-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DiUNQqcPkv7KCoPaQuNfyqhmaGPU3+2B5cGks2yaIlD0yfYTZk5XrXThb2IKC/BI GARlajQVKwTWAjWrp3PuQg== 0000950144-98-009407.txt : 19980812 0000950144-98-009407.hdr.sgml : 19980812 ACCESSION NUMBER: 0000950144-98-009407 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19980811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COX RADIO INC CENTRAL INDEX KEY: 0001018522 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 581620022 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-61179 FILM NUMBER: 98682366 BUSINESS ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 BUSINESS PHONE: 4048435000 MAIL ADDRESS: STREET 1: C/O COX ENTERPRISES INC STREET 2: 1400 LAKE HEARN DR CITY: ATLANTA STATE: GA ZIP: 30319 S-4 1 COX RADIO, INC. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1998 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- COX RADIO, INC. (Exact name of Registrant as specified in its charter) DELAWARE 4832 58-1620022 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification incorporation or organization) Classification Code Number) Number)
1400 LAKE HEARN DRIVE, N.E., ATLANTA, GEORGIA 30319 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive office) --------------------- MARITZA C. PICHON CHIEF FINANCIAL OFFICER COX RADIO, INC. 1400 LAKE HEARN DRIVE, N.E. ATLANTA, GEORGIA 30319 (404) 843-5000 (Name, address, including zip code, and telephone number, including area code, of Registrant's agent for service) --------------------- PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO: STUART A. SHELDON, ESQ. DOW, LOHNES & ALBERTSON, PLLC 1200 NEW HAMPSHIRE AVENUE, N.W. WASHINGTON, D.C. 20036 (202) 776-2000 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. --------------------- If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE - -------------------------------------------------------------------------------------------------------------------- 6.250% Notes due 2003............... $100,000,000 100% $100,000,000 $29,500.00 6.375% Notes due 2005............... $100,000,000 100% $100,000,000 $29,500.00 - --------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457 of the Securities Act of 1933, as amended. --------------------- THE REGISTRANT HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 EXPLANATORY NOTE This Registration Statement covers the registration of the $100,000,000 aggregate principal amount of 6.250% Notes due 2003 (the "2003 Notes") and of the $100,000,000 aggregate principal amount of 6.375% Notes due 2005 (the "2005 Notes" and, together with the 2003 Notes, the "New Notes"), which are being issued by Cox Radio, Inc. (the "Company") in exchange for 6.250% Notes due 2003 and the 6.375% Notes due 2005 with terms substantially identical to the New Notes (collectively, the "Old Notes"). The Old Notes were previously issued and sold by the Company in an offering exempt from the registration requirements of the Securities Act of 1933, as amended. The complete Prospectus contained herein relates to the issuance and exchange of the New Notes for the Old Notes. ii 3 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. PROSPECTUS SUBJECT TO COMPLETION DATED AUGUST 10, 1998 (COX RADIO INC. LOGO) OFFER TO EXCHANGE 6.250% NOTES DUE 2003 AND 6.375% NOTES DUE 2005 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR ANY AND ALL OUTSTANDING 6.250% NOTES DUE 2003 AND 6.375% NOTES DUE 2005 THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED Cox Radio, Inc. ("Cox Radio" or the "Company") hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (which together constitute the "Exchange Offer"), to exchange $1,000 principal amount of 6.250% Notes due 2003 (the "2003 New Notes") and $1,000 principal amount of 6.375% Notes due 2005 (the "2005 New Notes" and, together with the 2003 New Notes, the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement (as defined herein) of which this Prospectus constitutes a part, in exchange, respectively, for each $1,000 principal amount of 6.250% Notes due 2003 (the "2003 Old Notes") and $1,000 principal amount of 6.375% Notes due 2005 (the "2005 Old Notes" and, together with the 2003 Old Notes, the "Old Notes" and, collectively with the New Notes, the "Notes"), respectively. As of the date of this Prospectus, $100,000,000 aggregate principal amount of 2003 Old Notes and $100,000,000 aggregate principal amount of 2005 Old Notes are outstanding. The form and terms of the New Notes are the same in all material respects as the form and terms of the Old Notes for which they are to be exchanged, except that (i) the issuance of the New Notes will have been registered under the Securities Act and, therefore, the New Notes will not bear legends restricting the transfer thereof and (ii) holders of the New Notes will not be entitled to certain rights of holders of Old Notes under the Registration Rights Agreement (as defined herein). The New Notes will evidence the same debts as the Old Notes (which they replace) and will be issued under and be entitled to the benefits of the Indenture dated as of May 26, 1998 (the "Indenture") by and between the Company and The Bank of New York, as Trustee (the "Trustee"), governing the Old Notes. See "The Exchange Offer" and "Description of the Notes." The Company will accept for exchange any and all Old Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange. However, the Exchange Offer is subject to certain conditions, which may be waived by the Company, and to the terms and provisions of the Registration Rights Agreement. Old Notes may be tendered only in denominations of $1,000 and integral multiples thereof. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998 (the "Expiration Date"), unless the Company, in its sole discretion, extends the Exchange Offer (in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended). Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to 5:00 p.m. New York City time on the business day prior to the Expiration Date; otherwise such tenders are irrevocable. SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The New Notes are redeemable, at the option of the Company, in whole at any time or in part from time to time, at a redemption price equal to the greater of (i) 100% of their principal amount and (ii) the sum of the present values of the principal amount and the remaining scheduled payments of interest thereon, discounted to the redemption date on a semiannual basis at the Treasury Rate (as defined herein) plus 10 basis points in the case of the 2003 New Notes and 15 basis points in the case of the 2005 New Notes, plus in either case, accrued interest thereon to the date of redemption. See "Description of the Notes." The New Notes will mature on May 15, 2003 with respect to the 2003 New Notes and May 15, 2005 with respect to the 2005 New Notes, unless redeemed prior thereto. The New Notes are senior unsecured obligations of the Company and rank pari passu with all existing and future unsecured and unsubordinated obligations of the Company. Each of the Company's subsidiaries (the "Note Guarantors") that guarantees amounts payable by the Company under the Credit Agreement (as defined herein) or under any future senior, unsecured credit facility between the Company and its lenders thereunder will fully and unconditionally guarantee (each, a "New Note Guarantee") all amounts payable under the New Notes as long as such Subsidiary is a guarantor under the Credit Agreement or such future credit facility. The New Note Guarantees, if any, will be senior unsecured obligations of the applicable Note Guarantors and will rank pari passu with all existing and future unsecured and unsubordinated obligations of such Note Guarantors. The New Note Guarantees, if any, will be the same in all material respects as the form and terms of the guarantees in respect of the Old Notes. The current note guarantors for the Old Notes are WSB, Inc. and WHIO, Inc., each a Delaware corporation (collectively, the "Initial Note Guarantors"). August , 1998 4 (Cover page continued) The Exchange Offer is being made to satisfy certain obligations of the Company under the Registration Rights Agreement dated as of May 26, 1998 (the "Registration Rights Agreement") among the Company, the Initial Note Guarantors and NationsBanc Montgomery Securities LLC ("NationsBanc"), Chase Securities Inc. ("Chase") and J.P. Morgan Securities Inc. ("J.P. Morgan" and together with NationsBanc and Chase, the "Initial Purchasers"). Upon consummation of the Exchange Offer, holders of Old Notes that were not prohibited from participating in the Exchange Offer and did not tender their Old Notes will not have any registration rights under the Registration Rights Agreement with respect to such untendered Old Notes and, accordingly, such Old Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. Based upon interpretations by the staff of the Securities and Exchange Commission (the "Commission") set forth in certain no-action letters issued to third parties, the Company believes that the New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than a broker-dealer, as set forth below, or any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act")) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder has no arrangement or understanding with any person to participate in the distribution of such New Notes. See "The Exchange Offer -- Resale of the New Notes." Holders of Old Notes wishing to accept the Exchange Offer must represent to the Company, as required by the Registration Rights Agreement, that such conditions have been met and that such holder is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act. Each broker-dealer that is the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of New Notes for its own account pursuant to the Exchange Offer (a "Participating Broker-Dealer") must represent that the Old Notes tendered in exchange therefor were acquired as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by any broker-dealer (other than an affiliate of the Company) in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of up to 90 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes or who is an affiliate of the Company may not rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (May 13, 1988) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which the holder is not indemnified by the Company. No affiliate of the Company may rely on such no-action letters and any such affiliate must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The Company has not entered into any arrangement or understanding with any person to distribute the New Notes to be received in the Exchange Offer. The Old Notes were originally issued and sold on May 26, 1998 in an offering of $200,000,000 aggregate principal amount of the Old Notes (the "Offering"). The Offering was exempt from registration under the Securities Act in reliance upon the exemptions provided by Rule 144A under the Securities Act and Section 4(2) of the Securities Act. Accordingly, the Old Notes may not be reoffered, resold or otherwise pledged, hypothecated or transferred in the United States unless so registered or unless an exemption from the registration requirements of the Securities Act and applicable state securities laws is available. The Company will not receive any proceeds from the Exchange Offer. i 5 There has not previously been any public market for the Old Notes or the New Notes. The Company does not intend to list the New Notes on any securities exchange or to seek approval for quotation through any automated quotation system. The Initial Purchasers indicated to the Company that they intend to effect offers and sales of the New Notes in market-making transactions at negotiated prices related to prevailing market prices at the time of sale, but are not obligated to do so and such market-making activities may be discontinued at any time. The Initial Purchasers may act as principal or agent in such transactions. There can be no assurance that an active market for the New Notes will develop or that such trading market will be liquid. See "Risk Factors -- Lack of Public Market for the Notes." Moreover, to the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes could be adversely affected. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE OBLIGOR ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. --------------------- TABLE OF CONTENTS Available Information....................................... iv Incorporation of Certain Documents by Reference............. iv Prospectus Summary.......................................... 1 Pro Forma Combined Statement of Operations.................. 14 Certain Definitions and Market and Industry Data............ 16 Risk Factors................................................ 17 Use of Proceeds............................................. 21 Capitalization.............................................. 22 The Company................................................. 23 Business.................................................... 24 Legislation and Regulation.................................. 32 Management.................................................. 33 Security Ownership of Certain Beneficial Owners............. 34 Description of Certain Indebtedness......................... 35 The Exchange Offer.......................................... 36 Description of the Notes.................................... 46 Certain United States Federal Income Tax Considerations..... 57 Plan of Distribution........................................ 63 Legal Matters............................................... 63 Experts..................................................... 63
ii 6 CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS THIS PROSPECTUS 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. ALL STATEMENTS REGARDING THE COMPANY'S AND ITS SUBSIDIARIES EXPECTED FINANCIAL POSITION, BUSINESS AND FINANCING PLANS ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY AND ITS SUBSIDIARIES BELIEVE THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, THEY CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. ACTUAL RESULTS IN THE FUTURE COULD DIFFER MATERIALLY AND ADVERSELY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY, ITS SUBSIDIARIES OR PERSON ACTING ON BEHALF OF ANY OF THEM ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. iii 7 AVAILABLE INFORMATION As of the date of this Prospectus, the Company is subject to the information reporting requirements of the Exchange Act. In addition, under the Indenture governing the Notes, the Company will be required to furnish to the Trustee and to registered holders of the Notes audited annual consolidated financial statements, unaudited quarterly consolidated financial reports and certain other reports. The Registration Statement, the exhibits and schedules forming a part thereof and the reports and other information filed by the Company with the Commission pursuant to the informational requirements of the Exchange Act may be inspected without charge and copied upon payment of certain fees at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New York, New York 10048, and Chicago Regional Office, Northwestern Atrium, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The Commission also maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the Commission. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE GENERAL The following documents filed by the Company with the Commission are incorporated into this Prospectus by reference: 1. The Company's Current Report on Form 8-K dated April 14, 1997 (Commission File No. 1-12187); 2. The Company's Annual Report on Form 10-K for the year ended December 31, 1997 (Commission File No. 1-12187); 3. The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (Commission File No. 1-12187); 4. The Company's Proxy Statement for the 1998 Annual Meeting of Stockholders filed pursuant to Section 14(A) of the Exchange Act; and 5. The Company's Current Report on Form 8-K dated June 4, 1998 (Commission File No. 1-12187). All documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the termination of this Exchange Offer shall be deemed to be incorporated by reference into this Prospectus and to be a part of this Prospectus from the date of filing of such document. