<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 333-82575
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 9, 1999)
(COX LOGO)
$1,000,000,000
COX COMMUNICATIONS, INC.
$800,000,000 7 3/4% NOTES DUE 2010
$200,000,000 FLOATING RATE MOPPRS(SM)/CHEERS(SM)
----------------------
We are offering two series of debt securities by this prospectus supplement.
We are offering $800,000,000 aggregate principal amount of 7 3/4% Notes due
2010, which we refer to as the notes, and $200,000,000 aggregate principal
amount of Floating Rate MOPPRS(SM)/CHEERS(SM), which we refer to as the
MOPPRS/CHEERS. We collectively refer to the notes and the MOPPRS/CHEERS as the
securities.
The notes will mature on November 1, 2010 and will bear interest at the rate
of 7 3/4% per year. Interest on the notes will be payable on May 1 and November
1 of each year, beginning May 1, 2001. We may redeem all or a portion of the
notes at any time prior to maturity at 100% of the principal amount plus a
make-whole premium, if any.
We will pay interest on the MOPPRS/CHEERS to, but excluding, November 7,
2002, at the annual interest rate of three-month LIBOR, reset quarterly, plus 70
basis points, payable on February 7, May 7, August 7 and November 7 of each
year, beginning February 7, 2001. We may not redeem the MOPPRS/CHEERS before
November 7, 2002. On and after November 7, 2002, we may redeem, or be required
to redeem, the MOPPRS/CHEERS in the circumstances and at the redemption prices
described in this prospectus supplement. The stated maturity date of the
MOPPRS/CHEERS is November 7, 2012, subject to extension in the circumstances
described in this prospectus supplement.
THE MOPPRS/CHEERS ARE SUBJECT TO MANDATORY TENDER ON NOVEMBER 7, 2002. Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are
acting as remarketing dealers for the MOPPRS/CHEERS. If the remarketing dealers
have elected to remarket the MOPPRS/CHEERS as described in this prospectus
supplement, the MOPPRS/CHEERS will be subject to mandatory tender to the
remarketing dealers on November 7, 2002, by the beneficial owners of the
MOPPRS/CHEERS on that date, at a price equal to 100% of the principal amount of
the MOPPRS/CHEERS. If a remarketing dealer for any reason does not purchase all
of its portion of tendered MOPPRS/CHEERS on November 7, 2002, or elects not to
remarket the MOPPRS/CHEERS, or in the other limited circumstances described in
this prospectus supplement, we will be required to repurchase such MOPPRS/CHEERS
from the beneficial owners of the MOPPRS/CHEERS at a price equal to 100% of the
principal amount of the MOPPRS/CHEERS plus accrued interest, if any.
The securities will be unsecured and will rank equally with all of our other
unsecured senior indebtedness. The securities will not be convertible into or
exchangeable for our common or preferred stock, will not be entitled to the
benefit of any sinking fund and will not be listed on any securities exchange.
The securities will be issued in registered form only in denominations of $1,000
and integral multiples of $1,000.
----------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public offering price(1)................................ 99.715% $797,720,000
Underwriting discount................................... .65% $5,200,000
Proceeds, before expenses, to Cox(1).................... 99.065% $792,520,000
</TABLE>
(1) Plus accrued interest from November 7, 2000, if settlement occurs after
that date
The underwriters will sell the MOPPRS/CHEERS to the public at varying prices
relating to prevailing market prices at the time of resale to be determined by
the underwriters at the time of each sale. The net proceeds to Cox will be
103.15% of the principal amount of the MOPPRS/CHEERS sold, and the aggregate net
proceeds will be $206,300,000, plus accrued interest, if any, from November 7,
2000, if settlement occurs after that date. The aggregate net proceeds to Cox
will include the total consideration paid by the remarketing dealers for the
right to remarket the MOPPRS/CHEERS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved 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 book-entry form only through
The Depository Trust Company on or about November 7, 2000.
----------------------
Joint Book-Running Managers
CHASE SECURITIES INC. MERRILL LYNCH & CO.
----------------------
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY
ABN AMRO INCORPORATED
BNY CAPITAL MARKETS, INC.
SUNTRUST EQUITABLE SECURITIES
WACHOVIA SECURITIES, INC.
THE WILLIAMS CAPITAL GROUP, L.P.
----------------------
The date of this prospectus supplement is November 2, 2000.
"MandatOry Par Put Remarketed Securities(SM)" and "MOPPRS(SM)" are service marks
owned by Merrill Lynch & Co., Inc.
"CHase ExtendiblE Remarketable Securities(SM)" and "CHEERS(SM)" are service
marks of The Chase Manhattan Corporation.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUPPLEMENT
PAGE
----
Cox Communications, Inc..................................... S-2
Recent Developments......................................... S-3
Use of Proceeds............................................. S-4
Ratio of Earnings to Fixed Charges.......................... S-4
Capitalization.............................................. S-5
Selected Consolidated Financial Information and Other
Data...................................................... S-6
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. S-8
Description of the Notes.................................... S-11
Description of the MOPPRS/CHEERS............................ S-13
Book-Entry System, Form and Delivery; Same-Day Settlement
and Payment............................................... S-39
Certain United States Federal Income Tax Considerations..... S-41
Underwriting................................................ S-44
Legal Matters............................................... S-45
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 27A of the Securities Act of 1933, as amended, and 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. These risks and
uncertainties are described in our filings with the SEC, including our Annual
Report on Form 10-K for the year ended December 31, 1999, all of which are
incorporated herein by reference. 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 SEC and incorporated by reference in
this prospectus supplement and the accompanying prospectus, is accurate as of
the date on the front cover of this prospectus supplement only. Our business,
financial condition, results of operations and prospects may have changed since
that date.
S-1
<PAGE> 3
COX COMMUNICATIONS, INC.
Cox Communications, Inc. is one of the nation's largest broadband
communications companies with U.S. broadband network operations and investments
in cable television programming networks, telecommunications and technology, and
broadband networks. Cox serves approximately 6.2 million customers, making it
the nation's fifth largest cable company.
Cox's business strategy is to utilize the technological capabilities of its
advanced broadband network, its strong locally and regionally clustered cable
television systems and its longstanding commitment to superior customer service
to provide an array of entertainment and communications services to both
residential and commercial customers in its markets. Today, these services
primarily include analog and digital video, high-speed Internet access and local
and long-distance telephone. Additional services could include video-on-demand,
Internet to the television, targeted advertising and other types of interactive
and e-commerce applications.
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 and
telecommunications and technology companies which are complementary to Cox's
business strategy. Cox believes that these investments have contributed to the
growth of its broadband communications business and that its leadership position
in broadband communications has facilitated the growth of these investments. Cox
seeks to utilize insights gained from the integrated operations of its cable
television systems and related programming and telecommunications and technology
investments to continue its leadership in the broadband communications industry
by anticipating and capitalizing upon long-term industry trends.
Cox is an indirect 67.8% owned subsidiary of Cox Enterprises, Inc. Cox
Enterprises, a privately-held corporation headquartered in Atlanta, Georgia, is
one of the largest diversified media companies in the United States with
consolidated revenues in 1999 of approximately $6.1 billion. Cox Enterprises,
which has a 102-year history in the media and communications industry, publishes
18 daily newspapers and owns or operates 13 television stations in addition to
its interest in Cox. Through its indirect majority-owned subsidiary, Cox Radio,
Inc., Cox Enterprises owns or operates or provides sales and marketing services
for 81 radio broadcast stations. Through Manheim Auctions, Cox Enterprises is
also the nation's largest operator of wholesale auto auctions.
Cox's principal executive offices are located at 1400 Lake Hearn Drive, NE,
Atlanta, Georgia 30319. Cox's telephone number is (404) 843-5000.
S-2
<PAGE> 4
RECENT DEVELOPMENTS
In July 2000, Cox sold 4.6 million shares of its Sprint PCS common stock
for approximately $274.6 million. In October 2000, Cox sold an additional 3.7
million shares of its Sprint PCS common stock for approximately $130.9 million.
In August 2000, Cox consummated an agreement with @Home Corporation,
referred to as Excite@Home, AT&T Corp. and Comcast Corporation pursuant to which
Cox agreed to extend its distribution of certain Excite@Home services through
June 2006, subject to its right to terminate its current distribution
arrangements per certain mutual exclusivity provisions in its current
distribution arrangements at any time on or after June 4, 2001. In addition, Cox
relinquished its veto rights and representation on the Excite@Home board of
directors. Pursuant to this agreement, Cox will receive warrants to purchase two
shares of Excite@Home Series A common stock for each home its cable systems
pass. These warrants will vest in installments every six months beginning in
June 2001, and will be fully vested in June 2006, subject to certain adjustment
and forfeiture provisions. Also as part of this agreement, Cox received an
option to put, under certain circumstances, its shares of Excite@Home to AT&T,
exercisable at any time between January 1, 2000 and June 4, 2002, with the
maximum amount payable to Cox pursuant to such put option not to exceed $1.4
billion, for a price per share equal to the higher of $48 or the 30-day average
trading price of Excite@Home Series A common stock during the 30 trading-day
period beginning 15 trading days prior to, and ending 15 trading days
immediately after, AT&T's receipt of notice of exercise of the option. In
connection with this agreement, Cox recognized a pre-tax gain of $990.5 million.
In August and September 2000, Cox repurchased 2.8 million shares of its
Class A common stock under its stock repurchase program at an aggregate cost of
$101.8 million. As part of its stock repurchase program, Cox issued options
which allow the holder to put up to 1.3 million shares of Cox's Class A common
stock back to Cox at certain dates through December 15, 2000, at prices ranging
from $37.00 to $38.38 per share. Cox received a premium of $2.6 million upon
issuance of these put options. In addition, Cox had put options outstanding
covering 1.1 million shares which expired unexercised in August 2000.
In September 2000, Cox amended and restated its 364-day credit agreement
and its 5-year credit agreement providing for borrowings of up to $1.5 billion
and $900.0 million, respectively. As of September 30, 2000, Cox had no
borrowings outstanding under either credit agreement.
THIRD QUARTER 2000 FINANCIAL RESULTS
Total revenues for the nine months ended September 30, 2000 were $2,561.0
million, a 60% increase over revenues of $1,596.3 million for the nine months
ended September 30, 1999. Operating cash flow increased 62% to $990.9 million
for the nine months ended September 30, 2000. Depreciation and amortization
increased to $881.0 million from $476.5 million for the comparable period in
1999 due to the acquisitions of cable systems that were consummated during 1999
and 2000. Interest expense increased to $400.9 million primarily due to an
increase in the total debt outstanding. Net income for the nine months ended
September 30, 2000 was $1,996.9 million as compared to $768.9 million for the
comparable period in 1999.
S-3
<PAGE> 5
USE OF PROCEEDS
We expect to receive aggregate net proceeds from the sale of the securities
of approximately $998.5 million, after deducting the underwriting discount and
offering expenses and including the total consideration payable by the
remarketing dealers for the right to remarket the MOPPRS/CHEERS. We will use
these proceeds to repay commercial paper indebtedness and for our general
corporate purposes. The weighted average interest rate on our commercial paper
borrowings as of September 30, 2000 was approximately 6.9%.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- -----------------
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C> <C>
2.8x 1.5x 2.0x 12.3x 5.9x 11.3x 6.5x
</TABLE>
Earnings for the years ended December 31, 1995, 1996, 1997, 1998 and 1999
and for the six months ended June 30, 1999 and 2000 include $188.8 million, $4.6
million, $116.6 million, $2.5 billion, $1.6 billion, $1.3 billion and $1.9
billion respectively, of net gain on sale and exchange of cable systems and 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 we have a series of preferred stock outstanding, the holders of such
preferred stock are entitled to dividends only when, and to the extent that, our
board of directors declares such dividends. Our board has never declared a
dividend on our preferred stock and does not intend to do so in the foreseeable
future. Accordingly, the data in the above table also represents our combined
ratio of earnings to fixed charges and preferred stock dividends for the periods
presented.
S-4
<PAGE> 6
CAPITALIZATION
The following table sets forth the capitalization of Cox as of June 30,
2000 (i) on a historical basis and (ii) as adjusted to give effect to this
offering and application of the aggregate net proceeds.
This table should be read in conjunction with, and is qualified by
reference to, the "Selected Consolidated 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>
JUNE 30, 2000
-------------------------
AS
ADJUSTED FOR
HISTORICAL THE OFFERING
---------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
CASH........................................................ $ 81.5 $ 81.2
========= =========
DEBT
Commercial paper.......................................... $ 1,861.7 $ 862.9
Medium-term notes......................................... 451.3 451.3
Reset put securities...................................... 248.2 454.5
Notes and debentures...................................... 2,856.1 3,648.6
Indexed debentures........................................ 2,585.9 2,585.9
Capitalized lease obligations............................. 78.4 78.4
Amounts due to Cox Enterprises............................ 5.5 5.5
--------- ---------
Total debt........................................ 8,087.1 8,087.1
--------- ---------
MINORITY INTEREST
Minority interest in equity of consolidated
subsidiaries........................................... 127.1 127.1
Cox-obligated capital securities of subsidiary trust...... 644.7 644.7
Cox-obligated preferred securities of subsidiary trust.... 507.4 507.4
SHAREHOLDERS' EQUITY
Series A preferred stock -- liquidation preference of
$22.1375 per share, par value $1.00 per share.......... 4.8 4.8
Class A common stock, par value $1.00 per share........... 577.3 577.3
Class C common stock, par value $1.00 per share........... 27.6 27.6
Additional paid-in capital................................ 3,859.3 3,859.3
Retained earnings......................................... 3,391.0 3,391.0
Accumulated other comprehensive income.................... 3,959.2 3,959.2
Class A common stock in treasury, at cost................. (110.1) (110.1)
--------- ---------
Total shareholders' equity........................ 11,709.1 11,709.1
--------- ---------
Total capitalization.............................. $21,075.4 $21,075.4
========= =========
</TABLE>
S-5
<PAGE> 7
SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
The following selected consolidated financial information for each year in
the three-year period ended December 31, 1999 has been derived from Cox's
audited historical consolidated financial statements, and the consolidated
financial information for the six months ended June 30, 1999 and 2000 has been
derived from Cox's unaudited historical consolidated financial statements. The
unaudited historical consolidated financial information presented below does not
include all of the information and footnote disclosures required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, the unaudited consolidated financial information reflects all
adjustments considered necessary for a fair statement of the consolidated
results of operations and financial position for the interim periods presented.
All of these adjustments are of a normal recurring nature. All per share amounts
reflected below have been restated to reflect Cox's two-for-one stock split
effective on May 21, 1999.
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 liquidity,
operating performance and leverage. Cox defines operating cash flow as operating
income before depreciation and amortization and gain on sale and exchange of
cable systems. 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 5.1x and 5.5x at December 31, 1998 and 1999,
respectively. In addition, operating cash flow has been annualized to calculate
the multiple of debt to operating cash flow for the six months ended June 30,
1999 and 2000.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------- ---------------------
1997 1998 1999 1999 2000
--------- --------- --------- --------- ---------
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues............................... $ 1,610.4 $ 1,716.8 $ 2,318.1 $ 1,008.4 $ 1,658.8
Operating income....................... 257.1 201.4 262.9 101.8 75.1
Net income (loss)...................... (136.5) 1,270.7 881.9 757.0 1,158.7
Basic net income (loss) per share...... $ (0.25) $ 2.33 $ 1.54 $ 1.36 $ 1.92
Diluted net income (loss) per share.... (0.25) 2.30 1.51 1.34 1.89
OTHER OPERATING AND FINANCIAL DATA:
Operating cash flow.................... $ 609.8 $ 659.1 $ 901.2 $ 384.4 $ 636.8
Operating cash flow margin............. 37.9% 38.4% 38.9% 38.1% 38.4%
Multiple of debt to operating cash
flow................................ 5.2x 6.2x 7.1x 4.8x 6.4x
Cash flows provided by (used in)
operating activities................ $ 553.6 $ 667.2 $ 404.7 $ 193.7 $ (85.1)
Cash flows provided by (used in)
investing activities................ (1,108.0) (1,600.4) (3,849.6) 223.1 (1,218.6)
Cash flows provided by (used in)
financing activities................ 540.3 935.6 3,447.6 (424.1) 1,351.9
BALANCE SHEET DATA:
Total assets........................... $ 6,556.6 $12,878.1 $26,614.5 $16,168.7 $27,951.8
Total debt (including amounts due to
Cox Enterprises).................... 3,148.8 4,090.8 6,375.8 3,697.4 8,087.1
</TABLE>
S-6
<PAGE> 8
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 Cable, high-speed
Internet access 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 for the years ended December 31, 1997 and 1998 and for
the six months ended June 30, 1999 excludes basic customers and homes passed
related to TWC Cable Partners, a partnership which was owned 50% by Cox and 50%
by Time Warner, which operated cable television systems in Staten Island, New
York and Fort Walton Beach, Florida. In October 1999, Cox reorganized its
partnership with Time Warner and obtained control of the cable system serving
Fort Walton Beach. The Fort Walton Beach cable television system had basic
customers of 68,586, 71,213 and 72,940, at December 31, 1997 and 1998 and June
30, 1999, respectively.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- ----------------------
1997 1998 1999 1999 2000
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CUSTOMER DATA:
Basic customers................. 3,235,338 3,753,608 5,136,184 3,780,524 6,137,518
New services.................... 18,941 169,731 554,025 315,915 1,046,893
--------- --------- --------- --------- ---------
Revenue Generating Units........ 3,254,279 3,923,339 5,690,209 4,096,489 7,184,411
Homes passed.................... 5,023,870 5,923,428 8,031,340 5,973,572 9,640,317
Basic penetration............... 64.4% 63.4% 64.0% 63.3% 63.7%
Premium service units........... 1,865,184 2,206,833 3,237,013 2,213,424 4,305,867
</TABLE>
S-7
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Cox's
historical consolidated statements of income for the six-month periods ended
June 30, 1999 and 2000.
RESULTS OF OPERATIONS
The results of operations discussed below include the effects of the
following as of their transaction dates:
- the March 2000 exchange of AT&T common stock for: cable systems from AT&T
serving customers in Tulsa, Oklahoma and Baton Rouge, Louisiana; Peak
Cablevision, LLC; and the remaining 20% interest in a partnership in
which Cox initially acquired an 80% interest through its acquisition of
TCA Cable TV, Inc., in a merger transaction;
- the January 2000 acquisition of cable systems from Multimedia
Cablevision, Inc.;
- the October 1999 acquisition of cable systems from Media General, Inc.;
- the October 1999 reorganization of Cox's partnership with Time Warner,
under which Cox obtained control of the cable system serving Ft. Walton
Beach, Florida;
- the August 1999 TCA merger; and
- the August 1999 exchange of selected cable systems with MediaOne, Inc.
These transactions are collectively referred to in the discussion below as
the 2000 and 1999 transactions.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999
Total revenues for the six months ended June 30, 2000 were $1,658.8
million, a 64% increase over revenues of $1,008.4 million for the six months
ended June 30, 1999. Of this increase, 48% relates to increased revenues from
the 2000 and 1999 transactions. The remaining 16% increase includes the effects
of:
- basic and digital customer growth at existing cable systems;
- rate increases implemented primarily in the fourth quarter of 1999 and
first quarter of 2000 resulting from increased programming costs and
inflation, as well as increased channel availability;
- continued growth in local and national advertising sales;
- growth in data, commercial telephony and residential telephony product
subscriptions; and
- offset by a decrease in pay-per-view revenues as a result of
comparatively fewer national boxing events during 2000.
Programming costs were $413.2 million for the six months ended June 30,
2000, an increase of 65% over the same period in 1999. Of this increase, 50%
relates to the 2000 and 1999 transactions. The remaining 15% increase is due to
basic and digital customer growth at existing cable systems and January 2000
programming rate increases and channel additions. Plant operations expenses
increased 66% to $125.1 million. Of this increase, 47% relates to the 2000 and
1999 transactions. The remaining 19% increase relates to increased plant
maintenance and costs related to significant growth of new services at existing
cable systems.
Marketing costs increased 75% to $100.8 million. Of this increase, 49%
relates to the 2000 and 1999 transactions. The remaining 26% increase relates to
marketing campaigns aimed at enhancing customer awareness and other costs
associated with the continued rollout of digital video, high-speed data and
telephony services. General and administrative expenses for the six months ended
June 30, 2000 increased 59% to $382.9 million due to increased salaries and
other administrative costs associated with the continued rollout of digital
video, high-speed data and telephony services, and incremental and non-
recurring integration expenses associated with the 2000 and 1999 transactions.
S-8
<PAGE> 10
Depreciation and amortization increased to $561.6 million from $282.6
million in the six months ended June 30, 1999 due primarily to the 2000 and 1999
transactions. Interest expense increased to $264.7 million primarily due to an
increase in the total debt outstanding as discussed below in "Liquidity and
Capital Resources."
Expense related to indexed debentures of $249.9 million reflects an
increase in the contingent settlement amount of the exchangeable subordinated
debentures which are indexed to the market value of Sprint PCS common
stock -- Series 1.
Net gain on investments of $1,943.6 million primarily includes:
- $667.6 million pre-tax gain on the January and February 2000 sale of 16.1
million shares of Sprint PCS common stock;
- $318.9 million pre-tax gain on the sale of Cox's entire equity interest
in Flextech plc in March 2000;
- $775.9 million pre-tax gain in connection with the March 2000 exchange
with AT&T; and
- $173.2 million pre-tax gain on the June 2000 sale of 3.2 million shares
of its Sprint PCS common stock.
Minority interest of $37.8 million primarily represents distributions on
Cox's obligated capital and preferred securities of subsidiary trusts, referred
to as FELINE PRIDES and RHINOS. Net income for the six months ended June 30,
2000 was $1,158.7 million as compared to $757.0 million for the comparable
period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
USES OF CASH
As part of Cox's ongoing strategic plan, Cox has invested, and will
continue to invest, significant amounts of capital to enhance the reliability
and capacity of its broadband network in preparation for the offering of new
services and to make investments in companies in affiliated industries primarily
focused on telephony, programming and communications-related activities.
During the six months ended June 30, 2000, net cash used in operating
activities was $85.1 million. In addition, during the six months ended June 30,
2000, Cox had capital expenditures of $914.4 million. These expenditures were
primarily directed at upgrading and rebuilding its broadband network to allow
for the delivery of advanced broadband services, including digital video,
high-speed Internet access, telephony and video-on-demand.
In addition to improvements of existing cable systems, Cox made strategic
investments in businesses focused on telephony, programming and
communications-related activities. Investments in affiliated companies are
expected to range between $30.0 million and $35.0 million for 2000. Actual
capital requirements may vary significantly from the amounts stated above and
will depend on numerous factors as many of these affiliates are growing
businesses and specific financing requirements will change depending on the
evolution of these businesses.
Cash paid for purchases of cable systems of $2.7 billion primarily
represents payments in connection with Cox's acquisition of cable systems
serving 522,000 customers from Multimedia.
During the six months ended June 30, 2000, Cox repaid approximately $1.5
billion of debt, which primarily consisted of:
- $525.0 million aggregate principal amount of floating rate notes due
August 15, 2000;
- $425.0 million aggregate principal amount paid upon maturity of the
6.375% notes issued in June 1995; and
- $500.0 million borrowed under a floating rate bridge loan during January
2000.
Repurchase of Class A common stock represents the aggregate cost of
repurchasing 2.7 million shares of Cox's Class A common stock for $110.1 million
during the second quarter of 2000 in connection with a
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previously announced stock repurchase program which authorizes Cox to purchase
up to $500.0 million of its outstanding Class A common stock on the open market
or through private transactions.
Distributions paid on capital and preferred securities of subsidiary trusts
of $41.2 million consists of quarterly payments on the FELINE PRIDES and RHINOS.
SOURCES OF CASH
Proceeds from the sale of investments of $1,531.1 million primarily
include:
- $799.1 million from the January and February 2000 sale of 16.1 million
shares of Sprint PCS common stock;
- $522.3 million from the March 2000 sale of Cox's entire investment in
Flextech plc; and
- $137.6 million from the June 2000 sale of 3.2 million shares of Sprint
PCS common stock.
Proceeds from exchange of investments of $812.3 million primarily consist
of $798.0 million held by subsidiaries acquired in connection with the AT&T
exchange.
Net commercial paper borrowings were $1,355.2 million for the six-month
period. Proceeds from issuance of debt during the six months ended June 30, 2000
of $1,568.1 million primarily consists of the following:
- the January 2000 issuance of a floating rate bridge loan for aggregate
proceeds of $500.0 million;
- the March 2000 issuance of $275.0 million aggregate principal amount of
exchangeable subordinated debentures due 2030, referred to as Premium
PHONES, for proceeds of $269.5 million, net of underwriting commissions;
and
- the second quarter 2000 issuance of exchangeable subordinated discount
debentures due 2020 for aggregate proceeds of $782.7 million, net of
underwriting commissions.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board, commonly referred
to as FASB, issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities. 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 133. SFAS 133, as amended by SFAS
137 and 138, is effective for fiscal years beginning after June 15, 2000.
