarketing equal to the aggregate stated liquidation amount
of these capital securities will automatically be remitted by the remarketing
agent to the custodial agent for the benefit of the holders of these capital
securities. In addition, after deducting as the remarketing fee an amount not
exceeding 25 basis points (.25%) of the aggregate stated liquidation amount of
the remarketed securities from any amount of those proceeds in excess of the
aggregate stated liquidation amount of the remarketed capital securities plus
any accumulated and unpaid distributions, the remarketing agent will remit to
the custodial agent any remaining portion of the proceeds for the benefit of
that holder.
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If, despite using its reasonable efforts, the remarketing agent cannot
remarket the related capital securities of these holders at a price not less
than 100% of the aggregate stated liquidation amount of the capital securities
plus accumulated and unpaid distributions, or if the remarketing has not
occurred because a condition precedent to the remarketing has not been
fulfilled, and thus resulting in a failed remarketing, the remarketing agent
will promptly return these capital securities to the custodial agent to release
to these holders. We will cause a notice of the failed remarketing to be
published on the second business day immediately preceding August 16, 2002 by
publication in a daily newspaper in the English language of general circulation
in The City of New York, which is expected to be The Wall Street Journal. In
addition, we will request, not later than ten nor more than 15 calendar days
prior to the remarketing date, that the depositary notify its participants
holding capital securities, Income PRIDES and Growth PRIDES of the remarketing
and of the procedures that must be followed if a capital security holder wishes
to exercise its right to put its capital security to us. We will endeavor to
ensure that a registration statement with regard to the full amount of the
capital securities to be remarketed shall be effective in a form as will enable
the remarketing agent to rely on it in connection with the remarketing process.
We currently anticipate that Merrill Lynch, Pierce, Fenner & Smith Incorporated
will be the remarketing agent.
OPTIONAL REDEMPTION
The debentures are redeemable at our option, in whole but not in part, on
not less than 30 days nor more than 60 days prior written notice, upon the
occurrence and continuation of a tax event under the circumstances described
under "Description of the Debentures--Tax Event Redemption." If we redeem the
debentures upon the occurrence and continuation of a tax event, the proceeds
from that repayment shall simultaneously be applied on a proportionate basis to
redeem capital securities having an aggregate stated liquidation amount equal to
the aggregate principal amount of the debentures so redeemed at a redemption
price, per capital security, equal to the redemption amount plus accrued and
unpaid distributions to the date of that redemption. Those proceeds will be
payable in cash to the holders of the capital securities. If a tax event
redemption occurs prior to August 16, 2002, the redemption price payable to the
collateral agent, in liquidation of the Income PRIDES holders' interests in the
trust, will be simultaneously applied by the collateral agent to purchase the
treasury portfolio on behalf of the holders of the Income PRIDES. The treasury
portfolio will be pledged with the collateral agent to secure the obligation of
Income PRIDES holders to purchase Class A common stock under the related
purchase contracts.
If a failed remarketing has occurred, holders of trust securities and
holders of debentures following the distribution of the debentures upon a
dissolution of the trust, after August 16, 2002, will have the right,
- in the case of trust securities, to require the trust to put to us the
related debentures, or
- in the case of the debentures, to put the debentures directly to us on
September 1, 2002, upon at least three business days' prior notice, at a
price per debenture equal to $50, plus accrued and unpaid interest.
Upon our repurchase of those debentures from the trust
- the proceeds from the repurchase shall simultaneously be applied, in the
case of the trust securities, to redeem the trust securities of the
holder in an aggregate stated liquidation amount equal to the aggregate
principal amount of the debentures so repurchased and
- any accumulated and unpaid distributions with respect to those trust
securities will be paid to such holder in cash.
REDEMPTION PROCEDURES
If the trust gives a notice of redemption, which will be irrevocable, in
respect of all of the capital securities, then, by 12:00 noon, New York City
time, on the redemption date, the trust will irrevocably deposit with the
depositary, the purchase contract agent or the collateral agent, as applicable,
funds sufficient to pay the redemption price, but only if we have paid to the
property trustee a sufficient amount
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of cash in connection with the related redemption or maturity of the debentures.
The trust will give the depositary, the purchase contract agent or the
collateral agent irrevocable instructions and authority to pay the redemption
price to the holders of the capital securities called for redemption.
If notice of redemption has been given and funds deposited as required,
then, immediately prior to the close of business on the date of the deposit,
distributions will cease to accumulate and all rights of holders of those
capital securities called for redemption will cease, except for the right of the
holders of those capital securities to receive the redemption price without
interest on the redemption price.
If any date fixed for redemption of capital securities is not a business
day, then payment of the redemption price payable on that date will be made on
the next succeeding day that is a business day, without any interest or other
payment in respect of any delay, except that if the business day falls in the
next calendar year, the payment will be made on the immediately preceding
business day.
DISTRIBUTION OF THE DEBENTURES
Investment company event means that the trust has received an opinion from
independent counsel experienced in practice under the Investment Company Act of
1940, referred to as the 1940 Act, that, as a result of the occurrence of a
change in law or regulation or a written change in interpretation or application
of law or regulation by any legislative body, court, governmental agency or
regulatory authority, which change in 1940 Act law becomes effective on or after
the date of this prospectus supplement, there is more than an insubstantial risk
that the trust is or will be considered an investment company that is required
to be registered under the 1940 Act.
If, at any time, an investment company event shall occur and be continuing,
the trust shall be dissolved. As a result, debentures with an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accumulated and unpaid distributions on, the trust securities
would be distributed to the holders of the trust securities in liquidation of
the holders' interests in the trust on a proportionate basis within 90 days
following the occurrence of the investment company event. However, the
dissolution and distribution shall be conditioned on us being unable to avoid
the investment company event within a 90-day period either by taking some
ministerial action or by pursuing some other similar reasonable measure that
will have no adverse effect on the trust, us or the holders of the trust
securities and will involve no material cost. If an investment company event
occurs, debentures distributed to the collateral agent in liquidation of
holders' interests in the trust would be pledged, in place of the capital
securities, to secure Income PRIDES holders' obligations to purchase Class A
common stock under the purchase contracts.
We will have the right at any time to dissolve the trust and, after
satisfaction, or reasonable provision for satisfaction, of liabilities of
creditors of the trust as provided by applicable law, to cause the debentures to
be distributed to the holders of the trust securities. As of the date of any
distribution of debentures upon dissolution of the trust,
- the capital securities will no longer be deemed to be outstanding,
- the depositary or its nominee, as the record holder of the capital
securities, will receive a registered global certificate or certificates
representing the debentures to be delivered upon the distribution and
- any certificates representing capital securities not held by the
depositary or its nominee will be deemed to represent debentures having
an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of,
and accrued and unpaid interest equal to accumulated and unpaid
distributions on, those capital securities until the certificates are
presented to us or our agent for transfer or reissuance.
Debentures distributed to the collateral agent in liquidation of the
interest of the holders of the capital securities in the trust would be
substituted for the capital securities and pledged to secure Income PRIDES
holders' obligations to purchase our Class A common stock under the purchase
contracts.
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We cannot predict the market prices for either the capital securities or
the debentures that may be distributed in exchange for the capital securities if
a dissolution of the trust were to occur. Accordingly, the capital securities or
the debentures that an investor may receive if a dissolution of the trust were
to occur may trade at a discount to the price that the investor paid to purchase
the capital securities forming a part of the Income PRIDES offered here.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In case of a voluntary or involuntary dissolution of the trust, unless a
tax event redemption has occurred, the then holders of the capital securities
will be entitled to receive out of the assets of the trust, after satisfaction,
or reasonable provision for satisfaction, of liabilities to creditors,
debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accumulated and unpaid
distributions on, the capital securities on a proportionate basis in exchange
for those capital securities.
The holders of the common securities will be entitled to receive
distributions upon any such dissolution proportionately with the holders of the
capital securities. However, if a declaration event of default has occurred and
is continuing, the capital securities shall have a preference over the common
securities with regard to those distributions.
Under the declaration, the trust shall dissolve upon the first to occur of
(1) on August 12, 2006, the expiration of the term of the trust,
(2) upon our bankruptcy or the bankruptcy of the holder of the common
securities,
(3) upon our filing of a certificate of dissolution or its equivalent
or the revocation of our charter and the expiration of 90 days after the
date of revocation without its reinstatement,
(4) after the receipt by the property trustee of written direction
from us to dissolve the trust or the filing of a certificate of dissolution
or its equivalent with respect to the trust,
(5) upon the occurrence and continuation of an investment company
event pursuant to which the trust has been dissolved in accordance with the
terms of the trust securities and all of the debentures have been
distributed to the holders of trust securities in exchange for all of the
trust securities,
(6) with the consent of all of the administrative trustees and Cox,
(7) upon the entry of a decree of a judicial dissolution of the holder
of the common securities, us or the trust or
(8) when all trust securities have been called for redemption and the
amounts necessary for redemption have been paid to the holders in
accordance with the terms of the trust securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the indenture constitutes an event of default
under the declaration with respect to the trust securities. However, under the
declaration, the holder of the common securities will be deemed to have waived
any declaration event of default with respect to the common securities until all
declaration events of default with respect to the capital securities have been
cured, waived or otherwise eliminated. Until any declaration events of default
with respect to the capital securities have been so cured, waived or otherwise
eliminated, the property trustee will be deemed to be acting solely on behalf of
the holders of the capital securities. Only the holders of the capital
securities will have the right to direct the property trustee with respect to
particular matters under the declaration and, therefore, the indenture. If a
declaration event of default with respect to the capital securities is waived by
holders of capital securities, the waiver will also constitute the waiver of the
declaration event of default with respect to the common securities without any
further act, vote or consent of the holders of the common securities.
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If the property trustee fails to enforce its rights under the debentures in
respect of an indenture event of default after a holder of record of capital
securities has made a written request, that holder of record of capital
securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding against us to enforce the property trustee's rights under the
debentures without first proceeding against the property trustee or any other
person or entity. Notwithstanding the above, if a declaration event of default
has occurred and is continuing and that event is attributable to our failure to
pay interest or principal on the debentures on the date that interest or
principal is otherwise payable, then you, as a holder of capital securities, may
directly institute a proceeding after the respective due date specified in the
debentures for enforcement of payment (a direct action) to you directly of the
principal of or interest on the debentures having a principal amount equal to
the aggregate liquidation amount of your capital securities. In connection with
the direct action, we shall have the right under the indenture to set off any
payment made to you. The holders of capital securities will not be able to
exercise directly any other remedy available to the holders of the debentures.