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. As used herein, the terms "Prospectus" and "herein" mean this Prospectus, including the documents incorporated or deemed to be incorporated herein by reference, as the same may be amended, supplemented or otherwise modified from time to time. Statements contained in this Prospectus as to the contents of any contract or other document referred to herein do not purport to be complete, and where reference is made to the particular provisions of such contract or other document, such provisions are qualified in all respects by reference to all of the provisions of such contract or other document. The Company will provide without charge to any person to whom this Prospectus is delivered, on the written or oral request of such person, a copy of any or all of the future documents incorporated by reference herein (other than exhibits, unless such exhibits are specifically incorporated by reference in such documents). Requests for such documents should be directed to: Maritza Pichon, Chief Financial Officer, Cox Radio, Inc., 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319. iv 8 PROSPECTUS SUMMARY The following information is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in, or incorporated by reference in, this Prospectus. The information in, or incorporated by reference in, this Prospectus, other than the historical financial data, gives effect to certain planned acquisitions and dispositions by the Company. See "Business -- Pending Transactions" and "-- Long Island Acquisition." Consummation of the Pending Transactions (as defined herein) is contingent on certain approvals; there can be no assurance that the approval of the Federal Communications Commission ("FCC") to the Pending Transactions will be obtained or that other closing conditions to the Pending Transactions will be satisfied or waived. THE COMPANY Cox Radio, Inc., a Delaware corporation ("Cox Radio" or the "Company"), is one of the ten largest radio broadcasting companies in the United States, based on both net revenues and number of stations as of August 1, 1998. Cox Radio, upon completion of the Pending Transactions, will own or operate, or provide sales and marketing services for 59 radio stations (40 FM and 19 AM) clustered in 13 markets, including the 18 stations acquired from NewCity Communications, Inc. ("NewCity") during 1997 (the "NewCity Acquisition"). On a pro forma basis after giving effect to the Recent Transactions, the Pending Transactions and the Long Island Acquisition for the entire year, Cox Radio would have generated net revenue of $237.4 million and Broadcast Cash Flow (as defined herein) of $80.2 million for the year ended December 31, 1997. Cox Radio is an indirect majority-owned subsidiary of Cox Enterprises, Inc., a Delaware corporation ("CEI"). CEI indirectly owns approximately 69% of the Company's Common Stock (as herein defined) and has approximately 96% of the voting power of Cox Radio. The Company has two classes of common stock outstanding, Class A Common Stock, par value $1.00 per share (the "Class A Common Stock"), and Class B Common Stock, par value $1.00 per share (the "Class B Common Stock"), collectively defined as the "Common Stock." The Class A Common Stock is publicly traded on The New York Stock Exchange ("NYSE") under the symbol "CXR." CEI's wholly-owned subsidiary, Cox Broadcasting, Inc., a Delaware corporation ("Cox Broadcasting"), is the sole stockholder of the shares of the Company's Class B Common Stock. CEI, a privately-held corporation headquartered in Atlanta, is one of the largest media companies in the United States, with consolidated 1997 revenues of approximately $4.9 billion. CEI, which has approximately 100 years of experience in the media and communications industry and over 60 years experience in the radio broadcasting business, publishes 16 daily and 11 weekly newspapers, owns and/or operates eleven television stations and owns approximately 75% of Cox Communications, Inc. ("CCI"), a publicly traded broadband communications company (NYSE: COX) with approximately 3.4 million cable television customers. CEI is also the world's largest operator of auto auctions through Manheim Auctions. Cox Radio, as part of CEI, has been a pioneer in radio broadcasting, building its first radio station in 1934, acquiring its flagship station, WSB-AM in Atlanta in 1939 and launching its first FM station, WSB-FM in Atlanta in 1948. Prior to Cox Radio's initial public offering in September 1996, CEI transferred all of its U.S. radio operations to Cox Radio (the "Cox Radio Consolidation"). Cox Radio seeks to maximize the revenues and Broadcast Cash Flow of its radio stations by operating and developing clusters of stations in demographically attractive and rapidly growing markets, including major markets such as Los Angeles and Atlanta and Sunbelt markets such as Miami, Tampa, Orlando, San Antonio and Birmingham. During the past five years, the 13 markets in which the Company's stations currently operate generated, on an aggregate basis, greater radio advertising revenue growth than the average of 5.3%, which was calculated using revenue projections obtained from the Radio Advertising Bureau, for the U.S. radio industry as a whole. The NewCity Acquisition enhanced the clustering of the Company's radio stations by increasing the total number of markets in which Cox Radio owned and/or operated radio stations to 12 and by strengthening the Company's penetration in those markets. The Long Island Acquisition increased the number of markets where Cox Radio owns and/or operates radio stations to 13. Cox Radio owns or operates four or more stations in 10 of its 13 markets. 1 9 As a result of the Company's management, programming and sales efforts, the Company's radio stations are characterized by strong ratings and above average power ratios. The Company's stations are diversified in terms of format, target audience, geographic location and stage of development. Cox Radio has a track record of acquiring, repositioning and improving the operating performance of previously underperforming stations. Management believes that a number of the Company's stations have significant growth opportunities or turnaround potential and can therefore be characterized as start-up or developing stations. Generally, the Company considers start-up or developing stations to include those which have been recently acquired by the Company and offer the greatest potential for growth. Currently, the Company considers 28 of its stations to be start-up or developing stations. Cox Radio believes these stations can achieve significant Broadcast Cash Flow growth by employing the Company's operating strategy. Management believes that its mix of stations in different stages of development enables it to maximize the Company's growth potential. Cox Radio's senior operating management is comprised of six individuals with an average of over 24 years of experience in the radio broadcasting industry, including an average of over 15 years with Cox Radio. The Company believes that this experienced senior management team is well positioned to manage larger radio station clusters and take advantage of new opportunities arising in the U.S. radio broadcasting industry. The following table sets forth certain information with respect to Cox Radio and its markets:
PRO FORMA COMPANY DATA MARKET DATA ------------------------------------------------- ------------------------------------------------- 1997 COMBINED POWER 1997 NUMBER 1997 STATION RATIO FOR MARKET 1997 ADVERTISING OF COMBINED GROUP RADIO RADIO MARKET REVENUE 1997 STATIONS STATION AUDIENCE STATIONS ADVERTISING RADIO GROWTH METRO --------- GROUP MARKET OWNED OR REVENUE ADVERTISING CAGR MARKET MARKET FM AM MARKET SHARE SHARE(A) OPERATED(B) RANK(C) REVENUE(D) 1992-97 RANK(E) - ------ --- --- ------------ -------- ----------- ----------- ----------- ----------- ------- Los Angeles.......... 3 1 13.2 9.1 1.5 1 $575 6.3% 2 Atlanta.............. 2 2 30.6 18.5 1.7 10 222 14.8 12 Miami................ 2 -- 9.9 11.0 0.9 12 198 12.7 11 Tampa................ 2 2 13.3 13.9 1.0 19 102 10.0 21 Orlando.............. 5 2 31.7 30.6 1.0 28 76 9.2 38 San Antonio.......... 5 3 33.9 30.5 1.1 32 68 8.7 33 Long Island.......... 3 1 27.0(f) 9.6 2.8 48 41 5.7 16 Louisville........... 3 -- 7.3 8.5 0.9 47 41 7.2 52 Birmingham........... 5 2 41.5 36.3 1.1 50 40 9.2 55 Tulsa................ 3 2 40.0 32.8 1.2 55 35 10.1 60 Dayton............... 3 2 31.2 22.8 1.4 58 34 7.2 54 Syracuse............. 3 2 49.9 32.1 1.6 71 24 4.8 71 Bridgeport........... 1 -- 18.8 14.6 1.3 90 17 7.2 114
- --------------- (a) Audience share data based upon all persons aged 25-54. (b) A station's or station group's power ratio is defined as such station's or station group's revenue market share divided by audience market share of adults 25-54. (c) Ranking of the principal radio market served by the stations among all radio markets in the United States by 1997 market revenue, according to BIA's Investing in Radio, 1998 ("BIA"). (d) In millions of dollars. (e) Ranks assigned by BIA based on population in the market. (f) Revenue market share obtained from Inside Radio's Who Owns What, May 4, 1998. OPERATING STRATEGY The following is a summary of the key elements of the Company's operating strategy: Clustering of Stations. Cox Radio operates its stations in clusters to (i) enhance net revenue growth by increasing the appeal of the Company's stations to advertisers and enabling such stations to compete more effectively with other forms of advertising and (ii) achieve operating efficiencies by consolidating broadcast facilities, eliminating duplicative positions in management and production and 2 10 reducing overhead expenses. Management believes that operating several radio stations in each of its markets will enable its sales teams to offer advertisers more attractive advertising packages. Development of Underperforming Stations. The Company's management has demonstrated its ability to acquire underperforming radio stations and develop them into consistent ratings and revenue leaders. The Company's historic margins reflect the acquisition and continued development of underperforming stations, as well as the fact that increases in net revenue are typically realized subsequently to increases in audience share. Implementation of the Company's Management Philosophy. The Company's local station operations are supported by a lean corporate staff which employs a management philosophy emphasizing (i) market research and targeted programming; (ii) a customer-focused selling strategy; and (iii) marketing and promotional activities. Market Research and Targeted Programming. Cox Radio's research, programming and marketing strategy combines extensive research with an assessment of competitors' vulnerabilities and market dynamics in order to identify specific audience opportunities within each market. Cox Radio also retains consultants and research organizations to continually evaluate listener preferences. Using this information, Cox Radio tailors the programming, marketing and promotions of each Cox Radio station to maximize its appeal to its target audience. Cox Radio's disciplined application of market research enables each of its stations to be responsive to the changing preferences of its targeted listeners. Customer-Focused Selling Strategy. The Company utilizes a unique, customer-focused approach to selling advertising known as the Consultative Selling System. The Company's sales personnel are trained to approach each advertiser with a view towards solving the marketing needs of the customer. In this regard, the sales staff consults with customers, attempts to understand their business goals and offers comprehensive marketing solutions, including the use of radio advertising. Instead of merely selling station advertising time, the Company's sales personnel are encouraged to develop innovative marketing strategies for the station's advertising customers. Marketing and Promotional Activities. The Company's stations regularly engage in significant local promotional activities, including advertising on local television and in local print media, participating in telemarketing and direct mailings and sponsoring contests, concerts and events. Cox Radio also engages in joint promotional activities with other media in its markets to further leverage the Company's promotional spending. Strong Management Teams. In addition to relying upon its experienced senior operating management, the Company places great importance on the hiring and development of strong local management teams and has been successful in retaining experienced management teams that have strong ties to their communities and customers. The Company invests significant resources in identifying and training employees to create a talented team of managers at all levels of station operations. Local managers are empowered to run the day-to-day operations of their stations and to develop and implement policies that will improve station performance and establish long-term relationships with listeners and advertisers. ACQUISITION STRATEGY In the ordinary course of its business, Cox Radio seeks opportunities to acquire radio stations that it believes will provide added value to the Company. During the last several years, the Company has implemented its strategy of clustering radio stations in several of its existing markets by acquiring additional radio stations. The radio stations acquired by Cox Radio in the past have primarily been underperforming, and Cox Radio has generally improved the operating and financial performance of such stations. The Company intends to continue to make acquisitions where permissible in the markets in which it operates and may also make opportunistic acquisitions in additional markets in which the Company believes that it can cost-effectively achieve a leading position in terms of audience and revenue share. The nature and timing of further acquisitions are uncertain and difficult to estimate. 3 11 RECENT TRANSACTIONS Orlando Acquisition In March 1997, the Company exchanged WCKG-FM and WYSY-FM in Chicago for WHOO-AM, WHTQ-FM and WMMO-FM in Orlando (the "Orlando Acquisition"). The Orlando Acquisition resulted in a pre-tax gain of approximately $49 million. In addition to receiving the three Orlando stations, Cox Radio also received cash proceeds of approximately $20 million. Prior to the NewCity Acquisition, the Orlando stations were operated by NewCity since July 1996 under an LMA (as defined herein). Tampa Acquisition In March 1997, the Company acquired WFNS-AM in Tampa for an aggregate consideration of $1.5 million (the "Tampa Acquisition"). The Company had been operating this station pursuant to an LMA or a JSA (as defined herein) since June 1995. Los Angeles Acquisition In April 1997, Cox Radio completed its acquisition of the license and certain assets of KRTO-FM in Los Angeles for $19 million in cash (the "Los Angeles Acquisition"). NewCity Acquisition In April 1997, the Company, through the merger of its wholly owned subsidiary, New Cox Radio II, Inc., with and into NewCity, with NewCity surviving as a wholly owned subsidiary of Cox Radio, acquired all of the issued and outstanding capital stock of NewCity in the NewCity Acquisition. Cox Radio purchased the stock of NewCity for an aggregate consideration of approximately $253 million, including approximately $87 million in assumption of NewCity indebtedness and approximately $3 million in working capital adjustments. To consummate the NewCity Acquisition, the Company utilized approximately $56 million of amounts due from CEI and borrowed approximately $110 million pursuant to the Company's $300 million, five-year, senior, unsecured revolving credit facility with certain banks (the "Credit Agreement"), including Chase Bank of Texas, N.A. (formerly Texas Commerce Bank National Association), as Administrative Agent. On April 2, 1997, NewCity was merged with and into the Company, with the Company as the surviving corporation. NewCity's subsidiaries were subsequently consolidated into Cox Radio. In October 1997, the Company disposed of the assets of American Comedy Network, a former subsidiary of NewCity, for aggregate proceeds of approximately $1.1 million including certain non-compete agreements. Birmingham Acquisition II and Birmingham Disposition In May 1997, the Company agreed to acquire WENN-FM and WAGG-AM in Birmingham, Alabama, for consideration of $15 million (the "Birmingham Acquisition II"). In July 1997, the Company assigned its right to purchase WENN-FM for consideration of $14.5 million to a third party (the "Birmingham Disposition"). The Company consummated these transactions during November 1997. San Antonio Transactions In September 1997, the Company acquired KISS-FM, KSMG-FM and KLUP-AM in San Antonio, Texas for an aggregate consideration of $30.4 million plus certain non-compete agreements (the "San Antonio Acquisition I"). In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio for $23 million (the "San Antonio Acquisition II"). In December 1997, the Company acquired an option to purchase radio station KRIO-FM, serving the San Antonio market, for a purchase price of $9 million. The Company entered into an agreement to assign this option in January 1998 for an aggregate consideration of $250,000 (the "San Antonio Disposition"). The closing of the San Antonio Disposition occurred in May 1998. 4 12 The Orlando Acquisition, the Tampa Acquisition, the Los Angeles Acquisition, the NewCity Acquisition, the Birmingham Acquisition II, the Birmingham Disposition, the San Antonio Acquisition I, the San Antonio Acquisition II and the San Antonio Disposition are collectively referred to herein as the "Recent Transactions". PENDING TRANSACTIONS Birmingham Transactions In May 1997, the Company agreed to acquire radio stations WBHJ-FM and WBHK-FM in Birmingham, Alabama (the "Birmingham Acquisition I") for an aggregate consideration of $17 million, consisting of $5 million paid for an option to purchase the stations and $12 million issued to the seller as a station investment note receivable. On August 1, 1997, the Company began operating WBHJ-FM and WBHK-FM under an LMA. Pending certain regulatory approvals, the Company anticipates closing the Birmingham Acquisition I in the second half of 1998. In September 1997, the Company announced that it had entered into an agreement in principle with a third party to construct, program and own WEDA-FM, a new Class A FM radio station, in Homewood, Alabama to serve the Birmingham market (the "Birmingham Acquisition III"). The FCC has approved the third party's application for the new construction permit and settlement of the comparative hearing among the three applicants for the construction permit. As part of the agreement in principle, the third party would construct the station, the Company would enter into an LMA for the new station and the Company would acquire an option to purchase the station for an aggregate consideration of $5.5 million and the assumption of debt in an amount not to exceed $200,000. The Company expects to consummate the Birmingham Acquisition III in the second half of 1998. Dayton Acquisition In February 1998, the Company entered into an agreement to acquire radio stations WCLR-FM, WZLR-FM and WPTW-AM, serving the Dayton, Ohio market for approximately $6 million (the "Dayton Acquisition"). The Company has been operating these stations pursuant to an LMA since December 1997. In addition, the Company has entered into a station investment note receivable with the stations' seller for $6 million. Pending certain regulatory approvals, the Company anticipates closing the Dayton Acquisition in the second half of 1998. Orlando Exchange In February 1998, the Company entered into an agreement to acquire the assets of radio station WTLN-FM serving the Orlando, Florida market for consideration of $14.5 million. In a related transaction, the Company entered into an agreement to dispose of the assets of radio station WTLN-AM (formerly known as WZKD-AM), also serving the Orlando, Florida market, for $500,000 (the "Orlando Exchange"). Pending certain regulatory approvals, the Company anticipates closing the Orlando Exchange in the second half of 1998 or the first half of 1999. The Birmingham Acquisition I, the Birmingham Acquisition III, the Dayton Acquisition and the Orlando Exchange are collectively referred to herein as the "Pending Transactions". LONG ISLAND ACQUISITION In May 1998, the Company acquired the assets of radio stations WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New York market for consideration of $48 million (the "Long Island Acquisition"). 