Accordingly, Cox will be required to adopt SFAS 133 on January 1, 2001.
In November 1999, Cox developed an SFAS 133 implementation plan and
appointed a team to implement SFAS 133 on a company-wide basis. The
implementation plan includes, among other things, the education of both
financial and non-financial personnel, the conducting of an inventory of all
free-standing and embedded derivatives, the development of an SFAS 133 compliant
risk management policy, the development of controls and processes to identify
and account for derivatives on an on-going basis and the designation and
assessment of Cox's hedging strategies. Cox is currently assessing the impact of
the adoption of SFAS 133 on its consolidated financial statements and expects to
complete its implementation plan during the fourth quarter of 2000.
In 1999, Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, was issued. This SAB provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed with the
SEC. SAB No. 101, as amended by SAB No. 101B, is effective for the fourth
quarter of fiscal years beginning after December 15, 1999. Cox does not expect
the adoption of this standard will have a material impact on our consolidated
financial statements.
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DESCRIPTION OF THE NOTES
The notes will be issued as a separate series of debt securities under an
indenture, dated as of June 27, 1995, between us 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 supplement and the
accompanying prospectus form a part. Certain terms used in this section are
defined in the indenture. The notes constitute debt securities as described in
the accompanying prospectus. The following description of the terms of the notes
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.
GENERAL
The notes initially will be limited to $800,000,000 aggregate principal
amount and will mature on November 1, 2010. Pursuant to a plan designed to
result in a larger, more liquid issue, Cox may reopen this series of notes and
issue additional notes of this series or establish additional terms of this
series without consent from the holders of the notes. Such additional issuance
is expected to occur, if at all, not later than six months after the date of
issuance of the notes offered hereby. The notes will be issued in registered
form only in denominations of $1,000 and integral multiples of $1,000.
The notes will be unsecured and will rank equally with all of Cox's other
unsecured senior indebtedness. The notes will not be convertible into or
exchangeable for Cox's common or preferred stock, will not be entitled to the
benefit of any sinking fund and will not be listed on any securities exchange.
Except as described below, the notes are not redeemable prior to maturity.
PAYMENTS ON THE NOTES
The notes will bear interest at 7 3/4% per year from November 7, 2000 or
from the most recent interest payment date to which interest has been paid or
duly provided for, payable semiannually on May 1 and November 1 of each year,
beginning May 1, 2001, to the persons in whose names such notes are registered
at the close of business on the immediately preceding April 15 or October 15, as
the case may be, whether or not a business day. Interest on the notes will be
computed on the basis of a 360-day year of twelve 30-day months.
If any interest payment date, maturity date or redemption date of a note
falls on a day that is not a business day, the required payment of principal,
premium, if any, and interest will be made on the next succeeding business day
as if made on the date that the payment was due and no interest will accrue on
that payment for the period from and after that interest payment date, maturity
date or redemption date, as the case may be, to the date of that payment on the
next succeeding business day. The term business day means, with respect to any
note, any day other than a Saturday, a Sunday or a day on which banking
institutions or trust companies in The City of New York are authorized or
required by law, regulation or executive order to close.
Cox will pay interest on the notes until the principal of each note is
paid, in each case to the person in whose name such note is registered at the
close of business on the related record date immediately preceding the interest
payment date. Cox will pay the principal of, and premium, if any, on each note
on any redemption date or the maturity date therefor in immediately available
funds upon presentation and surrender of the notes at the office or agency Cox
maintains for this purpose in the Borough of Manhattan, The City of New York,
currently the corporate trust office of the trustee located at 101 Barclay
Street, New York, New York 10286. Interest payable on any interest payment date
will be the amount accrued from and including the date of original issuance or
from the most recent interest payment date on which interest has been paid to
but excluding the applicable interest payment date. Notwithstanding anything to
the contrary in this prospectus supplement or the accompanying prospectus, so
long as the notes are in book-entry form, Cox will make payments of principal,
premium, if any, and interest through the trustee to DTC.
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OPTIONAL REDEMPTION
Cox will have the right to redeem the notes at any time, in whole or in
part, on at least 30 but not more than 60 calendar days notice by mail. Cox will
pay a redemption price equal to the greater of
- 100% of the principal amount of the notes to be redeemed, and
- the sum, as determined by the Quotation Agent, of the present values of
the principal amount and the remaining scheduled payments of interest on
such notes to be redeemed (exclusive of interest accrued to the date of
redemption), in each case discounted from their respective scheduled
payment dates to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate
plus 25 basis points,
plus, in either case, accrued interest thereon to the date of redemption.
If money sufficient to pay the redemption price of and accrued interest on
all of the notes to be redeemed on the redemption date is deposited with the
trustee or a paying agent on or before the redemption date and certain other
conditions are satisfied, then on and after such date, interest will cease to
accrue on the notes called for redemption.
Comparable Treasury Issue means, with respect to the notes subject to
redemption, the United States Treasury security selected by the Quotation Agent
as having an actual or interpolated maturity comparable to the remaining life of
the notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity with the remaining life of the notes to
be redeemed.
Comparable Treasury Price means, with respect to any redemption date
applicable to the notes, the average of five Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest of
such Reference Treasury Dealer Quotations, or, if the trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
quotations.
Quotation Agent means the Reference Treasury Dealer appointed by Cox.
Reference Treasury Dealer means, with respect to the notes subject to
redemption, each of Merrill Lynch Government Securities Inc., Chase Securities
Inc., their respective successors, and three other primary United States
Government securities dealers in The City of New York, referred to as Primary
Treasury Dealers, selected by Cox. If Merrill Lynch or Chase shall cease to be a
Primary Treasury Dealer, Cox will substitute another Primary Treasury Dealer.
Reference Treasury Dealer Quotations means, with respect to each Reference
Treasury Dealer and any redemption date applicable to the notes, the average, as
determined by the trustee, of the bid and asked prices for the Comparable
Treasury Issue, expressed in each case as a percentage of its principal amount,
quoted in writing to the trustee by such Reference Treasury Dealer at 3:30 p.m.,
New York City time, on the third business day preceding such redemption date.
Treasury Rate means, with respect to any redemption date applicable to the
notes, the rate per annum equal to the semiannual or equivalent yield to
maturity or interpolated (on a day-count basis) of the Comparable Treasury
Issue, calculated on the third business day preceding such redemption date using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.
BOOK-ENTRY FORM ONLY
The notes will be issued in book-entry form only. See "Book-Entry System,
Form and Delivery; Same Day Settlement and Payment" below.
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DESCRIPTION OF THE MOPPRS/CHEERS
The MOPPRS/CHEERS will be issued as a separate series of debt securities
under the indenture. Certain terms used in this section are defined in the
indenture.
The MOPPRS/CHEERS constitute debt securities as described in the
accompanying prospectus. The following description of the terms of the
MOPPRS/CHEERS 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.
GENERAL
The MOPPRS/CHEERS initially will be limited to $200,000,000 aggregate
principal amount. Pursuant to a plan designed to result in a larger, more liquid
issue, Cox may reopen this series of MOPPRS/CHEERS and issue additional
MOPPRS/CHEERS of this series without consent from the holders of the
MOPPRS/CHEERS, but only with the consent of the remarketing dealers. Such
additional issuance is expected to occur, if at all, no later than six months
after the date of issuance of the MOPPRS/CHEERS offered hereby. We will issue
the MOPPRS/CHEERS in denominations of $1,000 and integral multiples of $1,000.
The MOPPRS/CHEERS will mature on November 7, 2012, subject to automatic
extension in the circumstances described below, which we refer to as the Stated
Maturity Date. THE MOPPRS/CHEERS ARE SUBJECT TO MANDATORY TENDER ON NOVEMBER 7,
2002, WHICH WE REFER TO AS THE INITIAL MANDATORY TENDER DATE.
We have appointed Chase Securities Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated to act as remarketing dealers for the MOPPRS/CHEERS on the
Initial Mandatory Tender Date and the Additional Mandatory Tender Date (as
defined below), if any, each with respect to $100,000,000 aggregate principal
amount of the MOPPRS/CHEERS, subject to the respective remarketing dealers
electing to remarket the MOPPRS/CHEERS. We also have appointed Merrill Lynch to
act as remarketing reset agent in connection with subsequent remarketings, if
any, as described below.
Because we have appointed two remarketing dealers, on and after the Initial
Mandatory Tender Date, the outstanding MOPPRS/CHEERS, if any, may have different
terms, including, if applicable, different Stated Maturity Dates and different
CUSIP numbers. However, if both remarketing dealers are remarketing the
MOPPRS/CHEERS at the same time and upon the same terms, they will coordinate
their efforts in order to establish the same interest rate for all of the
MOPPRS/CHEERS in connection with such remarketing. In addition, if only one
remarketing dealer elects to remarket the MOPPRS/ CHEERS, Cox may request that
remarketing dealer to remarket the full aggregate principal amount of the
MOPPRS/CHEERS.
If a remarketing dealer elects to remarket its portion of the MOPPRS/CHEERS
on the Initial Mandatory Tender Date, then, except in the limited circumstances
described in this prospectus supplement:
- the applicable MOPPRS/CHEERS will be subject to mandatory tender to the
related remarketing dealer at 100% of the principal amount thereof for
remarketing on the Initial Mandatory Tender Date, in either the Short
Term Mode (as defined below) or the MOPPRS/CHEERS Mode (as defined
below), on the terms and subject to the conditions described in this
prospectus supplement, subject to the right of Cox to redeem such
MOPPRS/CHEERS at its option, in whole but not in part, from the
remarketing dealer on the Initial Mandatory Tender Date or the Additional
Mandatory Tender Date, as the case may be;
- if the applicable MOPPRS/CHEERS are remarketed in the Short Term Mode,
then during the Short Term Spread Period for such MOPPRS/CHEERS, which
will be the period from and including the Initial Mandatory Tender Date
to but excluding the date established for remarketing of such
MOPPRS/CHEERS in the MOPPRS/CHEERS Mode, which we refer to as the
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Additional Mandatory Tender Date, such MOPPRS/CHEERS will bear interest
at the floating rate determined in accordance with the procedures set
forth below under "-- Determination of Short Term Rate", which we refer
to as the Short Term Rate;
- if the applicable MOPPRS/CHEERS are remarketed in the MOPPRS/CHEERS Mode
on the Initial Mandatory Tender Date or the Additional Mandatory Tender
Date, then during the MOPPRS/CHEERS Spread Period for such MOPPRS/CHEERS,
which will be the period from and including the Initial Mandatory Tender
Date or, if applicable, the Additional Mandatory Tender Date, to but
excluding the next succeeding date established for remarketing of the
MOPPRS/CHEERS (we refer to such date and each succeeding date, if any,
established for remarketing of the MOPPRS/CHEERS as an Optional Tender
Date), if any, or, as the case may be, the Stated Maturity Date, the
MOPPRS/CHEERS will bear interest at the fixed rate or floating rate
determined in accordance with the procedures set forth below (we refer to
such rate as the MOPPRS/CHEERS Rate); and
- following remarketing in the MOPPRS/CHEERS Mode, the MOPPRS/CHEERS may be
subject to remarketing in the Remarketing Reset Mode, if applicable,
described below and will bear interest at the fixed or floating rate or
rates determined in accordance with the procedures set forth below for
each Subsequent Spread Period, if any.
Spread Period, as used in this prospectus supplement, means the Initial
Period, the MOPPRS/ CHEERS Spread Period, the Short Term Spread Period or a
Subsequent Spread Period, as the context requires.
Under the circumstances described below, Cox may redeem, at its option,
each remarketing dealer's portion of the MOPPRS/CHEERS, in whole but not in
part, from the remarketing dealer on the Initial Mandatory Tender Date or, if
applicable, the Additional Mandatory Tender Date. During the MOPPRS/CHEERS
Spread Period and any Subsequent Spread Period, Cox may redeem, at its option,
the MOPPRS/CHEERS, in whole or in part, from the holders of the MOPPRS/CHEERS on
the terms described under "-- Redemption" below.
The MOPPRS/CHEERS will not be subject to any sinking fund.
If a remarketing dealer for any reason does not purchase all of its portion
of tendered MOPPRS/ CHEERS on the Initial Mandatory Tender Date or the
Additional Mandatory Tender Date or elects not to remarket the MOPPRS/CHEERS, or
in the other limited circumstances described in this prospectus supplement, Cox
will be required to repurchase such MOPPRS/CHEERS from the beneficial owners
thereof on either the Initial Mandatory Tender Date or the Additional Mandatory
Tender Date, as the case may be (we refer to either such date as a Mandatory
Tender Date), at 100% of the principal amount thereof, plus accrued interest, if
any, unless the other remarketing dealer agrees to, and does, remarket all of
the MOPPRS/CHEERS. See "-- Remarketing and Determination of Interest Rate for
Subsequent Interest Periods -- Repurchase" below.
We refer to the Stated Maturity Date (as such date may be extended), or any
date prior to the Stated Maturity Date on which the MOPPRS/CHEERS become due and
payable by Cox, whether by reason of redemption, repurchase or otherwise, as the
Maturity Date with respect to the principal of such MOPPRS/CHEERS. We may refer
to each Mandatory Tender Date or Optional Tender Date as a Tender Date in this
prospectus supplement.
Except as otherwise designated for any period, we will pay interest on each
MOPPRS/CHEERS in arrears on each Interest Payment Date specified for the
applicable period, on each Tender Date and on the Maturity Date. We refer to
each such date as an Interest Payment Date. We will pay interest on each
MOPPRS/CHEERS until the principal of each MOPPRS/CHEERS is paid, in each case to
the person in whose name such MOPPRS/CHEERS is registered on the fifteenth
calendar day (whether or not a business day) immediately preceding such Interest
Payment Date. We will pay the principal of, and premium, if any, on each
MOPPRS/CHEERS on the Maturity Date therefor in immediately available funds upon
presentation and surrender of the MOPPRS/CHEERS at the office or agency we
maintain for
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this purpose in the Borough of Manhattan, The City of New York, currently the
corporate trust office of the trustee located at 101 Barclay Street, New York,
New York 10286. Interest payable on any Interest Payment Date will be the amount
accrued from and including the date of original issuance or from the most recent
Interest Payment Date on which interest has been paid to but excluding the
applicable Interest Payment Date. Notwithstanding anything to the contrary in
this prospectus supplement or the accompanying prospectus, so long as the
MOPPRS/CHEERS are in book-entry form, we will make all payments of principal,
premium, if any, and interest through the trustee to DTC.
During any period in which MOPPRS/CHEERS bear interest at a Floating Rate
(i.e., a rate determined by reference to a Floating Rate Basis, as defined
below), if any Interest Payment Date (other than the Stated Maturity Date) would
otherwise be a day that is not a business day, such date will be postponed to
the next succeeding day that is a business day, except that, for any Interest
Payment Date that does not fall on a Tender Date or a Maturity Date, if LIBOR
(as defined below) is the applicable Floating Rate Basis and that business day
is in the next succeeding calendar month, such date shall be the immediately
preceding business day.
During any period in which the MOPPRS/CHEERS bear interest at a Fixed Rate
(i.e., any rate based on the Base Rate or a Fixed Rate Basis, each as defined
below), if any Interest Payment Date (other than an Interest Payment Date
falling on a Tender Date) would otherwise be a day that is not a business day,
the related payment of principal, premium, if any, and interest will be made on
the next succeeding business day as if it were made on the date such payment was
due, and no interest will accrue on the amounts so payable for the period from
and after such date to the next succeeding business day.
If the Stated Maturity Date for the MOPPRS/CHEERS falls on a day that is
not a business day, the related payment of principal, premium, if any, and
interest will be made on the next succeeding business day as if it were made on
the date such payment was due, and no interest will accrue on the amounts so
payable for the period from and after such date to the next succeeding business
day.
If a Tender Date would otherwise be a day that is not a business day, any
payment or remarketing scheduled to occur on such day will be postponed to the
next succeeding day that is a business day, and interest will accrue on the
amount of principal or premium, if any, payable to such business day.
The term business day means, with respect to the MOPPRS/CHEERS, any day
other than a Saturday or Sunday or a day on which banking institutions or trust
companies in The City of New York are authorized or required by law, regulation
or executive order to close and, in the case of MOPPRS/ CHEERS for which LIBOR
is the applicable Floating Rate Basis, any such day that is also a London
business day. The term London business day means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
All percentages resulting from any calculation of any interest rate for the
MOPPRS/CHEERS will be rounded, if necessary, to the nearest one hundred
thousandth of a percentage point, with five one millionths of a percentage point
rounded upward and all dollar amounts will be rounded to the nearest cent, with
one-half cent being rounded upward.
INTEREST TO INITIAL MANDATORY TENDER DATE
From issuance until the Initial Mandatory Tender Date, the MOPPRS/CHEERS
will bear interest at the annual interest rate of LIBOR (determined as described
below under "-- Determination of a Floating Rate Basis or a Fixed Rate Basis")
with an Index Maturity of three months plus 70 basis points, reset quarterly on
February 7, May 7, August 7 and November 7 of each year, beginning November 7,
2000, to, but excluding, the Initial Mandatory Tender Date. We refer to each
such date as an Interest Reset Date. From and including the date of original
issuance to, but excluding, the Initial Mandatory Tender Date, which we refer to
as the Initial Period, interest on the MOPPRS/CHEERS will be payable on February
7, May 7, August 7 and November 7 of each year, beginning February 7, 2001. We
refer to each such date as an Interest Payment Date. For the Initial Period,
interest will be computed on the basis of the actual number of days elapsed over
a 360-day year.
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REMARKETING AND DETERMINATION OF INTEREST RATE FOR SUBSEQUENT INTEREST PERIODS
MANDATORY TENDER OF MOPPRS/CHEERS; SHORT TERM MODE AND MOPPRS/CHEERS MODE
The following description sets forth the terms and conditions of the
remarketing of the MOPPRS/CHEERS, in the event that either or both of the
remarketing dealers elect to purchase MOPPRS/CHEERS and remarket MOPPRS/CHEERS
on a Mandatory Tender Date.
Mandatory Tender on the Initial Mandatory Tender Date and, if applicable,
the Additional Mandatory Tender Date; Remarketing. Provided that a remarketing
dealer gives notice to Cox and the trustee on a business day not later than five
business days prior to the Initial Mandatory Tender Date of its intention to
purchase the MOPPRS/CHEERS for remarketing (we refer to such date as the
Notification Date), the applicable MOPPRS/CHEERS will be automatically tendered,
or deemed tendered, to the related remarketing dealer for purchase on the
Initial Mandatory Tender Date and, if such MOPPRS/CHEERS are remarketed in the
Short Term Mode, the Additional Mandatory Tender Date, in each case except in
the circumstances described under "-- Repurchase" below. The purchase price for
the tendered MOPPRS/CHEERS to be paid by each remarketing dealer will equal 100%
of the principal amount thereof. See "-- Notification of Results; Settlement"
below. When the MOPPRS/CHEERS are tendered for remarketing on a Mandatory Tender
Date, each remarketing dealer may remarket its portion of the MOPPRS/CHEERS for
its own account at varying prices to be determined by such remarketing dealer at
the time of each sale.
If a remarketing dealer elects on the Notification Date to remarket the
MOPPRS/CHEERS, the obligation of such remarketing dealer to purchase its portion
of the MOPPRS/CHEERS on either Mandatory Tender Date is subject, among other
things, to the conditions that, since the Notification Date, no material adverse
change in the condition of Cox and its subsidiaries, considered as one
enterprise, shall have occurred, that no Event of Default (as defined in the
indenture), or any event which, with the giving of notice or passage of time, or
both, would constitute an Event of Default, with respect to the MOPPRS/CHEERS
shall have occurred and be continuing and that the remarketing dealer shall have
received at least two bids in accordance with the procedures described below for
the Short Term Mode or, as the case may be, the MOPPRS/CHEERS Mode. If for any
reason a remarketing dealer does not purchase all of its portion of tendered
MOPPRS/CHEERS on a Mandatory Tender Date, Cox will be required to repurchase
such MOPPRS/CHEERS from the beneficial owners thereof at a price equal to 100%
of the principal amount thereof plus all accrued and unpaid interest, if any, on
the MOPPRS/CHEERS to such Mandatory Tender Date, unless the other remarketing
dealer agrees to, and does, remarket all of the MOPPRS/CHEERS. See
"-- Repurchase" below.
Initial Interest Rate Mode Election. If a remarketing dealer elects on the
Notification Date to remarket its portion of the MOPPRS/CHEERS on the Initial
Mandatory Tender Date, then by not later than 4:00 p.m., New York City time, on
the fourth business day immediately preceding the Initial Mandatory Tender Date,
Cox, after consultation with such remarketing dealer, may notify the remarketing
dealer, the trustee and DTC by telephone, confirmed in writing, that Cox elects
to either (i) redeem such remarketing dealer's portion of the MOPPRS/CHEERS in
whole, but not in part, on the Initial Mandatory Tender Date, (ii) have the
applicable MOPPRS/CHEERS remarketed in the Short Term Mode, which means that the
period commencing on the Initial Mandatory Tender Date will be a Short Term
Spread Period for such MOPPRS/CHEERS, and such MOPPRS/CHEERS will be subject to
remarketing by the remarketing dealer in such mode on the Initial Mandatory
Tender Date and subsequently in the MOPPRS/CHEERS Mode on the Additional
Mandatory Tender Date or (iii) have the applicable MOPPRS/CHEERS remarketed in
the MOPPRS/CHEERS Mode on the Initial Mandatory Tender Date. We refer to the
interest rate mode in which the MOPPRS/CHEERS bear interest in the MOPPRS/CHEERS
Spread Period at the MOPPRS/CHEERS Rate as the MOPPRS/CHEERS Mode. Cox will be
eligible to elect the Short Term Mode and make such notification if at such time
its senior unsecured debt is rated at least "Baa3" by Moody's Investors Service,
Inc. and "BBB-" by Standard & Poor's Ratings Service or the equivalent thereof
by each such rating agency at the time of such notification; provided, that the
applicable remarketing dealer may waive this requirement at
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its sole discretion. We refer to the fourth business day immediately preceding
the Initial Mandatory Tender Date as the Initial Mode Election Date and, if
applicable, the Mode Terms Designation Date for such Short Term Mode, or, as the
case may be, the MOPPRS/CHEERS Mode.
If Cox makes no election or elects to have the applicable MOPPRS/CHEERS
remarketed in the MOPPRS/CHEERS Mode on the Initial Mandatory Tender Date, the
Initial Mandatory Tender Date will be the only Mandatory Date for such
MOPPRS/CHEERS. If the MOPPRS/CHEERS are remarketed initially in the Short Term
Mode, they will also be subject to mandatory tender for remarketing in the
MOPPRS/CHEERS Mode on the Additional Mandatory Tender Date, subject to
redemption by Cox from the applicable remarketing dealer on such date. If and
when the MOPPRS/CHEERS are remarketed in the MOPPRS/CHEERS Mode, then from and
including the Initial Mandatory Tender Date or, if applicable, the Additional
Mandatory Tender Date to but excluding the first Optional Tender Date, if any,
the MOPPRS/CHEERS will bear interest at the MOPPRS/CHEERS Rate. If no initial
Optional Tender Date is established, the MOPPRS/CHEERS Rate will be the interest
rate to the Maturity Date, and the MOPPRS/CHEERS Spread Period for the
applicable MOPPRS/CHEERS will be the period from and including the applicable
Mandatory Tender Date to but excluding the Maturity Date.
Designation of Terms for the Short Term Mode; Extension of Stated Maturity
Date. If Cox elects to have MOPPRS/CHEERS remarketed in the Short Term Mode,
then:
- by not later than 4:00 p.m., New York City time, on the Mode Terms
Designation Date for the Short Term Mode, Cox, after consultation with
the applicable remarketing dealer (or both remarketing dealers, if they
are acting jointly), will establish the Additional Mandatory Tender Date
for remarketing of the applicable MOPPRS/CHEERS in the MOPPRS/CHEERS
Mode, which shall be a date not more than one year following the Initial
Mandatory Tender Date (or if such day is not a business day, the next
succeeding business day), designate whether such date may be advanced on
a weekly or monthly basis and designate the applicable Floating Rate
Basis, Interest Payment Date(s), Interest Reset Date(s) (as defined
below) and any other applicable floating rate terms for remarketing of
the MOPPRS/CHEERS in the Short Term Mode as described below;
- the Additional Mandatory Tender Date will be the earlier of (i) the date
established on the Mode Terms Designation Date for the Short Term Mode as
the Additional Mandatory Tender Date (or if such day is not a business
day, the next succeeding business day), or (ii) one of the one-week or
one-month anniversary dates following the Initial Mandatory Tender Date
(or if any such day is not a business day, the next succeeding business
day) designated by Cox by notification to the applicable remarketing
dealer, the trustee and DTC (and Cox, in such notice, shall instruct the
trustee and/or DTC to notify the beneficial owners of the MOPPRS/CHEERS
of such date) not later than the fifth business day prior to such
one-week or one-month anniversary date;
- the Stated Maturity Date for the applicable MOPPRS/CHEERS will be
extended from November 7, 2012 to be the date that is the ten-year
anniversary of the Additional Mandatory Tender Date (whether or not a
business day); and
- the applicable MOPPRS/CHEERS will be automatically tendered or deemed
tendered to the applicable remarketing dealer for remarketing on the
Additional Mandatory Tender Date in the MOPPRS/CHEERS Mode, subject to
the right of Cox to redeem such MOPPRS/CHEERS, at its option, in whole
but not in part, from the remarketing dealer on the Additional Mandatory
Tender Date, as described below.