Upon the occurrence of a declaration event of default, the property
trustee, as the sole holder of the debentures, will have the right under the
indenture to declare the principal of and interest on the debentures to be
immediately due and payable. We and the trust are each required to file annually
with the property trustee an officers' certificate as to our compliance with all
conditions and covenants under the declaration.
VOTING RIGHTS
Except as described here, under the Trust Act and the Trust Indenture Act
and under "Description of the Guarantee--Modification of the Guarantee;
Assignment," and as otherwise required by law and the declaration, the holders
of the capital securities will have no voting rights.
Subject to the requirement of the property trustee obtaining a tax opinion
in specific circumstances provided below, the holders of a majority in aggregate
stated liquidation amount of the capital securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the property trustee, or direct the exercise of any trust or power conferred
upon the property trustee under the declaration, including the right to direct
the property trustee, as holder of the debentures, to
(1) exercise the remedies available under the indenture with respect
to the debentures,
(2) waive any past indenture event of default that is waivable under
the indenture,
(3) exercise any right to rescind or annul a declaration that the
principal of all the debentures shall be due and payable or
(4) consent to any amendment, modification or termination of the
indenture or the debentures where that consent shall be required. However,
where a consent or action under the indenture would require the consent or
act of holders of more than a majority in principal amount of the affected
debentures (a super-majority), only the holders of at least the
super-majority in aggregate stated liquidation amount of the capital
securities may direct the property trustee to give the consent or take the
action.
The property trustee shall notify all holders of the capital securities of
any notice of default received from the debt trustee with respect to the
debentures. The notice shall state that the indenture event of default also
constitutes a declaration event of default. Except with respect to directing the
time, method and place of conducting a proceeding for a remedy, the property
trustee shall not take any of the actions described in clauses (1), (2) or (3)
above unless the property trustee has obtained an opinion of tax counsel
experienced in those matters that, as a result of the action, the trust will not
fail to be classified as a grantor trust for United States federal income tax
purposes.
If the consent of the property trustee, as the holder of the debentures, is
required under the indenture with respect to any amendment, modification or
termination of the indenture or the debentures, the property trustee shall
request the direction of the holders of the capital securities and the common
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securities with respect to that amendment, modification or termination. The
indenture trustee shall vote with respect to that amendment, modification or
termination as directed by a majority in stated liquidation amount of the
capital securities and the common securities voting together as a single class.
However, where a consent under the indenture would require the consent of a
super-majority, the property trustee may only give that consent at the direction
of the holders of at least the proportion in stated liquidation amount of the
capital securities and the common securities which the relevant super-majority
represents of the aggregate principal amount of the debentures outstanding. The
property trustee shall not take any action in accordance with the directions of
the holders of the capital securities and the common securities unless the
property trustee has obtained an opinion of tax counsel experienced in those
matters that, as a result of the action, the trust will not fail to be
classified as a grantor trust for United States federal income tax purposes.
A waiver of an indenture event of default will constitute a waiver of the
corresponding declaration event of default.
Any required approval or direction of holders of capital securities may be
given at a separate meeting of holders of capital securities convened for that
purpose, at a meeting of all of the holders of trust securities or according to
written consent. The administrative trustees will cause a notice of any meeting
at which holders of capital securities are entitled to vote, or of any matter
upon which action by written consent of those holders is to be taken, to be
mailed to each holder of record of capital securities. Each notice will include
a statement specifying the following information:
- the date of the meeting or the date by which the action is to be taken;
- a description of any resolution proposed for adoption at the meeting on
which the holders are entitled to vote or of the matter upon which
written consent is sought; and
- instructions for the delivery of proxies or consents.
No vote or consent of the holders of capital securities will be required
for the trust to repay and cancel capital securities or distribute debentures in
accordance with the declaration.
Notwithstanding that holders of capital securities are entitled to vote or
consent under any of the circumstances described above, any capital securities
that are owned at that time by us or any entity directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
us, shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if those capital securities were not outstanding.
The procedures by which holders of capital securities may exercise their
voting rights are described below.
Holders of the capital securities will have no rights to appoint or remove
the trustees, who may be appointed, removed or replaced solely by us as the
indirect or direct holder of all of the common securities.
MODIFICATION OF THE DECLARATION
The declaration may be modified and amended if approved by the
administrative trustees and, in some circumstances, the property trustee or the
Delaware trustee or us. However, if any proposed amendment provides for, or the
administrative trustees otherwise propose to effect,
(1) any action that would materially adversely affect the powers,
preferences or special rights of the trust securities, whether by way of
amendment to the declaration or otherwise or
(2) the dissolution of the trust other than according to the terms of
the declaration,
then the holders of the trust securities voting together as a single class will
be entitled to vote on that amendment or proposal, and that amendment or
proposal shall not be effective except with the approval of at least a majority
in such stated liquidation amount of the affected trust securities. If any
amendment or
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proposal referred to in clause (1) above would adversely affect only the capital
securities or the common securities, then only the affected class will be
entitled to vote on that amendment or proposal and that amendment or proposal
shall not be effective except with the approval of a majority in stated
liquidation amount of that class of securities. In addition, the declaration may
be amended without the consent of the holders of the trust securities to, among
other things, cause the trust to continue to be classified as a grantor trust
for United States federal income tax purposes.
Notwithstanding the above, no amendment or modification may be made to the
declaration if that amendment or modification would
(1) cause the trust to be classified as other than a grantor trust for
United States federal income tax purposes,
(2) reduce or otherwise adversely affect the powers of the property
trustee or
(3) cause the trust to be deemed an investment company which is
required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below or as described in "Liquidation Distribution Upon Dissolution."
The trust may, with the consent of the administrative trustees and without
the consent of the holders of the trust securities, consolidate, amalgamate,
merge with or into, or be replaced by a trust organized under the laws of any
state provided that
(1) if the trust is not the surviving entity, the successor entity
either (x) expressly assumes all of the obligations of the trust under the
trust securities or (y) substitutes for the trust securities other
securities having substantially the same terms as the trust securities (the
successor securities). The successor securities must rank the same as the
trust securities with respect to distributions and payments upon
liquidation, redemption and otherwise,
(2) we expressly acknowledge a trustee of the successor entity
possessing the same powers and duties as the property trustee as the holder
of the debentures,
(3) if the capital securities are listed, any successor securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the capital securities are
then listed or quoted,
(4) the merger, consolidation, amalgamation or replacement does not
cause the capital securities, including any successor securities, to be
downgraded by any nationally recognized statistical rating organization,
(5) the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders of
the trust securities, including any successor securities, in any material
respect other than with respect to any dilution of the holders' interest in
the new entity,
(6) the successor entity has a purpose substantially identical to that
of the trust,
(7) prior to the merger, consolidation, amalgamation or replacement,
we have received an opinion of a nationally recognized independent counsel
to the trust experienced in those matters that,
- the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the trust securities, including any successor securities, in any
material respect other than with respect to any dilution of the
holders' interest in the new entity,
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- following the merger, consolidation, amalgamation or replacement,
neither the trust nor the successor entity will be required to
register as an investment company under the 1940 Act and
- following the merger, consolidation, amalgamation or replacement, the
trust or the successor entity will continue to be classified as a
grantor trust for United States federal income tax purposes, and
(8) we guarantee the obligations of the successor entity under the
successor securities at least to the extent provided by the guarantee and
the common securities guarantee.
Notwithstanding the above, the trust shall not, except with the consent of
holders of 100% in stated liquidation amount of the trust securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it, if that consolidation, amalgamation, merger or replacement would
cause the trust or the successor entity to be classified as other than a grantor
trust for United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
If the capital securities are issued as one or more fully-registered global
capital securities certificates representing the total aggregate number of
capital securities, the depositary will act as securities depositary for any
capital securities that are held separately from the Income PRIDES. In that
case, the capital securities will initially be registered in the name of The
First National Bank of Chicago, as purchase contract agent, and then will be
issued only as fully-registered securities registered in the name of Cede & Co.,
the depositary's nominee. However, under some circumstances, the administrative
trustees with our consent may decide not to use the system of book-entry
transfers through the DTC with respect to the capital securities. In that case,
certificates of the capital securities will be printed and delivered to the
holders.
The laws of some jurisdictions require that some purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in the global capital securities as
represented by a global certificate.
Purchases of capital securities within the depositary's system must be made
by or through direct participants, which will receive a credit for the capital
securities on the depositary's records. The beneficial ownership interest of
each actual purchaser of each capital security is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from the depositary of their purchases, but beneficial
owners are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners purchased capital
securities. Transfers of ownership interests in the capital securities are to be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interests in the capital securities, except if use of the
book-entry system for the capital securities is discontinued.
To facilitate subsequent transfers, all the capital securities deposited by
participants with the depositary will be registered in the name of the
depositary's nominee, Cede & Co. The deposit of capital securities with the
depositary and their registration in the name of Cede & Co. cause no change in
beneficial ownership. The depositary has no knowledge of the actual beneficial
owners of the capital securities. The depositary's records reflect only the
identity of the direct participants to whose accounts those capital securities
are credited, which may or may not be the beneficial owners. The participants
will remain responsible for keeping account of their holdings on behalf of their
customers.
So long as the depositary or its nominee is the registered owner or holder
of a global certificate, the depositary or the nominee will be considered the
sole owner or holder of the capital securities represented for all purposes
under the declaration and the capital securities. No beneficial owner of an
interest in a global certificate will be able to transfer that interest except
in accordance with the depositary applicable procedures, in addition to those
provided for under the declaration.
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The depositary has advised us that it will take any action permitted to be
taken by a holder of capital securities, including the presentation of capital
securities for exchange, only at the direction of one or more participants to
whose account the depositary's interests in the global certificates are credited
and only in respect of the portion of the stated liquidation amount of capital
securities as to which such participant or participants has or have given such
directions. However, if there is a declaration event of default under the
capital securities, the depositary will exchange the global certificates for
certificated securities, which it will distribute to its participants.