5 13 THE EXCHANGE OFFER Securities Offered......... $100,000,000 aggregate principal amount of 6.250% Notes due 2003 (the "2003 New Notes") and $100,000,000 aggregate principal amount of 6.375% Notes due 2005 (the "2005 New Notes" and, together with the 2003 New Notes, the "New Notes"). The Exchange Offer......... $1,000 principal amount of 2003 New Notes will be issued in exchange for each $1,000 principal amount of 2003 Old Notes and $1,000 principal amount of 2005 New Notes will be issued in exchange for each $1,000 original principal amount of 2005 Old Notes. As of the date hereof, $200,000,000 principal amount of Old Notes are outstanding. The Company will issue the New Notes to holders on or promptly after the Expiration Date. Based upon interpretations by the staff of the Commission set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder of such New Notes (other than a broker-dealer as set forth below, or any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder has no arrangement or understanding with any person to participate in the distribution of such New Notes. Any Participating Broker-Dealer that acquired Old Notes for its own account as a result of market-making activities or other trading activities may be a statutory underwriter. Each Participating Broker-Dealer that is the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by any broker-dealer (other than an affiliate of the Company) in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of up to 90 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes or who is an affiliate of the Company may not rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (May 13, 1988) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring 6 14 liability under the Securities Act for which the holder is not indemnified by the Company. Expiration Date............ 5:00 p.m., New York City time, on , 1998 unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Conditions to the Exchange Offer...................... The Exchange Offer is subject to certain conditions, which may be waived by the Company. See "The Exchange Offer -- Conditions." The Exchange Offer is not conditioned upon any minimum principal amount of Old Notes being tendered. Procedures for Tendering Old Notes.................. Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and date the accompanying Letter of Transmittal, or a facsimile thereof or transmit an Agents' Message (as defined herein) in connection with a book-entry transfer, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile on such Agent's Message, together with the Old Notes and any other required documentation to the Exchange Agent (as defined herein) at the address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. By executing the Letter of Transmittal or Agent's Message, each holder will represent to the Company that, among other things, the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the holder, that neither the holder nor any such other person has any arrangement or understanding with any person to participate in the distribution of such New Notes and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company. See "The Exchange Offer -- Purpose and Effect of the Exchange Offer" and "-- Procedures for Tendering." Untendered Old Notes....... Following the consummation of the Exchange Offer, holders of Old Notes eligible to participate, but who do not tender their Old Notes, will not have any further exchange rights and such Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Old Notes could be adversely affected. Consequences of Failure to Exchange................. The Old Notes that are not exchanged pursuant to the Exchange Offer will remain restricted securities. Accordingly, within the time period referred to in Rule 144(k) under the Securities Act, such Old Notes may be resold only (i) to the Company, (ii) to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in compliance with Rule 144A, (ii) inside the United States to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that, prior to such transfer, furnishes to the Trustee a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Old Notes (the form of which letter can be obtained from the Trustee and, if such transfer is in respect of an aggregate principal amount of Old 7 15 Notes of less than $100,000, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act, (iv) outside the United States in compliance with Rule 904 under the Securities Act, (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (vi) pursuant to an effective registration statement under the Securities Act. See "The Exchange Offer -- Consequences of Failure to Exchange." Shelf Registration Statement.................. If, because of any change in law, regulation or in the applicable interpretations of the staff of the Commission, the Company is not permitted to effect the Exchange Offer or, for any reason, the Exchange Offer Registration Statement is not declared effective within 180 days after the date of issuance of the Old Notes or in certain other circumstances, then the Company shall use its best efforts to (a) as promptly as practicable, file a shelf registration statement (the "Shelf Registration Statement") covering the Old Notes, (b) cause the shelf registration statement to be declared effective under the Securities Act and (c) keep the shelf registration statement effective until the earlier of two years after the initial sale of the Old Notes to the Initial Purchasers (as defined herein) or such time as all of the applicable Old Notes have been sold thereunder or otherwise cease to be registrable securities within the meaning of the Registration Rights Agreement. Special Procedures for Beneficial Owners.......... Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering its Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. The Company will keep the Exchange Offer open for not less than thirty calendar days in order to provide for the transfer of registered ownership. Guaranteed Delivery Procedures................. Holders of Old Notes who wish to tender their Old Notes and whose Old Notes are not immediately available or who cannot deliver their Old Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent (or comply with the procedures for book-entry transfer) prior to the Expiration Date must tender their Old Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. 8 16 Acceptance of Old Notes and Delivery of New Notes.... The Company will accept for exchange any and all Old Notes which are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The New Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer." Federal Income Tax Consequences............. The exchange pursuant to the Exchange Offer will not be a taxable event for federal income tax purposes. See "Certain Federal Income Tax Consequences." Use of Proceeds............ There will be no cash proceeds to the Company from the exchange pursuant to the Exchange Offer. Exchange Agent............. The Bank of New York. 9 17 THE NEW NOTES The New Notes.............. $100,000,000 aggregate principal amount of 6.250% Notes due 2003 (the "2003 New Notes") and $100,000,000 aggregate principal amount of 6.375% Notes due 2005 (the "2005 New Notes" and, together with the 2003 New Notes, the "New Notes"). General.................... The form and terms of the New Notes are the same in all material respects as the form and terms of the Old Notes (which they replace), except that (i) the New Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof, and (ii) the holders of New Notes will not be entitled to certain rights under the Registration Rights Agreement, including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to the timing of the Exchange Offer, which rights will terminate when the Exchange Offer is consummated. See "The Exchange Offer -- Purpose and Effect of the Exchange Offer." The New Notes will evidence the same debts as the Old Notes and will be entitled to the benefits of the Indenture. See "Description of the Notes." Interest Payment Dates..... May 15 and November 15, commencing on November 15, 1998 Stated Maturity Dates...... May 15, 2003 in the case of the 2003 New Notes and May 15, 2005 in the case of the 2005 New Notes Note Guarantees............ Pursuant to the Note Guarantees, the New Notes will be fully and unconditionally guaranteed by the Note Guarantors (as defined herein). The Note Guarantors will be each subsidiary of the Company that guarantees amounts payable under the Credit Agreement or under any future senior unsecured credit facility between the Company and the third party lenders thereunder on the date hereof or in the future. Each Note Guarantor's Note Guarantee shall terminate immediately upon the termination of such Note Guarantor's guarantee pursuant to the Credit Agreement or any such future credit facility without further action by any party. Optional Redemption........ The New Notes will be redeemable at the option of the Company, in whole or in part, at any time or from time to time, for an amount equal to the greater of (i) 100% of the principal amount of the New Notes to be redeemed, and (ii) the sum, as determined by the Quotation Agent, of the present values of the principal amount and the remaining scheduled payments of interest on the New Notes to be redeemed from the redemption date to May 15, 2003 in the case of the 2003 New Notes and May 15, 2005 in the case of the 2005 New Notes, in each case, discounted on a semiannual basis (assuming a 360-day year consisting of 30-day months) at the Treasury Rate plus 10 basis points in the case of the 2003 New Notes and 15 basis points in the case of the 2005 New Notes, plus in either case, accrued interest thereon to the date of redemption. See "Description of the Notes -- Optional Redemption." Ranking.................... The New Notes will be senior unsecured obligations of the Company ranking pari passu in right of payment with all other existing and future unsubordinated unsecured indebtedness of the Company, which, as of March 31, 1998, on a pro forma basis after giving effect to 10 18 the Offering, the application of the net proceeds of the Offering, the Pending Transactions and the Long Island Acquisition totalled approximately $315.2 million. The New Notes will be effectively subordinated to all indebtedness and other liabilities of the Company's subsidiaries, except in respect of the Note Guarantees of the Note Guarantors. Certain Covenants.......... The Indenture contains covenants for the New Notes including, but not limited to, covenants with respect to the following matters: (i) limitations on liens of the Company and Restricted Subsidiaries (as defined herein); (ii) limitations on consolidation, merger and sale of assets by the Company and the Note Guarantors; and (iii) limitations on the indebtedness of the Company's Restricted Subsidiaries. See "Description of the Notes -- Certain Covenants." RISK FACTORS Potential investors should consider carefully certain factors relating to an investment in the New Notes. See "Risk Factors." 11 19 SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA The following summary consolidated financial and other data have been derived from the Consolidated Financial Statements of Cox Radio. The consolidated statement of operations data and other operating data for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 and the consolidated balance sheet data as of December 31, 1994, 1995, 1996 and 1997 have been derived from the audited Consolidated Financial Statements of Cox Radio. The statement of operations data and other operating data for the six-month periods ended June 30, 1997 and 1998, and the balance sheet data as of December 31, 1993 and June 30, 1997 and 1998 have been derived from unaudited Consolidated Financial Statements of Cox Radio, which, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Company's results of operations for such period or financial position at such date. The pro forma combined financial data for the year ended December 31, 1997 assume the Recent Transactions, the Pending Transactions and the Long Island Acquisition had occurred at the beginning of the year. See "Incorporation of Certain Documents by Reference." See "Certain Definitions and Market Industry Data" following "Pro Forma Combined Statement of Operations" for certain defined terms and information concerning market and industry data used herein.
AS OF AND FOR THE SIX MONTH PERIOD AS OF AND FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30, ------------------------------------------------------ ----------------- PRO FORMA 1993 1994 1995 1996 1997 1997 1997 1998 ------ ------ ------ ------ ------ --------- ------- ------- (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Net revenues(1).................. $ 95.0 $111.5 $123.6 $132.9 $199.6 $237.4 $ 83.5 $121.2 Station operating expenses....... 67.9 76.3 90.0 91.9 129.8 157.1 55.6 80.4 Corporate general and administrative expenses(2)..... 2.5 2.7 5.9 5.3 6.9 7.4 3.5 3.9 Depreciation and amortization.... 7.3 6.9 7.2 8.1 17.5 22.0 7.2 11.0 ------ ------ ------ ------ ------ ------ ------ ------ Operating income................. 17.3 25.6 20.5 27.6 45.4 50.9 17.2 25.9 Interest expense................. 5.6 5.2 6.0 4.6 9.4 19.4 2.1 7.7 Net income (loss)................ (1.1)(3) 11.2 8.2 14.9 49.7(4) 17.0 38.1(4) 9.1 Basic earnings (loss) per common share.......................... (.06) .57 .42 .69 1.75 .60 1.35 .32 Diluted earnings (loss) per common share................... (.06) .57 .42 .69 1.75 .60 1.34 .32 BALANCE SHEET DATA: Cash and cash equivalents........ $ 1.7 $ 1.9 $ 1.7 $ 10.6(5) $ 6.2 $ 6.2 $ 11.6 $ 7.1 Intangible assets, net........... 114.2 120.1 126.8 138.1 518.9 622.3 496.0 578.7 Total assets..................... 168.3 180.0 191.8 261.7 654.6 735.0 620.8 736.1 Total debt (including amounts due to/from CEI)................... 89.7 120.3 125.1 -- 232.6 315.6 222.2 287.8 Shareholders' equity............. 64.2 40.4 47.2 235.8 287.3 254.6 274.2 297.3 OTHER OPERATING DATA AND FINANCIAL DATA: Broadcast cash flow(6)........... $ 27.1 $ 35.2 $ 33.6(7) $ 41.0 $ 69.8 $ 80.2 $ 27.9 $ 40.8 Broadcast cash flow margin(6).... 28.5% 31.6% 27.2% 30.9% 35.0% 33.8% 33.4% 33.7% EBITDA........................... $ 24.6 $ 32.5 $ 27.7(7) $ 35.7 $ 62.9 $ 72.9 $ 24.4 $ 36.9 EBITDA to interest ratio......... 4.4x 6.3x 4.6x 7.8x 6.7x 3.8x 11.6x 4.8x Debt to EBITDA ratio............. 3.6x 3.7x 4.5x -- 3.7x 4.3x 5.1x 3.8x Earnings to fixed charges ratio.......................... 3.1x 4.9x 3.4x 6.0x 4.8x 2.6x 8.2x 3.4x Net cash provided by operating activities..................... $ 11.4 $ 14.1 $ 14.0 $ 26.9 $ 42.2 $ 52.6 $ 12.4 $ 17.1 Net cash used in investing activities..................... (6.1) (12.3) (17.3) (62.6) (285.1) (368.1) (285.3) (74.8) Net cash provided by (used in) financing activities........... (4.8) (1.6) 3.1 44.6 238.5 321.5 273.8 58.6
12 20 - --------------- (1) Total revenues less advertising agency commissions. (2) Certain executives participated in CEI's Unit Appreciation Plan ("UAP"). Because CEI is, and Cox Radio was, a private company, the benefits under the UAP are generally payable in cash. This cash payment option resulted in charges to compensation expense of $0.9 million, $0.8 million, $1.6 million, and $2.5 million for the years ended December 31, 1993, 1994, 1995 and 1996, respectively. This compensation expense is included in historical corporate general and administrative expenses. Public companies traditionally implement stock award plans that provide for the issuance of stock to participants and do not result in compensation expense under applicable accounting standards. The Company implemented the Cox Radio, Inc. Long-Term Incentive Plan in 1996 and, therefore, has not incurred this expense since 1996. In addition, for the year ended December 31, 1995, corporate general and administrative expenses include a nonrecurring corporate charge. (3) Includes a $7.6 million noncash charge for the cumulative effect of accounting changes. (4) Includes an after-tax gain on the sale of WCKG-FM/WYSY-FM (Chicago) of approximately $29.3 million. (5) 1996 amount includes $9.1 million in restricted cash, representing the net proceeds from the disposal of WIOD-AM (Miami), net of the cash used to acquire radio stations KRAV-FM and KGTO-AM (Tulsa). (6) "Broadcast cash flow" consists of operating income plus depreciation and amortization and corporate general and administrative expenses. "Broadcast cash flow margin" is broadcast cash flow as a percentage of net revenues. "EBITDA" is operating income plus depreciation and amortization. Although broadcast cash flow, broadcast cash flow margin and EBITDA are not recognized under GAAP, they are accepted by the broadcasting industry as generally recognized measures of performance and are used by analysts who report publicly on the condition and performance of broadcasting companies. For the foregoing reasons, the Company believes that these measures are useful to investors. However, investors should not consider these measures to be an alternative to operating income as determined in accordance with GAAP, an alternative to cash flows from operating activities (as a measure of liquidity) or an indicator of the Company's performance under GAAP. (7) Declines in broadcast cash flow and EBITDA from the prior year are due mainly to the impact of the baseball strike on advertiser spending, the cost of sports programming rights in Atlanta, start-up costs related to acquisitions or LMAs consummated in late 1994 and early 1995 and a nonrecurring corporate charge in 1995. 13 21 PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED) The pro forma combined statement of operations assumes the Recent Transactions, the Pending Transactions and the Long Island Acquisition had occurred at the beginning of the year. No pro forma adjustments have been made for the Tampa Acquisition, the Birmingham III Acquisition and the Los Angeles Acquisition due to immateriality. Additionally, a pro forma balance sheet at June 30, 1998 and a pro forma statement of operations for the six months ended June 30, 1998 are not included as the effect of pro forma adjustments is immaterial.