Determination of the Short Term Rate. If the applicable MOPPRS/CHEERS are
in the Short Term Mode, the applicable remarketing dealer will determine the
Short Term Spread as described below by 3:30 p.m., New York City time, on the
third business day immediately preceding the Initial Mandatory Tender Date,
which we refer to as the Short Term Spread Determination Date, based on the full
aggregate principal amount of such remarketing dealer's portion of the
MOPPRS/CHEERS. If both remarketing
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dealers are remarketing the MOPPRS/CHEERS in the Short Term Mode on the Initial
Mandatory Tender Date upon identical terms, they will coordinate their efforts
in order to establish the same Short Term Rate for the full principal amount of
the MOPPRS/CHEERS being remarketed. The Short Term Rate will be equal to the
applicable Floating Rate Basis determined as described below plus or minus the
Short Term Spread.
Interest will be payable on the designated date or dates, with each such
date being an Interest Payment Date, in respect of the Short Term Spread Period,
reset on the designated Interest Reset Dates, and computed on the basis of the
day-count convention described below for the applicable Floating Rate Basis. The
Short Term Spread announced by the applicable remarketing dealer (or both
remarketing dealers, if they are acting jointly), and the resulting Short Term
Rate, absent manifest error, shall be binding and conclusive upon the beneficial
owners and holders of the applicable MOPPRS/CHEERS, Cox and the trustee.
The Short Term Spread will be the lowest bid indication (if positive), or
highest bid indication (if negative), expressed as a spread (in the form of a
percentage or number of basis points) above (if positive) or below (if negative)
the applicable Floating Rate Basis, obtained by the applicable remarketing
dealer or dealers by 3:30 p.m., New York City time, on the Short Term Spread
Determination Date from the bids quoted from five Reference Money Market Dealers
(as defined below) on such date for the applicable aggregate principal amount of
the applicable MOPPRS/CHEERS at a price equal to par, but assuming:
- an issue date of the Initial Mandatory Tender Date, with settlement on
such date without accrued interest;
- a maturity date equal to the Additional Mandatory Tender Date designated
on the Mode Terms Designation Date for the Short Term Mode for such
applicable MOPPRS/CHEERS;
- the applicable MOPPRS/CHEERS are subject to purchase as a whole by the
remarketing dealer or Cox at a price equal to 100% of the principal
amount thereof on a weekly or monthly basis, as the case may be (as
designated by Cox on the Mode Terms Designation Date), after the Initial
Mandatory Tender Date; and
- a stated annual interest rate, reset on the designated Interest Reset
Dates and payable on the designated Interest Payment Date or Dates, equal
to the applicable Floating Rate Basis plus or minus the spread bid by the
applicable Reference Money Market Dealer.
If fewer than five Reference Money Market Dealers bid as described above,
then the Short Term Spread shall be the lowest (if positive) or highest (if
negative) of such bid indications, obtained as described above, subject to the
remarketing dealer or dealers receiving at least two bids.
The Floating Rate Basis will be determined as described below under
"-- Determination of a Floating Rate Basis or a Fixed Rate Basis." The
determination will be made by the calculation agent as of the applicable
Interest Determination Date.
Reference Money Market Dealers means leading dealers of publicly traded
debt securities of Cox in The City of New York (which, unless otherwise
specified by the applicable remarketing dealer or dealers, shall include Merrill
Lynch or one of its affiliates and Chase or one of its affiliates) who are also
leading dealers in money market instruments selected by Cox after consultation
with the remarketing dealer or dealers and of whom notification was sent by Cox
to the remarketing dealer or dealers no later than 4:00 p.m., New York City
time, on the Mode Terms Designation Date for the Short Term Mode. If Cox does
not notify the remarketing dealer or dealers by such time, the remarketing
dealer or dealers will select the Reference Money Market Dealers.
Designation of Terms for the MOPPRS/CHEERS Mode. By not later than 12:00
p.m., New York City time, on the fourth business day preceding the Mandatory
Tender Date for remarketing in the MOPPRS/CHEERS Mode (which we refer to as the
Mode Terms Designation Date for the MOPPRS/CHEERS Mode), Cox, after consultation
with the applicable remarketing dealer (or both
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remarketing dealers, if they are acting jointly), will establish the first
Optional Tender Date, if any, designate the MOPPRS/CHEERS Rate as a Fixed Rate
or Floating Rate (and in the latter case, the applicable floating rate terms),
specify the Interest Payment Dates for the MOPPRS/CHEERS Spread Period and
establish the terms, if any, for redemption of the applicable MOPPRS/CHEERS for
the MOPPRS/CHEERS Spread Period.
Determination of the MOPPRS/CHEERS Rate. If the applicable MOPPRS/CHEERS
are to be remarketed in the MOPPRS/CHEERS Mode, the applicable remarketing
dealer will determine the MOPPRS/CHEERS Spread as described below based on the
Dollar Price (as defined below) for the applicable MOPPRS/CHEERS by 3:30 p.m.,
New York City time, on the third business day immediately preceding the Initial
Mandatory Tender Date or, if the MOPPRS/CHEERS initially are remarketed in the
Short Term Mode, the Additional Mandatory Tender Date (which we refer to as the
MOPPRS/ CHEERS Spread Determination Date). If both remarketing dealers are
remarketing the MOPPRS/CHEERS in the MOPPRS/CHEERS Mode on the same Mandatory
Tender Date upon identical terms, they will coordinate their efforts in order to
establish the same MOPPRS/CHEERS Rate for the full principal amount of the
MOPPRS/CHEERS being remarketed. The MOPPRS/CHEERS Rate will be equal to the
applicable Fixed Rate Basis (provided that, if no Optional Tender Date is
established, the "Base Rate" of 5.742% shall be used in place of the Fixed Rate
Basis) plus the MOPPRS/CHEERS Spread (as defined below) or, as the case may be,
the applicable Floating Rate Basis, in each case, determined as described below,
plus or minus the MOPPRS/CHEERS Spread.
Interest will be payable semiannually on the designated dates and computed
on the basis of a 360-day year of twelve 30-day months, in the case of a Fixed
Rate, and on the designated dates (we refer to each such date in respect of the
MOPPRS/CHEERS Spread Period, as an Interest Payment Date), and reset on the
designated Interest Reset Dates and computed on the basis of the day-count
convention described below for the applicable Floating Rate Basis, in the case
of a Floating Rate. The MOPPRS/CHEERS Spread announced by the remarketing dealer
(or both remarketing dealers if they are acting jointly), and the resulting
MOPPRS/CHEERS Rate, absent manifest error, shall be binding and conclusive upon
the beneficial owners and holders of the applicable MOPPRS/CHEERS, Cox and the
trustee.
The MOPPRS/CHEERS Spread will be the lowest bid indication (if positive),
or highest bid indication (if negative), expressed as a spread (in the form of a
percentage or in basis points) above (if positive) or below (if negative) either
(i) the Fixed Rate Basis (or, if applicable, the Base Rate), if Cox has selected
a Fixed Rate, or (ii) the Floating Rate Basis selected by Cox, if Cox has
selected a Floating Rate, in either case obtained by the applicable remarketing
dealer or dealers by 3:30 p.m., New York City time, on the MOPPRS/CHEERS Spread
Determination Date from the bids quoted by five Reference Corporate Dealers (as
defined below) for the applicable aggregate principal amount of the applicable
MOPPRS/CHEERS at the Dollar Price or, as the case may be, the Adjusted Dollar
Price, but assuming:
- an issue date equal to the Mandatory Tender Date for remarketing in the
MOPPRS/CHEERS Mode, with settlement on such date without accrued
interest;
- a maturity date equal to the first Optional Tender Date (or, if no such
date is designated, the Stated Maturity Date, as such date may be
extended) of the applicable MOPPRS/CHEERS;
- if applicable, the applicable MOPPRS/CHEERS are subject to redemption
upon the terms specified on the Mode Terms Designation Date for the
MOPPRS/CHEERS Mode; and
- a stated annual interest rate, reset, if applicable, on the designated
Interest Reset Dates, if any, and payable on the designated Interest
Payment Dates, equal to the Fixed Rate Basis (or, if applicable, the Base
Rate), in the case of a Fixed Rate, or the applicable Floating Rate
Basis, in the case of a Floating Rate, in each case plus or minus the
spread bid by the applicable Reference Corporate Dealer.
If fewer than five Reference Corporate Dealers bid as described above, then
the MOPPRS/CHEERS Spread shall be the lowest (if positive) or highest (if
negative) of such bid indications obtained as described above, subject to the
remarketing dealer or dealers receiving at least two bids.
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The Fixed Rate Basis or, as applicable, the Floating Rate Basis, will be
determined as described below under "-- Determination of a Floating Rate Basis
or a Fixed Rate Basis." The determination will be made by the applicable
calculation agent by 1:00 p.m., New York City time, on the MOPPRS/CHEERS Spread
Determination Date, in the case of the Fixed Rate Basis, and as of the
applicable Interest Determination Date, in the case of a Floating Rate Basis.
Dollar Price means, with respect to the applicable MOPPRS/CHEERS, the
present value determined by the applicable remarketing dealer on the third
business day preceding the Initial Mandatory Tender Date, as of the Initial
Mandatory Tender Date, of the Remaining Scheduled Payments (as defined below)
discounted to the Initial Mandatory Tender Date, on a semiannual basis (assuming
a 360-day year consisting of twelve 30-day months), at the Treasury Rate (as
defined below); provided that in the case of the Additional Mandatory Tender
Date, the Dollar Price will be the Adjusted Dollar Price.
Adjusted Dollar Price means, with respect to the Additional Mandatory
Tender Date, the Dollar Price as of the Initial Mandatory Tender Date
(determined by the applicable remarketing dealer as described above for the
Initial Mandatory Tender Date as if the Initial Mandatory Tender Date were the
only Mandatory Tender Date) plus the product of (i) such Dollar Price as of the
Initial Mandatory Tender Date, (ii) a rate equal to the greater of (a) the
weighted average per annum of the Short Term Rate for the Short Term Spread
Period or (b) the weighted average per annum of LIBOR (determined as described
below) with an Index Maturity equal to the applicable Interest Reset Period (as
defined below) for the Short Term Spread Period, and reset on the designated
Interest Reset Dates for such period, and (iii) the number of days in the Short
Term Spread Period divided by 360.
Reference Corporate Dealers means leading dealers of publicly traded debt
securities of Cox in The City of New York (which, unless otherwise specified by
the applicable remarketing dealer or dealers, will include Merrill Lynch or one
of its affiliates and Chase or one of its affiliates) selected by Cox after
consultation with the remarketing dealer or dealers and of whom notification was
sent by Cox to the remarketing dealer or dealers not later than 4:00 p.m., New
York City time, on the Mode Terms Designation Date for the MOPPRS/CHEERS Mode.
If Cox does not notify the remarketing dealer or dealers by such time, the
remarketing dealer or dealers will select the Reference Corporate Dealers.
Treasury Rate means, with respect to the Initial Mandatory Tender Date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issues (as defined below), assuming a price for the
Comparable Treasury Issues (expressed as a percentage of its principal amount),
equal to the Comparable Treasury Price (as defined below) for the Initial
Mandatory Tender Date; provided, however, that if, in the judgment of the
applicable remarketing dealer or dealers, no Comparable Treasury Issues are
outstanding at the time of determination, the Treasury Rate will be the rate per
annum equal to the yield for United States Treasury securities at "constant
maturity" having a maturity comparable to the remaining term to the Stated
Maturity Date of the MOPPRS/CHEERS being purchased obtained by the remarketing
dealer or dealers from a recognized information service or other source in
accordance with market practice.
Comparable Treasury Issues means, with respect to the Initial Mandatory
Tender Date, the United States Treasury benchmark on-the-run security or
securities selected by the remarketing dealer or dealers as having an actual
maturity comparable to the remaining term to the Stated Maturity Date of the
MOPPRS/CHEERS being purchased.
Comparable Treasury Price means, with respect to the Initial Mandatory
Tender Date, (a) the offer prices for the Comparable Treasury Issues (expressed
in each case as a percentage of its principal amount) on the MOPPRS/CHEERS
Spread Determination Date preceding the Initial Mandatory Tender Date, as set
forth on "Telerate Page 500" (or such other page as may replace Telerate Page
500) or (b) if such page (or any successor page) is not displayed or does not
contain such offer prices on such date, (i) the average of the Reference
Treasury Dealer Quotations for the Initial Mandatory Tender Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (ii) if the applicable remarketing dealer obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Reference Treasury
Dealer Quotations.
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Telerate Page 500 means the display designated as "Telerate Page 500" on
Bridge Telerate, Inc. (or such other page as may replace Telerate Page 500 on
such service) or such other service displaying the offer prices specified in
clause (a) above in the definition of "Comparable Treasury Price" as may replace
Bridge Telerate, Inc.
Reference Treasury Dealer Quotations means, with respect to each Reference
Treasury Dealer and the Initial Mandatory Tender Date, the offer prices for the
Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted to the applicable remarketing dealer by such Reference
Treasury Dealer by 3:30 p.m., New York City time, on the third business day
preceding the Initial Mandatory Tender Date.
Reference Treasury Dealers means, with respect to the Initial Mandatory
Tender Date, up to five primary U.S. Government securities dealers in The City
of New York (which, unless otherwise specified by the applicable remarketing
dealer or dealers, shall include Merrill Lynch or one of its affiliates and
Chase or one of its affiliates, in each case, that is a primary U.S. Government
securities dealer) selected by Cox after consultation with the remarketing
dealer or dealers and of whom notification was sent by Cox to the remarketing
dealer or dealers no later than 4:00 p.m., New York City time, on the Initial
Mode Election Date. If Cox fails to so notify the remarketing dealer or dealers
by such time, the remarketing dealer or dealers will select the Reference
Treasury Dealers. Also, if any of the foregoing or their affiliates shall cease
to be a primary U.S. Government securities dealer in The City of New York
(referred to as a Primary Treasury Dealer), Cox, or if applicable, the
remarketing dealer or dealers shall substitute therefor another Primary Treasury
Dealer.
Remaining Scheduled Payments means, with respect to the applicable
MOPPRS/CHEERS, the remaining scheduled payments of the principal thereof and
interest thereon (assuming interest is payable on May 7 and November 7 of each
year beginning May 7, 2003, and assuming the MOPPRS/CHEERS were not remarketed
in the Short Term Mode), calculated at the Base Rate only, that would be due
after the Initial Mandatory Tender Date to and including the Stated Maturity
Date, as determined by the applicable remarketing dealer.
NOTIFICATION OF RESULTS; SETTLEMENT
Provided the applicable remarketing dealer has previously notified Cox and
the trustee on the Notification Date of its intention to purchase all of its
portion of the tendered MOPPRS/CHEERS on the applicable Mandatory Tender Date,
the remarketing dealer (or both remarketing dealers if they are acting jointly)
will notify Cox, the trustee and DTC by telephone, confirmed in writing, by 4:00
p.m., New York City time, on the MOPPRS/CHEERS Spread Determination Date
preceding the Mandatory Tender Date on which the MOPPRS/CHEERS are remarketed in
the MOPPRS/CHEERS Mode of the MOPPRS/CHEERS Spread and, in the case of a Fixed
Rate, the MOPPRS/CHEERS Rate. If the MOPPRS/CHEERS are remarketed in the Short
Term Mode, the applicable remarketing dealer (or both remarketing dealers if
they are acting jointly) will notify Cox, the trustee and DTC by telephone,
confirmed in writing, by 4:00 p.m., New York City time, on the Short Term Spread
Determination Date of the Short Term Spread for such MOPPRS/CHEERS.
All of the tendered MOPPRS/CHEERS will be automatically delivered to the
account of the trustee, by book-entry through DTC pending payment of the
purchase price therefor, on each Mandatory Tender Date.
In the event that a remarketing dealer purchases the tendered MOPPRS/CHEERS
on a Mandatory Tender Date, such remarketing dealer will make, or cause the
trustee to make, payment to the DTC participant of each tendering beneficial
owner of the applicable MOPPRS/CHEERS, by book-entry through DTC by the close of
business on such Mandatory Tender Date against delivery through DTC of such
beneficial owner's tendered MOPPRS/CHEERS, of 100% of the principal amount of
the tendered MOPPRS/CHEERS that have been purchased for remarketing by the
remarketing dealer. If the remarketing dealer does not purchase all of the
MOPPRS/CHEERS on a Mandatory Tender Date, unless the other remarketing dealer
agrees to, and does, remarket all of the MOPPRS/CHEERS, it will be the
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obligation of Cox to make or cause to be made such payment for the
MOPPRS/CHEERS, as described below under "-- Repurchase." In any case, Cox will
make or cause the trustee to make payment of interest to each person entitled
thereto due on each Mandatory Tender Date by book-entry through DTC by the close
of business on such Mandatory Tender Date.
The transactions described above will be executed on the applicable
Mandatory Tender Date through DTC in accordance with the procedures of DTC, and
the accounts of the respective DTC participants will be debited and credited and
the MOPPRS/CHEERS delivered by book-entry as necessary to effect the purchases
and sales of the MOPPRS/CHEERS.
The tender and settlement procedures described above, including provisions
for payment by purchasers of MOPPRS/CHEERS in the remarketing or for payment to
selling beneficial owners of tendered MOPPRS/CHEERS, may be modified to the
extent required by DTC or to the extent required to facilitate the tender and
remarketing of MOPPRS/CHEERS in certificated form, if the book-entry system is
no longer available for the MOPPRS/CHEERS at the time of the remarketing. In
addition, the remarketing dealers may, in accordance with the terms of the
indenture, modify the tender and settlement procedures set forth above in order
to facilitate the tender and settlement process.
As long as DTC's nominee holds the certificates representing any
MOPPRS/CHEERS in the book-entry system of DTC, no certificates for such
MOPPRS/CHEERS will be delivered by any selling beneficial owner to reflect any
transfer of such MOPPRS/CHEERS effected in the remarketing. In addition, under
the terms of the MOPPRS/CHEERS and the Remarketing Agreements (described below),
Cox will agree that, notwithstanding any provision to the contrary set forth in
the indenture, (i) it will use its reasonable efforts to maintain the
MOPPRS/CHEERS in book-entry form with DTC or any successor thereto and to
appoint a successor depositary to the extent necessary to maintain the
MOPPRS/CHEERS in book-entry form, and (ii) it will waive any discretionary right
it otherwise has under the indenture to cause the MOPPRS/CHEERS to be issued in
certificated form, unless such issuance is required by law or judicial or
administrative order.
For further information with respect to transfers and settlement through
DTC, see "Book-Entry System, Form and Delivery; Same Day Settlement and Payment"
below.
THE REMARKETING DEALERS
Cox and each remarketing dealer are entering into a Remarketing Agreement
with respect to the remarketing on the Mandatory Tender Dates, which we refer to
as the Remarketing Agreements, the general terms and provisions of which are
summarized below. Except under certain circumstances described in the
Remarketing Agreements, the remarketing dealers will not receive any fees or
other reimbursement from Cox in connection with the remarketing. The aggregate
price paid to Cox by the underwriters for the purchase of the MOPPRS/CHEERS will
include the total consideration paid by the remarketing dealers for the right to
remarket the MOPPRS/CHEERS.
Cox will agree to indemnify the remarketing dealers against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to make contribution to certain payments in respect thereof, arising out of
or in connection with their duties under the respective Remarketing Agreements.
In the event that a remarketing dealer elects to remarket the MOPPRS/CHEERS
as described in this prospectus supplement, the obligation of the remarketing
dealer to purchase MOPPRS/CHEERS from tendering beneficial owners of
MOPPRS/CHEERS will be subject to several conditions precedent set forth in the
applicable Remarketing Agreement, including the conditions that, since the
Notification Date, no material adverse change in the condition of Cox and its
subsidiaries, considered as one enterprise, shall have occurred, that no Event
of Default (as defined in the indenture), or any event which, with the giving of
notice or passage of time, or both, would constitute an Event of Default, with
respect to the MOPPRS/CHEERS shall have occurred and be continuing, and that the
remarketing dealer shall have received at least two bids in accordance with the
procedures described above for the Short Term Mode or, as the case may be, the
MOPPRS/CHEERS Mode. In addition, each Remarketing Agreement will
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provide for the termination thereof, or redetermination of the MOPPRS/CHEERS
Spread or, as the case may be, the Short Term Spread by the remarketing dealer
on or before the applicable Mandatory Tender Date, upon the occurrence of
certain events as set forth in the Remarketing Agreements.
The Remarketing Agreements will provide that, in the event that no
applicable United States Treasury securities are outstanding as of any date for
purposes of determining a rate, the remarketing dealers, or, as the case may be,
the calculation agents, will determine an equivalent rate in good faith on a
commercially reasonable basis using a formulation by reference to market
practice at such date and a security that is, in the judgment of the remarketing
dealers and after consultation with Cox, or, as the case may be, the calculation
agents and after consultation with Cox, a comparable benchmark security at such
date. Cox and each remarketing dealer may cause the applicable Remarketing
Agreement and the terms of the MOPPRS/CHEERS, subject to the terms of the
indenture, to be amended as necessary to facilitate the foregoing.
No holder or beneficial owner of any MOPPRS/CHEERS shall have any rights or
claims under the Remarketing Agreements or against either remarketing dealer as
a result of the remarketing dealers not purchasing such MOPPRS/CHEERS.
Each Remarketing Agreement will also provide that the remarketing dealer
may resign at any time as remarketing dealer, such resignation to be effective
10 days after the delivery to Cox and the trustee of notice of such resignation.
In such case, it shall be the sole obligation of Cox to appoint a successor
remarketing dealer. In the event of resignation of one of remarketing dealers
prior to a remarketing, Cox may request the other remarketing dealer to remarket
the full principal amount of the MOPPRS/CHEERS on the applicable Mandatory
Tender Date.
Each remarketing dealer, in its individual or any other capacity, may buy,
sell, hold and deal in any of the MOPPRS/CHEERS. Each remarketing dealer may
exercise any vote or join in any action which any beneficial owner of
MOPPRS/CHEERS may be entitled to exercise or take with like effect as if it did
not act in any capacity under a Remarketing Agreement. Each remarketing dealer,
in its individual capacity, either as principal or agent, may also engage in or
have an interest in any financial or other transaction with Cox as freely as if
it did not act in any capacity under a Remarketing Agreement.
The rights of the remarketing dealers under the Remarketing Agreements,
including any rights to payment thereunder, will rank equally with the
MOPPRS/CHEERS. Cox will agree in the Remarketing Agreements that it will not
secure the MOPPRS/CHEERS or any obligation thereunder, or suffer to exist any
lien in favor of the MOPPRS/CHEERS or any obligation thereunder, without in any
such case effectively providing concurrently with the securing of the
MOPPRS/CHEERS or any obligation thereunder, or the granting of any such lien,
that the rights of the remarketing dealers under the Remarketing Agreements will
be secured equally and ratably with the MOPPRS/CHEERS and any obligation
thereunder so long as the MOPPRS/CHEERS or any such obligation are so secured.
REPURCHASE
Cox will repurchase the applicable MOPPRS/CHEERS as a whole on the
applicable Mandatory Tender Date at a price equal to 100% of the principal
amount of such MOPPRS/CHEERS plus all accrued and unpaid interest, if any, on
such MOPPRS/CHEERS to the date of repurchase in the event that:
- a remarketing dealer for any reason (other than redemption by Cox of the
applicable MOPPRS/ CHEERS from the such remarking dealer) does not notify
Cox of (a) the MOPPRS/CHEERS Spread by 4:00 p.m., New York City time, on
the MOPPRS/CHEERS Spread Determination Date, in the case of the
MOPPRS/CHEERS Mode, or (b) the Short Term Spread by 4:00 p.m., New York
City time, on the Short Term Spread Determination Date, in the case of
the Short Term Mode; or
- prior to either Mandatory Tender Date, a remarketing dealer has resigned
and no successor has been appointed on or before the Short Term Spread
Determination Date or, as applicable, the MOPPRS/CHEERS Spread
Determination Date; or
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- since the Notification Date, a remarketing dealer terminates the
applicable Remarketing Agreement due to the occurrence of a material
adverse change in the condition of Cox and its subsidiaries, considered
as one enterprise, or an Event of Default, or any event which, with the
giving of notice or passage of time, or both, would constitute an Event
of Default, with respect to the MOPPRS/CHEERS, or any other event
constituting a termination event under the Remarketing Agreement; or
- a remarketing dealer elects not to remarket the MOPPRS/CHEERS; or
- a remarketing dealer receives fewer than two bids in accordance with the
procedures described above for the Short Term Mode or, as the case may
be, the MOPPRS/CHEERS Mode; or
- a remarketing dealer for any reason does not purchase all tendered
MOPPRS/CHEERS on a Mandatory Tender Date.