Conveyance of notices and other communications by the depositary to direct
participants and indirect participants and by direct participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in force from
time to time.
Although voting with respect to the capital securities is limited, in those
cases where a vote is required, neither the depositary nor Cede & Co. will
itself consent or vote with respect to capital securities. Under its usual
procedures, the depositary would mail an omnibus proxy to the trust as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
capital securities are credited on the record date. The direct participants are
identified in a listing attached to the omnibus proxy. We and the trust believe
that the arrangements among the depositary, direct and indirect participants,
and beneficial owners will enable the beneficial owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a record
holder of a beneficial interest in the trust.
Distribution payments on the capital securities issued in the form of one
or more global certificates will be made to the depositary in immediately
available funds. The depositary's practice is to credit direct participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on the depositary's records unless the depositary has reason to
believe that it will not receive payments on that payment date. Payments by
participants to beneficial owners will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in street name. Those payments will be
the responsibility of the participant and not of the depositary, the trust or
us, subject to any statutory or regulatory requirements to the contrary that may
be in force from time to time. Payment of distributions to the depositary is the
responsibility of the trust, disbursement of such payments to direct
participants is the responsibility of the depositary, and disbursement of those
payments to the beneficial owners is the responsibility of direct and indirect
participants.
Except as provided here, a beneficial owner in a global capital security
certificate will not be entitled to receive physical delivery of capital
securities. Accordingly, each beneficial owner must rely on the procedures of
the depositary to exercise any rights under the capital securities.
Although the depositary has agreed to the above procedure to facilitate
transfer of interests in the global certificates among participants, the
depositary is under no obligation to perform or continue to perform these
procedures and these procedures may be discontinued at any time. Neither us, nor
the trust or any trustee will have any responsibility for the performance by the
depositary or its participants or indirect participants under the rules and
procedures governing the depositary. The depositary may discontinue providing
its services as securities depositary with respect to the capital securities at
any time by giving reasonable notice to the trust. Under these circumstances, if
a successor securities depositary is not obtained, capital securities
certificates are required to be printed and delivered to holders. Additionally,
the administrative trustees, with our consent, may decide to discontinue use of
the system of book-entry transfers through the depositary or any successor
depositary, with respect to the capital securities. In that case, certificates
for the capital securities will be printed and delivered to holders. In each of
the above circumstances, we will appoint a paying agent with respect to the
capital securities.
The information in this section concerning the depositary and the
depositary's book-entry system has been obtained from sources that we and the
trust believe to be reliable, but neither we nor the trust take responsibility
for its accuracy.
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REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the capital securities represented by the global
certificates shall be made to the depositary. The depositary shall credit the
relevant accounts at the depositary on the applicable distribution dates. In the
case of certificated securities, those payments shall be made by check mailed to
the address of the holder entitled to it as that address appears on the
register. The paying agent shall be permitted to resign as paying agent upon 30
days prior written notice to the trustees. If The Bank of New York shall no
longer be the paying agent, the administrative trustees shall appoint a
successor to act as paying agent, which shall be a bank or trust company.
The Bank of New York will act as registrar, transfer agent and paying agent
for the capital securities.
Registration of transfers of capital securities will be made without charge
by or on behalf of the trust. However, payment shall be made and any indemnity
as the trust or we may require shall be given in respect of any tax or other
government charge which may be imposed in relation to it.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee, prior to the occurrence of a default with respect to
the trust securities and after the curing or waiving of any defaults that may
have occurred, undertakes to perform only those duties that are specified in the
declaration. The property trustee, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to those provisions, the property trustee is under no
obligation to exercise any of the powers vested in it by the declaration at the
request of any holder of capital securities, unless offered reasonable indemnity
by that holder against the costs, expenses and liabilities which it might incur.
The holders of capital securities will not be required to offer an indemnity in
the case that those holders, by exercising their voting rights, direct the
property trustee to take any action it is empowered to take under the
declaration following a declaration event of default. The property trustee also
serves as trustee under the guarantee.
The property trustee maintains commercial banking relationships with us.
GOVERNING LAW
The declaration and the capital securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The administrative trustees are authorized and directed to operate the
trust in a way that the trust will not be required to register as an "investment
company" under the 1940 Act or be characterized as other than a grantor trust
for United States federal income tax purposes. We are authorized and directed to
conduct our affairs so that the debentures will be treated as our indebtedness
for United States federal income tax purposes. In this connection, we and the
administrative trustees are authorized to take any action not inconsistent with
applicable law, the declaration, the certificate of trust of the trust or our
certificate of incorporation, that we and the administrative trustees determine
in our discretion to be necessary or desirable to achieve that end, as long as
that action does not adversely affect the interests of the holders of the
capital securities or vary its terms.
Holders of the capital securities have no preemptive or similar rights.
DESCRIPTION OF THE GUARANTEE
Provided below is a summary of information concerning the guarantee which
will be executed and delivered by us for the benefit of the holders from time to
time of capital securities. The guarantee will be qualified as an indenture
under the Trust Indenture Act. The Bank of New York will act as the guarantee
trustee for the purposes of compliance with the provisions of the Trust
Indenture Act. The terms of the guarantee will be those provided in the
guarantee and those made part of the guarantee by the Trust Indenture Act. The
following summary is not necessarily complete, and reference is made to the copy
of
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the form of guarantee, including the definitions, which is filed as an exhibit
to the registration statement of which this prospectus supplement and the
accompanying prospectus form a part, and to the Trust Indenture Act. Whenever
particular defined terms of the guarantee are referred to in this prospectus
supplement, these defined terms are incorporated by reference in this prospectus
supplement. The following description of the terms of the guarantee supplements
and, to the extent inconsistent with, replaces the description of the general
terms of the capital securities guarantees contained in the accompanying
prospectus, which we request that you read. The guarantee will be held by the
guarantee trustee for the benefit of the holders of the capital securities.
OVERVIEW
Under the guarantee, we will irrevocably and unconditionally agree, to the
extent provided there, to pay in full on a senior basis, to the holders of the
capital securities issued by the trust, the guarantee payments. We shall pay the
guarantee payments as and when due, regardless of any defense, right of set-off
or counterclaim which the trust may have or assert. We shall make these payments
except
to the extent paid by the trust. The following payments or distributions with
respect to capital securities issued by the trust to the extent not paid by or
on behalf of the trust, will be subject to the guarantee, without duplication:
(a) any accumulated and unpaid distributions which are required to be
paid on the capital securities, to the extent the trust shall have funds
available;
(b) the redemption price, including all accumulated and unpaid
distributions to the date of redemption, of capital securities in respect
of which the related debentures have been redeemed by us upon the
occurrence of a tax event redemption, to the extent the trust shall have
funds available; and
(c) upon a voluntary or involuntary dissolution of the trust, other
than in connection with the distribution of debentures to the holders of
capital securities, the lesser of
- the aggregate of the stated liquidation amount and all accumulated and
unpaid distributions on the capital securities to the date of payment,
to the extent the trust has funds available, and
- the amount of assets of the trust remaining available for distribution
to holders of the capital securities in liquidation of the trust.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by us to the holders of capital securities or by
causing the trust to pay those amounts to the holders.
The guarantee will be a full and unconditional guarantee on a senior basis
with respect to the capital securities issued by the trust, but will not apply
to any payment of distributions except to the extent the trust shall have funds
available. If we do not make interest payments on the debentures purchased by
the trust, the trust will not pay distributions on the capital securities and
will not have funds available.
The guarantee, when taken together with our obligations under the
debentures, the indenture, and the declaration, will have the effect of
providing a full and unconditional guarantee on a senior unsecured basis by us
of payments due on the capital securities.
We have also agreed separately to irrevocably and unconditionally guarantee
the obligations of the trust with respect to the common securities to the same
extent as the guarantee. However, in the case of an indenture event of default,
holders of capital securities shall have priority over holders of common
securities with respect to distributions and payments on liquidation, redemption
or otherwise.
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COX'S GUARANTEE COVENANTS
In the guarantee, we will covenant that, so long as any capital securities
issued by the trust remain outstanding, if there shall have occurred any event
that would constitute an event of default under the guarantee or the
declaration, then
(a) we shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of our capital stock, other than
- purchases or acquisitions of our capital stock in connection with the
satisfaction of our obligations under any employee or agent benefit
plans or under any contract or security outstanding on the date of
that event requiring us to purchase our capital stock,
- as a result of a reclassification of our capital stock or the exchange
or conversion of one class or series of our capital stock for another
class or series of our capital stock,
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of our capital stock
or the security being converted or exchanged,
- dividends or distributions in our capital stock (or rights to acquire
capital stock) or repurchases or redemptions of capital stock solely
from the issuance or exchange of capital stock or
- redemptions or repurchases of any rights outstanding under a
shareholder rights plan;
(b) we shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by us
that rank junior to the debentures; and
(c) we shall not make any guarantee payments with respect to the above
other than according to the guarantee or the common securities guarantee.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of capital securities, in which case no consent will be required, the
guarantee may be amended only with the prior approval of the holders of not less
than a majority in stated liquidation amount of the outstanding capital
securities issued by the trust. All guarantees and agreements contained in the
guarantee shall bind the successors, assigns, receivers, trustees and our
representatives and shall inure to the benefit of the holders of the capital
securities then outstanding.
TERMINATION
The guarantee will terminate
(a) upon distribution of the debentures held by the trust to the
holders of the capital securities,
(b) upon full payment of the redemption price of all the capital
securities in the case that we repurchase all of the debentures upon the
occurrence of a tax event redemption or
(c) upon full payment of the amounts payable in accordance with the
declaration upon liquidation of the trust.
The guarantee will continue to be effective, or will be reinstated, if at
any time any holder of capital securities must return payment of any sums paid
under the capital securities or the guarantee.
EVENTS OF DEFAULT
An event of default under the guarantee will occur upon our failure to
perform any of our payment or other obligations under the guarantee.