YEAR ENDED DECEMBER 31, 1997 ------------------------------------------------------------------------------------------------------- PRO FORMA ADJUSTMENTS FOR THE RECENT TRANSACTIONS (EXCLUDING THE PRO FORMA FOR NEWCITY THE RECENT ACQUISITION), TRANSACTIONS, PRO FORMA THE PENDING THE PENDING ADJUSTMENTS FOR PRO FORMA FOR TRANSACTIONS TRANSACTIONS HISTORICAL HISTORICAL THE NEWCITY THE NEWCITY AND THE LONG ISLAND AND THE LONG ISLAND COX RADIO NEWCITY(1) ACQUISITION ACQUISITION(1) ACQUISITION(2) ACQUISITION ---------- ---------- --------------- --------------- ------------------- ------------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues.......... $199,572 $15,683 $ 547(3) $214,708 $ 22,650 $237,358 Costs and expenses: Operating........... 50,220 5,628 -- 55,848 5,821 61,669 Selling, general and administrative.... 79,544 6,625 (71)(3) 86,098 9,357 95,455 Corporate general and administrative.... 6,885 476 -- 7,361 -- 7,361 Depreciation and amortization...... 17,456 837 1,063(4) 19,356 2,653 22,009 -------- ------- ------- -------- -------- -------- Operating income...... 45,467 2,117 (1,539) 46,046 4,819 50,865 Interest expense...... (9,364) (2,389) (499)(5) (12,252) (7,190) (19,442) Other, net............ 48,428 (521) 521(6) 48,428 (49,129)(6) (701) -------- ------- ------- -------- -------- -------- Income (loss) before income taxes........ 84,531 (793) (1,517) 82,222 (51,500) 30,721 Income taxes(6)....... 34,807 250 (457) 34,600 (20,861) 13,738 -------- ------- ------- -------- -------- -------- Net income (loss)..... $ 49,724 $(1,043) $(1,059) $ 47,622 $(30,639) $ 16,983 ======== ======= ======= ======== ======== ======== Per share data: Basic and diluted net income per common share...... $ 1.75 $ .60 ======== ======== Basic pro forma shares outstanding....... 28,344 28,344 ======== ======== Diluted pro forma shares outstanding....... 28,494 28,494 ======== ========
- --------------- (1) Represents the historical operations of NewCity for the three month period ended March 31, 1997. Such financial statements were prepared in accordance with generally accepted accounting principles. (2) Reflects the historical operations and related pro forma adjustments for the Recent Transactions (excluding the NewCity Acquisition), the Pending Transactions and the Long Island Acquisition. Pro forma adjustments have been made for the Orlando Acquisition, consummated in March 1997; the Birmingham Acquisition I, LMAs for WBHJ-FM and WBHK-FM effective in May 1997; the San Antonio Acquisition I, consummated in September 1997; the Dayton Acquisition, LMAs for WCLR-FM, WZLR-FM and WPTW-AM effective in December 1997; the San Antonio Acquisition II, consummated in March 1998; the Long Island Acquisition, consummated in May 1998; and the Orlando Exchange which is expected to be consummated in the second half of 1998 or the first half of 1999. For each of the above acquisitions, amortization was calculated assuming an amortization period of 40 years. 14 22 (3) Represents LMA fees and expenses charged between the Company and NewCity related to certain of the Company's stations that were operated under LMA agreements by NewCity. (4) Reflects additional amortization expense related to approximately $250 million in intangibles and goodwill arising from the NewCity Acquisition. Intangible assets and goodwill are being amortized over 40 years. (5) Reflects adjustments to interest expense resulting from the borrowing of approximately $192.1 million to consummate the NewCity Acquisition and related tender for certain senior subordinated notes issued by NewCity. (6) Reflects adjustments to other expenses representing costs incurred by NewCity directly related to the NewCity Acquisition. (7) Reflects adjustments to the pre-tax gain on the disposition of WCKG-FM and WYSY-FM related to the Orlando Acquisition. (8) An effective tax rate of 45% was used to calculate the adjustments reflected in footnotes 2, 3, 5, and 6. No tax effect is reflected for a portion of the adjustment in footnote 4 because the amortization of goodwill arising from the NewCity Acquisition is not deductible for tax purposes. 15 23 CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA The terms "Broadcast Cash Flow," "broadcast cash flow margin" and "EBITDA" are referred to in various places in this Prospectus. Broadcast Cash Flow consists of operating income plus depreciation and amortization and corporate general and administrative expenses. Broadcast cash flow margin is Broadcast Cash Flow as a percentage of net revenues. EBITDA consists of operating income plus depreciation and amortization. Although Broadcast Cash Flow, broadcast cash flow margin and EBITDA are not recognized under generally accepted accounting principles ("GAAP"), the Company believes they are accepted by the broadcasting industry as generally recognized measures of performance and are used by analysts who report publicly on the condition and performance of broadcasting companies. For the foregoing reasons, the Company believes that these measures will be useful to investors. However, Broadcast Cash Flow, broadcast cash flow margin and EBITDA should not be considered as an alternative or as a substitute for net income, cash flows from operating activities and other income and cash flow statement data prepared in accordance with GAAP, or as a measure of liquidity or profitability. Unless otherwise indicated herein, (i) market ranking by radio advertising revenue, radio market advertising revenue and radio market advertising data used to calculate compounded annual growth rate ("CAGR") have been obtained from Investing in Radio 1998 Market Report, a publication of Broadcasting Investor Analysts ("BIA"); (ii) total industry listener and revenue levels have been obtained from the Radio Advertising Bureau ("RAB"); (iii) all audience share data and audience rankings, including ranking by population, except where specifically stated to the contrary, have been derived from surveys of Adults 25 to 54, listening Monday through Sunday, 6 a.m. to 12 midnight, and are based on the average of the Winter, Spring, Summer and Fall Market Reports (each an "Arbitron Market Report") either ending in the year presented or the four most recent Arbitron Market Reports, as reported by Arbitron, Radio Market Reports, Metro or Target Audience Trends, The Arbitron Company ("Arbitron"); (iv) revenue share data in each market presented have been obtained from the Miller, Kaplan Market Revenue Report (published monthly), a publication of Miller, Kaplan, Arase & Co., Certified Public Accountants ("Miller Kaplan") or The Hungerford Market Report, a publication of Hungerford, Aldrin, Nichols & Carter Certified Public Accountants ("Hungerford"); and (v) total advertising revenue has been obtained from Duncan's Radio Market Guide (1997 ed.) ("Duncan's") compiled by Duncan's American Radio. Duncan's definition of "total advertising revenue" includes television, radio, newspaper, outdoor and cable. The terms local marketing agreement ("LMA") and joint sales agreement ("JSA") are referred to in various places in this Prospectus. An LMA refers to an agreement under which a radio station agrees to provide, on a cooperative basis, all or certain of the programming, sales, marketing and similar services for a different radio station in the same market. A JSA refers to an agreement, similar to an LMA, under which a radio station agrees to provide all or certain of the sales and marketing services for another station while the owner of such other radio station provides all of the programming for such other radio station in the same market. The term "duopoly," as used in various places in this Prospectus, refers to the ownership of two or more AM or two or more FM radio stations in the same geographic market. A station's or station group's "power ratio" is defined as such station's or station group's revenue market share divided by audience market share of adults 25-54. 16 24 RISK FACTORS An investment in the New Notes offered hereby involves certain risks. Prospective investors should carefully consider the following risk facts, in addition to the other information contained elsewhere in this Prospectus prior to making an investment in the New Notes. CONSEQUENCES OF EXCHANGING OR FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes as set forth in the legends thereon. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. After the Exchange Offer, the Company does not intend to register the Old Notes under the Securities Act. Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer will continue to be subject to the restrictions on transfer of such Old Notes set forth in the legends thereon. In general, the Old Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not intend to register the Old Notes under the Securities Act. Based upon interpretations by the staff of the Commission set forth in certain no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder of such New Notes (other than a broker-dealer, as set forth below, or any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder has no arrangement or understanding with any person to participate in the distribution of such New Notes. Each Participating Broker-Dealer that is the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of New Notes for its own account pursuant to the Exchange Offer must represent that the Old Notes tendered in exchange therefor were acquired as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by any broker-dealer (other than an affiliate of the Company) in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes or who is an affiliate of the Company may not rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which the holder is not indemnified by the Company. See "Plan of Distribution." No affiliate of the Company may rely on such no-action letters and any such affiliate must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes could not rely on the position of the staff of the Commission enunciated in no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which the holder is not indemnified by the Company. 17 25 The Company has not entered into any arrangement or understanding with any person to distribute the New Notes to be received in the Exchange Offer. To comply with the securities laws of certain jurisdictions, it may be necessary to qualify for sale or register the New Notes prior to offering or selling such New Notes. The Company currently does not intend to register or qualify the sale of the New Notes in any such jurisdiction. Upon consummation of the Exchange Offer, holders that were not prohibited from participating in the Exchange Offer and did not tender their Old Notes will not have any registration rights under the Registration Rights Agreement with respect to such nontendered Old Notes, and accordingly, such Old Notes will continue to be subject to the restrictions on transfer contained in the legend thereon. See "The Exchange Offer -- Consequences of Failure to Exchange." Issuance of the New Notes in exchange for the Old Notes pursuant to the Exchange Offer will be made only after a timely receipt by the Company of such Old Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of the Old Notes desiring to tender such Old Notes in exchange for New Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to the tenders of Old Notes for exchange. Old Notes that are not tendered or are tendered but not accepted will, following the consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof, and, upon consummation of the Exchange Offer, certain registration rights with respect to the Notes under the Registration Rights Agreement will terminate. In addition, any holder of Old Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the New Notes may be deemed to have received restricted securities, and if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer that is the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), of New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. See "Plan of Distribution." To the extent that Old Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Old Notes could be adversely affected. See "The Exchange Offer." RISKS ASSOCIATED WITH ACQUISITION STRATEGY A principal component of the Company's business strategy is the acquisition of additional radio stations. In addition to the Pending Transactions, Cox Radio intends to continue to evaluate the acquisition of additional radio stations or radio station groups. There can be no assurance that future acquisitions will be available on attractive terms. In addition, there can be no assurance that any synergies or savings will be achieved as a result of any acquisitions, that the integration of Cox Radio and new stations or management groups can be accomplished successfully or on a timely basis or that the Company's acquisition strategy can be implemented. Although Cox Radio has entered into definitive agreements regarding the Pending Transactions, there can be no assurance that any of the Pending Transactions will be consummated. Consummation of each of the Pending Transactions is subject to certain closing conditions, including the receipt of FCC approval, which receipt cannot be assured. COMPETITION The radio broadcasting industry is a highly competitive business. The Company's radio stations compete against other radio stations and other media (including new media technologies that are being developed or introduced) for audience share and advertising revenue. Factors that are material to a station's competitive position include management experience, the station's audience share rank in its market, transmitter power, assigned frequency, audience characteristics, local program acceptance, and the number and characteristics of other stations in the market area. Recent changes in the law and in FCC rules and policies have increased the number of radio stations a broadcaster may own in a given market and permit, within limits, joint arrangements with other stations in a market relating to programming, advertising sales, and station operations. Management believes that radio stations that elect to take advantage of these opportunities may, in certain circumstances, have lower operating costs and may be able to offer advertisers more attractive rates 18 26 and services. No assurance can be given that any of the Company's stations will be able to maintain or increase its current audience ratings and advertising revenue share. GOVERNMENT REGULATION OF BROADCASTING INDUSTRY The radio broadcasting industry is subject to extensive and changing regulation. Among other things, the Communications Act of 1934, as amended (the "Communications Act"), and FCC rules and policies limit the number of stations that one entity can own in a given market. The Communications Act and FCC rules and policies also require FCC approval for transfers of control of licensees and assignments of FCC licenses. The filing of petitions or complaints against Cox Radio or other FCC licensees could result in the FCC delaying the grant of, or refusing to grant, its consent to the assignment of licenses to or from an FCC licensee or the transfer of control of an FCC licensee. In certain circumstances, the Communications Act and FCC rules will operate to impose limitations on alien ownership and voting of the Common Stock. There can be no assurance that there will not be changes in the current regulatory scheme, the imposition of additional regulations or the creation of new regulatory agencies, which changes could restrict or curtail the ability of Cox Radio to acquire, operate and dispose of stations or, in general, to compete profitably with other operators of radio and other media properties. Each of the Company's radio stations operates pursuant to one or more licenses issued by the FCC. Pursuant to Congress' mandate in the Telecommunications Act of 1996 (the "1996 Act"), which significantly amended the Communications Act, the FCC adopted a rule extending radio license terms from seven to eight years. All licenses renewed as part of the current renewal cycle will have a term of eight years. The Company's licenses expire at various times through the year 2006. Although Cox Radio has applied or will apply to renew these licenses, third parties may challenge the Company's renewal applications. While Cox Radio is not aware of facts or circumstances that would prevent the Company from having its current licenses renewed, there can be no assurance that the licenses will be renewed. Failure to obtain the renewal of any of Cox Radio's broadcast licenses or to obtain FCC approval for an assignment or transfer to Cox Radio of a license in connection with a radio station acquisition may have a material adverse effect on the Company's business and operations. In addition, if Cox Radio or any of its officers, directors or significant stockholders materially violates the FCC's rules and regulations or the Communications Act, is convicted of a felony or is found to have engaged in unlawful anticompetitive conduct or fraud upon another government agency, the FCC may, in response to a petition from a third party or on its own initiative, in its discretion, commence a proceeding to impose sanctions upon Cox Radio which could involve the imposition of monetary fines, the revocation of Cox Radio's broadcast licenses or other sanctions. If the FCC were to issue an order denying a license renewal application or revoking a license, Cox Radio would be required to cease operating the applicable radio station only after Cox Radio had exhausted all rights to administrative and judicial review without success. IMPORTANCE OF LOS ANGELES AND ATLANTA RADIO STATIONS In 1997, the Company's four radio stations in Los Angeles and four radio stations in Atlanta generated approximately 26.7% and 23.8%, respectively, of Cox Radio's net revenues. On a pro forma basis after giving effect to the Pending Transactions and the Long Island Acquisition, such radio stations in Los Angeles and Atlanta would have generated approximately 24.3% and 21.5%, respectively, of Cox Radio's net revenues in 1997. A significant decline in net revenues from the Company's stations in these markets, as a result of a ratings decline or otherwise, could have a material adverse effect on Cox Radio's financial position and results of operations. CONTROL BY CEI; POTENTIAL CONFLICTS OF INTEREST CEI, through wholly-owned subsidiaries, owns approximately 69% of the outstanding Common Stock and has approximately 96% of the voting power of Cox Radio. As a result, CEI has sufficient voting power to elect all the members of the Board of Directors of Cox Radio (the "Cox Radio Board") and effect transactions without the approval of Cox Radio's public stockholders. Cox Radio's Amended and Restated Certificate of Incorporation (the "Cox Radio Certificate") and Amended and Restated Bylaws (the "Bylaws") also contain certain anti-takeover provisions. The interests of CEI, which operates businesses in other industries, including 19 27 television broadcasting, broadband communications, auto auctions and newspapers, may from time to time diverge from the interests of Cox Radio. In addition, from time to time, the Company enters into transactions with CEI or its affiliates and has entered into a credit facility with CEI. Conflicts of interest between Cox Radio and CEI could arise with respect to business dealings between them, including potential acquisitions of businesses or properties, the issuance of additional securities and the election of new or additional members of the Cox Radio Board. The Audit Committee of the Cox Radio Board consists of independent directors and addresses certain potential conflicts of interest that may arise between the Company and CEI. There can be no assurance that any conflicts of interest will be resolved in favor of Cox Radio. ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON RESALES There presently is no active trading market for the Notes and none may develop. If the New Notes are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar securities, the financial condition, performance and prospects of the Company and other factors beyond the control of the Company, including general economic conditions. There can be no assurance as to the development or liquidity of any market for the New Notes. FORWARD LOOKING STATEMENTS This Prospectus contains forward-looking statements which can be identified by terminology such as "believes," "anticipates," "intends," "expects" and words of similar import. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and in the regions in which the Company operates; technology changes; competition; changes in business strategy or development plans; the ability to attract and retain qualified personnel; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted against the Company; and other factors referenced in this Prospectus, including, without limitation, under the captions "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." GIVEN THESE UNCERTAINTIES, PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments. 20 28 USE OF PROCEEDS This Exchange Offer is intended to satisfy certain of the Company's obligations under the Purchase Agreement and the Registration Rights Agreement. The Company will not receive any cash proceeds from the issuance of the New Notes offered hereby. In consideration for issuing the New Notes contemplated in this Prospectus, the Company will receive Old Notes in like principal amount, the form and terms of which are the same in all material respects as the form and terms of the New Notes (which replace such Old Notes), except as otherwise described herein. The net proceeds to the Company from the Offering were approximately $198.4 million, after deducting the discount due the Initial Purchasers and commissions and other expenses payable by the Company. The Company used the net proceeds from the Offering to repay indebtedness outstanding under the Credit Agreement, as a result of which the aggregate principal amount of borrowings outstanding under the Credit Agreement, as of June 30, 1998 was approximately $100.0 million and, as of June 30, 1998, approximately $200.0 million was available for the Company to borrow on a revolving basis to finance future acquisitions thereunder. The weighted average per annum interest rate applicable to borrowings under the Company's Credit Agreement for the six months ended June 30, 1998 was 6.5%, and the maturity date for such borrowings was March 7, 2002. See "Description of Certain Indebtedness." Affiliates of NationsBanc Montgomery Securities LLC, Chase Securities Inc. and J.P. Morgan Securities Inc. are lenders under the Credit Agreement and received their proportionate share of the repayment thereof. 21 29 CAPITALIZATION The following table sets forth the capitalization of the Company as of June 30, 1998. Such capitalization reflects the proceeds from the sale of the Old Notes, which occurred on May 26, 1998. No effect on the capitalization of the Company will occur upon consummation of the Exchange Offer herein.