In any such case, payment will be made by Cox to the DTC participant of
each tendering beneficial owner of MOPPRS/CHEERS, by book-entry through DTC by
the close of business on the Mandatory Tender Date against delivery through DTC
of such beneficial owner's tendered MOPPRS/CHEERS.
Notwithstanding the foregoing, if one remarketing dealer resigns or
otherwise elects not to remarket, but the other remarketing dealer agrees to,
and does, remarket all of the MOPPRS/CHEERS on the applicable Mandatory Tender
Date, then Cox will not be obligated to repurchase any of the MOPPRS/CHEERS on
such date.
SUBSEQUENT REMARKETINGS; REMARKETING RESET MODE
The following description sets forth the terms and conditions of the
remarketing of the MOPPRS/CHEERS on each Optional Tender Date, if any, for each
Subsequent Spread Period, if any, following the MOPPRS/CHEERS Spread Period. If
the MOPPRS/CHEERS are remarketed on an Optional Tender Date, we refer to the
terms and conditions of such remarketing as the Remarketing Reset Mode.
If Cox chooses to have MOPPRS/CHEERS remarketed in the Remarketed Reset
Mode, then, during each Subsequent Spread Period, the applicable MOPPRS/CHEERS
will bear interest at a Fixed Rate or a Floating Rate, and will be subject to
redemption, in accordance with the procedures described below. Each
MOPPRS/CHEERS will be automatically tendered, or deemed tendered, to the
remarketing reset agent for remarketing on each Optional Tender Date, unless the
beneficial owner thereof elects not to tender in accordance with the procedures
described below. In addition, Cox will be required to repurchase all of the
applicable MOPPRS/CHEERS on any Optional Tender Date commencing a Subsequent
Spread Period for which no new interest rate is established, as described below
under "-- Mandatory Repurchase Upon Failure to Set a Spread," and to repurchase
any tendered MOPPRS/CHEERS that are the subject of a failed remarketing on the
applicable Optional Tender Date, as described below under "-- Mandatory
Repurchase Upon Failed Remarketing."
Subsequent Spread Periods; Spread Determination. The Spread will be
determined in the manner described below for each period from and including each
Optional Tender Date to but excluding each next succeeding Optional Tender Date
(we refer to each such period as a Subsequent Spread Period), which will be one
or more periods of at least six months and not more than the period remaining to
the Stated Maturity Date of the MOPPRS/CHEERS (or any integral multiple of six
months therein), designated by Cox, commencing on the Optional Tender Date
specified by Cox and the remarketing reset agent on the applicable Mode Terms
Designation Date (as defined below) in connection with the establishment of each
Subsequent Spread Period through and including the next succeeding Optional
Tender Date or the Stated Maturity Date, as the case may be (no Subsequent
Spread Period may end after the Stated Maturity Date).
The Spread that will be applicable to MOPPRS/CHEERS during each Subsequent
Spread Period will be the percentage (a) recommended by the remarketing reset
agent so as to result in a rate that, in
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the opinion of the remarketing reset agent, will enable tendered MOPPRS/CHEERS
to be remarketed by the remarketing reset agent at 100% of the principal amount
thereof, as described under "-- Tender at Option of Beneficial Owners;
Remarketing" below, and (b) agreed to by Cox. During each Subsequent Spread
Period, the MOPPRS/CHEERS will bear interest at a Floating Rate or a Fixed Rate,
determined as described below.
Unless notice of redemption of the MOPPRS/CHEERS has been given, the term,
redemption dates, redemption type (i.e., Par, Premium or Make-Whole), redemption
prices (if applicable), Optional Tender Date, Interest Payment Dates, interest
rate type (i.e., Fixed Rate or Floating Rate), Floating Rate Basis (if
applicable) and any other relevant terms for each Subsequent Spread Period for
MOPPRS/CHEERS will be established by 3:00 p.m., New York City time, on the
eighth business day prior to the Optional Tender Date commencing such Subsequent
Spread Period (we refer to such date as the Mode Terms Designation Date for such
Subsequent Spread Period); provided, that the Mode Terms Designation Date for
establishing the first Optional Tender Date, if any, for the applicable
MOPPRS/CHEERS, will be the Mode Terms Designation Date for the MOPPRS/CHEERS
Mode for such MOPPRS/CHEERS.
The Spread for each Subsequent Spread Period will be established by 3:00
p.m., New York City time, on the fourth business day prior to the Optional
Tender Date commencing such Subsequent Spread Period (which we refer to as the
Subsequent Spread Determination Date). Cox will request, not less than ten nor
more than 20 days prior to any Subsequent Spread Determination Date, that DTC
notify its DTC participants of such Subsequent Spread Determination Date and of
the procedures that must be followed if any beneficial owner of a MOPPRS/CHEERS
wishes to tender such MOPPRS/CHEERS as described under "-- Tender at Option of
Beneficial Owners; Remarketing" below. In the event that DTC or its nominee is
no longer the holder of record of the MOPPRS/CHEERS, Cox will notify the
MOPPRS/CHEERS holders of such information within such period of time. This
notice will be the only notice given by Cox or the remarketing reset agent with
respect to such Subsequent Spread Determination Date and procedures for
tendering MOPPRS/CHEERS.
If the MOPPRS/CHEERS are to bear interest at a Floating Rate, as agreed to
by Cox and the remarketing reset agent on a Mode Terms Designation Date, then
the applicable Floating Rate for the corresponding Subsequent Spread Period will
be determined as described below under "-- Determination of a Floating Rate
Basis or a Fixed Rate Basis -- Floating Rate," and will be equal to (i) the
applicable Floating Rate Basis, plus or minus (ii) the applicable Spread (as
agreed to by Cox and the remarketing reset agent on the Subsequent Spread
Determination Date for such Subsequent Spread Period).
If the MOPPRS/CHEERS are to bear interest at a Fixed Rate, as agreed to by
Cox and the remarketing reset agent on a Mode Terms Designation Date, then the
applicable Fixed Rate for the corresponding Subsequent Spread Period will be
determined by 1:00 p.m., New York City time, on the third Business Day prior to
the Optional Tender Date commencing such Subsequent Spread Period, which we
refer to as the Fixed Interest Determination Date, and will be equal to (i) the
Fixed Rate Basis, determined as described below under "-- Determination of a
Floating Rate Basis or a Fixed Rate Basis -- Fixed Rate" plus (ii) the
applicable Spread (as agreed to by Cox and the remarketing reset agent on the
preceding Subsequent Spread Determination Date for such Subsequent Spread
Period).
Mandatory Repurchase Upon Failure to Set a Spread. In the event that Cox
and the remarketing reset agent do not agree on the Spread for any Subsequent
Spread Period for the applicable MOPPRS/CHEERS, then Cox is required
unconditionally to repurchase and retire all of the MOPPRS/CHEERS on the
Optional Tender Date at a price equal to 100% of the principal amount of such
MOPPRS/CHEERS, together with accrued and unpaid interest thereon to the Optional
Tender Date.
Tender at Option of Beneficial Owners; Remarketing. Cox and the
remarketing reset agent will enter into a remarketing reset agreement with
respect to remarketings on Optional Tender Dates, referred to as the Remarketing
Reset Agreement. In the event Cox and the remarketing reset agent agree on the
Spread on the Subsequent Spread Determination Date with respect to any
Subsequent Spread Period for any MOPPRS/CHEERS, Cox and the remarketing reset
agent will enter into a Remarketing Agency
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<PAGE> 27
Agreement, incorporating by reference the Remarketing Reset Agreement, on such
Subsequent Spread Determination Date with respect to such MOPPRS/CHEERS.
On the Optional Tender Date commencing each Subsequent Spread Period, each
applicable MOPPRS/CHEERS will be automatically tendered, or deemed tendered, to
the remarketing reset agent for remarketing by the remarketing reset agent on
the Optional Tender Date at 100% of the principal amount thereof, which we refer
to as the Purchase Price, unless the beneficial owner of the MOPPRS/CHEERS, at
such owner's option, upon giving notice, which we refer to as the Hold Notice,
as provided below, elects not to tender such MOPPRS/CHEERS. Subject to the
second succeeding paragraph, the Purchase Price will be paid by the remarketing
reset agent in accordance with the standard procedures of DTC, which currently
provide for payments in same-day funds. Interest accrued on such MOPPRS/CHEERS
with respect to the preceding interest period will be paid in the manner
described above under "-- General" and below under "-- Determination of a
Floating Rate Basis or a Fixed Rate Basis -- Floating Rate" or "-- Fixed Rate,"
as the case may be. If such beneficial owner has an account at the remarketing
reset agent and tenders such MOPPRS/CHEERS through such account, such beneficial
owner will not be required to pay any fee or commission to the remarketing reset
agent. If such MOPPRS/CHEERS are tendered through a broker, dealer, commercial
bank, trust company or other institution, other than the remarketing reset
agent, such holder may be required to pay fees or commissions to such other
institution. It is currently anticipated that MOPPRS/CHEERS that are so
purchased by the remarketing reset agent will be remarketed by it.
The Hold Notice must be received by the remarketing reset agent through DTC
during the period commencing at 3:00 p.m., New York City time, on the Mode Terms
Designation Date and ending at 12:00 noon, New York City time, on the third
business day prior to the Optional Tender Date for such Subsequent Spread Period
(we refer to such date as the Notice Date in respect of the Subsequent Spread
Period); provided, however, that if the remarketing reset agent and Cox are
unable to agree on the Spread for the Subsequent Spread Period, any Hold Notices
received will be null and void. In order to ensure that a Hold Notice is
received on a particular day, the beneficial owner of MOPPRS/CHEERS must direct
his broker or other designated DTC participant to give such Hold Notice before
the broker's cut-off time for accepting instructions for that day. Different
firms may have different cut-off times for accepting instructions from their
customers. Accordingly, beneficial owners should consult the brokers or other
DTC participants through which they own their interests in the MOPPRS/CHEERS for
the cut-off times for such brokers or other DTC participants. Except as
otherwise provided above, a Hold Notice shall be irrevocable. If a Hold Notice
is not received through DTC for any reason by the remarketing reset agent with
respect to any MOPPRS/CHEERS by 12:00 noon, New York City time, on the Notice
Date, the beneficial owner of such MOPPRS/CHEERS shall be deemed to have elected
to tender such MOPPRS/CHEERS for purchase by the remarketing reset agent. All of
the applicable MOPPRS/CHEERS, whether or not tendered, shall bear interest upon
the same terms.
The remarketing reset agent will attempt, on a reasonable efforts basis, to
remarket the tendered MOPPRS/CHEERS at a price equal to 100% of the aggregate
principal amount so tendered. There is no assurance that the remarketing reset
agent will be able to remarket the entire principal amount of MOPPRS/CHEERS
tendered in a remarketing. The obligation of the remarketing reset agent to
perform its duties will be subject to certain conditions and termination events
set forth in the Remarketing Agency Agreement, including a condition that no
material adverse change in the condition of Cox and its subsidiaries, taken as a
whole, shall have occurred since the Subsequent Spread Determination Date for
the MOPPRS/CHEERS. In addition, the Remarketing Agency Agreement will provide
for the termination thereof by the remarketing reset agent upon the occurrence
of certain events as set forth therein.
For its services in connection with each remarketing under the Remarketing
Reset Agreement, the remarketing reset agent will receive from Cox a fee
determined at the time of executing a Remarketing Agency Agreement for such
remarketing. Cox will agree to indemnify the remarketing reset agent against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or to make
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<PAGE> 28
contribution to certain payments in respect thereof, arising out of or in
connection with its duties under the Remarketing Reset Agreement.
The Remarketing Reset Agreement will provide that, in the event that no
applicable United States Treasury securities are outstanding as of any date for
purposes of determining a rate, the remarketing reset agent, or, as the case may
be, the calculation agent, will determine an equivalent rate in good faith on a
commercially reasonable basis using a formulation by reference to market
practice at such date and a security that is, in the judgment of the remarketing
reset agent and after consultation with Cox, or, as the case may be, the
calculation agent and after consultation with Cox, a comparable benchmark
security at such date. Cox and the remarketing reset agent may cause the
Remarketing Reset Agreement and the terms of the MOPPRS/CHEERS, subject to the
terms of the indenture, to be amended as necessary to facilitate the foregoing.
No beneficial owner of any MOPPRS/CHEERS shall have any rights or claims
against the remarketing reset agent as a result of the remarketing reset agent
not purchasing such MOPPRS/CHEERS.
Notwithstanding anything to the contrary contained in this prospectus
supplement, the remarketing reset agent shall have the option, but not the
obligation, to purchase any MOPPRS/CHEERS tendered to it that it is not able to
remarket. If the remarketing reset agent is unable to remarket the entire
principal amount of all MOPPRS/CHEERS tendered on any Optional Tender Date and,
in its sole discretion, the remarketing reset agent chooses not to purchase such
tendered MOPPRS/CHEERS, it will promptly notify Cox and the trustee.
The term remarketing reset agent means Merrill Lynch or such other
broker-dealer selected by Cox to act as remarketing reset agent. Pursuant to the
Remarketing Reset Agreement, Merrill Lynch will agree to act as the initial
remarketing reset agent.
The term calculation agent means the entity selected by Cox as its agent to
determine (i) the applicable Floating Rate Basis and the interest rate on the
MOPPRS/CHEERS for any Interest Reset Period and/or (ii) the Fixed Rate Basis
that is used in connection with the determination of the applicable Fixed Rate,
and the ensuing applicable Fixed Rate. Pursuant to the respective Remarketing
Agreements, Chase and Merrill Lynch will act as calculation agents in respect of
a Fixed Rate, if any, for a MOPPRS/CHEERS Spread Period. Pursuant to the
Remarketing Reset Agreement, Merrill Lynch will agree to act as calculation
agent in respect of any Fixed Rate Basis, and pursuant to a Calculation Agency
Agreement with Cox and Merrill Lynch, The Bank of New York will agree to act as
calculation agent in respect of any Floating Rate Basis. Cox, in its sole
discretion, may change the remarketing reset agent and the calculation agents
(other than with respect to the Fixed Rate Basis, if any, for the MOPPRS/CHEERS
Spread Period) at any time on or prior to 3:00 p.m., New York City time, on the
Mode Terms Designation Date relating thereto.
Each of the calculation agents and the remarketing reset agent, in its
individual or any other capacity, may buy, sell, hold and deal in any of the
MOPPRS/CHEERS. Any of such parties may exercise any vote or join in any action
which any beneficial owner of MOPPRS/CHEERS may be entitled to exercise or take
with like effect as if it did not act in any capacity under the Remarketing
Agreements or, as the case may be, the Remarketing Reset Agreement, Remarketing
Agency Agreement or Calculation Agency Agreement. Any of such parties, in its
individual capacity, either as principal or agent, may also engage in or have an
interest in any financial or other transaction with Cox as freely as if it did
not act in any capacity under the Remarketing Agreements or, as the case may be,
the Remarketing Reset Agreement, Remarketing Agency Agreement or Calculation
Agency Agreement.
Mandatory Repurchase Upon Failed Remarketing. In the event that the
remarketing reset agent is unable to remarket some or all of the tendered
MOPPRS/CHEERS and, in its sole discretion, chooses not to purchase such tendered
MOPPRS/CHEERS, Cox is obligated unconditionally to purchase and retire on the
Optional Tender Date the remaining unsold tendered MOPPRS/CHEERS at a price
equal
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<PAGE> 29
to 100% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the applicable Optional Tender Date.
DETERMINATION OF A FLOATING RATE BASIS OR A FIXED RATE BASIS
Floating Rate. The Floating Rate Basis for any Spread Period during which
MOPPRS/CHEERS bear interest at a Floating Rate will be determined by reference
to (i) the CMT Rate, (ii) the Commercial Paper Rate, (iii) LIBOR, (iv) the
Federal Funds Rate, (v) the Prime Rate (vi) the Seven-Day Commercial Paper Rate,
(vii) the Treasury Rate or (viii) the Weekly-Average Federal Funds Rate, each as
described below, or such other Floating Rate Basis as may be designated by Cox,
after consultation with the applicable remarketing dealer or dealers or
remarketing reset agent, in each case as selected on the applicable date.
If the MOPPRS/CHEERS are to bear interest at a Floating Rate, then during
the corresponding Spread Period, (i) unless otherwise specified for a Floating
Rate, the interest rate on the MOPPRS/CHEERS will be reset daily, weekly,
monthly, quarterly or semiannually (we refer to each such period as an Interest
Reset Period) and the MOPPRS/CHEERS will bear interest at a per annum rate
(computed on the basis of the actual number of days elapsed over a 360-day year,
if the Floating Rate Basis is the Commercial Paper Rate, the Federal Funds Rate,
LIBOR, the Prime Rate, the Seven-Day Commercial Paper Rate or the Weekly-Average
Federal Funds Rate, or on the basis of the actual number of days in the year, if
the Floating Rate Basis is the CMT Rate or the Treasury Rate) equal to the
applicable Floating Rate Basis for the applicable Interest Reset Period, plus or
minus the applicable Spread, Short Term Spread or MOPPRS/CHEERS Spread, as the
case may be, and (ii) interest on the MOPPRS/CHEERS will be payable either
monthly, quarterly, semiannually or otherwise, on such dates (we refer to each
such date as an Interest Payment Date with respect to the applicable Spread
Period) as specified on the applicable date. Unless otherwise specified in the
case of a Floating Rate, interest on the MOPPRS/CHEERS will be payable, in the
case of a Floating Rate which resets (i) daily, weekly or monthly, on the 7th of
each month; (ii) quarterly, on each February 7, May 7, August 7 and November 7;
and (iii) semiannually, on each May 7 and November 7. The first day of an
Interest Reset Period is referred to in this prospectus supplement as an
Interest Reset Date, and, unless otherwise specified, the Interest Reset Dates
for any Spread Period will be in the case of a Floating Rate which resets (i)
daily, each Business Day, (ii) weekly, on Wednesday of each week, or, in the
case of the Treasury Rate, on Tuesday of each week (subject to the second
succeeding paragraph below), or, in the case of the Weekly-Average Federal Funds
Rate, on Monday of each week, (iii) monthly, on the 7th of each month; (iv)
quarterly, on each February 7, May 7, August 7 and November 7; and (v)
semiannually, on each May 7 and November 7.
Unless otherwise specified for a Floating Rate, the interest rate with
respect to each Floating Rate Basis will be determined in accordance with the
applicable provisions below. The interest rate in effect on each day will be (i)
if such day is an Interest Reset Date, the interest rate determined as of the
Interest Determination Date immediately preceding such Interest Reset Date or
(ii) if such day is not an Interest Reset Date, the interest rate determined as
of the Interest Determination Date immediately preceding the most recent
Interest Reset Date.
If any Interest Reset Date would otherwise be a day that is not a business
day, the particular Interest Reset Date will be postponed to the next succeeding
business day, except that if LIBOR is the applicable Floating Rate Basis and
that business day falls in the next succeeding calendar month, the particular
Interest Reset Date will be the immediately preceding business day. In addition,
if the Treasury Rate is the applicable Floating Rate Basis and the Interest
Determination Date would otherwise fall on an Interest Reset Date, the
particular Interest Reset Date will be postponed to the next succeeding business
day.
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The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date, which will be:
- with respect to the Commercial Paper Rate, the Federal Funds Rate, the
Prime Rate, the Seven-Day Commercial Paper Rate and the Weekly-Average
Federal Funds Rate -- the business day immediately preceding the related
Interest Reset Date;
- with respect to the CMT Rate -- the second business day preceding the
related Interest Reset Date;
- with respect to LIBOR -- the second London business day preceding the
related Interest Reset Date; and
- with respect to the Treasury Rate -- the day in the week in which the
related Interest Reset Date falls on which day Treasury Bills (as defined
below) are normally auctioned (i.e., Treasury Bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is normally held on the following Tuesday, except
that the auction may be held on the preceding Friday); provided, however,
that if an auction is held on the Friday of the week preceding the
related Interest Reset Date, the Interest Determination Date will be the
preceding Friday.
Unless otherwise specified, the Calculation Date, if applicable, pertaining
to any Interest Determination Date will be the earlier of (i) the tenth calendar
day after such Interest Determination Date or, if such day is not a business
day, the next succeeding business day or (ii) the business day immediately
preceding the applicable Interest Payment Date or Maturity Date, as the case may
be.
H.15 (519) means the weekly statistical release designated as H.15(519), or
any successor publication, published by the Board of Governors of the Federal
Reserve System.
H.15 Daily Update means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.
The Index Maturity means the designated period to maturity of the
instrument or obligation with respect to which the related Floating Rate Basis
will be calculated.
Unless otherwise specified for a Floating Rate, the calculation agent shall
determine each Floating Rate Basis in accordance with the following provisions:
CMT Rate means:
(1) if CMT Telerate Page 7051 is selected for the applicable Spread
Period:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the Index Maturity selected on
the applicable Mode Terms Designation Date as published in H.15(519)
under the caption "Treasury Constant Maturities", as the yield is
displayed on Bridge Telerate, Inc. (or any successor service) on page
7051 (or any other page as may replace the specified page on that
service) (which we refer to as Telerate Page 7051), for the particular
Interest Determination Date; or
(b) if the rate referred to in clause (a) does not so appear on
Telerate Page 7051, the percentage equal to the yield for United States
Treasury securities at "constant maturity" having the particular Index
Maturity and for the particular Interest Determination Date as published
in H.15(519) under the caption "Treasury Constant Maturities"; or
(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the rate on the particular Interest Determination Date for
the period of the particular Index Maturity as may then be published by
either the Federal Reserve System Board of Governors or the United
States Department of the Treasury that the calculation agent determines
to be comparable to the rate which would otherwise have been published
in H.15(519); or
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<PAGE> 31
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular Interest Determination Date calculated by the
calculation agent as a yield to maturity based on the arithmetic mean of
the secondary market bid prices at approximately 3:30 P.M., New York
City time, on that Interest Determination Date of three leading primary
United States government securities dealers in The City of New York
(which may include the remarketing reset agent or its affiliates or, as
the case may be, the remarketing dealers or their affiliates and each of
whom we refer to as a Reference Dealer), selected by the calculation
agent from five Reference Dealers selected by the calculation agent and
eliminating the highest quotation, or, in the event of equality, one of
the highest, and the lowest quotation or, in the event of equality, one
of the lowest, for United States Treasury securities with an original
maturity equal to the particular Index Maturity, a remaining term to
maturity no more than 1 year shorter than that Index Maturity and in a
principal amount that is representative for a single transaction in the
securities in that market at that time; or
(e) if fewer than five but more than two of the prices referred to
in clause (d) are provided as requested, the rate on the particular
Interest Determination Date calculated by the calculation agent based on
the arithmetic mean of the bid prices obtained and neither the highest
nor the lowest of the quotations shall be eliminated; or
(f) if fewer than three prices referred to in clause (d) are
provided as requested, the rate on the particular Interest Determination
Date calculated by the calculation agent as a yield to maturity based on
the arithmetic mean of the secondary market bid prices as of
approximately 3:30 P.M., New York City time, on that Interest
Determination Date of three Reference Dealers selected by the
calculation agent from five Reference Dealers selected by the
calculation agent and eliminating the highest quotation or, in the event
of equality, one of the highest and the lowest quotation or, in the
event of equality, one of the lowest, for United States Treasury
securities with an original maturity greater than the particular Index
Maturity, a remaining term to maturity closest to that Index Maturity
and in a principal amount that is representative for a single
transaction in the securities in that market at that time; or
(g) if fewer than five but more than two prices referred to in
clause (f) are provided as requested, the rate on the particular
Interest Determination Date calculated by the calculation agent based on
the arithmetic mean of the bid prices obtained and neither the highest
nor the lowest of the quotations will be eliminated; or
(h) if fewer than three prices referred to in clause (f) are
provided as requested, the CMT Rate in effect on the particular Interest
Determination Date.