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The holders of a majority in stated liquidation amount of the capital
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee in respect of the
guarantee or to direct the exercise of any trust or power conferred upon the
guarantee trustee under the guarantee. If the guarantee trustee fails to enforce
the guarantee, any holder of capital securities may institute a legal proceeding
directly against us to enforce the holder's rights under the guarantee, without
first instituting a legal proceeding against the trust, the guarantee trustee or
any other person or entity. We waive any right or remedy to require that any
action be brought first against the trust or any other person or entity before
proceeding directly against us.
STATUS OF THE GUARANTEE
The guarantee will constitute our senior unsecured obligation and will rank
equally with all of our other senior unsecured obligations.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, prior to the occurrence of a default with respect to
the guarantee, undertakes to perform only those duties that are specified in the
guarantee. The guarantee trustee, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. According to these provisions, the guarantee trustee is under no
obligation to exercise any of the powers vested in it by the guarantee at the
request of any holder of capital securities, unless offered reasonable indemnity
against the costs, expenses and liabilities which it might incur. However, this
shall not relieve the guarantee trustee, upon the occurrence of an event of
default under the guarantee, from exercising the rights and powers vested in it
by the guarantee.
GOVERNING LAW
The guarantee will be governed by and construed in accordance with the
internal laws of the State of New York.
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DESCRIPTION OF THE DEBENTURES
Provided below is a description of the specific terms of the debentures in
which the trust will invest the proceeds from the issuance and sale of the trust
securities. The following description is not necessarily complete, and reference
is made to the indenture, dated as of June 27, 1995, between us and The Bank of
New York, as debt trustee, which is incorporated by reference as an exhibit to
the registration statement of which this prospectus supplement and the
accompanying prospectus form a part, and to the Trust Indenture Act. Certain
capitalized terms used herein are defined in the indenture. The debentures
constitute debt securities as described in the accompanying prospectus. The
following description of the terms of the debentures supplements and, to the
extent inconsistent with, replaces the description of the general terms of the
debt securities contained in the accompanying prospectus, which we request that
you read. Reference in this prospectus supplement to the debentures refers to
the 7% senior debentures due 2004.
Under specific circumstances involving the dissolution of the trust,
debentures may be distributed to the holders of the trust securities in
liquidation of the trust.
OVERVIEW
The debentures will be senior and unsecured and will rank equally in right
of payment with all of our other senior unsecured indebtedness. The debentures
will be issued as a separate series of debt securities under the indenture,
limited to $650 million (or up to $747.5 million, if the underwriters'
over-allotment option is exercised in full) in aggregate principal amount.
The debentures will not be subject to a sinking fund provision. Unless a
tax event redemption has occurred prior to August 16, 2002 the entire principal
amount of the debentures will mature and become due and payable, together with
any accrued and unpaid interest thereon including compound interest and expenses
and taxes of the trust, if any, on August 16, 2004.
We will have the right at any time to dissolve the trust and cause the
debentures to be distributed to the holders of the trust securities. If
debentures are distributed to holders of trust securities in liquidation of the
holders' interests in the trust, those debentures will initially be issued as a
global security.
As described in this prospectus supplement, under specific limited
circumstances, debentures may be issued in certificated form in exchange for a
global security. In the case that debentures are issued in certificated form,
these debentures will be in denominations of $50 and integral multiples of $50
and may be transferred or exchanged at the offices described below. Payments on
debentures issued as a global security will be made to the depositary, a
successor depositary or, in the case that no depositary is used, to a paying
agent for the debentures. In the case that debentures are issued in certificated
form, principal and interest will be payable, the transfer of the debentures
will be registrable and debentures will be exchangeable for debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office or agency of the property trustee in New York, New York. However, at our
option, payment of interest may be made by check mailed to the address of the
entitled holder or by wire transfer to an account appropriately designated by
the entitled holder. Notwithstanding the above, so long as the holder of any
debentures is the property trustee, the payment of principal and interest on the
debentures held by the property trustee will be made at the place and to the
account as may be designated by the property trustee.
The indenture does not contain provisions that afford holders of the
debentures protection in case we are involved in a highly leveraged transaction
or other similar transaction that may adversely affect those holders.
INTEREST
Each debenture shall initially bear interest at the rate of 7% per year
from the original date of issuance, payable quarterly in arrears on February 16,
May 16, August 16 and November 16 of each year, commencing November 16, 1999.
Each debenture shall bear interest to the person in whose name that
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debenture is registered, subject to certain exceptions, at the close of business
on the business day next preceding that interest payment date.
The applicable interest rate on the debentures and the distribution rate on
the related capital securities outstanding on and after August 16, 2002 will be
reset on the third business day immediately preceding August 16, 2002 to the
reset rate. The reset rate will be equal to the sum of the reset spread and the
rate on the two-year benchmark treasury in effect on the third business day
immediately preceding August 16, 2002. The reset rate will be determined by the
reset agent as the rate the capital securities should bear in order for a
capital security to have an approximate market value on the third business day
immediately preceding August 16, 2002 of 100.5% of $50. However, we may limit
the reset rate to be no higher than the rate on the two-year benchmark treasury
on the third business day immediately preceding August 16, 2002 plus 200 basis
points (2%). The market value of the capital securities may be less than 100.5%
if the reset spread is limited to a maximum of 2%.
On the reset announcement date, the two-year benchmark treasury will be
selected and the reset agent will establish the reset spread to be added to the
rate on the two-year benchmark treasury in effect on the third business day
immediately preceding August 16, 2002. On that date, we will announce the reset
spread and the two-year benchmark treasury. We will cause a notice of the reset
spread and the two-year benchmark treasury to be published on the business day
following the reset announcement date by publication in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal. If debentures shall not remain in
book-entry only form, we shall have the right to select record dates, which
shall be more than fifteen business days but less than 60 business days prior to
the interest payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year consisting of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed will be computed on the basis of the actual number of days elapsed
in that 90-day period. In the case that any date on which interest is payable on
the debentures is not a business day, then payment of the interest payable on
that date will be made on the next succeeding day that is a business day.
However, no interest or other payment shall be paid in respect of the delay but
if that business day is in the next succeeding calendar year, then that payment
shall be made on the immediately preceding business day, in each case with the
same force and effect as if made on that date.
TAX EVENT REDEMPTION
If a tax event shall occur and be continuing, we may, at our option, redeem
debentures in whole but not in part at any time prior to August 16, 2002. The
redemption price shall equal, for each debenture, the redemption amount plus
accrued and unpaid interest, including compound interest and expenses and taxes
of the trust, if any, to the date of redemption. If, following the occurrence of
a tax event, we exercise our option to redeem the debentures, then the proceeds
of that redemption will be applied to redeem trust securities having a
liquidation amount equal to the principal amount of debentures to be paid, in
accordance with their terms, at the redemption price. The redemption price will
be payable in cash to the holders of the trust securities. If a tax event
redemption occurs prior to August 16, 2002, the redemption price payable in
liquidation of the Income PRIDES holders' interest in the trust will be
distributed to the collateral agent. The collateral agent will apply an amount
equal to the redemption amount of the redemption price to purchase the treasury
portfolio on behalf of the holders of Income PRIDES and remit any remaining
portion of the redemption price to the purchase contract agent for payment to
the holders of those Income PRIDES. The treasury portfolio will be substituted
for the capital securities and will be pledged with the collateral agent to
secure the Income PRIDES holders' obligation to purchase our Class A common
stock under the purchase contracts. However, if the tax event redemption occurs
after August 16, 2002, the treasury portfolio will not be purchased.
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Tax event means the receipt by the trust of an opinion of a nationally
recognized independent tax counsel experienced in such matters that, as a result
of
(a) any amendment to, or change, including any announced prospective
change in, the laws or any regulations of the United States or any
political subdivision or taxing authority or which affects taxation,
(b) any amendment to or change in an interpretation or application of
these laws or regulations by any legislative body, court, governmental
agency or regulatory authority or
(c) any interpretation or pronouncement that provides for a position
with respect to these laws or regulations that differs from the generally
accepted position on the date the trust securities are issued,
which amendment or change is effective or which interpretation or pronouncement
is announced on or after the date of issuance of the trust securities under the
declaration, there is more than an insubstantial risk that
(a) interest payable by us on the debentures would not be deductible,
in whole or in part, by us for United States federal income tax purposes or
(b) the income of the trust would be subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
Treasury portfolio means, with respect to the applicable principal amount
of debentures
(a) if the tax event redemption date occurs prior to August 16, 2002,
a portfolio of zero-coupon U.S. treasury securities consisting of
- interest or principal strips of U.S. treasury securities which mature
on or prior to August 15, 2002, in an aggregate amount equal to the
applicable principal amount and
- with respect to each scheduled interest payment date on the debentures
that occurs after the tax event redemption date, interest or principal
strips of U.S. treasury securities which mature on or prior to that
date in an aggregate amount equal to the aggregate interest payment
that would be due on the applicable principal amount of the debentures
on that date, and
(b) if the tax event redemption date occurs after August 16, 2002, a
portfolio of zero-coupon U.S. treasury securities consisting of
- principal or interest strips of U.S. treasury securities which mature
on or prior to August 15, 2004 in an aggregate amount equal to the
applicable principal amount and
- with respect to each scheduled interest payment date on the debentures
that occurs after the tax event redemption date, interest or principal
strips of the U.S. treasury securities which mature on or prior to
that date in an aggregate amount equal to the aggregate interest
payment that would be due on the applicable principal amount of the
debentures on that date.
Applicable principal amount means either
- if the tax event redemption date occurs prior to August 16, 2002, the
aggregate principal amount of the debentures corresponding to the
aggregate stated liquidation amount of the capital securities which are
components of Income PRIDES on that tax event redemption date or
- if the tax event redemption occurs on or after August 16, 2002, the
aggregate principal amount of the debentures corresponding to the
aggregate stated liquidation amount of the capital securities outstanding
on that tax event redemption date.
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Redemption amount means for each debenture, the product of
- the principal amount of that debenture and
- a fraction whose numerator is the treasury portfolio purchase price and
whose denominator is the applicable principal amount.
Treasury portfolio purchase price means the lowest aggregate price quoted
by a primary U.S. government securities dealer in New York City to the quotation
agent on the third business day immediately preceding the tax event redemption
date for the purchase of the treasury portfolio for settlement on the tax event
redemption date.