AS OF JUNE 30, 1998 -------------- (IN THOUSANDS) ACTUAL -------------- LONG-TERM DEBT: Credit Agreement............................................ $100,000 Amounts due from CEI........................................ (12,612) Other long-term debt........................................ 740 2003 Notes.................................................. 99,910 2005 Notes.................................................. 99,725 -------- Total long-term debt.............................. 287,763 SHAREHOLDERS' EQUITY: Preferred Stock, $1.00 par value; 5,000,000 shares authorized; none outstanding............... -- Common Stock Class A Common Stock, $1.00 par value; 70,000,000 shares authorized 8,874,361 shares issued and outstanding................ 8,874 Class B Common Stock, $1.00 par value; 45,000,000 shares authorized 19,577,672 shares issued and outstanding............... 19,578 Additional paid-in capital.................................. 251,454 Retained earnings........................................... 17,355 -------- Total shareholders' equity........................ 297,261 -------- Total capitalization.............................. $585,024 ========
22 30 THE COMPANY Cox Radio, Inc. ("Cox Radio" or the "Company") is one of the ten largest radio broadcasting companies in the United States, based on both net revenues and number of stations as of August 1, 1998. Upon completion of all the Pending Transactions, Cox Radio will own or operate, or provide sales and marketing services for, 59 radio stations (40 FM and 19 AM) clustered in 13 markets, including 18 stations acquired from NewCity Communications, Inc. ("NewCity") during 1997 (the "NewCity Acquisition"). On a pro forma basis, after giving effect to the Recent Transactions, the Pending Transactions and the Long Island Acquisition, Cox Radio would have generated net revenue of $237.4 million and Broadcast Cash Flow of $80.2 million for the year ended December 31, 1997. Cox Radio is an indirect majority-owned subsidiary of Cox Enterprises, Inc. ("CEI"). CEI indirectly owns approximately 69% of the Company's Common Stock (defined below) and has approximately 96% of the voting power of Cox Radio. The Company has two classes of common stock outstanding, Class A Common Stock, par value $1.00 per share (the "Class A Common Stock"), and Class B Common Stock, par value $1.00 per share (the "Class B Common Stock"), collectively defined as the "Common Stock." CEI's wholly-owned subsidiary, Cox Broadcasting, Inc. ("Cox Broadcasting"), is the sole stockholder of shares of the Company's Class B Common Stock. CEI, a privately-held corporation headquartered in Atlanta, Georgia, is one of the largest media companies in the United States, with consolidated 1997 revenues of approximately $4.9 billion. Prior to Cox Radio's initial public offering in September 1996, CEI transferred all of its U.S. radio operations to Cox Radio (the "Cox Radio Consolidation"). Cox Radio, as part of CEI, was a pioneer in radio broadcasting, building its first station in 1934, acquiring its flagship station, WSB-AM (Atlanta), in 1939 and launching its first FM station, WSB-FM (Atlanta), in 1948. The Company's principal executive offices are located at 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319, and its telephone number is (404) 843-5000. 23 31 BUSINESS Cox Radio seeks to maximize the revenues and Broadcast Cash Flow of its radio stations by operating and developing clusters of stations in demographically attractive and rapidly growing markets, including major markets such as Los Angeles and Atlanta and Sunbelt markets such as Miami, Tampa, Orlando, San Antonio and Birmingham. During the past five years, the 13 markets in which the Company's stations now operate have generated, on an aggregate basis, greater radio advertising revenue growth than the average of 5.3%, which was calculated using revenue projections obtained from the Radio Advertising Bureau (the "RAB"), for the U.S. radio industry as a whole. The NewCity Acquisition enhanced the clustering of the Company's radio stations by increasing the total number of markets in which Cox Radio owned and/or operated radio stations to 12 and by strengthening the Company's penetration in those markets. The Long Island Acquisition increased the number of markets in which Cox Radio owns or operates radio stations to 13. Cox Radio operates four or more radio stations in 10 of its 13 markets. As a result of the Company's management, programming and sales efforts, the Company's radio stations are characterized by strong ratings and above average power ratios (defined as revenue share divided by audience share). The Company's stations are diversified in terms of format, target audience, geographic location and stage of development. Cox Radio has a track record of acquiring, repositioning and improving the operating performance of previously underperforming stations. Management believes that a number of the Company's stations have significant growth opportunities or turnaround potential and can therefore be characterized as start-up or developing stations. Generally, the Company considers start-up or developing stations to include those which have been recently acquired by the Company and offer the greatest potential for growth. Currently, the Company considers 28 of its stations to be start-up or developing stations. Cox Radio believes these stations can achieve significant Broadcast Cash Flow growth by employing the Company's operating strategy. Management believes that its mix of stations in different stages of development enables it to maximize the Company's growth potential. Cox Radio's senior operating management is comprised of six individuals with an average of over 24 years of experience in the radio broadcasting industry, including an average of over 15 years with Cox Radio. The Company believes that this experienced senior management team is well positioned to manage larger radio station clusters and take advantage of new opportunities arising in the U.S. radio broadcasting industry. OPERATING STRATEGY The following is a description of the key elements of the Company's operating strategy: Clustering of Stations. Cox Radio operates its stations in clusters to (i) enhance net revenue growth by increasing the appeal of the Company's stations to advertisers and enabling such stations to compete more effectively with other forms of advertising and (ii) achieve operating efficiencies by consolidating broadcast facilities, eliminating duplicative positions in management and production and reducing overhead expenses. Management believes that operating several radio stations in each of its markets will enable its sales teams to offer advertisers more attractive advertising packages. Furthermore, as radio groups achieve significant audience share, they can deliver to advertisers the audience reach that historically only television and newspapers could offer, with the added benefit of frequent exposure to advertisers' target customers. Management believes that the Company's clusters of stations, and their corresponding audience share, provide opportunities to capture an increased share of total advertising revenue in each of the Company's markets. Development of Underperforming Stations. The Company's management has demonstrated its ability to acquire underperforming radio stations and develop them into consistent ratings and revenue leaders. The Company's historic margins reflect the acquisition and continued development of underperforming stations, as well as the fact that increases in net revenue are typically realized subsequently to increases in audience share. Management believes that a number of the Company's stations have significant growth opportunities or turnaround potential and can therefore be characterized as developing stations. 24 32 Implementation of the Company's Management Philosophy. The Company's local station operations are supported by a lean corporate staff which employs a management philosophy emphasizing (i) market research and targeted programming; (ii) a customer-focused selling strategy; and (iii) marketing and promotional activities. Market Research and Targeted Programming. Cox Radio's research, programming and marketing strategy combines extensive research with an assessment of competitors' vulnerabilities and market dynamics in order to identify specific audience opportunities within each market. Cox Radio also retains consultants and research organizations to continually evaluate listener preferences. Using this information, Cox Radio tailors the programming, marketing and promotions of each Cox Radio station to maximize its appeal to its target audience. Cox Radio's disciplined application of market research enables each of its stations to be responsive to the changing preferences of its targeted listeners. This approach focuses on the needs of the listener and its community and is designed to improve ratings and maximize the impact of advertising for the Company's customers. Through its research, programming and marketing, Cox Radio also seeks to create a distinct and marketable local identity for each of its stations in order to enhance audience share and listener loyalty and to protect against direct format competition. To achieve this objective, the Company employs and promotes distinct high-profile on-air personalities and local sports programming at many of its stations. For example, the Company broadcasts (i) "Dr. Laura" in Los Angeles, Atlanta, Dayton, Syracuse, Tulsa and Orlando; (ii) "Rush Limbaugh" in Los Angeles, Orlando, Syracuse and Tulsa; (iii) "Clark Howard" in Atlanta, Orlando, Dayton and Syracuse; (iv) the Atlanta Braves in Atlanta and Tampa; and (v) the Orlando Magic in Orlando. Customer-Focused Selling Strategy. The Company utilizes a unique, customer-focused approach to selling advertising known as the Consultative Selling System. The Company's sales personnel are trained to approach each advertiser with a view towards solving the marketing needs of the customer. In this regard, the sales staff consults with customers, attempts to understand their business goals and offers comprehensive marketing solutions, including the use of radio advertising. Instead of merely selling station advertising time, the Company's sales personnel are encouraged to develop innovative marketing strategies for the station's advertising customers. Marketing and Promotional Activities. The Company's stations regularly engage in significant local promotional activities, including advertising on local television and in local print media, participating in telemarketing and direct mailings and sponsoring contests, concerts and events. Special events may include charitable athletic events, events centered around a major local occasion or local ethnic group and special community or family events. Cox Radio also engages in joint promotional activities with other media in their markets to further leverage the Company's promotional spending. These promotional efforts help the Company's stations add new listeners and increase the amount of time spent listening to the stations. Strong Management Teams. In addition to relying upon its experienced senior operating management, the Company places great importance on the hiring and development of strong local management teams and has been successful in retaining experienced management teams that have strong ties to their communities and customers. The Company invests significant resources in identifying and training employees to create a talented team of managers at all levels of station operations. These resources include: (i) Gallup/SRI, which helps the Company identify and select talented individuals for management and sales positions; (ii) Center for Sales Strategy ("CSS"), an independent sales and management training company which trains and develops managers and sales executives; and (iii) a program of leadership development conducted by the Company's senior operating management and outside consultants. Local managers are empowered to run the day-to-day operations of their stations and to develop and implement policies that will improve station performance and establish long-term relationships with listeners and advertisers. The compensation of the senior operating management team and local station managers is largely dependent upon financial performance and linked to participation in the Company's Long-Term Incentive Plan. 25 33 ACQUISITION STRATEGY In the ordinary course of its business, Cox Radio seeks opportunities to acquire radio stations that it believes will provide added value to the Company. During the last several years, the Company has implemented its strategy of clustering radio stations in several of its existing markets. The radio stations acquired by Cox Radio in the past have primarily been underperforming, and Cox Radio has generally improved the operating and financial performance of such stations. The Company intends to continue to make acquisitions where permissible in the markets in which it operates and may also make opportunistic acquisitions in additional markets in which the Company believes that it can cost-effectively achieve a leading position in terms of audience and revenue share. The nature and timing of further acquisitions, are uncertain and difficult to estimate. Market Selection Considerations. Cox Radio's acquisition strategy has been focused primarily on clustering stations in its existing markets; however, in the future, Cox Radio will increasingly seek to make opportunistic acquisitions in additional markets. Management believes that Cox Radio will have the financial resources and management expertise to continue to pursue its acquisition strategy. Certain future acquisitions may be limited by the multiple and cross-ownership rules of the Federal Communications Commission ("FCC"). See "Legislation and Regulation." Station Considerations. Cox Radio expects to concentrate on acquiring radio stations that offer, through application of Cox Radio's operating philosophy, the potential for improvement in the station's performance, particularly its Broadcast Cash Flow. Such stations may be in various stages of development, presenting Cox Radio with an opportunity to apply its management techniques and to enhance asset value. In evaluating potential acquisitions, the Company considers the strength of a station's broadcast signal. A powerful broadcast signal enhances delivery range and clarity, thereby influencing listener preference and loyalty. Cox Radio also assesses the strategic fit of an acquisition with its existing clusters of radio stations. When entering a new market, Cox Radio expects to acquire a "platform" upon which to expand its portfolio of stations and to build a leading cluster of stations. STATION OPERATIONS The Company's stations, including the stations to be acquired in the Pending Transactions, are located in markets which, during the last five years, have generated, on an aggregate basis, greater radio advertising revenue growth than the average of 5.3% for the U.S. radio industry as a whole, in each case calculated using revenue projections obtained from RAB. These markets include six Sunbelt markets and four markets which management believes have a disproportionately small number of radio stations relative to the size of the potential market audience. In most of the Company's markets, radio captures a small percentage of the total advertising dollars spent, with local advertisers accounting for the majority of the spending. Clustering creates an opportunity to increase radio's share of a market's advertising revenues. The following table summarizes certain information relating to radio stations owned or operated by the Company, assuming the consummation of the Pending Transactions:
AUDIENCE 1997 SHARE IN RANK IN AUDIENCE SHARE IN TARGET TARGET ADULTS 25-54 MARKET AND STATION TARGET DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC CALL LETTERS(1) FORMAT GROUP GROUP GROUP GROUP - ------------------------------- ------------------ ------------------ ----------- ----------- ----------------- LOS ANGELES KFI-AM....................... Talk Adults 35-54 4.5 5 3.5 KOST-FM...................... Adult Contemporary Women 25-44 5.0 3 4.0 KACE-FM...................... R&B Oldies African American 11.4(2) 4(2) 1.6(2) Adults 35-54 KRTO-FM...................... R&B Oldies African American -- -- -- Adults 35-54
26 34