(2) if CMT Telerate Page 7052 is selected for the applicable Spread
Period:
(a) the percentage equal to the one-week or one-month, as selected
on the applicable Mode Terms Designation Date, average yield for United
States Treasury securities at "constant maturity" having the Index
Maturity selected on the applicable Date, as published in H.15(519)
opposite the caption "Treasury Constant Maturities", as the yield is
displayed on Bridge Telerate, Inc. (or any successor service) (on page
7052 or any other page as may replace the specified page on that
service) (which we refer to as Telerate Page 7052), for the week or
month, as applicable, ended immediately preceding the week or month, as
applicable, in which the particular Interest Determination Date falls;
or
(b) if the rate referred to in clause (a) does not so appear on
Telerate Page 7052, the percentage equal to the one-week or one-month,
as selected on the applicable Mode Terms Determination Date, average
yield for United States Treasury securities at "constant maturity"
having the particular Index Maturity and for the week or month, as
applicable, preceding the particular Interest Determination Date as
published in H.15(519) opposite the caption "Treasury Constant
Maturities;" or
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(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the one-week or one-month, as selected on the Mode Terms
Designation Date, average yield for United States Treasury securities at
"constant maturity" having the particular Index Maturity as otherwise
announced by the Federal Reserve Bank of New York for the week or month,
as applicable, ended immediately preceding the week or month, as
applicable, in which the particular Interest Determination Date falls;
or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular Interest Determination Date calculated by the
calculation agent as a yield to maturity based on the arithmetic mean of
the secondary market bid prices at approximately 3:30 P.M., New York
City time, on that Interest Determination Date of three Reference
Dealers selected by the calculation agent from five Reference Dealers
selected by the calculation agent and eliminating the highest quotation,
or, in the event of equality, one of the highest, and the lowest
quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity equal to the
particular Index Maturity, a remaining term to maturity no more than 1
year shorter than that Index Maturity and in a principal amount that is
representative for a single transaction in the securities in that market
at that time; or
(e) if fewer than five but more than two of the prices referred to
in clause (d) are provided as requested, the rate on the particular
Interest Determination Date calculated by the calculation agent based on
the arithmetic mean of the bid prices obtained and neither the highest
nor the lowest of the quotations shall be eliminated; or
(f) if fewer than three prices referred to in clause (d) are
provided as requested, the rate on the particular Interest Determination
Date calculated by the calculation agent as a yield to maturity based on
the arithmetic mean of the secondary market bid prices as of
approximately 3:30 P.M., New York City time, on that Interest
Determination Date of three Reference Dealers selected by the
calculation agent from five Reference Dealers selected by the
calculation agent and eliminating the highest quotation or, in the event
of equality, one of the highest and the lowest quotation or, in the
event of equality, one of the lowest, for United States Treasury
securities with an original maturity greater than the particular Index
Maturity, a remaining term to maturity closest to that Index Maturity
and in a principal amount that is representative for a single
transaction in the securities in that market at the time; or
(g) if fewer than five but more than two prices referred to in
clause (f) are provided as requested, the rate on the particular
Interest Determination Date calculated by the calculation agent based on
the arithmetic mean of the bid prices obtained and neither the highest
nor the lowest of the quotations will be eliminated; or
(h) if fewer than three prices referred to in clause (f) are
provided as requested, the CMT Rate in effect on that Interest
Determination Date.
If two United States Treasury securities with an original maturity greater
than the Index Maturity selected on the applicable Mode Terms Designation Date,
have remaining terms to maturity equally close to the particular Index Maturity,
the quotes for the United States Treasury security with the shorter original
remaining term to maturity will be used.
Commercial Paper Rate means:
(1) the Money Market Yield (as defined below) on the Interest
Determination Date of the rate for commercial paper having the Index
Maturity selected on the applicable Mode Terms Designation Date published
in H.15(519) under the caption "Commercial Paper -- Nonfinancial"; or
(2) if the rate described in clause (1) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
Interest Determination Date for commercial paper having the Index Maturity
selected on the applicable Mode Terms Designation Date, published in
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H.15 Daily Update, or other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption "Commercial
Paper -- Nonfinancial"; or
(3) if the rates referred to in clauses (1) and (2) are not so
published by 3:00 P.M., New York City time, on the related calculation
date, the rate on the Interest Determination Date calculated by the
calculation agent as the Money Market Yield of the arithmetic mean of the
offered rates at approximately 11:00 A.M., New York City time, on the
Interest Determination Date of three leading dealers of United States
dollar commercial paper in The City of New York (which may include the
remarketing reset agent and its affiliates or, as the case may be, the
remarketing dealers and their affiliates), selected by the calculation
agent for commercial paper having the Index Maturity selected on the
applicable Mode Terms Designation Date, placed for industrial issuers whose
bond rating is "Aa", or the equivalent, from a nationally recognized
statistical rating organization; or
(4) if the dealers selected by the calculation agent are not quoting
as mentioned in clause (3), the Commercial Paper Rate in effect on the
Interest Determination Date.
Money Market Yield means a yield calculated in accordance with the
following formula and expressed as a percentage:
<TABLE>
<S> <C> <C> <C> <C>
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
</TABLE>
where:
D = the applicable per annum rate for commercial paper quoted on a
bank discount basis and expressed as a decimal; and
M = the actual number of days in the interest period for which
interest is being calculated.
Federal Funds Rate means:
(1) the rate on the Interest Determination Date for United States
dollar federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)", as displayed on Bridge Telerate, Inc. or any successor
service on page 120 or any other page as may replace the applicable page on
that service, which we refer to as Telerate Page 120; or
(2) if the rate referred to in clause (1) does not appear on Telerate
Page 120 or is not so published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on the Interest Determination Date for
United States dollar federal funds published in H.15 Daily Update, or other
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "Federal Funds/Effective Rate"; or
(3) if the rates referred to in clauses (1) and (2) are not so
published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate on the Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by
three leading brokers of United States dollar federal funds transactions in
The City of New York (which may include the remarketing reset agent or its
affiliates or, as the case may be, the remarketing dealers or their
affiliates), selected by the calculation agent before 9:00 A.M., New York
City time, on the Interest Determination Date; or
(4) if the brokers selected by the calculation agent are not quoting
as mentioned in clause (3), the Federal Funds Rate in effect on the
Interest Determination Date.
LIBOR means:
(1) the rate for deposits in U.S. dollars, having the Index Maturity
selected on the applicable Mode Terms Designation Date, or on the date of
this prospectus supplement, in the case of the Initial Period, commencing
on the Interest Reset Date, that appears as of 11:00 A.M., London time, on
the particular Interest Determination Date on the display on Bridge
Telerate, Inc. or any successor service on page 3750 or any page as may
replace the specified page on that service for the purpose of
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displaying the London interbank rates of major banks for U.S. dollars,
which we refer to as Telerate Page 3750; or
(2) if no rate appears on the particular Interest Determination Date
on Telerate Page 3750 as specified in clause (1), the rate calculated by
the calculation agent as the arithmetic mean of at least two offered
quotations obtained by the calculation agent after requesting the principal
London offices of each of four major reference banks (which may include
affiliates of the remarketing reset agent or, as the case may be, the
remarketing dealers) in the London interbank market to provide the
calculation agent with its offered quotation for deposits in U.S. dollars
for the period of the applicable Index Maturity commencing on the related
Interest Reset Date, by prime banks in the London interbank market at
approximately 11:00 A.M., London time, on that Interest Determination Date
and in a principal amount that is representative for a single transaction
in U.S. dollars in that market at that time; or
(3) if fewer than two offered quotations referred to in clause (2) are
so provided, the rate on the Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the rates quoted at
approximately 11:00 A.M., in the City of New York, on the Interest
Determination Date by three major banks (which may include affiliates of
the remarketing reset agent or, as the case may be, the remarketing
dealers), in The City of New York selected by the calculation agent for
loans in U.S. dollars to leading European banks, having the applicable
Index Maturity and in a principal amount that is representative for a
single transaction in U.S. dollars in that market at that time; or
(4) if the banks so selected by the calculation agent are not quoting
as mentioned in clause (3), LIBOR in effect on the particular Interest
Determination Date.
Prime Rate means:
(1) the rate on the Interest Determination Date as published in
H.15(519) under the heading "Bank Prime Loan"; or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on the
Interest Determination Date published in H.15 Daily Update, or another
recognized electronic source used for the purpose of displaying the
applicable rate under the caption "Bank Prime Loan"; or
(3) if the rates referred to in clauses (1) and (2) are not so
published by 3:00 P.M., New York City time, on the related Calculation
Date, the rate calculated by the calculation agent as the arithmetic mean
of the rates of interest publicly announced by each bank that appears on
the Reuters Screen USPRIME 1 Page (as defined below) as the particular
bank's prime rate or base lending rate as of 11:00 A.M., New York City
time, on the Interest Determination Date; or
(4) if fewer than four rates described in clause (3) by 3:00 P.M., New
York City time, on the related Calculation Date are shown on Reuters Screen
USPRIME 1, the rate on the Interest Determination Date calculated by the
calculation agent as the arithmetic mean of the prime rates or base lending
rates quoted on the basis of the actual number of days in the year divided
by a 360-day year as of the close of business on the Interest Determination
Date by three major banks (which may include affiliates of the remarketing
reset agent or, as the case may be, the remarketing dealers) in The City of
New York selected by the calculation agent; or
(5) if the banks selected by the calculation agent are not quoting as
mentioned in clause (4), the Prime Rate in effect on the Interest
Determination Date.
Reuters Screen USPRIME 1 Page means the display designated as page "USPRIME
1" on the Reuters Monitor Money Rates Service (or any successor service) on the
USPRIME 1 Page (or such other page as may replace the USPRIME 1 Page on such
service) for the purpose of displaying prime rates or base lending rates of
major United States banks.
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Seven-Day Commercial Paper Rate means:
(1) the Money Market Yield (as defined below) of the 7-day "AA"
nonfinancial Commercial Paper Rate shown on the internet world wide web
page (or any successor page) of the Board of Governors of the Federal
Reserve System (www.bog.frb.fed.us/releases/CP/) at 11:00 a.m., New York
City time, on the Interest Determination Date for the Business Day
immediately preceding such Interest Determination Date; or
(2) if the rate described in clause (1) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
Interest Determination Date for the Business Day immediately preceding such
Interest Determination Date calculated by the calculation agent as the
Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on the Interest Determination
Date of three leading dealers of United States dollar commercial paper in
The City of New York (which may include the remarket dealers and their
affiliates or, as the case may be, the remarketing reset agent and its
affiliates), selected by the calculation agent for 7-day commercial paper
placed for industrial issuers whose bond rating is "Aa", or the equivalent,
from a nationally recognized statistical rating organization; or
(3) if the dealers selected by the calculation agent are not quoting
as mentioned in clause (2), the Seven-Day Commercial Paper Rate in effect
on the Interest Determination Date.
Treasury Rate means:
(1) the rate from the auction held on the Interest Determination Date,
referred to as the Auction, of direct obligations of the United States,
referred to as Treasury Bills, having the Index Maturity selected on the
applicable Mode Terms Designation Date, under the caption "INVESTMENT RATE"
on the display on Bridge Telerate, Inc. (or any successor service) on page
56 (or any other page as may replace that page on that service), which we
refer to as Telerate Page 56, or page 57 (or any other page as may replace
that page on that service), which we refer to as Telerate Page 57; or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the Bond
Equivalent Yield (as defined below) of the rate for the applicable Treasury
Bills as published in H.15 Daily Update, or another recognized electronic
source used for the purpose of displaying the applicable rate, under the
caption "U.S. Government Securities/Treasury Bills/Auction High"; or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the Bond
Equivalent Yield of the auction rate of the applicable Treasury Bills as
announced by the United States Department of the Treasury; or
(4) if the rate referred to in clause (3) is not so announced by the
United States Department of the Treasury, or if the Auction is not held,
the Bond Equivalent Yield of the rate on the particular Interest
Determination Date of the applicable Treasury Bills as published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market"; or
(5) if the rate referred to in clause (4) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date of the applicable Treasury Bills as
published in H.15 Daily Update, or another recognized electronic source
used for the purpose of displaying the applicable rate, under the caption
"U.S. Government Securities/Treasury Bills/Secondary Market"; or
(6) if the rate referred to in clause (5) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the calculation agent
as the Bond Equivalent Yield of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on that
Interest Determination Date, of three primary United States government
securities dealers (which may include the remarketing reset agent or its
affiliates or, as the case may be, the remarketing dealers or their
affiliates) selected
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by the calculation agent for the issue of Treasury Bills with a remaining
maturity closest to the Index Maturity selected on the applicable Mode
Terms Designation Date; or
(7) if the dealers so selected by the calculation agent are not
quoting as mentioned in clause (6), the Treasury Rate in effect on the
particular Interest Determination Date.
Bond Equivalent Yield means a yield (expressed as a percentage) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C> <C> <C>
D X N
Bond Equivalent Yield = ------------- X 100
360 - (D X M)
</TABLE>
where:
D = the applicable per annum rate for Treasury Bills quoted on a bank
discount basis and expressed as a decimal;
N = 365 or 366, as the case may be; and
M = the actual number of days in the applicable Interest Reset Period.
Weekly-Average Federal Funds Rate means:
(1) the rate equal to the weekly average rate for the week ending in
the week in which the particular Interest Determination Date falls for
United States dollar federal funds as published in H.15(519) under the
caption "Federal Funds (Effective), Week Ending"; or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date for United States dollar federal
funds as published in H.15 Daily Update, or such other recognized
electronic source used for the purpose of displaying the applicable rate,
under the caption "Federal Funds (Effective), Week Ending"; or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related Calculation Date, the rate on the
particular Interest Determination Date calculated by the calculation agent
as the arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of
United States dollar federal funds transactions in The City of New York
(which may include the remarketing reset agent or its affiliates, or, as
the case may be, the remarketings dealers or their affiliates) selected by
the calculation agent prior to 9:00 A.M., New York City time, on that
Interest Determination Date; or
(4) if the brokers selected by the calculation agent are not quoting
as mentioned in clause (3), the Weekly-Average Federal Funds Rate in effect
on the Interest Determination Date.
Fixed Rate. The Fixed Rate Basis for any Spread Period means the
semiannual equivalent yield to maturity or interpolated yield to maturity (on a
day count basis) determined by 1:00 p.m., New York City time, on the
MOPPRS/CHEERS Spread Determination Date for the MOPPRS/CHEERS Mode or, as the
case may be, on the Fixed Interest Determination Date for any Subsequent Spread
Period (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the applicable United
States Treasury security (or securities in the case of interpolation), selected
by the calculation agent after consultation with the remarketing dealer or, as
the case may be, the remarketing reset agent, as having a maturity or
interpolated maturities comparable to the term selected for the following Spread
Period, which would be used in accordance with customary financial practice in
pricing new issues of corporate debt securities of comparable maturity to the
term selected for the following Spread Period.
If the MOPPRS/CHEERS are to bear interest at a Fixed Rate, then interest
will be payable semiannually in arrears on the Interest Payment Dates specified
on the applicable Mode Terms Designation Date at (i) the MOPPRS/CHEERS Rate
beginning on the applicable Mandatory Tender Date and continuing for the term of
the MOPPRS/CHEERS Spread Period, in the case of the
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MOPPRS/CHEERS Mode, or (ii) the applicable Fixed Rate, beginning on the
applicable Optional Tender Date and continuing for the duration of the relevant
Subsequent Spread Period, in the case of the Remarketing Reset Mode. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
REDEMPTION
Redemption From Remarketing Dealers on the Initial Mandatory Tender Date or
the Additional Mandatory Tender Date. If the remarketing dealers elect to
remarket the MOPPRS/CHEERS on a Mandatory Tender Date, the MOPPRS/CHEERS will be
subject to mandatory tender to the remarketing dealers for remarketing on such
date, in each case subject to the conditions described above under "-- Mandatory
Tender of MOPPRS/CHEERS; Short Term Mode and MOPPRS/CHEERS Mode" and
"-- Repurchase" and to Cox's right to redeem the MOPPRS/CHEERS from each
remarketing dealer as described in the next sentence. Cox will notify the
applicable remarketing dealer and the trustee, not later than 4:00 p.m., New
York City time, on the fourth Business Day preceding the applicable Mandatory
Tender Date, if Cox irrevocably elects to exercise its right to redeem the
applicable MOPPRS/CHEERS, in whole but not in part, from such remarketing dealer
on such Mandatory Tender Date at the Optional Redemption Price.
The Optional Redemption Price shall be the greater of (i) 100% of the
principal amount of the MOPPRS/CHEERS being redeemed and (ii) the Dollar Price,
in the case of the Initial Mandatory Tender Date, or the Adjusted Dollar Price,
in the case of the Additional Mandatory Tender Date, plus in either case accrued
and unpaid interest from the Mandatory Tender Date on the principal amount being
redeemed to the date of redemption. If Cox elects to redeem the MOPPRS/CHEERS,
it shall pay the redemption price therefor in same-day funds by wire transfer to
an account designated by each remarketing dealer on the applicable Mandatory
Tender Date.
Redemption During or After MOPPRS/CHEERS Spread Period. During or after
the MOPPRS/ CHEERS Spread Period, the MOPPRS/CHEERS are subject to redemption in
the following circumstances:
On each Optional Tender Date and on those Interest Payment Dates specified
as redemption dates for the MOPPRS/CHEERS by Cox on the applicable Mode Terms
Designation Date for the MOPPRS/ CHEERS Spread Period or any Subsequent Spread
Period, the MOPPRS/CHEERS may be redeemed, at the option of Cox, in whole or in
part, upon notice thereof given at any time on at least 30 but not more than 60
calendar days notice prior to the redemption date, if any, in the case of the
MOPPRS/ CHEERS Spread Period, or during the 30 calendar day period ending on the
eighth business day prior to the redemption date, in the case of the Subsequent
Spread Period, in accordance with the redemption type selected. The
MOPPRS/CHEERS are also subject to redemption in whole or in part as provided
under "-- Mandatory Repurchase Upon Failure to Set a Spread" and "-- Mandatory
Repurchase Upon Failed Remarketing" above. In the event that less than all of
the outstanding MOPPRS/CHEERS are to be redeemed, the MOPPRS/CHEERS to be
redeemed shall be selected by such method as Cox shall deem fair and
appropriate.
The redemption type may be one of the following:
- Par Redemption: redemption at a redemption price equal to 100% of the
principal amount thereof, plus unpaid interest thereon, if any, accrued
to the redemption date.
- Premium Redemption: redemption at a redemption price or prices greater
than 100% of the principal amount thereof, plus unpaid interest thereon,
if any, accrued to the redemption date, as determined on the applicable
Mode Terms Designation Date.
- Make-Whole Redemption: redemption at a redemption price equal to the
Make-Whole Amount (as defined below).
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If the MOPPRS/CHEERS are subject to optional redemption during the
MOPPRS/CHEERS Spread Period or any Subsequent Spread Period and no redemption
type has been designated, the redemption type will be Par Redemption.
Make-Whole Amount means, in connection with any optional redemption of any
MOPPRS/ CHEERS, an amount equal to the greater of (i) 100% of its principal
amount and (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (exclusive of interest accrued to the
date of redemption) discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable
Treasury Yield (as defined below) plus the Reinvestment Spread (as defined
below), plus accrued interest to the date of redemption.
Treasury Yield means, with respect to any redemption date applicable to any
of the MOPPRS/ CHEERS, the rate per annum equal to the semiannual equivalent
yield to maturity or interpolated (on a day count basis) of the Comparable
Treasury Issue (as defined below), assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
applicable Comparable Treasury Price (as defined below) for such redemption
date.
Comparable Treasury Issue means, with respect to the MOPPRS/CHEERS subject
to redemption, the United States Treasury security or securities selected by the
remarketing dealer or, as the case may be, the remarketing reset agent, as
having an actual or interpolated maturity comparable to the remaining term of
the MOPPRS/CHEERS that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the
MOPPRS/CHEERS.
Comparable Treasury Price means, with respect to any redemption date
applicable to the MOPPRS/CHEERS, (i) the average of the applicable Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest of such applicable Reference Treasury Dealer Quotations, or (ii) if
the trustee obtains fewer than four such Reference Treasury Dealer Quotations,
the average of all such Reference Treasury Dealer Quotations.
Reference Treasury Dealer Quotations means, with respect to each Reference
Treasury Dealer (as defined below) and any redemption date applicable to the
MOPPRS/CHEERS, the average, as determined by the trustee, of the bid and asked
prices for the Comparable Treasury Issue for the MOPPRS/CHEERS (expressed in
each case as a percentage of its principal amount) quoted in writing to the
trustee by such Reference Treasury Dealer at 3:30 p.m., New York City time, on
the third Business Day preceding such redemption date.
Reference Treasury Dealer means, with respect to the MOPPRS/CHEERS subject
to redemption, at least four primary U.S. Government securities dealers in The
City of New York as Cox or the trustee shall select, which may include the
remarketing dealers, the remarketing reset agent or an affiliate thereof.
Reinvestment Spread means, with respect to the MOPPRS/CHEERS subject to
redemption, a number, expressed as a number of basis points or as a percentage,
selected on the applicable Mode Terms Designation Date.
ACCOUNTING
For purposes of financial accounting and reporting for publicly held
companies, the SEC may require prospective investors to separately account for
the applicable remarketing dealer's right to purchase and to remarket the
MOPPRS/CHEERS on the Initial Mandatory Tender Date. Persons considering
investing in the MOPPRS/CHEERS who are required to file financial reports with
the SEC pursuant to the Securities Exchange Act of 1934, as amended, should
consult their own accounting advisors concerning potential reporting
requirements.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, which we
refer to as ERISA, and the Internal Revenue Code impose certain restrictions on
(a) employee benefit plans (as defined in Section 3(3) of ERISA), (b) plans
described in section 4975(e)(1) of the Internal Revenue Code, including
individual retirement accounts or Keogh plans, (c) any entities whose underlying
assets include plan assets by reason of a plan's investment in such entities,
each of which we refer to as a Plan, and (d) persons who have certain specified
relationships to such Plans, referred to as Parties-in-Interest under ERISA and
Disqualified Persons under the Internal Revenue Code. Moreover, based on the
reasoning of the United States Supreme Court in John Hancock Life Ins. v. Harris
Trust and Sav. Bank, 510 U.S. 86 (1993), an insurance company's general account
may be deemed to include assets of the Plans investing in the general account
(e.g., through the purchase of an annuity contract). ERISA also imposes certain
duties on persons who are fiduciaries of Plans subject to ERISA and prohibits
certain transactions between a Plan and Parties-in-Interest or Disqualified
Persons with respect to such Plans.
Cox and the remarketing dealers, because of their activities or the
activities of their respective affiliates, may be considered to be
Parties-in-Interest or Disqualified Persons with respect to certain Plans. If
the MOPPRS/CHEERS are acquired by a Plan with respect to which Cox or a
remarketing dealer is, or subsequently becomes, a Party-in-Interest or
Disqualified Person, the purchase, holding or sale of MOPPRS/CHEERS to the
remarketing dealer could be deemed to be a direct or indirect violation of the
Prohibited Transaction rules of ERISA, and the Internal Revenue Code unless such
transaction were subject to one or more statutory or administrative exemptions
such as Prohibited Transaction Class Exemption 75-1, which exempts certain
transactions involving employee benefit plans and certain broker-dealers,
reporting dealers and banks; Prohibited Transaction Class Exemption 90-1, which
exempts certain transactions between insurance company pooled separate accounts
and Parties-in-Interest or Disqualified Persons; Prohibited Transaction Class
Exemption 91-38, which exempts certain transactions between bank collective
investment funds and Parties-in-Interest or Disqualified Persons; Prohibited
Transaction Class Exemption 84-14, which exempts certain transactions effected
on behalf of a Plan by a qualified professional asset manager; Prohibited
Transaction Class Exemption 95-60, which exempts certain transactions between
insurance company general accounts and Parties-in-Interest or Disqualified
Persons; or Prohibited Transaction Class Exemption 96-23, which exempts certain
transactions effected on behalf of a Plan by an in-house asset manager. Even if
the conditions specified in one or more of these exemptions are met, the scope
of relief provided by these exemptions will not necessarily cover all acts that
might be construed as prohibited transactions.
Accordingly, prior to making an investment in the MOPPRS/CHEERS, a Plan
should determine whether Cox or the applicable remarketing dealer is a
Party-in-Interest or Disqualified Person with respect to such Plan and, if so,
whether such transaction is subject to one or more statutory or administrative
exemptions, including those described above.
Prior to making an investment in the MOPPRS/CHEERS, Plans should consult
with their legal advisers concerning the impact of ERISA and the Internal
Revenue Code and the potential consequences of such investment with respect to
their specific circumstances. Moreover, each Plan fiduciary should take into
account, among other considerations, whether the fiduciary has the authority to
make the investment on behalf of the Plan; whether the investment constitutes a
direct or indirect transaction with a Party-in-Interest or a Disqualified
Person; and whether under the general fiduciary standards of investment
procedure and diversification an investment in the MOPPRS/CHEERS is appropriate
for the Plan, taking into account the overall investment policy of the Plan and
the composition of the Plan's investment portfolio.
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BOOK-ENTRY SYSTEM, FORM AND DELIVERY; SAME DAY SETTLEMENT AND PAYMENT
BOOK-ENTRY SYSTEM, FORM AND DELIVERY
The securities will be issued as global securities as described under
"Description of Debt Securities -- Global Securities" in the accompanying
prospectus. The Depository Trust Company, or DTC, will be the depositary for the
securities. The securities will be issued as fully registered securities in the
name of Cede & Co., DTC's nominee, and will be deposited with DTC. DTC will keep
a computerized record of its participants whose clients have purchased the
securities. The participant would then keep a record of its clients who
purchased the securities. A global security may not be transferred, except that
DTC, its nominees and their successors may transfer an entire global security to
one another.
The securities will be in book-entry form only, and we will not deliver
securities in certificated form to individual purchasers of the notes, and no
person owning a beneficial interest in a global security will be treated as a
holder for any purpose under the indenture. Accordingly, owners of such
beneficial interests must rely on the procedures of DTC and the participant
through which such person owns its interest in order to exercise any rights of a
holder under such global security or the indenture. Beneficial interests in
global securities will be shown on, and transfers of beneficial interests will
be made only through, records maintained by DTC and its participants. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in certificated form. Such limits and laws
may impair the ability to transfer beneficial interests in a global security.