Quotation agent means
- Merrill Lynch Government Securities, Inc. and its respective successors;
however, if they cease to be a primary treasury dealer, we shall
substitute another primary treasury dealer, and
- any other primary treasury dealer selected by us.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each registered holder of debentures to be
redeemed at its registered address. Unless we default in payment of the
redemption price, on and after the redemption date interest shall cease to
accrue on the redeemed debentures.
PUT OPTION
If a failed remarketing has occurred, holders of debentures, including the
property trustee and following the distribution of the debentures upon a
dissolution of the trust those debenture holders, will have the right to put
their debentures to us on September 1, 2002, upon at least three business days'
prior notice at a price per debenture equal to $50, plus any accrued and unpaid
interest. Upon our repurchase of those debentures, the proceeds from the
repurchase shall simultaneously be applied to redeem, in the case of trust
securities, any outstanding capital securities of those holders having an
aggregate stated liquidation amount equal to the aggregate principal amount of
the debentures so repurchased plus accumulated and unpaid distributions.
EXPENSES AND TAXES OF THE TRUST
In the indenture, we, as borrower, have agreed to pay all debts and other
obligations, other than with respect to the trust securities, and all costs and
expenses of the trust. These include the costs and expenses relating to the
organization of the trust, the fees and expenses of the trustees and the costs
and expenses relating to the operation of the trust and any and all related
taxes costs and expenses, other than United States withholding taxes, to which
the trust might become subject. We also have agreed in the indenture to execute
those additional agreements as may be necessary or desirable to give full effect
to the above.
INDENTURE EVENTS OF DEFAULT
If any indenture event of default shall occur and be continuing, the
property trustee, as the holder of the debentures, will have the right to
declare the principal of and the interest on the debentures, including any
compound interest and expenses and taxes of the trust, if any, and any other
amounts payable under the indenture, to be due and payable and to enforce its
other rights as a creditor with respect to the debentures.
The following are events of default under the indenture with respect to the
debentures:
- failure to pay interest on the debentures when due, continued for a
period of 30 days;
- failure to pay the principal of or premium, if any, on the debentures
when due and payable on August 16, 2004, upon redemption or otherwise;
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- failure to comply with our obligations under "Description of Debt
Securities--Certain Covenants--Mergers or Sales of Assets" in the
accompanying prospectus;
- failure to comply, within 60 days after notice provided in accordance
with the terms of the indenture, with any of our other covenants or
agreements contained in the indenture with respect to the debentures,
including our obligations under the covenants described under
"Description of Debt Securities--Certain Covenants--Limitation on Liens,"
"--Limitation on Indebtedness of Restricted Subsidiaries" or
"--Designation of Subsidiaries" in the accompanying prospectus, provided
that this provision does not apply to defaults in covenants for which the
indenture specifically provides otherwise;
- Indebtedness of ours 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 ours and the restricted subsidiaries; and
- certain events of bankruptcy, insolvency or reorganization of us or a
restricted subsidiary.
Except as described in the second to last sentence of this paragraph, if an
event of default occurs and is continuing with respect to the debentures, the
debt trustee or the holders of at least 25% in principal amount of the
outstanding debentures may declare the principal of and accumulated but unpaid
interest on all the debentures 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 our bankruptcy, insolvency or
reorganization occurs and is continuing, the principal of and interest on all
the debentures will become and be immediately due and payable without any
declaration or other act on the part of the debt trustee or any holders of the
debentures. In addition, in the case of the debentures held by the trust, if an
event of default has occurred and is continuing, and that event is attributable
to our failure to pay interest or principal, then a holder of capital securities
may directly institute a proceeding against us for payment. Under some
circumstances, the holders of a majority in principal amount of the outstanding
debentures may rescind any acceleration and its consequences.
Subject to the provisions of the indenture relating to the duties of the
debt trustee, if an event of default occurs and is continuing, the debt 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 debentures,
unless those holders have offered to the debt trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right to
receive payment of principal or interest when due, no debenture holder may
pursue any remedy with respect to the indenture or the debentures unless:
- That holder has previously given the debt trustee notice that an event of
default is continuing;
- Holders of at least 25% in principal amount of the outstanding debentures
have requested the debt trustee to pursue the remedy;
- Those holders have offered the debt trustee reasonable security or
indemnity against any loss, liability or expense;
- The debt 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
debentures have not given the debt 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 debentures 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 debt trustee. The debt
trustee, however, may refuse to follow any direction that conflicts with law or
the indenture or that the debt trustee determines is unduly prejudicial to the
rights of any other debenture holder, or that would involve the debt trustee in
personal liability.
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The indenture provides that if a default occurs and is continuing with
respect to the debentures and is known to the debt trustee, the debt trustee
must mail notice of the default within 90 days after it occurs to each holder of
the debentures. Except in the case of a default in the payment of principal of
or interest on any debenture, the debt 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 debentures. In addition, we must deliver
to the debt trustee, within 120 days after the end of each fiscal year, an
officer's certificate indicating whether the signers thereof know of any default
that occurred during the previous year. We also are required to deliver to the
debt trustee, within 30 days after its occurrence, written notice of any events
which would constitute certain defaults, their status and what action we are
taking or propose to take.
Prior to the acceleration of the maturity of the debentures, the holders of
a majority in aggregate principal amount of the outstanding debentures may on
behalf of all the debentures waive any past default or event of default, except:
- A default in the payment of the principal of or interest on any of the
debentures; 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 us, the debt trustee and holders of the affected debentures to their
former positions and rights. No such waiver will extend to any subsequent or
other default.
An indenture event of default also constitutes a declaration event of
default. The holders of capital securities in some circumstances have the right
to direct the property trustee to exercise its rights as the holder of the
debentures. Notwithstanding the above, if an event of default has occurred and
is continuing and that event is attributable to our failure to pay interest or
principal on the debentures on the date that interest or principal is otherwise
payable, we acknowledge that a holder of capital securities may directly
institute a proceeding for enforcement of payment to that holder directly of the
principal of and interest on the debentures having a principal amount equal to
the aggregate stated liquidation amount of the capital securities of that holder
after the respective due date specified in the debentures. In connection with
that action, we shall have the right under the indenture to set-off any payment
made to that holder by us. The holders of capital securities will not be able to
exercise directly any other remedy available to the holders of the debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of capital securities in connection with the
involuntary or voluntary dissolution of the trust, the debentures will be issued
in the form of one or more global certificates (each, a global security)
registered in the name of the depositary or its nominee. Except under the
limited circumstances described below, debentures represented by the global
security will not be exchangeable for, and will not otherwise be issuable as,
debentures in certificated form. The global securities described above may not
be transferred except by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the depositary
or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in certificated form. These laws
may impair the ability to transfer beneficial interests in a global security.
Except as provided below, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of debentures in
certificated form and will not be considered its holders for any purpose under
the indenture. No global security representing debentures shall be exchangeable,
except for another global security of like denomination and tenor to be
registered in the name of the depositary or its nominee or to a successor
depositary or its nominee. Accordingly, each beneficial owner must rely on the
procedures of the depositary or if that person is not a participant, on the
procedures of the participant through which that person owns its interest to
exercise any rights of a holder under the indenture.
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THE DEPOSITARY
If debentures are distributed to holders of capital securities in
liquidation of those holders' interests in the trust, the depositary will act as
securities depositary for the debentures. As of the date of this prospectus, the
description of the depositary's book-entry system and the depositary's practices
as they relate to purchases, transfers, notices and payments with respect to the
capital securities apply in all material respects to any debt obligations
represented by one or more global securities held by the depositary. We may
appoint a successor to the depositary or any successor depositary if the
depositary or a successor depositary is unable or unwilling to continue as a
depositary for the global securities.
Neither us nor the trust, the property trustee, any paying agents, any of
our other agents or the debt trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a global security for the debentures or for
maintaining, supervising or reviewing any records relating to those beneficial
ownership interests.
A global security shall be exchangeable for debentures registered in the
names of persons other than the depositary or its nominee only if
(1) the depositary notifies us that it is unwilling or unable to
continue as a depositary for that global security and we do not appoint an
eligible successor depositary within 90 days,
(2) the depositary at any time ceases to be a clearing agency
registered under the Exchange Act at which time the depositary is required
to be so registered to act as a depositary and we do not appoint an
eligible successor depositary within 90 days or
(3) we, in our sole discretion, determine that the global security
shall be so exchangeable.
Any global security that is exchangeable according to the preceding
sentence shall be exchangeable for debentures registered in those names as the
depositary shall direct. It is expected that these instructions will be based
upon directions received by the depositary from its participants with respect to
ownership of beneficial interests in the global security.
GOVERNING LAW
The indenture and the debentures will be governed by, and construed in
accordance with, the internal laws of the State of New York.
MISCELLANEOUS
We will pay all fees and expenses related to
(1) the offering of the trust securities and the debentures,
(2) the organization, maintenance and dissolution of the trust,
(3) the retention of the trustees and
(4) the enforcement by the property trustee of the rights of the
holders of the capital securities.
EFFECT OF OBLIGATIONS UNDER THE
DEBENTURES AND THE GUARANTEE
As provided in the declaration, the sole purpose of the trust is to issue
the trust securities evidencing undivided beneficial interests in the assets of
the trust, and to invest the proceeds from the issuance and sale in the
debentures and only engage in other necessary or incidental activities.
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As long as payments of interest and other payments are made when due on the
debentures, those payments will be sufficient to cover distributions and
payments due on the trust securities because of the following factors:
- the aggregate principal amount of debentures will be equal to the sum of
the aggregate stated liquidation amount of the trust securities;
- the interest rate and the interest and other payment dates on the
debentures will match the distribution rate and distribution and other
payment dates for the trust securities;
- we shall pay, and the trust shall not be obligated to pay, directly or
indirectly, all costs, expenses, debts, and obligations of the trust,
other than with respect to the trust securities; and
- the declaration further provides that the trustees shall not take or
cause or permit the trust to, among other things, engage in any activity
that is not consistent with the purposes of the trust.
Payments of distributions, to the extent funds are available, and other
payments due on the capital securities, to the extent funds therefor are
available, are guaranteed by us as to the extent provided under "Description of
the Guarantee." If we do not make interest payments on the debentures purchased
by the trust, the trust will not have sufficient funds to pay distributions on
the capital securities. The guarantee does not apply to any payment of
distributions unless and until the trust has sufficient funds for the payment of
such distributions.