AUDIENCE 1997 SHARE IN RANK IN AUDIENCE SHARE IN TARGET TARGET ADULTS 25-54 MARKET AND STATION TARGET DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC CALL LETTERS(1) FORMAT GROUP GROUP GROUP GROUP - ------------------------------- ------------------ ------------------ ----------- ----------- ----------------- ATLANTA WSB-AM....................... News/Talk Adults 35-64 11.4 1 8.0 WSB-FM....................... Adult Contemporary Women 25-54 7.9 4 6.1 WJZF-FM...................... Jazz Men 25-54 3.6 13 3.4 WCNN-AM(3)................... News/Talk Adults 35-64 1.2 18 1.0 MIAMI WFLC-FM...................... Hot Adult Adults 25-54 4.5 6 4.5 Contemporary WHQT-FM...................... Urban Adult Adults 25-54 6.5 1 6.5 Contemporary TAMPA WWRM-FM...................... Soft Adult Women 35-54 10.9 1 6.8 Contemporary WCOF-FM...................... 70's Oldies Adults 25-44 7.5(4) 5(4) 6.7(4) WFNS-AM...................... 70's Oldies Adults 25-44 -- -- -- WSUN-AM...................... News Adults 25-54 .4 27 .4 ORLANDO WDBO-AM...................... News/Talk Adults 35-64 6.3 5 4.1 WWKA-FM...................... Country Adults 25-54 8.4 1 8.4 WCFB-FM...................... Urban Adult Women 25-54 5.3(5) 7(5) 4.7(5) Contemporary WTLN-AM(6)................... Urban Adult Women 25-54 -- -- -- Contemporary WHOO-AM...................... Standards Adults 55+ 14.0 2 .8 WHTQ-FM...................... Classic Rock Men 25-54 8.0 2 5.3 WMMO-FM...................... Rock Adult Adults 25-54 6.2 5 6.2 Contemporary WTLN-FM(7)................... Religious Adults 25-54 1.1 18 1.1 SAN ANTONIO KCYY-FM...................... Country Adults 25-54 6.2 6 6.2 KKYX-AM...................... Classic Country Adults 35-64 2.5 15 1.2 KCJZ-FM...................... Smooth Jazz Adults 25-54 3.6 11 3.6 Adult Oriented KISS-FM...................... Rock Adults 18-49 7.1 4 4.7 KSMG-FM...................... Hot Adult Adults 25-54 7.2 3 7.2 Contemporary KLUP-AM...................... Adult Standards Adults 35-64 2.2 16 .7 KONO-FM...................... Oldies Adults 25-54 6.9(8) 4(8) 6.9(8) KONO-AM...................... Oldies Adults 25-54 -- -- -- LOUISVILLE WRKA-FM...................... Oldies Adults 35-54 8.6 4 6.3 WRVI-FM...................... Rock Adult Adults 25-49 1.9 15 1.7 Contemporary WLSY-FM...................... R&B Oldies Adults 35-54 .5 27 .5 BIRMINGHAM(9) WZZK-FM...................... Country Adults 25-54 11.6 1 11.6 WEZN-AM(10).................. Stardust Adults 50+ 7.8 4 1.7 WODL-FM...................... Oldies Adults 25-54 6.7 6 6.7 WBHJ-FM(3)................... Contemporary Hit Adults 18-34 13.6 1 4.5 Urban WBHK-FM(3)................... Urban Adult Adults 25-54 8.1 3 8.1 Contemporary WAGG-AM...................... Gospel Adults 25-54 3.7 11 3.7
27 35
AUDIENCE 1997 SHARE IN RANK IN AUDIENCE SHARE IN TARGET TARGET ADULTS 25-54 MARKET AND STATION TARGET DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC DEMOGRAPHIC CALL LETTERS(1) FORMAT GROUP GROUP GROUP GROUP - ------------------------------- ------------------ ------------------ ----------- ----------- ----------------- DAYTON WHIO-AM...................... News/Talk Adults 35-64 5.4 4 3.9 WHKO-FM...................... Country Adults 25-54 14.2 1 14.2 WCLR-FM(3)(11)............... Oldies Adults 35-54 6.4(12) 4(12) 4.7(12) WZLR-FM(3)(11)............... Oldies Adults 35-54 -- -- -- WPTW-AM(3)(11)............... Local Programming Adults 35+ .3 39 -- TULSA KRMG-AM...................... News/Talk Adults 25-54 7.2 4 7.2 KWEN-FM...................... Country Adults 25-54 11.1 2 11.1 KJSR-FM...................... 70's Oldies Adults 25-54 8.1 3 8.1 KRAV-FM...................... Adult Contemporary Adults 25-54 5.7 7 5.7 KGTO-AM...................... Standards Adults 55+ 10.2 3 .7 BRIDGEPORT WEZN-FM...................... Adult Contemporary Adults 25-54 14.6(13) 1(13) 14.6(13) SYRACUSE WSYR-AM...................... News/Talk Adults 35-64 8.6 4 5.4 WYYY-FM...................... Adult Contemporary Adults 25-54 9.8 2 9.8 WBBS-FM...................... Country Adults 25-54 12.1 1 12.1 WHEN-AM...................... Sports/Talk Men 25-54 3.6 9 2.1 WWHT-FM...................... Adult Hit Radio Women 18-34 10.1 4 2.7 LONG ISLAND WBLI-FM...................... Hot Adult Adults 25-54 4.5 5 4.5 Contemporary WBAB-FM...................... Adult Oriented Men 25-54 6.1(14) 3(14) 5.1(14) Rock WHFM-FM...................... Adult Oriented Men 25-54 -- -- -- Rock WGBB-AM...................... To be determined Not Applicable -- -- -- Source: Arbitron 1997 Market Reports four-book average
- --------------- (1) Metropolitan market served; city of license may differ. (2) Audience share and audience rank information for KACE-FM and KRTO-FM are combined because the stations are simulcast. (3) Station operated by Cox Radio pursuant to an LMA. (4) Audience share and audience rank information for WCOF-FM and WFNS-AM are combined because the stations are simulcast. (5) Audience share and audience rank information for WCFB-FM and WTLN-AM are combined because the stations are simulcast. (6) Formerly known as WZKD-AM. Station to be sold by Cox Radio pursuant to the Orlando Exchange. (7) Station to be acquired by Cox Radio pursuant to the Orlando Exchange. (8) Audience share and audience rank information for KONO-FM and KONO-AM are combined because the stations are simulcast. (9) WEDA-FM is excluded from this listing because the station has not yet commenced operations. (10) Audience share and rank data is based only on Arbitron Market Report for Fall 1997 because format was only applicable for that period. (11) Station to be acquired by Cox Radio pursuant to the Dayton Acquisition. (12) Audience share and audience rank information for WCLR-FM and WZLR-FM are combined because the stations are simulcast. (13) Audience share and rank data is based only on Arbitron Market Reports for Fall 1997 and Spring 1997 because Arbitron does not produce Summer and Winter Arbitron Market Reports for the Bridgeport/Fairfield County market. (14) Audience share and audience rank information for WBAB-FM and WHFM-FM are combined because the stations are simulcast.
28 36 The following table sets forth certain information relating to each of the markets in which the Company's stations operate or will operate upon consummation of the Pending Transactions:
1997 MARKET RADIO'S RADIO 1997 1997 MARKET PERCENTAGE OF ADVERTISING ADVERTISING METRO TOTAL RADIO 1997 TOTAL REVENUE GROWTH REVENUE MARKET ADVERTISING ADVERTISING ADVERTISING CAGR MARKET RANK(A) RANK(B) REVENUE(C) REVENUE(D) REVENUE 1992-97 - ------ ----------- -------- ------------ ----------- ------------- -------------- Los Angeles.......... 1 2 $3,293 $575 16.3% 6.3% Atlanta.............. 10 12 886 222 21.7 14.8 Miami................ 12 11 918 198 19.0 12.7 Tampa................ 19 21 524 102 17.4 10.0 Orlando.............. 28 38 387 76 18.3 9.2 San Antonio.......... 32 33 384 68 19.8 8.7 Louisville........... 47 52 224 41 15.4 7.2 Long Island.......... 48 16 --(e) 41 --(e) 5.7 Birmingham........... 50 55 207 40 17.3 9.2 Tulsa................ 55 60 159 35 20.2 10.1 Dayton............... 58 54 197 34 15.1 7.2 Syracuse............. 71 71 123 24 18.7 4.8 Bridgeport........... 90 114 151 17 18.4 7.2
- --------------- (a)Ranking of the principal radio market served by the stations among all radio markets in the United States by 1997 market revenue, according to BIA's Investing in Radio, 1998. (b)Ranks assigned by BIA based on population in the market. (c)Includes television, radio, newspaper, outdoor and cable. Source, Duncan's Radio Market Guide, 1997. Dollars in millions. (d)Dollars in millions. (e)Because the Long Island/Nassau-Suffolk market advertising dollars, exclusive of radio advertising dollars, are commingled with the New York City market, this information is not applicable for comparative purposes. As a result of the Company's management, programming and sales efforts, the Company's radio stations are characterized by strong ratings and above average power ratios. A third of the Company's stations are ranked first or second in terms of audience share in their target demographic groups. In five of the Company's markets, the Company's station groups ranked number one with respect to combined station revenue market share. RECENT TRANSACTIONS Orlando Acquisition In March 1997, the Company exchanged WCKG-FM and WYSY-FM in Chicago for WHOO-AM, WHTQ-FM and WMMO-FM in Orlando (the "Orlando Acquisition"). The Orlando Acquisition resulted in a pre-tax gain of approximately $49 million. In addition to receiving the three Orlando stations, Cox Radio also received cash proceeds of approximately $20 million. Prior to the NewCity Acquisition, the Orlando stations were operated by NewCity since July 1996 under an LMA. Tampa Acquisition In March 1997, the Company acquired WFNS-AM in Tampa for an aggregate consideration of $1.5 million (the "Tampa Acquisition"). The Company had been operating this station pursuant to an LMA or a JSA since June 1995. Los Angeles Acquisition In April 1997, Cox Radio completed its acquisition of the license and certain assets of KRTO-FM in Los Angeles for $19 million in cash (the "Los Angeles Acquisition"). 29 37 NewCity Acquisition In April 1997, the Company, through the merger of its wholly owned subsidiary New Cox Radio II, Inc. with and into NewCity, with NewCity surviving as a wholly owned subsidiary of Cox Radio, acquired all of the issued and outstanding capital stock of NewCity in the NewCity Acquisition. Cox Radio purchased the stock of NewCity for an aggregate consideration of approximately $253 million, including approximately $87 million in assumption of NewCity indebtedness and approximately $3 million in working capital adjustments. To consummate the NewCity Acquisition, the Company utilized approximately $56 million of amounts due from CEI and borrowed approximately $110 million pursuant to the Company's Credit Agreement. On April 2, 1997, NewCity was merged with and into the Company, with the Company as the surviving corporation. NewCity's subsidiaries were subsequently consolidated into Cox Radio. In October 1997, the Company disposed of the assets of American Comedy Network, a former subsidiary of NewCity, for aggregate proceeds of approximately $1.1 million including certain non-compete agreements. Birmingham Acquisition II and Birmingham Disposition In May 1997, the Company agreed to acquire WENN-FM and WAGG-AM in Birmingham, Alabama, for consideration of $15 million (the "Birmingham Acquisition II"). In July 1997, the Company assigned its right to purchase WENN-FM for consideration of $14.5 million to a third party (the "Birmingham Disposition"). The Company consummated these transactions during November 1997. San Antonio Transactions In September 1997, the Company acquired KISS-FM, KSMG-FM and KLUP-AM in San Antonio, Texas for an aggregate consideration of $30.4 million plus certain non-compete agreements (the "San Antonio Acquisition I"). In March 1998, the Company acquired KONO-FM and KONO-AM in San Antonio for $23 million (the "San Antonio Acquisition II"). In December 1997, the Company acquired an option to purchase radio station KRIO-FM, serving the San Antonio market, for a purchase price of $9 million. The Company entered into an agreement to assign this option in January 1998 for an aggregate consideration of $250,000 (the "San Antonio Disposition"). The closing of the San Antonio Disposition occurred in May 1998. The Orlando Acquisition, the Tampa Acquisition, the Los Angeles Acquisition, the NewCity Acquisition, the Birmingham Acquisition II, the Birmingham Disposition, the San Antonio Acquisition I, the San Antonio Acquisition II and the San Antonio Disposition are collectively referred to herein as the "Recent Transactions". PENDING TRANSACTIONS Birmingham Transactions In May 1997, the Company agreed to acquire radio stations WBHJ-FM and WBHK-FM in Birmingham, Alabama (the "Birmingham Acquisition I") for an aggregate consideration of $17 million, consisting of $5 million paid for an option to purchase the stations and a $12 million note transferred to the seller as a station investment note receivable. On August 1, 1997, the Company began operating WBHJ-FM and WBHK-FM under an LMA. Pending certain regulatory approvals, the Company anticipates closing the Birmingham Acquisition I in the second half of 1998. In September 1997, the Company announced that it had entered into an agreement in principle with a third party to construct, program and own WEDA-FM, a new Class A FM radio station in Homewood, Alabama to serve the Birmingham market (the "Birmingham Acquisition III"). The FCC has approved the third party's application for the new construction permit and settlement of the comparative hearing among the three applicants for the construction permit. As part of the agreement in principle, the third party would construct the station, the Company would enter into an LMA for the new station and the Company would acquire an option to purchase the station for an aggregate consideration of $5.5 million and the assumption of 30 38 debt in an amount not to exceed $200,000. The Company expects to consummate the Birmingham Acquisition III in the second half of 1998. Dayton Acquisition In February 1998, the Company entered into an agreement to acquire radio stations WCLR-FM, WZLR-FM and WPTW-AM serving the Dayton, Ohio market for approximately $6 million (the "Dayton Acquisition"). The Company has been operating these stations pursuant to an LMA since December 1997. In addition, the Company has entered into a station investment note receivable with the stations' seller for $6 million. Pending certain regulatory approvals, the Company anticipates closing the Dayton Acquisition in the second half of 1998. Orlando Exchange In February 1998, the Company entered into an agreement to acquire the assets of WTLN-FM serving the Orlando, Florida market for consideration of $14.5 million. In a related transaction, the Company entered into an agreement to dispose of the assets of WTLN-AM (formerly known as WZKD-AM), also serving the Orlando, Florida market for $500,000 (the "Orlando Exchange"). Pending certain regulatory approvals, the Company expects to complete the Orlando Exchange in the second half of 1998 or the first half of 1999. The Birmingham Acquisition I, the Birmingham Acquisition III, the Dayton Acquisition and the Orlando Exchange are collectively referred to herein as the "Pending Transactions". LONG ISLAND ACQUISITION In May 1998, the Company acquired the assets of WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM, serving the Nassau-Suffolk, New York market for consideration of $48 million (the "Long Island Acquisition"). COMPETITION; CHANGES IN THE BROADCASTING INDUSTRY The radio broadcasting industry is a highly competitive business. The success of each of the Company's stations depends largely upon its audience ratings and its share of the overall advertising revenue within its market. The Company's radio stations compete for listeners directly with other radio stations in their respective markets primarily on the basis of program content that appeals to a target demographic group. By building a strong listener base consisting of a specific demographic in each of its markets, Cox Radio is able to attract advertisers seeking to reach those listeners. The Company's stations compete for advertising revenue directly with other radio stations and with other electronic and print media within their respective markets. Factors that are material to a station's competitive position include management experience, the station's audience share rank in its market, transmitter power, assigned frequency, audience characteristics, local program acceptance, and the number and characteristics of other stations in the market area. Cox Radio attempts to improve its competitive position with promotional campaigns aimed at the demographics targeted by its stations and by sales efforts designed to attract advertisers. Recent changes in the law and in FCC rules and policies have increased the number of radio stations a broadcaster may own in a given market and permit, within limits, joint arrangements with other stations in a market relating to programming, advertising sales, and station operations. Management believes that radio stations that elect to take advantage of these opportunities may, in certain circumstances, have lower operating costs and may be able to offer advertisers more attractive rates and services. Although the radio broadcasting industry is highly competitive, some barriers to entry exist. The operation of a radio broadcast station requires a license from the FCC and the number of radio stations that a single entity may own and operate in a given market is limited by the availability of FM and AM radio frequencies allotted by the FCC to communities in that market, as well as by the FCC's multiple ownership rules, which regulate the number of stations that may be owned and controlled by a single entity. The FCC also recently initiated a rulemaking proceeding to consider the use of competitive bidding procedures 31 39 (auctions) to award licenses or construction permits for new broadcast stations to the highest bidder, and may also subject to auction all pending and future applications by licensees to improve or otherwise modify their existing facilities, where such applications would be mutually exclusive with other licensees' applications. The Company's stations compete for advertising revenue with other radio stations and with other electronic and print media. Potential advertisers can substitute advertising through broadcast television, cable television systems (which can offer concurrent exposure on a number of cable networks to enlarge the potential audience), daily, weekly, and free-distribution newspapers, other print media, direct mail, and on-line computer services for radio advertising. Competing media commonly target the customers of their competitors, and advertisers regularly shift dollars from radio to these competing media and vice versa. Accordingly, there can be no assurance that any of the Company's stations will be able to maintain or increase its current audience ratings and advertising revenue share. In addition, the