DTC has provided Cox with the following information:
DTC is
- a limited-purpose trust company organized under the New York Banking
Law,
- a banking organization within the meaning of the New York Banking Law,
- a member of the United States Federal Reserve System,
- a clearing corporation within the meaning of the New York Uniform
Commercial Code, and
- a clearing agency registered under Section 17A of the Securities
Exchange Act of 1934.
DTC holds securities that its participants deposit with DTC. These DTC
participants are referred to as direct participants. DTC also facilitates the
settlement among direct participants of securities transactions, such as
transfer and pledges, in deposited securities through computerized records for
direct participants' accounts. This eliminates the need to exchange
certificates. Direct participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations.
Other organizations, such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
direct participant, also use DTC's book-entry system. The rules that apply to
DTC and its participants are on file with the SEC.
A number of direct participants, together with the New York Stock Exchange,
the American Stock Exchange and the National Association of Securities Dealers,
own DTC.
Cox will wire principal, premium and interest payments to DTC's nominee.
Cox and the trustee will treat DTC's nominee as the owner of the global
securities for all purposes. Accordingly, Cox and the trustee will have no
direct responsibility or liability to pay amounts due on the securities to
owners of beneficial interests in the global securities.
It is DTC's current practice, when it receives any payment of principal,
premium or interest, to credit direct participants' accounts on the payment date
according to their respective holdings of beneficial interests in the global
securities as shown on DTC's records. In addition, it is DTC's current practice
to assign any consenting or voting rights to direct participants whose accounts
are credited with securities on a record date, by using an omnibus proxy.
Customary practices between the participants and owners of beneficial interests,
as is the case with securities held for the account of customers registered in
street name, will govern payments by participants to owners of beneficial
interests in the global securities and
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<PAGE> 41
voting by participants. However, these payments will be the responsibility of
the participants and not of DTC, the trustee or us.
Securities represented by a global security will be exchangeable for
securities in certificated form with the same terms in authorized denominations
only if:
- DTC notifies us that it is unwilling or unable to continue as depositary
or if DTC ceases to be a clearing agency registered under the Securities
Exchange Act of 1934 and we do not appoint a successor depositary within
90 days;
- An event of default under the indenture with respect to the securities
has occurred and is continuing and the beneficial owners representing a
majority in principal amount of the securities represented by the global
security advise DTC to cease acting as depositary; or
- We determine at any time that all securities shall no longer be
represented by a global security.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy of such information.
SAME-DAY SETTLEMENT AND PAYMENT
The underwriters will pay for the securities in immediately available
funds. Cox will make all payments due on the securities in immediately available
funds so long as such securities are in book-entry form.
The securities will trade in DTC's Same-Day Funds Settlement System until
maturity or until the securities are issued in certificated form, and secondary
market trading activity in the securities will therefore be required by DTC to
settle in immediately available funds.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In this section, we summarize certain of the material United States federal
income tax consequences of purchasing, owning, exchanging and disposing of the
securities. Except where we state otherwise, this summary deals only with the
securities 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 the
securities for cash at their original offering price upon original issuance. In
addition, this summary only addresses the United States federal income tax
consequences of holding the MOPPRS/CHEERS until the Initial Mandatory Tender
Date. We intend to treat the securities as indebtedness for United States
federal income tax purposes, and the following discussion assumes that such
treatment will be respected.
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 the
securities;
- the United States federal estate, gift or alternative minimum tax
consequences of the purchase, ownership, exchange or disposition of the
securities;
- persons who hold the securities 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,
exchange or disposition of the securities.
Accordingly, you should consult your own tax advisor regarding the tax
consequences of purchasing, owning, exchanging and disposing of the securities
in light of your own circumstances.
A U.S. Holder is a beneficial owner of the securities who or which is:
- a citizen or individual resident of the United States, as defined in
Section 7701(b) of the Internal Revenue Code;
- a corporation or partnership, including any entity treated as a
corporation or partnership for United States federal income tax purposes,
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia unless, in the case of a partnership,
Treasury regulations are enacted that provide otherwise;
- an estate if its income is subject to United States federal income
taxation regardless of its source; or
- a trust if (1) a United States court can exercise primary supervision
over its administration, and (2) one or more United States persons have
the authority to control all of its substantial decisions.
Notwithstanding the preceding sentence, certain trusts in existence on August
20, 1996, and treated as a U.S. Holder prior to such date, may also be treated
as U.S. Holders. If a partnership holds the securities, the tax treatment of the
partner generally will depend upon the status of the partner and the activities
of the partnership. Partners of partnerships holding the securities should
consult their tax advisors regarding the United States federal tax consequences
of purchasing, owning, exchanging and disposing of the securities.
A Non-U.S. Holder is a beneficial owner of the securities other than a U.S.
Holder. We urge prospective investors that are Non-U.S. Holders to consult their
own tax advisors regarding the United
S-41
<PAGE> 43
States federal income tax consequences of an investment in the 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, and any of which may change at any time, possibly
on a retroactive basis. Any such changes may affect this summary.
No statutory, administrative or judicial authority directly addresses the
treatment of the MOPPRS/ CHEERS or instruments similar to the MOPPRS/CHEERS for
United States federal income tax purposes. No rulings have been sought or are
expected to be sought from the Internal Revenue Service with respect to any of
the United States federal income tax consequences discussed below, and no
assurance can be given that the Internal Revenue Service will not take contrary
positions. As a result, no assurance can be given that the Internal Revenue
Service will agree with the tax characterizations or the tax consequences of the
MOPPRS/CHEERS described herein.
WE URGE PROSPECTIVE INVESTORS TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP, EXCHANGE AND
DISPOSITION OF THE 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.
TAX CHARACTERIZATION OF THE MOPPRS/CHEERS
The United States federal income tax treatment of the MOPPRS/CHEERS is not
certain. Because the MOPPRS/CHEERS are subject to mandatory tender on the
Initial Mandatory Tender Date, we intend to treat each MOPPRS/CHEERS as a debt
instrument maturing on the Initial Mandatory Tender Date. In addition, because
(i) each MOPPRS/CHEERS provides for stated interest at a single qualified
floating rate throughout the period prior to the Initial Mandatory Tender Date
and (ii) the interest on the MOPPRS/CHEERS during such period is unconditionally
payable at least annually in cash or property (other than debt instruments of
the Cox), we intend to treat the MOPPRS/CHEERS as a variable rate debt
instrument and the interest payable thereon as qualified stated interest. Our
discussion under "-- Stated Interest" and "-- Sale, exchange or redemption of
the securities" assumes such treatment of the MOPPRS/CHEERS for United States
federal income tax purposes. A qualified floating rate is any floating rate the
variations of which reasonably can be expected to measure contemporaneous
variations in the cost of newly-borrowed funds in the currency in which
MOPPRS/CHEERS are denominated, such as LIBOR. By purchasing the MOPPRS/CHEERS,
each holder agrees to follow such treatment for United States federal income tax
purposes.
STATED INTEREST
Payments of stated interest on the securities will generally be taxable to
a U.S. Holder as ordinary interest income at the time such payments are received
or accrued, in accordance with such holder's regular method of tax accounting.
SALE, EXCHANGE OR REDEMPTION OF THE SECURITIES
Generally, a sale, exchange, redemption, retirement or other disposition of
the securities will result in taxable gain or loss equal to the difference
between the amount of cash plus the fair market value of other property received
(other than amounts representing accrued and unpaid interest) and the U.S.
Holder's adjusted tax basis in the securities. A U.S. Holder's adjusted tax
basis will generally equal the initial cost of such securities to such holder.
Such gain or loss will generally be capital gain or loss. Capital gain or loss
will be long-term gain or loss if the securities are held by the U.S. Holder for
more than one year, otherwise such gain or loss will be short-term.
S-42
<PAGE> 44
U.S. Holders that are corporations generally will be taxed on net capital
gains at a maximum rate of 35%. In contrast, U.S. Holders that are individuals
generally will be taxed on net capital gains at a maximum rate of 39.6% for
property held for 12 months or less, and 20% for property held for more than 12
months. Special rules, and generally lower maximum rates, apply to individuals
in lower tax brackets and to individuals who have held, for more than 5 years,
capital assets acquired or deemed to have been acquired after December 31, 2000.
Any capital losses realized by a U.S. Holder that is a corporation generally may
be used only to offset capital gains. Any capital losses realized by a U.S.
Holder that is an individual generally may be used only to offset capital gains
plus $3,000 of other income per year.
ALTERNATIVE CHARACTERIZATION OF THE MOPPRS/CHEERS
There can be no assurance that the Internal Revenue Service will agree with
our treatment of the MOPPRS/CHEERS. In particular, the Internal Revenue Service
could seek to treat the MOPPRS/ CHEERS as maturing on the stated maturity date,
instead of the Initial Mandatory Tender Date. In such an event, the issue price
of the MOPPRS/CHEERS would include the consideration paid by the remarketing
dealers to us in connection with our appointment of the remarketing dealers to
such positions, and the U.S. Holder of the MOPPRS/CHEERS would be treated as
having sold a call option to the applicable remarketing dealer for an amount
equal to the consideration paid by the remarketing dealer to us in connection
with our appointment of the remarketing dealer to such position. The amount
deemed received as consideration for the sale of the call option would be
treated as an option premium paid to such U.S. Holder and, consequently, would
be recognized as income to such U.S. Holder when such option is exercised or
expires on the Initial Mandatory Tender Date.
In addition, if the MOPPRS/CHEERS were treated as maturing on the Stated
Maturity Date, the Internal Revenue Service could, because of the optional
remarketing of the MOPPRS/CHEERS, seek to treat the MOPPRS/CHEERS as having
contingent interest and, as a result, subject to the special regulations
governing contingent payment debt instruments, which we refer to as the CPDI
regulations. Pursuant to these regulations and regardless of a U.S. Holder's
usual method of tax accounting, each U.S. Holder would be required to accrue
interest income on the MOPPRS/CHEERS, for each accrual period, in an amount
equal to the product of (i) the MOPPRS/CHEERS's adjusted issue price as of the
beginning of the accrual period, and (ii) a projected yield to maturity. The
projected yield to maturity would be based upon the yield at which we could
issue a fixed-rate debt security with no contingent payments, but with terms and
conditions otherwise comparable to those of the MOPPRS/CHEERS. Such yield could
be higher than the stated interest rate on the MOPPRS/CHEERS prior to the
initial mandatory tender date. As a result, U.S. Holders may be required for
certain taxable years to include interest income in taxable income in excess of
any cash interest payments actually received in that year. In addition, pursuant
to the CPDI regulations, the character of any gain or loss recognized on the
sale, exchange, redemption or retirement of the MOPPRS/CHEERS would generally
differ from that described in "-- Sale, exchange or redemption of the
securities." For example, any gain upon sale or exchange of the MOPPRS/CHEERS
would generally be ordinary interest income, and any loss would generally be
ordinary loss to the extent of the interest previously included in income by the
U.S. Holder with respect to the MOPPRS/CHEERS and, thereafter, capital loss.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Payments of principal and interest on, and the proceeds of disposition of,
the securities may be subject to information reporting and United States federal
backup withholding tax at the rate of 31% if the U.S. Holder thereof fails to
supply an accurate taxpayer identification number or otherwise fails to comply
with applicable United States information reporting or certification
requirements. Any amounts so withheld will be allowed as a credit against such
U.S. Holder's United States federal income tax liability.
S-43
<PAGE> 45
UNDERWRITING
Cox intends to offer the securities through the underwriters. Chase
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are
acting as representatives of the underwriters listed below. Subject to the terms
and conditions contained in the purchase agreement among Cox and the several
underwriters named below, Cox has agreed to sell to each of the underwriters,
and each of the underwriters has severally agreed to purchase from Cox, the
aggregate principal amount of securities set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
NOTES MOPPRS/CHEERS
UNDERWRITER ------------ -------------
<S> <C> <C>
Chase Securities Inc.................................. $288,000,000 $ 72,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................. 288,000,000 72,000,000
Banc of America Securities LLC........................ 52,000,000 13,000,000
Salomon Smith Barney Inc.............................. 52,000,000 13,000,000
ABN AMRO Incorporated................................. 24,000,000 6,000,000
BNY Capital Markets, Inc.............................. 24,000,000 6,000,000
SunTrust Equitable Securities Corporation............. 24,000,000 6,000,000
Wachovia Securities, Inc.............................. 24,000,000 6,000,000
The Williams Capital Group, L.P. ..................... 24,000,000 6,000,000
------------ ------------
Total.................................... $800,000,000 $200,000,000
============ ============
</TABLE>
The underwriters have agreed to purchase all of the securities sold
pursuant to the purchase agreement if any of these securities are purchased. If
an underwriter defaults, the purchase agreement provides that the purchase
commitments of the nondefaulting underwriters may be increased or the purchase
agreement may be terminated.
Cox has agreed to indemnify the underwriters against certain liabilities
under the Securities Act of 1933, as amended, or to contribute to payments the
underwriters may be required to make in respect of those liabilities.
The underwriters are offering the securities, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of legal matters
by their counsel, including the validity of the securities, and other conditions
contained in the purchase agreement, such as the receipt by the underwriters of
officer's certificates and legal opinions. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject orders in whole or
in part.
The expenses of this offering, not including the underwriting discounts
applicable to the securities, are estimated at $300,000 and are payable by Cox.
COMMISSIONS AND DISCOUNTS
The underwriters have advised Cox that they propose initially to offer the
notes to the public at the public offering price set forth on the cover page of
this prospectus supplement, and to certain dealers at such prices less a
concession not in excess of .4% of the principal amount of the notes. The
underwriters may allow, and such dealers may reallow, a discount not in excess
of .25% of the principal amount of the notes to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
Subject to the terms and conditions set forth in the purchase agreement, we
have agreed to sell to the underwriters, and the underwriters, severally and not
jointly, have agreed to purchase from us, the MOPPRS/CHEERS at a price equal to
103.15% of the principal amount thereof, including the total consideration paid
by the remarketing dealers for the right to remarket the MOPPRS/CHEERS.
The underwriters have advised us that the underwriters propose to offer the
MOPPRS/CHEERS from time to time for sale in negotiated transactions or
otherwise, at prices relating to prevailing market prices determined at the time
of sale. The underwriters may effect such transactions by selling MOPPRS/CHEERS
to or through dealers and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the underwriter and any
purchasers of
S-44
<PAGE> 46
MOPPRS/CHEERS for whom they may act as agent. The underwriters and any dealers
that participate with the underwriters in the distribution of the MOPPRS/CHEERS
may be deemed to be underwriters, and any discounts or commissions received by
them and any profit on the resale of MOPPRS/CHEERS by them may be deemed to be
underwriting compensation.
NEW ISSUE OF SECURITIES
The securities are new issues of securities with no established trading
markets. The securities will not be listed on any securities exchange. Cox has
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. Cox can provide no assurance as to the
liquidity of, or any trading market for, the securities.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the offering, the underwriters are permitted to engage
in certain transactions that stabilize the price of the securities. Such
transactions may, with respect to the notes, consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the notes. Such
transactions with respect to the notes and the MOPPRS/CHEERS, as the case may
be, may also include over-allotment transactions and purchases to cover short
positions created by the underwriters in connection with the offering.
If the underwriters create a short position in the notes or the
MOPPRS/CHEERS in connection with the offering, i.e., if they sell a greater
aggregate principal amount of the respective securities than is set forth on the
cover of this prospectus supplement, the underwriters must reduce that short
position by purchasing securities in the open market. A short position is more
likely to be created if the underwriters are concerned that there may be
downward pressure in the price of the securities in the open market after
pricing that could adversely affect investors who purchase in the offering. In
general, purchases of a security for the purpose of stabilization or to reduce a
short position could cause the price of the security to be higher than it might
be in the absence of such purchases.
Neither Cox nor any underwriter 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. In addition, neither Cox nor any
underwriter makes any representation that the underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.
NO SALES OF SIMILAR SECURITIES
We have agreed that during a period of 45 days from the date of this
prospectus supplement, we will not, without prior written consent of Chase and
Merrill Lynch, directly or indirectly, issue, sell, offer or agree to sell,
grant any option for the sale of, or otherwise dispose of, any debt securities
of ours or securities of ours that are convertible into, or exchangeable for,
the securities or such other debt securities.
OTHER RELATIONSHIPS
In the ordinary course of business, certain of the underwriters and their
affiliates have from time to time provided investment banking, general financing
and banking and financial advisory services to us and our affiliates, and have
also acted as representatives of various other underwriters in connection with
public offerings of our securities.
The Bank of New York, the trustee under the indenture, is an affiliate of
BNY Capital Markets, Inc., one of the underwriters in the offering of the
securities.
LEGAL MATTERS
Certain legal matters in connection with the offering of the notes will be
passed upon for Cox by Dow, Lohnes & Albertson, PLLC, Washington, D.C., and for
the underwriters by Brown & Wood LLP, New York, New York.
S-45
<PAGE> 47
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> 48
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> 49
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> 50
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> 51
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> 52
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> 53
DESCRIPTION OF CAPITAL STOCK
The following description of Cox's capital stock sets forth general terms
and provisions of the particular issuance of capital stock to which any
prospectus supplement may relate and reflects a two-for-one stock split
effective on May 21, 1999. The prospectus supplement will describe the
particular terms of any sale of capital stock and the extent, if any, to which
such general provisions will not apply to such sale. The following description
also sets forth selected provisions of Cox's certificate of incorporation, as
amended, and bylaws. This description is a summary only and is qualified in its
entirety by Cox's certificate of incorporation and bylaws, which are
incorporated as exhibits to the registration statement of which this prospectus
is a part.
Cox's certificate of incorporation authorizes it to issue 650,000,000
shares of Class A common stock, 60,000,000 shares of Class C common stock and
10,000,000 shares of preferred stock.
As of June 30, 1999, there were outstanding 527,548,343 shares of Class A
common stock and 27,597,792 shares of Class C common stock. In addition,
10,284,386 shares of Class A common stock were reserved for issuance pursuant to
Cox's employee benefit plans, 27,597,792 shares of Class A common stock were
reserved for issuance to the holders of Class C common stock and approximately
4,675,016 shares of Class A common stock were reserved for issuance to the
holders of Cox's Series A preferred stock according to the terms outlined under
"Series A Convertible Preferred Stock" below.
COMMON STOCK
Except with respect to voting, transfer and convertibility, shares of Class
A common stock and shares of Class C common stock are identical in all respects.
Class A common stockholders are entitled to one vote per share, while Class C
common stockholders are entitled to ten votes per share. The shares of Class C
common stock are subject to significant transfer restrictions.
Voting. The Class A common stockholders and the Class C common
stockholders vote together as a single class on all actions, except that the
affirmative vote of the holders of a majority of outstanding shares of Class A
common stock and Class C common stock voting separately as a class is required:
- to approve any amendment to Cox's certificate of incorporation that would
alter or change the powers, preferences or special rights of such class
in a way that adversely affects the holders of such class; and
- to approve such other matters as may require a class vote under the
Delaware General Corporation Law.
Dividends and Other Distributions. Each share of common stock is equal in
respect of dividends and other distributions in cash, stock or property,
including distributions upon Cox's liquidation or a sale of all or substantially
all of Cox's assets. However, in the case of dividends or other distributions
payable on either class of common stock in shares of such stock, including
distributions pursuant to stock splits or dividends, only Class A common stock
will be distributed with respect to outstanding Class A common stock and only
Class C common stock will be distributed with respect to outstanding Class C
common stock. Neither of the Class A common stock nor the Class C common stock
will be split, divided or combined unless each other class is proportionately
split, divided or combined.
Cox has never declared or paid cash dividends on its Class A common stock
and currently intends to retain any future earnings for use in developing and
operating its businesses. Accordingly, Cox does not expect to pay cash dividends
on the Class A common stock in the foreseeable future.
Restrictions on Transfer of Class C Common Stock; Convertibility of Class C
Common Stock into Class A Common Stock. Cox Holdings, Inc. and Cox DNS, Inc.
hold all of the shares of Class C common stock currently outstanding. Cox
Holdings and Cox DNS are wholly owned subsidiaries of Cox Enterprises. Shares of
the Class C common stock are convertible at any time, or from time to time, at
the Class C stock holder's option, into Class A common stock on a
share-for-share basis. Shares of Class C
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common stock will be converted automatically into shares of Class A common stock
on a share-for-share basis:
- at any time Cox's board of directors and the holders of a majority of the
shares of Class C common stock then outstanding approve conversion of all
shares of Class C common stock into Class A common stock;
- if the Class A common stock is precluded from trading on any national
securities exchange or national quotation system as a result of the Class
C common stock's existence;
- upon election by Cox's board of directors in connection with their
approval of any sale or lease of all or substantially all of Cox's assets
or any merger, consolidation, liquidation or dissolution of Cox; or
- upon election by Cox's board of directors, after the board has determined
there has been a material adverse change in the outstanding Class A
common stock's liquidity, marketability or market value due to its
exclusion from a national exchange or quotation system or due to federal
or state legal requirements, in either case because of the Class C common
stock's existence.
Liquidation, Dissolution or Winding Up. In the event of any liquidation,
dissolution or winding up of Cox, whether voluntary or not, the Class A common
stock holders and the Class C common stock holders shall be entitled to share
ratably, according to their respective interests, in Cox's assets which remain
after payment, or provision of payment, of Cox's debts and other liabilities and
the preferential amounts due to the holders of any stock ranking prior to the
common stock in the distribution of assets.
PREFERRED STOCK
Cox may issue preferred stock with such designations, powers, preferences
and other rights and qualifications, limitations and restrictions as Cox's board
of directors may authorize, without further action by Cox's shareholders,
including but not limited to:
- the distinctive designation of each series and the number of shares that
will constitute the series;
- the voting rights, if any, of shares of the series;
- the dividend rate on the shares of the series, any restriction,
limitation or condition upon the payment of dividends, whether dividends
will be cumulative and the dates on which dividends are payable;
- the prices at which, and the terms and conditions on which, the shares of
the series may be redeemed, if the shares are redeemable;
- the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares in the series;
- any preferential amount payable upon shares of the series in the event of
the liquidation, dissolution or winding up of Cox or the distribution of
its assets; and
- the prices or rates of conversion at which, and the terms and conditions
on which, the shares of such series may be converted into other
securities, if such shares are convertible.
SERIES A CONVERTIBLE PREFERRED STOCK
In October 1998, Cox completed the acquisition of a cable television system
located in Las Vegas, Nevada, and certain related businesses previously owned by
Prime South Diversified, Inc. Cox issued shares of Series A preferred stock as
part of the consideration for the acquisition.
Dividends. Series A preferred stock holders are entitled to dividends only
when, and to the extent that, Cox's board of directors declares such dividends.
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Voting. Series A preferred stock holders are entitled to one vote per
share, and such holders vote together with the holders of Class A common stock
and Class C common stock on all matters upon which the Class A common stock and
Class C common stock holders are entitled to vote.
Conversion. Shares of the Series A preferred stock are convertible into
shares of Class A common stock at the preferred stockholders' option only after
October 1, 2003, a change in control of Cox or notification of liquidation,
whichever event occurs first. Shares of the Series A preferred stock are
convertible into shares of Class A common stock according to a formula based
upon 20.0% of the fair value of Cox's Las Vegas cable system and the average
closing price of the Class A common stock over a specified ten-day period.
Shares of the Series A preferred stock will convert automatically into shares of
Class A common stock, if the Las Vegas cable system makes a distribution on its
capital stock or upon the sale of all or substantially all of Cox's assets,
according to the formula described above. Cox anticipates that appreciation
realized upon conversion of the Series A preferred stock into Class A common
stock will be accounted for as contingent purchase price in accordance with APB
Opinion No. 16, "Business Combinations."
TRANSFER AGENT
The transfer agent and registrar for the Class A common stock is First
Chicago Trust Company of New York.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The following description of the terms of the debt securities sets forth
selected general terms and provisions of the particular issuance of debt
securities to which any prospectus supplement may relate. The prospectus
supplement will describe the particular terms of any debt securities and the
extent, if any, to which such general provisions will not apply to those debt
securities.
The debt securities will be issued from time to time in series under an
indenture, dated as of June 27, 1995, between Cox and The Bank of New York, as
trustee. A copy of the indenture is incorporated by reference as an exhibit to
the registration statement of which this prospectus is a part.
The indenture does not limit the aggregate principal amount of debt
securities Cox may issue, and the indenture provides that Cox may issue debt
securities from time to time in one or more series. The following summary of
selected provisions of the indenture and the debt securities does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the indenture, including the definitions of selected terms
which it contains as well as those terms which the Trust Indenture Act of 1939,
as amended, requires be incorporated.