If we fail to make interest or other payments on the debentures when due,
taking account of any extension period, the declaration provides a mechanism
enabling the holders of the capital securities to direct the property trustee to
enforce its rights under the indenture. If the property trustee fails to enforce
its rights under the indenture in respect of an indenture event of default, a
holder of record of capital securities may, to the fullest extent permitted by
applicable law, institute a legal proceeding against us to enforce the property
trustee's rights under the indenture without first instituting any legal
proceeding against the property trustee or any other person or entity.
Notwithstanding the above, if a declaration event of default has occurred
and is continuing and that event is attributable to our failure to pay interest
or principal on the debentures on the date that interest or principal is
otherwise payable, then a holder of capital securities may directly institute a
proceeding against us for payment. We, under the guarantee, acknowledge that the
guarantee trustee shall enforce the guarantee on behalf of the holders of the
capital securities. If we fail to make payments under the guarantee, the
guarantee provides a mechanism enabling the holders of the capital securities to
direct the guarantee trustee to enforce its rights under the guarantee.
Notwithstanding the above, if we fail to make a payment under the guarantee, any
holder of capital securities may institute a legal proceeding directly against
us to enforce its rights under the guarantee without first instituting a legal
proceeding against the trust, the guarantee trustee, or any other person or
entity.
The guarantee, when taken together with our obligations under the
debentures and the indenture and its obligations under the declaration,
including its obligations to pay costs, expenses, debts and liabilities of the
trust, other than with respect to the trust securities, has the effect of
providing a full and unconditional guarantee of amounts due on the capital
securities.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In this section, we summarize certain of the material United States federal
income tax consequences of purchasing, holding and disposing of FELINE PRIDES,
capital securities and Class A common stock acquired under a purchase contract.
Except where we state otherwise, this summary deals only with FELINE PRIDES,
capital securities and Class A common stock 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 Income
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PRIDES, Growth PRIDES or capital securities 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 FELINE
PRIDES, capital securities or Class A common stock;
- the United States federal estate, gift or alternative minimum tax
consequences of the purchase, ownership or disposition of FELINE PRIDES,
capital securities or Class A common stock;
- persons who hold FELINE PRIDES, capital securities or common stock 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 FELINE PRIDES, capital securities or Class A common
stock.
Accordingly, you should consult your own tax advisor regarding the tax
consequences of purchasing, owning and disposing of FELINE PRIDES, capital
securities or Class A common stock in light of your own circumstances.
A U.S. Holder is a beneficial owner of FELINE PRIDES, capital securities or
Class A common stock 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 elect to continue
to be treated as a U.S. Holder.
A Non-U.S. Holder is a FELINE PRIDES, capital securities or Class A common
stock holder other than a U.S. Holder. Prospective investors that are not United
States persons within the meaning of Section 7701(a)(30) of the Internal Revenue
Code are urged to consult their own tax advisors regarding the United States
federal income tax consequences of an investment in FELINE PRIDES or capital
securities, 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. These income tax laws and regulations, however,
may change at any time, possibly on a retroactive basis. Any such changes may
affect this summary.
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No statutory, administrative or judicial authority directly addresses the
treatment of FELINE PRIDES or instruments similar to FELINE PRIDES 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.
The trust will be provided with an opinion of Dow, Lohnes & Albertson,
PLLC, tax counsel to Cox and the trust, referred to as Tax Counsel, regarding
certain United States federal income tax matters discussed below. An opinion of
Tax Counsel, however, is not binding on the IRS, and no assurance can be given
that the IRS will not take contrary positions.
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 THE FELINE PRIDES OR CAPITAL SECURITIES 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.
FELINE PRIDES
Allocation of Purchase Price. A U.S. Holder's acquisition of FELINE PRIDES
will be treated as an acquisition of a unit consisting of two components -- in
the case of an Income PRIDES, the capital security and the purchase contract
constituting such Income PRIDES and, in the case of a Growth PRIDES, the
treasury securities interest and the purchase contract comprising such Growth
PRIDES. The purchase price of each FELINE PRIDES will be allocated between the
two components in proportion to their respective fair market values at the time
of purchase. Such allocation will establish the U.S. Holder's initial tax basis
in the capital security or treasury securities interest and the purchase
contract. We will report the fair market value of each capital security and each
treasury security interest as $48.844 and $41.958, respectively, and the fair
market value of the purchase contract as $1.156. This position will be binding
upon each U.S. Holder (but not on the IRS) unless such U.S. Holder explicitly
discloses a contrary position on a statement attached to such U.S. Holder's
timely filed United States federal income tax return for the taxable year in
which a FELINE PRIDES is acquired. Thus, absent such disclosure, a U.S. Holder
should allocate the purchase price for a FELINE PRIDES in accordance with the
foregoing. The remainder of this discussion assumes that this allocation of
purchase price will be respected for United States federal income tax purposes.
A different allocation could affect the timing and character of income to a U.S.
Holder.
Ownership of Capital Securities or Treasury Securities. A U.S. Holder will
be treated as owning the capital securities or treasury securities constituting
a part of the Income PRIDES or Growth PRIDES, respectively. We and, by acquiring
FELINE PRIDES, each U.S. Holder agree to treat such U.S. Holder as the owner,
for United States federal, state and local income and franchise tax purposes, of
the capital securities or treasury securities constituting a part of the FELINE
PRIDES beneficially owned by such U.S. Holder. The remainder of this summary
will assume that U.S. Holders of FELINE PRIDES will be treated as the owners of
the capital securities or treasury securities constituting a part of such FELINE
PRIDES for United States federal, state and local income and franchise tax
purposes. The United States federal income tax consequences of owning the
capital securities or treasury securities are discussed below (see "--Capital
Securities," "--Treasury Securities" and "--Tax Event Redemption of Capital
Securities.").
CAPITAL SECURITIES
Classification of the Trust. In connection with the issuance of the FELINE
PRIDES, Tax Counsel will render a legal opinion generally to the effect that,
under the current law and assuming full compliance with the terms of the
declaration, the indenture and certain other documents, and based on certain
facts
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and assumptions described in the opinion, the trust will be classified for
United States federal income tax purposes as a grantor trust and will not be
subject to tax as an association (or publicly traded partnership) taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
U.S. Holder of capital securities will be treated as owning an undivided
beneficial ownership interest in the debentures. Accordingly, each such U.S.
Holder will be required to include in gross income, as ordinary income, for
United States federal income tax purposes, its pro rata share of the interest
income or OID, if any, paid or accrued on the debentures. See "--Interest Income
and Original Issue Discount."
Classification of the Debentures. We, the trust and, by acquiring Income
PRIDES or capital securities, each U.S. Holder, agree to treat the debentures as
indebtedness for all United States tax purposes. In connection with the issuance
of the debentures, Tax Counsel will render a legal opinion generally to the
effect that under the current law and assuming full compliance with the terms of
the indenture and certain other documents, and based on certain facts and
assumptions described in the opinion, the debentures will be classified as
indebtedness for United States federal income tax purpose.
Interest Income and Original Issue Discount. The debentures should be
treated as "reset bonds" under applicable Treasury regulations, and interest on
the debentures should not constitute contingent interest for purposes of the OID
rules. Under the Treasury regulations applicable to reset bonds, the debentures
should be treated, solely for purposes of calculating the accrual of OID, as
maturing on the day immediately preceding the purchase contract settlement date
for an amount equal to 100.5% of the Stated Amount, referred to as the Reset
Amount, and as having been reissued on the purchase contract settlement date for
the Reset Amount. If the amount of the initial purchase price for the FELINE
PRIDES allocated to the capital securities is less than the Reset Amount, as is
anticipated, the Debentures should be treated as having been issued with OID
equal to the difference between the reset amount and the amount so allocated to
the capital securities, unless such difference is less than three-fourths of
one-percent of the Reset Amount, in which case the debentures would not be
treated as having been issued with OID.
If the debentures were treated as issued with OID, a U.S. Holder would be
required to include such OID in income on an economic accrual basis over the
period between the issue date and the day immediately preceding the purchase
contract settlement date regardless of such U.S. Holder's method of tax
accounting. Consequently, each U.S. Holder (including those using the cash basis
of accounting) would be required to include OID in its gross income even though
we would not actually make current cash payments with respect to such OID. Any
amount of OID included in a U.S. Holder's gross income would increase such U.S.
Holder's tax basis in its capital securities. In addition, a U.S. Holder will
include stated interest on the debentures in income as ordinary income when paid
to the trust or accrued, in accordance with such U.S. Holder's regular method of
accounting, whether or not such U.S. Holder is required to accrue OID.
U.S. Holders that are corporations will not be entitled to a dividends
received deduction with respect to any income recognized with respect to the
capital securities.
Distribution of Debentures to U.S. Holders of Capital Securities. A
distribution by the trust of the debentures as described under the caption
"Description of the Capital Securities--Liquidation Distribution Upon
Dissolution" would be non-taxable to U.S. Holders. In such event, a U.S. Holder
would have an aggregate tax basis in the debentures received in the liquidation
equal to the aggregate tax basis such U.S. Holder had in its capital securities
surrendered therefor, and the holding period of such debentures would include
the period during which such U.S. Holder had held the capital securities. Also,
a U.S. Holder would continue to include interest or OID, if any, in respect of
debentures received from the trust in the manner described under "--Interest
Income and Original Issue Discount."
Sales, Exchanges or Other Dispositions of Capital Securities. In general,
gain or loss will be recognized by a U.S. Holder on a sale, exchange, redemption
or other taxable disposition (collectively, a disposition) of a capital security
(including a redemption for cash or the remarketing thereof) in an amount equal
to the difference between the amount realized by the U.S. Holder on the
disposition of the capital security and the U.S. Holder's adjusted tax basis in
the capital security. Selling expenses incurred
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by a U.S. Holder, including the remarketing fee, will reduce the amount of gain
or increase the amount of loss recognized by such U.S. Holder upon the sale,
exchange or other disposition of the capital securities. Gain or loss realized
by a U.S. Holder on a disposition of a capital security may be long-term capital
gain or loss depending on the holding period of the capital securities. Such
amount realized, however, will be taxable as ordinary interest income to the
extent that it is characterized as a payment in respect of accrued but unpaid
interest on such U.S. Holder's allocable share of the debentures that such U.S.