radio broadcasting industry is subject to competition from new media technologies that are being developed or introduced, such as the delivery of audio programming by cable television systems, by satellite digital audio radio service ("satellite DARS" or "SDARS"), and by digital audio broadcasting ("DAB"). DAB and SDARS provide for the delivery by terrestrial or satellite means of multiple new audio programming formats with compact disc quality sound to local and national audiences. The delivery of information through the Internet also could create a new form of competition. The radio broadcasting industry historically has grown despite the introduction of new technologies for the delivery of entertainment and information, such as broadcast television, cable television, audio tapes and compact discs. A growing population and greater availability of radios, particularly car and portable radios, have contributed to this growth. There can be no assurance, however, that the development or introduction in the future of any new media technology will not have an adverse effect on the radio broadcasting industry. Cox Radio cannot predict what other matters might be considered in the future by the FCC, nor can it assess in advance what impact, if any, the implementation of any FCC proposals or changes might have on its business. LEGISLATION AND REGULATION The ownership, operation and sale of radio stations, including those licensed to Cox Radio, are subject to the jurisdiction of the FCC, which acts under authority granted by the Communications Act of 1934, as amended (the "Communications Act"). Among other things, the FCC assigns frequency bands for broadcasting, determines the particular frequencies, locations and operating power of stations, issues, renews and modifies station licenses, determines whether to approve changes in ownership or control of station licenses, regulates equipment used by stations, adopts and implements regulations and policies that directly or indirectly affect the ownership, operation, program content, employment practices, and business of stations, and has the power to impose penalties, including license revocations, for violations of its rules or the Communications Act. The Telecommunications Act of 1996 (the "1996 Act"), which significantly amended the Communications Act in numerous respects, dramatically changed the ground rules for competition and regulation in virtually all sectors of the telecommunications industry, including broadcasting, local and long-distance telephone services, cable television services and telecommunications equipment manufacturing. In addition, the 1996 Act imposed numerous requirements on the FCC to launch new inquiries and rulemaking proceedings, perhaps 80 in all, involving a multitude of telecommunications issues, including those described herein that will directly affect the broadcast industry. The 1996 Act mandated that such rulemaking proceedings be completed within certain time frames, in some cases as short as six months. Some of these proceedings have been completed while others remain pending. Broadcast station licenses are subject to renewal upon application to the FCC. Pursuant to Congress' mandate in the 1996 Act, the FCC adopted a rule extending radio license terms from seven to eight years. All licenses renewed as part of the current renewal cycle will have a term of eight years. The FCC will renew a broadcast license if it determines that the "public convenience, interest or necessity" will be served thereby. Each of the Company's radio stations operates pursuant to one or more licenses issued by the FCC that 32 40 presently have a maximum term of seven years. The Company's licenses expire at various times through the year 2006. Although Cox Radio has applied or will apply to renew these licenses, third parties may challenge the Company's renewal applications. Historically, Cox Radio's management has not experienced any material difficulty in obtaining renewal from the FCC of any of the broadcast licenses for stations under its control. See "Risk Factors-Government Regulation of the Broadcasting Industry." MANAGEMENT The following table sets forth the name and age of the directors and executive officers of Cox Radio as of August 1, 1998:
NAME AGE POSITION WITH COX RADIO ---- --- ----------------------- Nicholas D. Trigony.................... 57 Chairman of the Board of Directors Robert F. Neil......................... 39 President and Chief Executive Officer, Director Richard A. Ferguson.................... 52 Vice President and Chief Operating Officer, Director Maritza Pichon......................... 44 Chief Financial Officer Marc W. Morgan......................... 48 Senior Group Vice President Robert B. Green........................ 45 Group Vice President James T. Morely........................ 49 Senior Group Vice President Richard A. Reis........................ 44 Group Vice President James C. Kennedy....................... 50 Director David E. Easterly...................... 56 Director Ernest D. Fears, Jr.................... 66 Director Paul M. Hughes......................... 59 Director
33 41 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table provides information as of March 18, 1998 with respect to the shares of Class A Common Stock and Class B Common Stock beneficially owned by each person known by the Company to own more than 5% of any class of the outstanding voting securities of the Company.
PERCENT OF PERCENT OF VOTE CLASS A CLASS B CLASS OF OF ALL CLASSES OF NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK - ------------------------ ------------ ------------ ------------ ----------------- Cox Enterprises, Inc.(1)(2)(3).......... -- 19,577,672 100.00% 95.67% J.&W. Seligman & Co. Incorporated(4).... 1,189,000 -- 13.41 0.58 Baron Capital Group, Inc.(5)............ 920,000 -- 10.37 0.45 Massachusetts Financial Services Company(6)............................ 864,600 -- 9.75 0.42 College Retirement Equities Fund(7)..... 636,800 -- 7.18 0.31 Mellon Bank Corporation(8).............. 458,250 -- 5.17 0.22
- --------------- (1) The address for CEI is 1400 Lake Hearn Drive, N.E., Atlanta, Georgia 30319. (2) All the shares of Common Stock of the Company that are beneficially owned by CEI are held of record by Cox Broadcasting. Cox Broadcasting holds 19,577,672 shares of Class B Common Stock that are convertible into the same number of shares of Class A Common Stock. All the shares of outstanding capital stock of Cox Broadcasting are beneficially owned by Cox Holdings, Inc., and all of the shares of outstanding capital stock of Cox Holdings, Inc. are beneficially owned by CEI. The beneficial ownership of the outstanding capital stock of CEI is described in footnote (3) below. (3) There are 202,448,312 shares of common stock of CEI outstanding, with respect to which (i) Barbara Cox Anthony, as trustee of the Anne Cox Chambers Atlanta Trust, exercises beneficial ownership over 58,316,422 shares (28.8%); (ii) Anne Cox Chambers, as trustee of the Barbara Cox Anthony Atlanta Trust, exercises beneficial ownership over 58,316,422 shares (28.8%); (iii) Barbara Cox Anthony, Anne Cox Chambers and Richard L. Braunstein, as trustees of the Dayton Cox Trust A, exercise beneficial ownership over 82,745,685 shares (40.9%); and (iv) 244 individuals and trusts exercise beneficial ownership over the remaining 3,069,783 shares (1.5%). Thus, Barbara Cox Anthony and Anne Cox Chambers, who are sisters, together exercise sole or shared beneficial ownership over 199,378,529 shares (98.5%) of the common stock of CEI. In addition, Garner Anthony, the husband of Barbara Cox Anthony, holds beneficially and of record 14,578 shares of common stock of CEI. Barbara Cox Anthony disclaims beneficial ownership of such shares. Barbara Cox Anthony and Anne Cox Chambers are the mother and aunt, respectively, of James C. Kennedy, the Chairman of the Board of Directors and Chief Executive Officer of CEI and a director of the Company. (4) The information contained in this table with respect to J.&W. Seligman & Co. Incorporated is based on a Schedule 13G reporting ownership as of January 31, 1998 by J.&W. Seligman & Co. Incorporated; William C. Morris; and Seligman Communications & Information Fund, Inc. The address for the reporting persons is 100 Park Avenue, New York, New York 10017. (5) The information contained in this table with respect to Baron Capital Group, Inc. is based on a joint filing on Schedule 13G reporting ownership as of December 31, 1997 by Baron Capital Group, Inc., BAMCO, Inc., Baron Capital Management, Inc., Baron Asset Fund, and Ronald Baron. The address for each of the reporting parties is 767 Fifth Avenue, 24th Floor, New York, New York 10153. (6) The information contained in this table with respect to Massachusetts Financial Services Company is based on a filing on Schedule 13G reporting ownership as of December 31, 1997. The address for the reporting person is 500 Boylston Street, Boston, Massachusetts 02116. (7) The information contained in this table with respect to College Retirement Equities Fund is based on a joint filing on Schedule 13G reporting ownership as of December 31, 1997 by College Retirement Equities Fund and TIAA-CREF Mutual Funds. The address for each reporting party is 730 Third Avenue, New York, New York 10017. (8) The information contained in this table with respect to Mellon Bank Corporation is based on a joint filing on Schedule 13G reporting ownership as of December 31, 1997 by the following direct or indirect subsidiaries of Mellon Bank Corporation: Boston Safe Deposit and Trust Company; Mellon Bank, N.A.; Mellon Capital Management Corporation; Mellon Equity Associates; The Boston Company Asset Management, Inc.; The Dreyfus Corporation; Boston Group Holdings, Inc.; The Boston Company, Inc.; and MBC Investment Corporation. The address of Mellon Bank Corporation and for all reporting persons is One Mellon Bank Center, Pittsburgh, Pennsylvania 15258. 34 42 DESCRIPTION OF CERTAIN INDEBTEDNESS THE CREDIT AGREEMENT On March 7, 1997, Cox Radio entered into a $300 million, five-year, senior, unsecured revolving credit facility (the "Credit Agreement") with certain guarantors and banks, including Chase Bank of Texas, N.A. (formerly Texas Commerce Bank National Association), as Administrative Agent, NationsBank of Texas, N.A., as Syndications Agent, and Citibank, N.A., as Documentation Agent. The loan proceeds were used to finance the payment of the consideration payable in the NewCity Acquisition, repay certain secured debt of NewCity and finance certain acquisitions. The remaining credit availability may be used to finance additional acquisitions and for other corporate purposes. The Credit Agreement has restrictions on the payment of dividends, certain mergers, consolidations or dispositions of assets and establishes limitations on, among other things, additional indebtedness and transactions with affiliates. The total principal amount outstanding under the Credit Agreement was approximately $100.0 million as of June 30, 1998 and the weighted average per annum interest rate applicable to borrowings thereunder for the six months ended June 30, 1998 was 6.5%. Future borrowings under the Credit Agreement will accrue interest at the London Interbank Offered Rate plus a specified margin. THE CEI CREDIT FACILITY The Company has entered into a revolving credit facility with CEI (the "CEI Credit Facility"). Borrowings by the Company under the CEI Credit Facility are typically repaid by the Company within 30 days. Borrowings under the CEI Credit Facility accrue interest at CEI's commercial paper rate plus .40%. As of June 30, 1998, no amounts were outstanding under the CEI Credit Facility. ADDITIONAL FINANCING The Company expects to enter into a new credit facility pursuant to which the lenders thereunder would commit to lend $100 million to the Company on a revolving basis for acquisitions and general corporate purposes. Loans pursuant to such commitment are expected to bear interest on terms similar to the terms of the Credit Agreement. 35 43 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER The Old Notes were originally sold by the Company on May 26, 1998 to the Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers subsequently placed the Old Notes with qualified institutional buyers pursuant to Rule 144A under the Securities Act. As a condition of the Purchase Agreement, the Company entered into the Registration Rights Agreement with the Initial Purchasers pursuant to which the Company has agreed, for the benefit of the holders of the Old Notes, at the Company's cost, to use its best efforts to (i) cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 180 days after the date of the original issuance of the Old Notes and (ii) keep the Exchange Offer open for not less than 30 calendar days (or longer if required by applicable law) after the date on which notice of the Exchange Offer is mailed to the holders of the Old Notes. For each 2003 Old Note validly tendered pursuant to the Exchange Offer and not validly withdrawn by the holder thereof, the holder of such 2003 Old Note will receive a 2003 New Note having a principal amount equal to that of the surrendered 2003 Old Note and for each 2005 Old Note validly tendered pursuant to the Exchange Offer and not validly withdrawn by the holder thereof, the holder of such 2005 Old Note will receive a 2005 New Note having a principal amount equal to that of the surrendered 2005 Old Note. Based upon interpretations by the staff of the Commission set forth in certain no-action letters issued to third parties, the Company believes that the New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than a broker-dealer, as set forth below, or any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder has no arrangement or understanding with any person to participate in the distribution of such New Notes. See "The Exchange Offer -- Resale of the New Notes." Holders of Old Notes wishing to accept the Exchange Offer must represent to the Company, as required by the Registration Rights Agreement, that such conditions have been met and that such holder is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act. Each Participating Broker-Dealer must represent that the Old Notes tendered in exchange therefor were acquired as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by any broker-dealer (other than an affiliate of the Company) in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of up to 90 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes or who is an affiliate of the Company may not rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (May 13, 1988) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which the holder is not indemnified by the Company. No affiliate of the Company may rely on such no-action letters and any such affiliate must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The Company has not entered into any arrangement or understanding with any person to distribute the New Notes to be received in the Exchange Offer. If, because of any change in law, regulation or in the applicable interpretations of the staff of the Commission, the Company is not permitted to effect the Exchange Offer or, for any reason, the Exchange 36 44 Offer Registration Statement is not declared effective within 180 days after the date of issuance of the Old Notes or in certain other circumstances, then the Company shall use its best efforts to (a) as promptly as practicable, file a shelf registration statement (the "Shelf Registration Statement") covering the Old Notes, (b) cause the shelf registration statement to be declared effective under the Securities Act and (c) keep the shelf registration statement effective until the earlier of two years after the initial sale of the Old Notes to the Initial Purchasers or such time as all of the applicable Old Notes have been sold thereunder or otherwise cease to be registrable securities within the meaning of the Registration Rights Agreement. The Company will, in the event of the filing of the Shelf Registration Statement, provide to each applicable holder of the Old Notes copies of the prospectus which is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement has become effective and take certain other actions as are required to permit unrestricted resales of the Old Notes. A holder of the Old Notes that sells such Old Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement which are applicable to such a holder (including certain indemnification obligations). In addition, each holder of the Old Notes will be required to deliver information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their Old Notes included in the Shelf Registration Statement and to benefit from the provisions set forth in the following paragraph. Each holder will be deemed to have agreed that, upon receipt of notice from the Company of the occurrence of any event which makes any statement in the prospectus which is part of the Shelf Registration Statement (or, in the case of Participating Broker-Dealers, the prospectus which is part of the Exchange Offer Registration Statement) untrue in any material respect or which requires the making of any changes in such prospectus in order to make the statements therein not misleading or of certain