Cox refers you to the prospectus supplement for the following terms and
other possible terms of each series of debt securities in respect of which this
prospectus is being delivered, to the extent such terms are applicable to such
debt securities:
- the classification, specific designation, date, aggregate principal
amount, purchase price and denomination of the debt securities;
- currency or units based on or relating to currencies in which such debt
securities are denominated and/or in which principal, premium, if any,
and/or interest will or may be payable;
- the formula, if any, upon which Cox may determine from time to time the
principal amount of debt securities outstanding;
- any date of maturity, which may be fixed or extendible;
- the interest rate or rates or the method by which the interest rate or
rates will be determined, if any;
- the dates on which any interest will be payable, Cox's right, if any, to
extend or defer the interest period and the duration of extensions or
deferrals;
- the place or places where the principal of, premium, if any, and interest
on the debt securities will be payable;
- any repayment, redemption, prepayment or sinking fund provisions and any
provisions related to the purchase of debt securities at the option of
the holders;
- whether the debt securities will be issuable in global form, and, if so,
the identity of the depositary, or in registered and/or bearer form and,
if bearer securities are issuable, any restrictions applicable to the
exchange of one form for another and to the offer, sale and delivery of
bearer securities;
- the terms, if any, on which debt securities may be converted into or
exchanged for stock or other securities of Cox or other entities or for
cash, any specific terms relating to the adjustment of the conversion or
exchange terms, and the period during which debt securities may be so
converted or exchanged;
- any applicable United States federal income tax consequences, including
whether and under what circumstances Cox will pay additional amounts on
debt securities held by a person who is not a U.S. person, as defined in
the prospectus supplement, in respect of any tax, assessment or
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governmental charge withheld or deducted and, if so, whether Cox will
have the option to redeem debt securities rather than pay such additional
amounts;
- the subordination provisions, if any, relating to the debt securities;
and
- any other specific terms of the debt securities, including any additional
events of default or covenants provided for with respect to debt
securities, and any terms which may be required by or advisable under
applicable laws or regulations.
Holders may present debt securities for exchange, and holders of registered
debt securities may present them for transfer, in the manner, at the places and
subject to the restrictions set forth in the debt securities and the prospectus
supplement. Cox will provide these services without charge, other than any tax
or other governmental charge payable in that connection, but subject to the
limitations provided in the indenture. Debt securities in bearer form and the
coupons, if any, pertaining to such debt securities will be transferable by
delivery.
Debt securities will bear interest at a fixed rate or a floating rate. Debt
securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate will be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any discounted debt securities or to certain debt
securities issued at par, which are treated as having been issued at a discount
for United States federal income tax purposes, will be described in the
accompanying prospectus supplement.
Cox may issue debt securities from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on any
interest payment date, to be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors. Holders of
these debt securities may receive a payment of principal on any principal
payment date, or a payment of interest on any interest payment date, that is
greater or less than the amount of principal or interest otherwise payable on
those dates, depending upon the value of the applicable currency, commodity,
equity index or other factor on those dates. Information as to the methods Cox
will use to determine the amount of principal or interest payable on any date,
the currencies, commodities, equity indices or other factors to which the amount
payable on that date is linked and certain additional tax considerations will be
set forth in the applicable prospectus supplement.
Unless Cox indicates otherwise in the accompanying prospectus supplement,
the debt securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiples of $1,000. Unless
Cox specifies otherwise in the prospectus supplement, the principal amount of
the debt securities will be payable at the corporate trust office of the trustee
in New York, New York. Holders may present the debt securities for transfer or
exchange at that office unless Cox specifies otherwise in the prospectus
supplement, subject to the limitations provided in the indenture and without any
service charge, but Cox may require payment of a sum sufficient to cover any tax
or other governmental charges payable.
CONCERNING THE TRUSTEE
The Bank of New York is the trustee under the indenture and has been
appointed by Cox as registrar and paying agent with regard to the debt
securities. The trustee is a depositary for funds and performs other services
for, and transacts other banking business with, Cox in the normal course of
business.
RANKING
Unless Cox specifies otherwise in a prospectus supplement for a particular
series of debt securities, all series of debt securities will be senior
indebtedness of Cox and will be direct, unsecured obligations, ranking equally
with all of Cox's other unsecured and unsubordinated obligations.
Cox conducts most of its operations through its subsidiaries. Therefore,
Cox's rights and the rights of Cox's creditors, including debt securities
holders, to participate in the assets of any subsidiary upon such
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subsidiary's liquidation or recapitalization will be subject to the prior claims
of the subsidiary's creditors, except to the extent Cox may be a creditor with
recognized claims against the subsidiary.
CERTAIN COVENANTS
The indenture contains covenants, including, among others, the following:
Limitation on liens. Cox will not, and will not permit any restricted
subsidiary to, create, incur or assume any lien, other than permitted liens on
restricted property incurred to secure the payment of Indebtedness of Cox or any
restricted subsidiary, if, immediately after the creation, incurrence or
assumption of such lien, the aggregate outstanding principal amount of all
Indebtedness of Cox and its restricted subsidiaries that is secured by liens
other than permitted liens on restricted property would exceed the greater of:
- $200 million or
- 15% of the aggregate outstanding principal amount of all Indebtedness of
Cox and the restricted subsidiaries, whether or not so secured,
unless effective provision is made such that, at Cox's determination, the debt
securities together with any other Indebtedness of equal ranking, whether then
existing or later created, are secured equally and ratably with, or prior to,
such Indebtedness, but only for as long as such Indebtedness is so secured.
Limitation on Indebtedness of restricted subsidiaries. Cox will not permit
any restricted subsidiary to incur any Indebtedness if, immediately after the
incurrence or assumption of such Indebtedness, the aggregate outstanding
principal amount of all indebtedness of the restricted subsidiaries would exceed
the greater of:
- $200 million; or
- 15% of the aggregate outstanding principal amount of all Indebtedness of
Cox and the restricted subsidiaries;
provided that, in any event, a restricted subsidiary may incur Indebtedness to
extend, renew or replace its own Indebtedness to the extent that the principal
amount of the Indebtedness so incurred does not exceed the level of the
principal amount of the Indebtedness immediately prior to such extension,
renewal or replacement plus any premium, accrued and unpaid interest or
capitalized interest payable on the previous amount.
Designation of subsidiaries. Cox may designate a restricted subsidiary as
an unrestricted subsidiary or designate an unrestricted subsidiary as a
restricted subsidiary at any time, provided that:
- immediately after giving effect to such designation, the restricted
group's leverage ratio is not greater than 7:1 and Cox and the restricted
subsidiaries are in compliance with the "Limitation on liens" and
"Limitation on Indebtedness of restricted subsidiaries" covenants; and
- Cox delivers an officers' certificate with respect to such designation,
to the trustee, within 75 days after the end of Cox's fiscal quarter in
which it made such designation, or, in the case of a designation made
during the last fiscal quarter of Cox's fiscal year, within 120 days
after the end of such fiscal year. The officers' certificate shall state
the effective date of such designation.
Mergers or sales of assets. The indenture provides that Cox may not merge
with or into or consolidate with another entity or lease, convey or transfer all
or substantially all of its assets to another entity unless either:
- Cox is the surviving corporation; or
- the resulting, surviving or transferee entity is a corporation organized
under the laws of a state of the United States or the District of
Columbia and expressly assumes all of Cox's obligations under the debt
securities and the indenture; and
- immediately after and giving effect to such transaction, no event of
default has occurred.
The indenture does not contain any provisions affording debt securities
holders any additional protection in the event that Cox enters into a
highly-leveraged transaction.
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DEFINITIONS
Indebtedness means, without duplication, with respect to any entity:
- any indebtedness of such entity for borrowed money or evidenced by a
note, debenture or similar instrument, including a purchase money
obligation which was given in connection with the acquisition of any
property or assets, including securities;
- any guarantee by such entity of any indebtedness of others as described
in the preceding clause; and
- any amendment, extension, renewal or refunding of any such indebtedness
or guarantee.
The term Indebtedness excludes:
- any indebtedness of Cox or of any its restricted subsidiaries to Cox or
another restricted subsidiary;
- any guarantee by Cox or any restricted subsidiary of indebtedness of Cox
or another restricted subsidiary;
- trade accounts payable; and
- letters of credit, performance bonds and similar obligations issued in
favor of governmental or franchising authorities as a term of a cable
television franchise or other governmental franchise, license, permit or
authorization held by such entity or any of its subsidiaries.
Leverage ratio with respect to the restricted group means, as of the date
of and after giving effect to any designation of an unrestricted subsidiary as a
restricted subsidiary, or any designation of a restricted subsidiary as an
unrestricted subsidiary, in each case in accordance with the "Designation of
subsidiaries" covenant, the ratio of:
- the aggregate outstanding principal amount of all Indebtedness of the
restricted group as of such date;
to
- the product of four times the restricted group cash flow for the most
recent full fiscal quarter for which financial information is available
on such date.
Permitted liens means:
1. Any lien which arises out of a judgment or award against Cox or any
restricted subsidiary, with respect to which Cox or such restricted
subsidiary, at the time, shall be prosecuting an appeal or proceeding
for review, or with respect to which the period within which such
appeal or proceeding for review may be initiated shall not have
expired, and with respect to which:
- Cox or such restricted subsidiary shall have secured a stay of
execution pending such appeal or proceeding for review; or
- Cox or such restricted subsidiary shall have posted a bond or
established adequate reserves, in accordance with generally
accepted accounting principles, for the payment of such judgment or
award;
2. Any lien upon any real or personal property or interest in such
property belonging to Cox or a restricted subsidiary and existing at
the time the property or interest was acquired, or securing payment
of Indebtedness which Cox or the restricted subsidiary incurred to
finance some or all of the purchase price of, or cost of construction
of or improvements on, any such property or interest therein;
provided that:
- the outstanding principal amount of the Indebtedness secured by
such lien does not at any time exceed 100% of the greater of the
purchase price for or the fair value of such real or personal
property or interest;
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- such lien does not encumber or constitute a charge against any
other restricted property owned by the restricted group, except
that in the case of construction or improvement, the lien may
extend to unimproved real property on which the property so
constructed or the improvement is located; and
- the indebtedness secured by such lien would be permitted to be
incurred under the covenant described under "Limitation on
Indebtedness of restricted subsidiaries;" and
3. Any lien representing the extension, renewal or replacement, or
successive extensions, renewals or replacements, of liens referred to
in paragraph (2) above, provided that the principal of the
Indebtedness thus secured does not exceed
- the principal of the Indebtedness secured immediately prior to such
extension, renewal or replacement,
plus
- any accrued and unpaid interest or capitalized interest payable;
and such extension, renewal or replacement shall be limited to
- all or a part of the property or interest subject to the lien so
extended, renewed or replaced,
plus
- improvements and construction on such property.
The outstanding principal amount of Indebtedness secured by a lien
permitted by paragraph (2) or (3) above or, if less, the fair value of the
property or interest thus secured, shall be included in the calculation of the
aggregate outstanding principal amount of Indebtedness secured by liens on
restricted property, for purposes of determining whether a lien, other than a
permitted lien, may be incurred in compliance with the covenant described under
"Limitation on liens."
Principal property means, as of any date of determination, any property or
assets which any restricted subsidiary owns other than:
- any such property which, in the good faith opinion of Cox's board of
directors, is not of material importance to the business conducted by Cox
and its restricted subsidiaries taken as a whole; and
- any shares of any class of stock or any other security of any
unrestricted subsidiary.
Restricted group means, as of any date of determination, Cox and the
restricted subsidiaries as of such date and after giving effect to any
designation being made on such date in accordance with the "Designation of
subsidiaries" covenant.
Restricted group cash flow for any period means the restricted group's net
income for such period,
plus
the sum, without duplication, of the aggregate of each of the following
items of Cox and the restricted subsidiaries for such period, to the extent
taken into account as charges to restricted group net income for such period:
- interest expense;
- income tax expense;
- depreciation and amortization expense and other noncash charges;
- extraordinary items; and
- after-tax losses on sales of assets outside of the ordinary course of
business, which otherwise are not included in extraordinary items in
accordance with generally accepted accounting principles;
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minus
the sum, without duplication, of the aggregate of each of the following
items of Cox and the restricted subsidiaries for such period, to the extent
taken into account as credits to restricted group net income for such period:
- noncash credits;
- extraordinary items; and
- after-tax gains on sales of assets outside of the ordinary course of
business, which otherwise are not included in extraordinary items in
accordance with generally accepted accounting principles.
For purposes of this definition:
- Restricted group net income for any period means the aggregate of the net
income or loss of Cox and its restricted subsidiaries for such period,
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that the net income or loss of any entity
accounted for by the equity method of accounting, and the net income or
loss of any unrestricted subsidiary, shall be excluded. However, the net
income of any such entity or unrestricted subsidiary shall be included to
the extent of the amount of dividends or distributions such entity or
unrestricted subsidiary pays to Cox or a restricted subsidiary during
such period; and
- if Cox or any restricted subsidiary consummated any acquisition or
disposition of assets during the period for which restricted group cash
flow is being calculated, or consummated any acquisition or disposition
of assets subsequent to such period and on or prior to the date as of
which the leverage ratio is to be determined, then, in each such case,
the restricted group cash flow for such period shall be calculated on a
pro forma basis, instead of as a pooling of interests, if applicable, as
if such acquisition or disposition had occurred at the beginning of such
period.
Restricted property means, as of any date of determination, any principal
property and any shares of stock of a restricted subsidiary which Cox or a
restricted subsidiary owns.
DEFAULTS
An event of default with respect to debt securities of any series is
defined in the indenture as:
1. a default in the payment of interest when due on the debt securities
of that series which continues for 30 days;
2. a default in the payment of principal of any debt security of that
series when due, whether at its stated maturity, upon redemption,
upon required repurchase, by declaration or otherwise;
3. Cox's failure to comply with its obligations under "-- Certain
Covenants -- Mergers or sales of assets" above;
4. Cox's failure to comply, within 60 days after notice provided in
accordance with the terms of the indenture, with any of its other
covenants or agreements contained in the indenture with respect to
that series of debt securities, including its obligations under the
covenants described above under "-- Certain Covenants -- Limitation
on liens," "-- Limitation on Indebtedness of restricted subsidiaries"
or "-- Designation of subsidiaries," provided that this provision
does not apply to defaults in covenants for which the indenture
specifically provides otherwise;
5. Indebtedness of Cox or any restricted subsidiary is not paid within
any applicable grace period after final maturity or is accelerated by
its holders because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds 5% of the aggregate
outstanding principal amount of all Indebtedness of Cox and the
restricted subsidiaries;
6. certain events of bankruptcy, insolvency or reorganization of Cox or
a restricted subsidiary;
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7. failure to make a sinking fund payment when due on the debt
securities of that series; or
8. any other events of default specified for that series of debt
securities.
Except as described in the second to last sentence of this paragraph, if an
event of default occurs and is continuing with respect to a particular series of
debt securities, the trustee or the holders of at least 25% in principal amount
of the outstanding debt securities of such series may declare the principal of
and accrued but unpaid interest on all the debt securities of such series to be
due and payable. Upon such a declaration, such principal and interest shall be
due and payable immediately. If an event of default relating to specific events
of bankruptcy, insolvency or reorganization of Cox occurs and is continuing, the
principal of and interest on all the debt securities will become and be
immediately due and payable without any declaration or other act on the part of
the trustee or any holders of the debt securities. Under some circumstances, the
holders of a majority in principal amount of the outstanding debt securities of
a series may rescind any acceleration and its consequences with respect to the
debt securities of that series.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an event of default occurs and is continuing, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request or direction of any of the holders of the debt securities of any
series, unless such holders have offered to the trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right to
receive payment of principal, premium, if any, or interest when due, no debt
security holder may pursue any remedy with respect to the indenture or the debt
securities of its series unless:
- that holder has previously given the trustee notice that an event of
default is continuing;
- holders of at least 25% in principal amount of the outstanding debt
securities of such series have requested the trustee to pursue the
remedy;
- those holders have offered the trustee reasonable security or indemnity
against any loss, liability or expense;
- the trustee has not complied with such request within 60 days of
receiving it with an offer of security or indemnity; and
- the holders of a majority in principal amount of the outstanding debt
securities of such series have not given the trustee a direction
inconsistent with such request within such 60-day period.
Subject to some restrictions, the holders of a majority in principal amount
of the outstanding debt securities of any series are given the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the trustee, or of exercising any trust or power conferred on the trustee.
The trustee, however, may refuse to follow any direction that conflicts with law
or the indenture or that the trustee determines is unduly prejudicial to the
rights of any other holder of a debt security of the same series, or that would
involve the trustee in personal liability.
The indenture provides that if a default occurs and is continuing with
respect to a particular series of debt securities and is known to the trustee,
the trustee must mail notice of the default within 90 days after it occurs to
each holder of the debt securities of such series. Except in the case of a
default in the payment of principal of, premium, if any, or interest on any debt
security, the trustee may withhold notice if and so long as a committee of its
trust officers determines that withholding notice is in the interests of the
holders of the debt securities of such series. In addition, Cox must deliver to
the trustee, within 120 days after the end of each fiscal year, an officers'
certificate indicating whether the signers thereof know of any default that
occurred during the previous year. Cox also is required to deliver to the
trustee, within 30 days after its occurrence, written notice of any events which
would constitute certain defaults, their status and what action Cox is taking or
proposes to take.
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Prior to the acceleration of the maturity of the debt securities of any
series, the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series may on behalf of all the debt
securities and any related coupons of that series waive any past default or
event of default, except:
- a default in the payment of the principal of, and premium, if any, or
interest on, any of the debt securities or in the payment of any related
coupon; and
- a default that cannot be waived without the consent of each holder
affected.
A waiver will serve to end such default, to cure any event of default, and to
restore Cox, the trustee and holders of the affected debt securities to their
former positions and rights. No such waiver will extend to any subsequent or
other default.
AMENDMENTS AND WAIVERS
Subject to specific exceptions, the indenture may be amended with respect
to a series of debt securities with the consent of the holders of a majority in
principal amount then outstanding of the debt securities of that series,
including consents obtained in connection with a tender offer or exchange for
the debt securities. Any past default or compliance with any provisions also may
be waived with such a consent of the holders of a majority in principal amount
then outstanding of the debt securities of such series. However, without the
consent of each holder of an outstanding debt security of that series, no
amendment may, among other things:
- reduce the amount of debt securities of that series whose holders must
consent to an amendment;
- reduce the rate of, or extend the time for, payment of interest on any
debt security of that series;
- reduce the principal of or extend the stated maturity of any debt
security of that series;
- reduce the premium payable upon the redemption of any debt security of
that series, or change the time at which any debt security of that series
may or shall be redeemed;
- make any debt securities of that series payable in a currency other than
that stated in the debt securities of such series;
- release any security that may have been granted in respect of the debt
securities; or
- make any change (1) affecting the rights of holders of a majority in
principal amount of the outstanding debt securities of that series to
direct the time, method and place of conducting proceedings for any
remedy available to the trustee, (2) in the amendment provisions which
requires each holder's consent, or (3) in the waiver provisions.
Without the consent of any of the debt securities holders, Cox and the
trustee may amend the indenture:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption by a successor entity of Cox's obligations
under the indenture;
- to provide for uncertificated debt securities in addition to or in place
of certificated debt securities;
- to add guarantees with respect to the debt securities;
- to secure the debt securities;
- to add to the covenants for the benefit of holders of all or any series
of the debt securities and to make a default of that additional covenant
an event of default under the indenture for all or any series of debt
securities;
- to surrender any right or power conferred upon Cox;
- to convey, transfer, assign, mortgage or pledge any property to or with
the trustee, or to make such other provisions in regard to matters or
questions arising under the indenture as shall not adversely affect the
interests of any holders of debt securities;
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- to make any change that does not adversely affect the rights of any debt
securities holder;
- to provide for a successor or separate trustee with respect to the debt
securities of one or more series; or
- to comply with any SEC requirement in connection with the qualification
of the indenture under the Trust Indenture Act.
The indenture does not require the debt securities holders to give consent
approving of the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the indenture becomes effective, Cox is required
to mail to holders of the debt securities of the affected series a notice
briefly describing such amendment. However, Cox's failure to give such notice to
all holders of the debt securities of such series, or any defect in such notice,
will not impair or affect the validity of the amendment.
DEFEASANCE
Cox at any time may terminate all its obligations with respect to a
particular series of debt securities, and under the indenture, with respect to
the legal defeasance of such series, except for specific obligations including:
- those respecting the defeasance trust;
- to register the transfer or exchange of the debt securities;
- to replace mutilated, destroyed, lost or stolen debt securities; and
- to maintain a registrar and paying agent in respect of the debt
securities.
Cox at any time may terminate its obligations with respect to a series of
debt securities under the covenants described under "-- Certain Covenants,"
other than the covenants described under "-- Mergers or sales of assets," and
any other restrictive covenants described in the accompanying prospectus
supplement relating to that series, as well as the operation of the
cross-acceleration provision and the bankruptcy provisions described under
"-- Defaults" above.
Cox may exercise its legal defeasance option notwithstanding its prior
exercise of the covenant defeasance option. If Cox exercises its legal
defeasance option with respect to a particular series of debt securities,
payment of the debt securities of that series may not be accelerated because of
an event of default with respect thereto. If Cox exercises its covenant
defeasance option with respect to a particular series of debt securities,
payment of the debt securities of such series may not be accelerated because of
an event of default as specified in paragraphs (4), (5) or (6) under
"-- Defaults" above, with respect to restricted subsidiaries only, or paragraph
(8) above, except to the extent that any of the agreements or covenants
referenced in such paragraphs remain applicable.
In order to exercise either defeasance option with respect to a particular
series of debt securities, Cox must deposit irrevocably in trust, with the
trustee, money or U.S. Government obligations, which trust will be known as the
defeasance trust. Through the payment of interest and principal on the debt
securities in accordance with their terms the defeasance trust will provide
money in an amount sufficient to pay all the principal, including any mandatory
sinking fund payments, of, premium, if any, on, and interest on the debt
securities of that series, to redemption or maturity, as the case may be. Cox
also must comply with other specified conditions, including delivery to the
trustee of an opinion of counsel to the effect that:
- holders of the debt securities of that series will not recognize income
gain or loss for United States federal income tax purposes as a result of
such deposit and defeasance;
- holders of the debt securities of that series will be subject to United
States federal income tax on the same amount, in the same manner and at
the same times as would have been the case if such deposit and defeasance
had not occurred;
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- in the case of legal defeasance only, that opinion of counsel must be
based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law; and
- the creation of the defeasance trust will not violate the Investment
Company Act of 1940, as amended.
In addition, Cox must deliver to the trustee an officers' certificate
stating that Cox did not make such deposit with the intent of preferring the
debt securities holders over other of Cox's creditors, or with the intent of
defeating, hindering, delaying or defrauding its creditors or the creditors of
others.
TRANSFER
Holders may transfer or exchange the debt securities in accordance with the
indenture. Unless Cox indicates otherwise in the applicable prospectus
supplement, Cox will issue the debt securities in registered form and they will
be transferable only upon the surrender of such debt securities for registration
of transfer. Cox may require payment of a sum sufficient to cover any tax,
assessment or other governmental charge payable in connection with certain
transfers or exchanges. Cox is not required to transfer or exchange any debt
security selected for redemption. In addition, Cox is not required to transfer
or exchange any debt security for a period of 15 days before a selection of debt
securities to be redeemed or before any interest payment date.
GOVERNING LAW
The indenture provides that it and the debt securities will be governed by,
and construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
GLOBAL SECURITIES
Cox may issue the registered debt securities of a series in the form of one
or more fully registered global securities which will be deposited with a
depositary, or with a nominee for the depositary, as identified in the
prospectus supplement relating to such series. A registered global security will
be registered in the name of the depositary or its nominee. If registered debt
securities are issued in global form, one or more registered global securities
will be issued in a denomination or aggregate denominations equal to the portion
of the aggregate principal amount of outstanding registered debt securities of
the series to be represented by those registered global securities. Unless and
until it is exchanged in whole for debt securities in definitive registered
form, a registered global security may not be transferred except as a whole by
the depositary:
- to its nominee;
- by its nominee to such depositary or another such nominee; or
- by the depositary or any of its nominees to a successor of that
depositary or the successor's nominee.
The specific terms of the depositary arrangement with respect to any
portion of a series of debt securities to be represented by a registered global
security will be described in the prospectus supplement relating to such series.
Cox anticipates that the following provisions will apply to all depositary
arrangements.
Ownership of beneficial interests in a registered global security will be
limited to persons, who will be referred to as participants, who have accounts
with the depositary for such registered global security, or persons that may
hold interests through participants. Upon the issuance of a registered global
security, the depositary will credit the participants' accounts, on its
book-entry registration and transfer system, with the respective principal
amounts of the debt securities represented by such registered global security
and beneficially owned by those participants. The accounts to be credited shall
be designated by any dealers,
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underwriters or agents participating in the distribution of those debt
securities, or by Cox if it offers and sells such debt securities directly.
Ownership of beneficial interests in such registered global security will be
shown on, and the transfer of those ownership interests will be effected only
through, records maintained by the depositary with respect to participants'
interests, and on the records of participants with respect to interests of
persons holding through participants. The laws of some states may require that
some purchasers of securities take physical delivery of such securities in
definitive form. Such laws may impair the ability of those purchasers to own,
transfer or pledge beneficial interests in registered global securities.