Holder has not previously included in gross income. Capital gains of individuals
are eligible for reduced rates of taxation depending upon the holding period of
such capital assets. The deductibility of capital losses is subject to
limitations.
TREASURY SECURITIES
Original Issue Discount. A U.S. Holder of Growth PRIDES will be required
to treat the treasury securities interest comprising the Growth PRIDES as an
interest in a bond originally issued on the date such Growth PRIDES is purchased
and having OID equal to the excess of the stated amount of the Growth PRIDES
over the amount of the purchase price of the Growth PRIDES allocated to the
treasury securities interest. A U.S. Holder will be required to include such OID
in income on an economic accrual basis over the period between the issue date of
the Growth PRIDES and the day immediately preceding the purchase contract
settlement date, regardless of such U.S. Holder's method of tax accounting.
Amounts of OID included in a U.S. Holder's gross income will increase such U.S.
Holder's tax basis in its treasury securities interest.
Sales, Exchanges or Other Dispositions of Treasury Securities. In the
event that a U.S. Holder obtains the release of treasury securities by
delivering capital securities to the collateral agent, gain or loss will be
recognized by the U.S. Holder on a subsequent sale, exchange or other taxable
disposition of the treasury securities in an amount equal to the difference
between the amount realized by the U.S. Holder on such disposition and the U.S.
Holder's adjusted tax basis in the treasury securities. Such gain or loss may be
long-term capital gain or loss depending on the holding period of the treasury
securities. Capital gains of individuals are eligible for reduced rates of
taxation depending upon the holding period of such capital assets. The
deductibility of capital losses is subject to limitations.
PURCHASE CONTRACTS
Income From Contract Adjustment Payments; Delivery of Cash. There is no
direct authority addressing the treatment, under current law, of the contract
adjustment payments, or the delivery of cash in respect of accrued contract
adjustment payments (if any) by a U.S. Holder of Income PRIDES upon the creation
of Growth PRIDES, and such treatment is, therefore, unclear. Contract adjustment
payments may constitute taxable income to a U.S. Holder of Growth PRIDES when
received or accrued, in accordance with the U.S. Holder's method of tax
accounting. To the extent Cox is required to file information returns with
respect to contract adjustment payments, it intends to report such payments as
taxable income to each U.S. Holder.
Holders should consult their own tax advisors concerning the treatment of
contract adjustment payments and the delivery of cash upon creation of Growth
PRIDES, including the possibility that any contract adjustment payment may be
treated as a loan, purchase price adjustment, rebate or payment analogous to an
option premium, rather than being includible in income on a current basis, and
that the delivery of cash upon creation of Growth PRIDES may be treated as an
offset to contract adjustment payments or as a purchase price adjustment. The
treatment of contract adjustment payments and the delivery of cash upon creation
of Growth PRIDES could affect a U.S. Holder's tax basis in a purchase contract
or Class A common stock received under a purchase contract or the amount
realized by a U.S. Holder upon the sale or disposition of a FELINE PRIDES or the
termination of a purchase contract. See "--Acquisition of Class A Common Stock
under a Purchase Contract," "--Sale or Disposition of FELINE PRIDES" and
"--Termination of Purchase Contract."
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Acquisition of Class A Common Stock Under a Purchase Contract. A U.S.
Holder of FELINE PRIDES generally will not recognize gain or loss on the
purchase of Class A common stock under a purchase contract, except with respect
to any cash paid in lieu of a fractional share of Class A common stock. Subject
to the following discussion, a U.S. Holder's aggregate initial tax basis in the
Class A common stock received under a purchase contract generally should equal
the purchase price paid for such Class A common stock plus such U.S. Holder's
tax basis in the purchase contract, if any, less the portion of such purchase
price and tax basis allocable to the fractional share. Payments of contract
adjustment payments that have been received in cash by a U.S. Holder but not
included in income by such U.S. Holder should reduce such U.S. Holder's tax
basis in the purchase contract or the Class A common stock to be received
thereunder. Payments in cash that have been made by a U.S. Holder to create
Growth PRIDES but not offset against payments of contract adjustment payments
may increase such U.S. Holder's tax basis in the purchase contract or the Class
A common stock to be received thereunder (see "--Income from Contract Adjustment
Payments; Delivery of Cash" above). The holding period for Class A common stock
received under a purchase contract will commence on the day after the
acquisition of such Class A common stock.
Ownership of Class A Common Stock Acquired Under the Purchase
Contract. Any dividend on Class A common stock paid by us out of our current or
accumulated earnings and profits (as determined for United States federal income
tax purposes) will be includible in income by a U.S. Holder when received. Any
such dividend will be eligible for the dividends received deduction if received
by an otherwise qualifying corporate U.S. Holder that meets the holding period
and other requirements for the dividends received deduction.
Upon a disposition of common stock, a U.S. Holder generally will recognize
capital gain or loss equal to the difference between the amount realized and
such U.S. Holder's adjusted tax basis in the common stock. Such gain or loss may
be long-term capital gain or loss depending on the holding period of the common
stock. Capital gains of individuals are eligible for reduced rates of taxation
depending upon the holding period of such capital assets. The deductibility of
capital losses is subject to limitations.
Early Settlement of Purchase Contract. A U.S. Holder of FELINE PRIDES will
not recognize gain or loss on the receipt of such U.S. Holder's proportionate
share of capital securities or treasury securities upon early settlement of a
purchase contract and will have the same tax basis in such capital securities or
treasury securities as before such early settlement.
Termination of Purchase Contract. If a purchase contract terminates, a
U.S. Holder of FELINE PRIDES will recognize gain or loss equal to the difference
between the amount realized, if any, upon such termination and such U.S.
Holder's adjusted tax basis, if any, in the purchase contract at the time of
such termination. Payments of contract adjustment payments received by a U.S.
Holder but not included in income by such U.S. Holder should either reduce such
U.S. Holder's tax basis in the purchase contract or result in an amount realized
on the termination of the purchase contract. Any contract adjustment payments
included in a U.S. Holder's income but not paid should increase such U.S.
Holder's tax basis in the purchase contract. Payments in cash that have been
made by a U.S. Holder to create Growth PRIDES but not offset against payments of
contract adjustment payments may increase such U.S. Holder's tax basis in the
purchase contract or result in a deduction on the termination of the purchase
contract (see "--Income from Contract Adjustment Payments; Delivery of Cash"
above).
Any such gain or loss may be long-term capital gain or loss depending upon
the holding period of the purchase contract. Capital gains of individuals are
eligible for reduced rates of taxation depending upon the holding period of such
capital assets. The deductibility of capital losses is subject to limitations. A
U.S. Holder will not recognize gain or loss on the receipt of such U.S. Holder's
proportionate share of the capital securities, treasury securities or treasury
portfolio upon termination of the purchase contract and will have the same tax
basis in such capital securities, treasury securities or treasury portfolio as
before such distribution.
Adjustment to Settlement Rate. U.S. Holders of FELINE PRIDES might be
treated as receiving a constructive distribution from us if (i) the settlement
rate is adjusted and as a result of such adjustment
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the proportionate interest of U.S. Holders of FELINE PRIDES in our assets or
earnings and profits is increased and (ii) the adjustment is not made pursuant
to a bona fide, reasonable anti-dilution formula. An adjustment in the
settlement rate would not be considered made pursuant to such a formula if the
adjustment were made to compensate a U.S. Holder for certain taxable
distributions with respect to the common stock. Thus, under certain
circumstances, an increase in the settlement rate might give rise to a taxable
dividend to U.S. Holders of FELINE PRIDES even though such U.S. Holders would
not receive any cash related thereto.
SUBSTITUTION OF TREASURY SECURITIES TO CREATE OR RECREATE GROWTH PRIDES
A U.S. Holder of an Income PRIDES that delivers treasury securities to the
collateral agent in substitution for capital securities generally will not
recognize gain or loss upon the delivery of such treasury securities or the
release of the capital securities to such U.S. Holder. Such U.S. Holder will
continue to take into account items of income or deduction otherwise includible
or deductible, respectively, by such U.S. Holder with respect to such treasury
securities and capital securities. Such U.S. Holder's tax basis in the treasury
securities, the capital securities and the purchase contract will not be
affected by such delivery and release.
SUBSTITUTION OF CAPITAL SECURITIES TO CREATE OR RECREATE INCOME PRIDES
A U.S. Holder of a Growth PRIDES that delivers capital securities to the
collateral agent in substitution for treasury securities generally will not
recognize gain or loss upon the delivery of such capital securities or the
release of the treasury securities to the U.S. Holder. Such U.S. Holder will
continue to take into account items of income or deduction otherwise includible
or deductible, respectively, by such U.S. Holder with respect to such treasury
securities and capital securities. Such U.S. Holder's tax basis in the treasury
securities, the capital securities and the purchase contract will not be
affected by such delivery and release.
TAX EVENT REDEMPTION OF CAPITAL SECURITIES
A tax event redemption will be a taxable event for U.S. Holders of capital
securities. In general, gain or loss will be recognized by a U.S. Holder in an
amount equal to the difference between the redemption price (whether paid
directly to such U.S. Holder or applied by the collateral agent to the purchase
of the treasury portfolio on behalf of holders of Income PRIDES) and the U.S.
Holder's adjusted tax basis in the capital securities. Gain or loss realized by
a U.S. Holder upon a tax event redemption will be capital gain or loss and may
be long-term capital gain or loss depending upon the holding period of the
capital securities. Such amount realized, however, will be taxable as ordinary
interest income to the extent that it is characterized as a payment in respect
of accrued but unpaid interest not previously included in gross income. Capital
gains of individuals are eligible for reduced rates of taxation depending upon
the holding period of such capital assets. The deductibility of capital losses
is subject to limitations.
Ownership of Treasury Portfolio. Cox, the trust and, by acquiring Income
PRIDES, each U.S. Holder agree to treat such U.S. Holder as the owner, for
United States federal, state and local income and franchise tax purposes, of the
applicable ownership interest of the treasury portfolio constituting a part of
the Income PRIDES beneficially owned by such U.S. Holder in the event of a tax
redemption prior to the purchase contract settlement date. Each U.S. Holder will
include in income any amount earned on its pro rata portion of the treasury
portfolio for all United States federal, state and local income and franchise
tax purposes. Based on such agreement, the remainder of this summary assumes
that U.S. Holders of Income PRIDES will be treated as the owners of the
applicable ownership interest of the treasury portfolio constituting a part of
such Income PRIDES for United States federal, state and local income and
franchise tax purposes.
Interest Income and Original Issue Discount. The treasury portfolio will
consist of stripped U.S. treasury securities. Following a tax redemption prior
to the purchase contract settlement date, a U.S. Holder of Income PRIDES will be
required to treat its pro rata portion of each treasury security in
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the treasury portfolio as a bond that was originally issued on the date the
collateral agent acquired the relevant treasury securities and will include OID
in income over the life of the treasury securities in an amount equal to the
U.S. Holder's pro rata portion of the excess of the amounts payable on such
treasury securities over the value of the treasury securities at the time the
collateral agent acquires them on behalf of holders of Income PRIDES. The amount
of such excess will constitute only a portion of the total amounts payable in
respect of the treasury portfolio. Consequently, a substantial portion of each
scheduled interest payment to U.S. Holders will be treated as a tax-free return
of the U.S. Holder's investment in the treasury portfolio and will not be
considered current income for federal income tax purposes.
A U.S. Holder, whether on the cash or accrual method of tax accounting,
will be required to include OID (other than OID on short-term treasury
securities as defined below) in income for federal income tax purposes as it
accrues on a constant yield to maturity basis. See "--Interest Income and
Original Issue Discount" above. In the case of any treasury security with a
maturity of one year or less from the date it is purchased (a short-term
treasury security), in general only accrual basis taxpayers will be required to
include OID in income as it is accrued. Unless such an accrual basis U.S. Holder
elects to accrue the OID on a short-term treasury security according to the
constant-yield-to-maturity method, such OID will be accrued on a straight-line
basis.
Tax Basis of the Treasury Portfolio. A U.S. Holder's initial tax basis in
such U.S. Holder's applicable ownership interest of the treasury portfolio will
equal such U.S. Holder's pro rata portion of the amount paid by the collateral
agent for the treasury portfolio. A U.S. Holder's tax basis in the treasury
portfolio will be increased by the amount of OID included in income with respect
thereto and decreased by the amount of cash received in respect of the treasury
portfolio.
SALE OR DISPOSITION OF FELINE PRIDES
Upon a sale or other disposition of FELINE PRIDES, a U.S. Holder will be
treated as having sold, exchanged or disposed of the purchase contract and the
capital securities, treasury portfolio or, in the case of Growth PRIDES, the
treasury securities, that constitute such FELINE PRIDES and generally will have
gain or loss equal to the difference between the portion of the proceeds to such
U.S. Holder allocable to the purchase contract and the capital securities,
treasury portfolio or treasury securities, as the case may be, and such U.S.
Holder's respective adjusted tax bases in the purchase contract and the capital
securities, treasury portfolio or treasury securities. Such gain or loss
generally will be capital gain or loss. Capital gain or loss may be long-term
capital gain or loss depending on the holding period of the FELINE PRIDES.
Notwithstanding the above, to the extent that such U.S. Holder is treated as
having received an amount with respect to accrued interest on the capital
securities, such amount will be treated as ordinary interest income to the
extent not previously included in income. Similarly, to the extent that such
U.S. Holder is treated as having received an amount with respect to accrued
contract adjustment payments, such amount may be treated as ordinary income to
the extent not previously included in income. Capital gains of individuals are
eligible for reduced rates of taxation depending upon the holding period of such
capital assets. The deductibility of capital losses is subject to limitations.
If the disposition of FELINE PRIDES occurs when the purchase contract has
negative value, the U.S. Holder should be considered to have received additional
consideration for the capital securities, treasury portfolio or treasury
securities in an amount equal to such negative value and to have paid such
amount to be released from the U.S. Holder's obligation under the purchase
contract. U.S. Holders should consult their tax advisors regarding a disposition
of the FELINE PRIDES at a time when the purchase contract has negative value.
Payments to a U.S. Holder of contract adjustment payments that have not
previously been included in the income of such U.S. Holder should either reduce
such U.S. Holder's tax basis in the purchase contract or result in an increase
in the amount realized on the disposition of the purchase contract. Any contract
adjustment payments included in a U.S. Holder's income but not paid should
increase such U.S. Holder's tax basis in the purchase contract. Payments in cash
that have been made by a U.S. Holder to create Growth PRIDES but not offset
against payments of contract adjustment payments may increase such
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U.S. Holder's tax basis in the purchase contract or result in a decrease in the
amount realized on the disposition of the purchase contract (see "--Income from
Contract Adjustment Payments; Delivery of Cash" above).
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Payments under the FELINE PRIDES, capital securities or Class A common
stock acquired under a purchase contract, the proceeds received with respect to
a fractional share of Class A common stock upon the settlement of a purchase
contract, and the sale of FELINE PRIDES, capital securities or Class A common
stock acquired under a purchase contract, 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.
UNDERWRITING
Subject to the terms and conditions contained in the underwriting agreement
among Cox and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley
& Co. Incorporated, Banc of America Securities LLC and J.P. Morgan Securities
Inc. (together, the underwriters), we have agreed to sell to each of the
underwriters, and each of the underwriters has severally agreed to purchase from
us, the number of Income PRIDES, Growth PRIDES and capital securities set forth
opposite its name below. In the underwriting agreement, the underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the Income PRIDES, Growth PRIDES and capital securities offered hereby if any
of those Income PRIDES, Growth PRIDES or capital securities are purchased.
<TABLE>
<CAPTION>
NUMBER NUMBER OF NUMBER OF
OF INCOME GROWTH CAPITAL
UNDERWRITER PRIDES PRIDES SECURITIES
- ----------- --------- --------- ----------
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith................ 6,435,000 715,000 715,000
Incorporated
Morgan Stanley & Co. Incorporated.................... 4,095,000 455,000 455,000
Banc of America Securities LLC....................... 585,000 65,000 65,000
J.P. Morgan Securities Inc........................... 585,000 65,000 65,000
---------- --------- ---------
Total................................... 11,700,000 1,300,000 1,300,000
========== ========= =========
</TABLE>
The underwriters have advised us that they propose initially to offer the
Income PRIDES, Growth PRIDES and capital securities to the public at the
respective public offering prices set forth on the cover page of this prospectus
supplement, and to certain dealers at such prices less a concession not in
excess of $.90 per Income PRIDES, $.75 per Growth PRIDES and $.175 per capital
security. The underwriters may allow, and such dealers may reallow, a discount
not in excess of $.10 per Income PRIDES, $.10 per Growth PRIDES and $.10 per
capital security to certain other dealers. After the initial public offering,
the public offering prices, concessions and discounts may be changed.
The underwriters have options to purchase up to an additional 1,950,000
FELINE PRIDES, in any combination of Income PRIDES and Growth PRIDES, at the
respective public offering prices set forth on the cover page of this prospectus
supplement less underwriting commissions; provided, however, that the
underwriters must purchase at least as many capital securities as Growth PRIDES.
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 Income PRIDES, Growth PRIDES
and capital securities as the percentage of the Income PRIDES, Growth PRIDES and
capital securities initially offered that such underwriter has agreed to
purchase. The underwriters may exercise this option only to cover over-
allotments, if any, made on the sale of Income PRIDES, Growth PRIDES and capital
securities offered hereby.
S-72
<PAGE> 74
Each of the Income PRIDES, Growth PRIDES and capital securities are a new
issue of securities with no established trading market. The Income PRIDES and
the Growth PRIDES have been approved for listing on the NYSE, subject to
official notice of issuance. However, we do not intend to apply for listing of
the capital securities on a national securities exchange. We have been advised
by the underwriters that they intend to make a market in the securities, but
they are not obligated to do so and may discontinue market-making at any time
without notice. We can provide no assurance as to the liquidity of, or any
trading market for, the securities.
Until the distribution of the securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
any selling group members to bid for and purchase the securities or shares of
our Class A common stock. As an exception to these rules, the underwriters are
permitted to engage in certain transactions that stabilize the price of the
securities or our Class A common stock. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
securities or our Class A common stock.
If the underwriters create a short position in the securities in connection
with the offering, i.e., if they sell more securities than are set forth on the
cover page of this prospectus supplement, the underwriters may reduce that short
position by purchasing securities in the open market. The underwriters may also
elect to reduce any short position by exercising all or part of the
over-allotment options described above.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security and our Class A
common stock to be higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the securities or our Class A common
stock. In addition, neither we nor any of the underwriters make any
representation that the underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or if
indemnification is not allowed, to contribute to payments the underwriters may
be required to make because of those liabilities.
This prospectus supplement, as amended or supplemented, may be used by the
remarketing agent for remarketing or upon early settlement or cash settlement of
the purchase contracts.
In the ordinary course of business, certain of the underwriters and their
affiliates have from time to time provided investment banking and financial
advisory services to us and have also acted as representatives of various other
underwriters in connection with public offerings of our Class A common stock and
debt securities.
We estimate that we will spend $0.8 million for fees and expenses
associated with the offering of the securities.
LEGAL OPINIONS
The validity of the purchase contracts, the Class A common stock issuable
upon their settlement and the debentures will be passed upon for us by Dow,
Lohnes & Albertson, PLLC, Washington, D.C. Several matters of Delaware law with
respect to the validity of the capital securities offered here will be passed
upon for us and for the trust by Richards, Layton & Finger, P.A., Wilmington,
Delaware. Certain matters will be passed upon for the underwriters by Brown &
Wood LLP.
S-73
<PAGE> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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.
5
<PAGE> 81
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
6
<PAGE> 82
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.
7
<PAGE> 83
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.
8
<PAGE> 84
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
9
<PAGE> 85
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
13,000,000 FELINE PRIDES(SM)
COX COMMUNICATIONS, INC.
7% CAPITAL SECURITIES
COX TRUST II
-----------------------------------------
PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN & CO.
August 9, 1999
(SM) Service Mark of Merrill Lynch & Co., Inc.
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