So long as the depositary for a registered global security, or its nominee,
is the registered owner of that registered global security, that depositary or
that nominee, as the case may be, will be considered the sole owner or holder of
the debt securities represented by such registered global security for all
purposes under the indenture. Except as set forth below, owners of beneficial
interests in a registered global security will not be entitled to have the debt
securities registered in their names, will not receive or be entitled to receive
physical delivery of such debt securities in definitive form and will not be
considered the owners or holders of the debt securities under the indenture.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for such registered
global security and, if such person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights a holder possesses under the indenture. Cox understands that under
existing industry practices, if Cox requests any action of holders or if an
owner of a beneficial interest in a registered global security desires to give
or take any action which a holder is entitled to give or take under the
indenture, as the case may be, the depositary for such registered global
security would authorize the participants holding the relevant beneficial
interests to give or take that action, and such participants would authorize
beneficial owners owning through such participants to give or take that action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Principal, premium, if any, and interest payments on debt securities
represented by a registered global security registered in the name of a
depositary or its nominee will be made to such depositary or its nominee, as the
case may be, as the registered owner of such registered global security. None of
Cox, the trustee, the registrar or any other agent of Cox, of the trustee or of
the registrar will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in such registered global security, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Cox expects that the depositary for any debt securities represented by a
registered global security, or its nominee, upon receipt of any payment of
principal, premium or interest in respect of the registered global security,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests as shown on the records
of such depositary or its nominee. Cox also expects that payments by
participants to owners of beneficial interests in the registered global security
held through such participants will be governed by standing customer
instructions and customary practices, and will be the responsibility of those
participants, as is now the case with the securities held for the accounts of
customers in bearer form or registered in street name.
If the depositary for any debt securities represented by a registered
global security is at any time unwilling or unable to continue as depositary, or
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, as amended, and Cox does not appoint a successor depositary registered as
a clearing agency under the Exchange Act within 90 days, Cox will issue such
debt securities in definitive form in exchange for such registered global
security. In addition, Cox may at any time and in its sole discretion determine
not to have any of the debt securities of a series represented by one or more
registered global securities and, in such event, will issue such debt securities
in definitive form in exchange for all of the registered global securities
representing such debt securities. Any debt securities issued in definitive form
in exchange for a registered global security will be registered in such name or
names as the depositary shall instruct the trustee or the registrar. Cox expects
that such instructions, with respect to ownership of beneficial interests in the
registered global security, will be based upon directions received by the
depositary from participants.
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DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
GENERAL
The junior subordinated debentures will be issued in one or more series
under a junior subordinated debenture indenture, as supplemented from time to
time, between Cox and The Bank of New York, as the debenture trustee. The junior
subordinated debenture indenture has been qualified under the Trust Indenture
Act, and is subject to, and governed by, the Trust Indenture Act and is included
as an exhibit to the registration statement of which this prospectus is a part.
This summary of certain terms and provisions of the junior subordinated
debentures and the junior subordinated debenture indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of such junior subordinated debentures and the junior
subordinated debenture indenture, including the definitions therein of certain
terms, and those terms made a part of the junior subordinated debenture
indenture by the Trust Indenture Act.
The applicable prospectus supplement will describe the specific terms of
each series of junior subordinated debentures offered thereby, including:
- the specific title and designation, aggregate principal amount, including
any limit on the principal amount, purchase price and denominations of
those junior subordinated debentures;
- the date or dates on which the principal of those junior subordinated
debentures is payable or the method of determining the same, if
applicable;
- the rate or rates, which may be fixed or variable, at which those junior
subordinated debentures will bear interest, if any, or the method of
determining the same, if applicable;
- the date or dates from which interest, if any, shall accrue or the method
of determining the same, if applicable, the interest payment dates, if
any, on which interest will be payable or the manner of determining the
same, if applicable, and the record dates for the determination of
holders to whom interest is payable on those junior subordinated
debentures;
- the duration of the maximum consecutive period that Cox may elect to
defer payments of interest on those junior subordinated debentures;
- any redemption, repayment or sinking fund provisions;
- whether those junior subordinated debentures are convertible into or
exchangeable for Class A common stock or other securities or rights of
Cox or other issuers, or a combination of the foregoing and, if so, the
applicable conversion or exchange terms and conditions;
- any applicable material United States federal income tax consequences;
and
- any other specific terms pertaining to those junior subordinated
debentures, whether in addition to, or modification or deletion of, the
terms described herein.
RANKING
Each series of junior subordinated debentures will rank equally with all
other series of junior subordinated debentures to be issued by Cox and sold to
other trusts or other entities to be established by Cox that are similar to the
Cox Trusts and will be unsecured and will rank subordinate and junior in right
of payment, to the extent and in the manner set forth in the junior subordinated
debenture indenture, to all senior indebtedness of Cox as defined in the junior
subordinated debenture indenture. The junior subordinated debenture indenture
will not limit the amount of secured or unsecured debt, including senior
indebtedness, that may be incurred by Cox or its subsidiaries. See
"-- Subordination." As of June 30, 1999, the aggregate principal amount of
senior indebtedness as defined in the junior subordinated debenture indenture
was approximately $3.5 billion.
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FORM, REGISTRATION AND TRANSFER
The junior subordinated debentures will be issued in fully registered form.
Until any dissolution of the applicable Cox Trust, the junior subordinated
debentures will be held in the name of the property trustee in trust for the
benefit of the holders of the related trust securities. If the junior
subordinated debentures are distributed to the holders of the related trust
securities, the junior subordinated debentures will be issued to such holders in
the same form as the trust securities were held. Accordingly, any depositary
arrangements for such junior subordinated debentures are expected to be
substantially similar to those in effect for the trust preferred securities. See
"Description of Trust Preferred Securities -- Global Trust Preferred
Securities."
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of and premium, if any, on and interest on the junior subordinated
debentures will be made at the office of the debenture trustee in The City of
New York or at the office of such paying agent or paying agents as Cox may
designate from time to time, except that at the option of Cox payment of any
interest may be made, except in the case of a global certificate representing
junior subordinated debentures, by:
1. check mailed to the address of the person entitled thereto as such
address shall appear in the applicable securities register for
junior subordinated debentures or
2. transfer to an account maintained by the person entitled thereto as
specified in such securities register, provided that proper
transfer instructions have been received by the relevant record
date.
Payment of any interest on any junior subordinated debenture will be made to the
person in whose name such junior subordinated debenture is registered at the
close of business on the record date for such interest, except in the case of
defaulted interest. Cox may at any time designate additional paying agents or
rescind the designation of any paying agent; provided, however, Cox will at all
times be required to maintain a paying agent in each place of payment for the
junior subordinated debentures.
Any moneys deposited with the debenture trustee or any paying agent, or
then held by Cox in trust, for the payment of the principal of and premium, if
any, on or interest on any junior subordinated debentures and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall, at the request of Cox, be repaid to Cox and
the holder of such junior subordinated debentures shall thereafter look, as a
general unsecured creditor, only to Cox for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
So long as no debenture event of default has occurred and is continuing,
Cox will have the right under the junior subordinated debenture indenture to
defer the payment of interest on the junior subordinated debentures at any time
or from time to time up to the maximum period specified in the applicable
prospectus supplement for the deferral of interest. Each of these deferral
periods is referred to in this prospectus as an extension period. An extension
period must end on an interest payment date and may not extend beyond the stated
maturity of such junior subordinated debentures. At the end of an extension
period, Cox must pay all interest then accrued and unpaid, together with
interest on the accrued and unpaid interest, to the extent permitted by
applicable law. During an extension period, interest will continue to accrue and
holders of junior subordinated debentures, and holders of the related trust
securities that are outstanding, will be required to accrue such deferred
interest income for United States federal income tax purposes prior to the
receipt of cash attributable to such income, regardless of the method of
accounting used by the holders.
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Prior to the termination of any extension period, Cox may extend such
extension period, provided that such extension does not
- cause such extension period to exceed the maximum extension period,
- end on a date other than an interest payment date, or
- extend beyond the stated maturity of the related junior subordinated
debentures.
Upon the termination of any extension period, or any extension of the related
extension period, and the payment of all amounts then due, Cox may begin a new
extension period, subject to the limitations described above. No interest shall
be due and payable during an extension period except at the end thereof. Cox
must give the debenture trustee notice of its election to begin or extend an
extension period at least five business days prior to the earlier of:
- the date cash distributions on the related trust securities would have
been payable except for the election to begin or extend such extension
period or
- the date the applicable Cox Trust is required to give notice to any
securities exchange or to holders of its trust preferred securities of
the record date or the date cash distributions are payable, but in any
event not less than five business days prior to such record date.
The debenture trustee shall give notice of Cox's election to begin or
extend an extension period to the holders of the trust preferred securities.
Subject to the foregoing limitations, there is no limitation on the number of
times that Cox may begin or extend an extension period.
RESTRICTIONS ON CERTAIN PAYMENTS
Cox will covenant that if at any time:
1. there shall have occurred any event of which Cox has actual
knowledge that is, or with the giving of notice or the lapse of
time, or both, would be, a debenture event of default;
2. Cox shall be in default with respect to any of its payment
obligations under the preferred securities guarantee; or
3. Cox shall have given notice of its election to exercise its right
to begin or extend an extension period as provided in the junior
subordinated debenture indenture and shall not have rescinded such
notice, and such extension period, or any extension thereof, shall
have commenced and be continuing,
then it will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of Cox's
capital stock;
- make any payment of principal of or premium, if any, on or interest on or
repay or repurchase or redeem any debt securities of Cox, including other
junior subordinated debentures, that rank equally with or junior in right
of payment to the junior subordinated debentures; or
- make any guarantee payments with respect to any guarantee by Cox of the
debt securities of any subsidiary of Cox, including under any guarantees
to be issued by Cox with respect to securities of other Cox trusts or
entities to be established by Cox similar to the Cox Trusts, if such
guarantee ranks equally with or junior in right of payment to the junior
subordinated debentures
other than:
- dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, Class A common stock and Class C
common stock of Cox;
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- any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan
in the future, or the redemption or repurchase of any such rights
pursuant thereto;
- payments under the preferred securities guarantee;
- as a result of reclassification of Cox's capital stock or the exchange
or conversion of one class or series of Cox's capital stock for another
class or series of Cox's capital stock;
- the purchase of fractional interests in shares of Cox's capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged; and
- purchases of Class A and Class C common stock related to the issuance of
Class A and Class C common stock or rights under any of Cox's benefit
plans for its directors, officers, or employees or any of Cox's dividend
reinvestment plans.
So long as the trust securities remain outstanding, Cox also will covenant:
- to maintain 100% direct or indirect ownership of the related trust common
securities, provided that any permitted successor of Cox under the junior
subordinated debenture indenture may succeed to Cox's ownership of such
trust common securities;
- to use its best efforts to cause each Cox Trust
- to remain a business trust, except in connection with the distribution
of junior subordinated debentures to the holders of related trust
securities in liquidation of such Cox Trust, the conversion, exchange or
redemption of all of such trust securities, or certain mergers,
consolidations or amalgamations, each as permitted by the declaration of
trust,
- to otherwise continue to be classified as a grantor trust for United
States federal income tax purposes;
- to use its reasonable best efforts to cause each holder of its trust
securities to be treated as owning an undivided beneficial interest in
the related junior subordinated debentures; and
- not to cause, as sponsor of the Cox Trusts, or to permit, as the trust
common securities holder, the dissolution, liquidation or winding-up of
any Cox Trust, except as provided in the declaration of trust.
MODIFICATION OF JUNIOR SUBORDINATED DEBENTURE INDENTURE
From time to time, Cox and the debenture trustee may, without the consent
of the holders of the junior subordinated debentures, amend, waive or supplement
the junior subordinated debenture indenture for specified purposes, including,
among other things, curing ambiguities or adding provisions, provided that any
such action does not materially adversely affect the interests of the holders of
the junior subordinated debentures, and maintaining the qualification of the
junior subordinated debenture indenture under the Trust Indenture Act. The
junior subordinated debenture indenture will permit Cox and the debenture
trustee, with the consent of the holders of a majority in principal amount of
all outstanding junior subordinated debentures affected thereby, to modify the
junior subordinated debenture indenture in a manner affecting the rights of the
holders of junior subordinated debentures; provided, however, that no such
modification may, without the consent of the holder of each outstanding junior
subordinated debenture so affected:
- change the stated maturity or reduce the principal of any such junior
subordinated debentures;
- change the interest rate or the manner of calculation of the interest
rate or extend the time of payment of interest on any such junior
subordinated debentures except pursuant to Cox's right under the junior
subordinated debenture indenture to defer the payment of interest as
provided therein (see "-- Option to Extend Interest Payment Date");
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- change any of the conversion, exchange or redemption provisions
applicable to any such junior subordinated debentures;
- change the currency in respect of which payments of principal of or any
premium or interest on any such junior subordinated debentures are to be
made;
- change the right of holders of trust securities to bring a direct action
in respect of any required payments or conversion or exchange rights;
- impair or affect the right of any holder of any such junior subordinated
debentures to institute suit for the payment of the principal thereof or
premium, if any, or interest thereon or for the conversion or exchange of
any such junior subordinated debentures in accordance with their terms;
- change the subordination provisions adversely to the holders of the
junior subordinated debentures; or
- reduce the percentage of principal amount of junior subordinated
debentures the holders of which are required to consent to any such
modification of the junior subordinated debenture indenture.
DEBENTURE EVENTS OF DEFAULT
The following described events with respect to any series of junior
subordinated debentures will constitute a debenture event of default, whatever
the reason for such debenture event of default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body, unless such event is specifically deleted
or modified in or pursuant to the supplemental indenture, board resolution or
officers' certificate establishing the terms of such series pursuant to the
junior subordinated debenture indenture:
1. failure for 30 days to pay any interest on that series of junior
subordinated debentures when due, subject to any permitted
deferral; provided that, during any extension period for such
series of junior subordinated debentures, failure to pay interest
on such series of junior subordinated debentures will not
constitute a debenture event of default; or
2. failure to pay any principal of or premium, if any, on that series
of junior subordinated debentures when due, whether at maturity,
upon any redemption, by declaration of acceleration of maturity or
otherwise; or
3. if applicable, failure by Cox to deliver the required securities or
other rights upon an appropriate conversion or exchange election by
holders of that series of junior subordinated debentures or the
related trust preferred securities; or
4. failure to observe or perform any other agreement or covenant
contained in the junior subordinated debenture indenture in respect
of that series of junior subordinated debentures for 90 days after
written notice to Cox from the debenture trustee or the holders of
at least 25% in aggregate outstanding principal amount of that
series of junior subordinated debentures; or
5. certain events in bankruptcy, insolvency or reorganization of Cox.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures of any series have, subject to certain
exceptions, the right to direct the time, method and place of conducting any
proceeding for any remedy available to the debenture trustee in respect of such
junior subordinated debentures. The debenture trustee or the holders of at least
25% in aggregate outstanding principal amount of the junior subordinated
debentures of any series may declare the principal of and any accrued interest
on such junior subordinated debentures due and payable immediately upon a
debenture event of default, other than a debenture event of default referred to
in paragraph (5) above, which shall result in the immediate acceleration of the
junior subordinated debentures. The holders of a majority in aggregate
outstanding principal amount of the junior subordinated debentures of any series
may annul such
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declaration and waive the default in respect of such junior subordinated
debentures if the default, other than the non-payment of the principal and
interest of the junior subordinated debentures which has become due solely by
such acceleration, has been cured and a sum sufficient to pay all matured
installments of interest and premium, if any, and principal due otherwise than
by acceleration has been deposited with the debenture trustee.
The holders of a majority in aggregate outstanding principal amount of the
junior subordinated debentures of any series may, on behalf of the holders of
all of the junior subordinated debentures of such series, waive any past
default, except:
- a default in the payment of the principal of or premium, if any, on or
interest on the junior subordinated debentures, unless that default has
been cured and a sum sufficient to pay all matured installments of
interest and premium, if any, and principal due otherwise than by
acceleration has been deposited with the debenture trustee; or
- a default in respect of a covenant or provision which under the junior
subordinated debenture indenture cannot be modified or amended without
the consent of the holder of each outstanding junior subordinated
debenture of such series.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
To the extent any action under the junior subordinated debenture indenture
is entitled to be taken by the holders of at least a specified percentage of
junior subordinated debentures, holders of the corresponding trust preferred
securities may take such action if such action is not taken by the property
trustee of the related Cox Trust. Notwithstanding the foregoing, if a debenture
event of default has occurred and is continuing and is attributable either to:
- the failure of Cox to pay the principal of or premium, if any, on or
interest on the junior subordinated debentures on the due date or
- the failure by Cox to deliver the required securities or other rights
upon an appropriate conversion or exchange right election,
a holder of the related trust preferred securities may institute a legal
proceeding directly against Cox for enforcement of payment to such holder of the
principal of or premium, if any, on or interest on such junior subordinated
debentures having a principal amount equal to the liquidation amount of the
trust preferred securities held by such holder or for enforcement of such
conversion or exchange rights, as the case may be, which is referred to as a
direct action. Cox may not amend the junior subordinated debenture indenture to
remove the foregoing right to bring a direct action without the prior written
consent of the holders of all of the trust preferred securities outstanding. If
the right to bring a direct action is removed, the applicable Cox Trust may
become subject to the reporting obligations under the Exchange Act.
Notwithstanding any payments made to a holder of trust preferred securities by
Cox in connection with a direct action, Cox shall remain obligated to pay the
principal of and premium, if any, on and interest on the related junior
subordinated debentures, and Cox shall be subrogated to the rights of the holder
of such trust preferred securities with respect to payments on the trust
preferred securities to the extent of any payments made by Cox to such holder in
any direct action.
The holders of the trust preferred securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the related junior subordinated debentures unless an
event of default has occurred and is continuing under the applicable declaration
of trust. See "Description of Trust Preferred Securities -- Events of Default;
Notice."
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CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
Cox shall not consolidate with or merge into any other person or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to any person, and no person shall consolidate with or merge into
Cox or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to Cox, unless:
- in case Cox consolidates with or merges into another person or conveys or
transfers its properties and assets as an entirety or substantially as an
entirety to any person, the successor person is organized under the laws
of the United States or any State or the District of Columbia, and such
successor person expressly assumes Cox's obligations under the junior
subordinated debentures and the preferred securities guarantee;
- immediately after giving effect thereto, no debenture event of default,
and no event which, after notice or lapse of time or both, would become a
debenture event of default, shall have occurred and be continuing; and
- certain other conditions as prescribed in the junior subordinated
debenture indenture are met.
SATISFACTION AND DISCHARGE
The junior subordinated debenture indenture will cease to be of further
effect, except as to Cox's obligations to pay all other sums due pursuant to the
junior subordinated debenture indenture and to provide the required officers'
certificates and opinions of counsel, and Cox will be deemed to have satisfied
and discharged the junior subordinated debenture indenture, when, among other
things, all junior subordinated debentures not previously delivered to the
debenture trustee for cancellation
- have become due and payable, or
- will become due and payable at maturity or upon redemption within one
year, or
- if redeemable at the option of Cox, are to be called for redemption
within one year under arrangements satisfactory to the debenture trustee
for the giving of notice of redemption by the debenture trustee in the
name, and at the expense, of Cox,
and Cox deposits or causes to be deposited with the debenture trustee funds, in
trust, for the purpose and in an amount sufficient to pay and discharge the
entire indebtedness on the junior subordinated debentures not previously
delivered to the debenture trustee for cancellation, for the principal and
premium, if any, and interest to the date of the deposit or to the stated
maturity thereof, as the case may be.
SUBORDINATION
The junior subordinated debentures will rank subordinate and junior in
right of payment to all senior indebtedness to the extent provided in the junior
subordinated debenture indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of Cox, the holders of senior indebtedness
will first be entitled to receive payment in full of such senior indebtedness
before the holders of junior subordinated debentures will be entitled to receive
or retain any payment in respect thereof.
In the event of the acceleration of the maturity of junior subordinated
debentures, the holders of all senior indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
senior indebtedness before the holders of junior subordinated debentures will be
entitled to receive or retain any payment in respect of the junior subordinated
debentures.
No payments on account of principal or premium, if any, or interest in
respect of the junior subordinated debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to senior
indebtedness, or an event of default with respect to any senior indebtedness
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resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
Indebtedness shall mean:
1. every obligation of Cox for money borrowed;
2. every obligation of Cox evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses;
3. every reimbursement obligation of Cox with respect to letters of credit,
banker's acceptances or similar facilities issued for the account of
Cox;
4. every obligation of Cox issued or assumed as the deferred purchase price
of property or services, excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business;
5. every capital lease obligation of Cox which generally accepted
accounting principles require to be classified and accounted for as a
capital lease on Cox's balance sheet;
6. all indebtedness of Cox, whether incurred on or prior to the date of the
date of the junior subordinated debenture indenture or thereafter
incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements;
7. letters of credit, performance bonds and similar obligations issued in
favor of governmental or franchising authorities as a term of a cable
television franchise or other governmental franchise, license, permit or
authorization held by such entity or any of its subsidiaries;
8. every obligation of the type referred to in paragraphs (1) through (7)
of another person and all dividends of another person the payment of
which, in either case, Cox has guaranteed or is responsible or liable
for, directly or indirectly, as obligor or otherwise; and
9. obligations of the type referred to in paragraphs (1) through (8) of
another person secured by any lien on any property or asset of Cox,
whether or not such obligation is assumed by Cox; and all deferrals,
renewals, extensions and refundings of, and amendments, modifications
and supplements to, any of the foregoing obligations.
Indebtedness ranking on a parity with the junior subordinated debentures
shall mean
1. Indebtedness, whether outstanding on the date of execution of the
junior subordinated debenture indenture or thereafter created,
assumed or incurred, to the extent such Indebtedness specifically
by its terms ranks equally with and not prior to the junior
subordinated debentures in the right of payment upon the happening
of the dissolution, winding-up, liquidation or reorganization of
Cox, and
2. all other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with Cox that is a financing
vehicle of Cox, which is referred to as a financing entity, in
connection with the issuance by such financing entity of equity
securities or other securities guaranteed by Cox pursuant to an
instrument that ranks equally with or junior in right of payment to
the preferred securities guarantee.
The securing of any Indebtedness otherwise constituting indebtedness ranking on
a parity with the junior subordinated debentures shall not prevent such
Indebtedness from constituting indebtedness ranking on a parity with the junior
subordinated debentures.
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Indebtedness ranking junior to the junior subordinated debentures shall
mean any Indebtedness, whether outstanding on the date of execution of the
junior subordinated debenture indenture or thereafter created, assumed or
incurred, to the extent such Indebtedness by its terms ranks junior to and not
equally with or prior to:
- the junior subordinated debentures; and
- any other Indebtedness ranking equally with the junior subordinated
debentures in right of payment upon the happening of the dissolution,
winding-up, liquidation or reorganization of Cox.
The securing of any Indebtedness otherwise constituting indebtedness ranking
junior to the junior subordinated debentures shall not be deemed to prevent such
Indebtedness from constituting Indebtedness ranking junior to the junior
subordinated debentures.
Senior indebtedness shall mean all Indebtedness, whether outstanding on the
date of execution of the junior subordinated debenture indenture or thereafter
created, assumed or incurred, except indebtedness ranking on a parity with the
junior subordinated debentures or indebtedness ranking junior to the junior
subordinated debentures.
GOVERNING LAW
The junior subordinated debenture indenture and the junior subordinated
debentures will be governed by and construed in accordance with the laws of the
State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The debenture trustee shall be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to the foregoing, the debenture trustee will not be under
any obligation to exercise any of the powers vested in it by the junior
subordinated debenture indenture at the request of any holder of junior
subordinated debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby. The
debenture trustee will not be required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the debenture trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The trust preferred securities will be issued by a Cox Trust under the
declaration of trust of such Cox Trust and will represent beneficial interests
in the assets 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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<PAGE> 106
- 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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--------------------------------------------------------------------------------
$1,000,000,000
(COX LOGO)
COX COMMUNICATIONS, INC.
$800,000,000 7 3/4% NOTES DUE 2010
$200,000,000 FLOATING RATE MOPPRS(SM)/CHEERS(SM)
-----------------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------------
Joint Book-Running Managers
CHASE SECURITIES INC. MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY
ABN AMRO INCORPORATED
BNY CAPITAL MARKETS, INC.
SUNTRUST EQUITABLE SECURITIES
WACHOVIA SECURITIES, INC.
THE WILLIAMS CAPITAL GROUP, L.P.
NOVEMBER 2, 2000
"MANDATORY PAR PUT REMARKETED SECURITIES(SM)" AND "MOPPRS(SM)" ARE SERVICE MARKS
OWNED BY MERRILL LYNCH & CO., INC.
"CHASE EXTENDIBLE REMARKETABLE SECURITIES(SM)" AND "CHEERS(SM)" ARE SERVICE
MARKS OF THE CHASE MANHATTAN CORPORATION.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