other events specified in the Registration Rights Agreement, such holder (or Participating Broker-Dealer, as the case may be) will suspend the sale of Old Notes pursuant to such prospectus until the Company has amended or supplemented such prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented prospectus to such holder (or Participating Broker-Dealer, as the case may be) or the Company has given notice that the sale of the Notes may be resumed. If the Company shall give such notice to suspend the sale of the Old Notes, it shall extend the relevant period referred to above during which the Company and the Note Guarantors, if any, are required to keep effective the Shelf Registration Statement (or the period during which Participating Broker-Dealers are entitled to use the prospectus included in the Exchange Offer Registration Statement in connection with the resale of New Notes) by the number of days during the period from and including the date of the giving of such notice to and including the date when holders shall have received copies of the supplemented or amended prospectus necessary to permit resales of the Notes or to and including the date on which the Company has given notice that the sale of Notes may be resumed. If the Company or any Note Guarantor, if any, fails to comply with the Registration Rights Agreement or if the Exchange Offer Registration Statement or the Shelf Registration Statement fails to become effective, then liquidated damages (the "Liquidated Damages") shall become payable in respect of the Notes as follows: (i) If neither the Exchange Offer Registration Statement nor the Shelf Registration Statement is declared effective by the commission on or prior to the 180th day after the Closing Date (in the case of an Exchange Offer Registration Statement) or on or prior to the later of (A) the 40th day after the date such Registration Statement was required to be filed and (B) the 180th day after the Closing Date (in the case of a Shelf Registration Statement), then Liquidated Damages shall accrue on the principal amount of the Notes at a rate of 0.25% per annum; or (ii) if (A) the Company has not exchanged the Exchange Notes for all Notes validly tendered or any Note Guarantor has not executed a Note Guarantee, if any, in respect of such Exchange Notes, in 37 45 accordance with the terms of the Exchange Offer on or prior to the 45th day after the date on which the Exchange Offer Registration Statement was declared effective or (B) if applicable, the Shelf Registration Statement has been declared effective and such Shelf Registration Statement ceases to be effective or usable for resales at any time prior to the second anniversary of the Closing Date (other than after such time as all Notes have been disposed of thereunder or otherwise cease to be registrable securities within the meaning of the Registration Rights Agreement), then Liquidated Damages shall accrue on the principal amount of the Notes at a rate of 0.25% per annum, commencing on (x) the 46th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective or useable for resales, in the case of (B) above; provided, however, that the Liquidated Damages rate on the principal amount of Notes may not exceed in the aggregate 0.25% per annum; provided, further, however, that (1) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) above), (2) upon the exchange of New Notes for all Old Notes validly tendered and execution by each Note Guarantor of a Note Guarantee, if any, in respect thereof (in the case of clause (ii) (A) above) or upon the effectiveness or availability of the Shelf Registration Statement which had ceased to remain effective or useable for resales (in the case of clause (iii) (B) above), then Liquidated Damages on the principal amount of Old Notes as a result of such clause (or the relevant subclause thereof) shall cease to accrue. Any amounts of Liquidated Damages due pursuant to the foregoing paragraphs will be payable in cash on May 15 and November 15 of each year to the holders of record on the last day of the month preceding the month in which the relevant payment date falls. The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, all the provisions of the Registration Rights Agreement, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part. Following the consummation of the Exchange Offer, holders of the Old Notes who were eligible to participate in the Exchange Offer but who did not tender their Old Notes will not have any further registration rights and such Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Old Notes could be adversely affected. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Company will accept any and all Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Company will issue $1,000 principal amount of 2003 New Notes in exchange for each $1,000 principal amount of 2003 Old Notes and $1,000 principal amount of 2005 New Notes in exchange for each $1,000 principal amount of 2005 Old Notes accepted in the Exchange Offer. Holders may tender some or all of their Old Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in integral multiples of $1,000. The form and terms of the New Notes are the same in all material respects as the form and terms of the Old Notes, except that (i) the New Notes have been registered under the Securities Act and hence will not bear legends restricting the transfer thereof and (ii) the holders of the New Notes will not be entitled to certain rights under the Registration Rights Agreement, including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to the timing of the Exchange Offer, all of which rights will terminate when the Exchange Offer is terminated. The New Notes will evidence the same debts as the Old Notes (which they replace) and will be entitled to the benefits of the Indenture. As of the date of this Prospectus, $200,000,000 aggregate principal amount of Old Notes are outstanding. The Company has fixed the close of business on , 1998 as the record date for the Exchange Offer for purposes of determining the persons to whom this Prospectus and the Letter of Transmittal will be mailed initially. 38 46 Holders of Old Notes do not have any appraisal or dissenters' rights under the Delaware General Corporation Law or the Indenture in connection with the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the Commission thereunder. The Company shall be deemed to have accepted validly tendered Old Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purpose of receiving the New Notes from the Company. If any tendered Old Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, the certificates for any such unaccepted Old Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. Holders who tender Old Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the Exchange Offer. See "-- Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1998, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Company will notify the Exchange Agent of any extension by oral or written notice and will mail to the registered holders an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. The Company reserves the right, in its sole discretion, (i) to delay accepting any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer if any of the conditions set forth below under "-- Conditions" shall not have been satisfied, by giving oral or written notice of such delay, extension or termination to the Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders. PROCEDURES FOR TENDERING Only a holder of Old Notes may tender such Old Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal or transmit an Agent's Message (as defined below) in connection with a book-entry transfer, and mail or otherwise deliver such Letter of Transmittal or such facsimile, or Agent's Message, together with the Old Notes and any other required documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered effectively, the Old Notes, Letter of Transmittal or Agent's Message, and other required documents must be completed and received by the Exchange Agent at the address set forth below under "Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. In addition, either (i) certificates for such Old Notes must be received by the Exchange Agent prior to the Expiration Date along with the Letter of Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Notes into the Exchange Agent's account at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date or (iii) the holder must comply with the guaranteed delivery procedures described below. Delivery of the Old Notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be received by the Exchange Agent prior to the Expiration Date. DELIVERY OF DOCUMENTS TO THE BOOK ENTRY 39 47 TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURE DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. DTC has authorized DTC participants that hold Old Notes on behalf of beneficial owners of Old Notes through DTC to tender their Old Notes as if they were holders. To effect a tender of Old Notes, DTC participants should either (i) complete and sign the Letter of Transmittal (or a manually signed facsimile thereof), have the signature thereon guaranteed if required by the instructions to the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or such manually signed facsimile) to the Exchange Agent pursuant to the procedure set forth in "Procedures for Tendering" or (ii) transmit their acceptance to DTC through the DTC Automated Tender Offer Program ("ATOP") for which the transaction will be eligible and follow the procedure for book-entry transfer set forth in "-- Book-Entry Transfer." By executing the Letter of Transmittal or Agent's Message, each holder will make to the Company the representations set forth above in the second paragraph under the heading "-- Purpose and Effect of the Exchange Offer." The tender by a holder and the acceptance thereof by the Company will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal or Agent's Message. THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL OR AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose Old Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. See "Instructions to Registered Holder and/or Book-Entry Transfer Facility Participant from Beneficial Owner" included with the Letter of Transmittal. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless the Old Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member firm of the Medallion System (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Old Notes listed therein, such Old Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered holder as such registered holder's name appears on such Old Notes with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and evidence satisfactory to the Company of its authority to so act must be submitted with the Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old 40 48 Notes not properly tendered or any Old Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right in its sole discretion to waive any defects, irregularities or conditions of tender as to particular Old Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Company, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES For each Old Note accepted for exchange, the holder of such Old Note will receive a New Note having a principal amount equal to that of the surrendered Old Note. For purposes of the Exchange Offer, the Company shall be deemed to have accepted properly tendered Old Notes for exchange when, as and if the Company has given oral or written notice thereof to the Exchange Agent. In all cases, the issuance of New Notes for Old Notes that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility, a properly completed and duly executed Letter of Transmittal or Agent's Message and all other required documents. If any tendered Old Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offer, such unaccepted or non-exchanged Old Notes will be returned without expense to the tendering holder thereof (or, in the case of Old Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such non-exchanged Old Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the Expiration Date. BOOK-ENTRY TRANSFER The Exchange Agent will establish a new account or utilize an existing account with respect to the Old Notes at DTC promptly after the date of this Prospectus, and any financial institution that is a participant in DTC and whose name appears on a security position listing as the owner of Old Notes may make a book-entry tender of Old Notes by causing DTC to transfer such Old Notes into the Exchange Agent's account in accordance with DTC's procedures for such transfer. However, although tender of Old Notes may be effected through book-entry transfer into the Exchange Agent's account at DTC, the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and validly executed, with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Exchange Agent at its address set forth below under the caption "Exchange Agent" on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. The confirmation of book-entry transfer of Old Notes into the Exchange Agent's account at DTC as described above is referred to herein as a "Book-Entry Confirmation." Delivery of documents to DTC in accordance with DTC's procedures does not constitute delivery to the Exchange Agent. The term "Agent's Message" means a message transmitted by DTC to, and received by, the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering the Old Notes stating (i) the aggregate principal amount of Old Notes which have been tendered by such participant, (ii) that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and (iii) that the Company may enforce such agreement against the participant. 41 49 GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Old Notes and (i) whose Old Notes are not immediately available, (ii) who cannot deliver their Old Notes, the Letter of Transmittal or any other required documents to the Exchange Agent or (iii) who cannot complete the procedures for book-entry transfer, prior to the Expiration Date, may effect a tender if: (a) the tender is made through an Eligible Institution; (b) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Old Notes and the principal amount of Old Notes tendered, stating that the tender is being made thereby and guaranteeing that, within five New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) (or in the case of a book-entry transfer, an Agent's Message) together with the certificate(s) representing the Old Notes (or a confirmation of book-entry transfer of such Notes into the Exchange Agent's account at the Book-Entry Transfer Facility), and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and (c) the certificate(s) representing all tendered Old Notes in proper form for transfer (or a confirmation of book-entry transfer of such Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility), together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within five New York Stock Exchange trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Old Notes according to the guaranteed delivery procedures set forth above. WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex, letter or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the business day prior to the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn (including the certificate number(s) and principal amount of such Old Notes, or, in the case of Old Notes transferred by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited), (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Old Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Old Notes register the transfer of such Old Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such Old Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Old Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no New Notes will be issued with respect thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes which have been tendered but which are not accepted for exchange will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may be retendered by following one of the procedures described above under "-- Procedures for Tendering" at any time prior to Expiration Date. 42 50 CONDITIONS Notwithstanding any other term of the Exchange Offer, the Company shall not be required to accept for exchange, or exchange New Notes for, any Old Notes, and may terminate or amend the Exchange Offer as provided herein before the Expiration Date, if: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or any material adverse development has occurred in any existing action or proceeding with respect to the Company or any of its subsidiaries; or (b) any law, statute, rule, regulation or interpretation by the staff of the Commission is proposed, adopted or enacted, which, in the sole judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Company; or (c) any governmental approval has not been obtained, which approval the Company shall, in its sole discretion, deem necessary for the consummation of the Exchange Offer as contemplated hereby. If the Company determines in its reasonable discretion that any of the conditions are not satisfied, the Company may (i) refuse to accept any Old Notes and return all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer and retain all Old Notes tendered prior to the expiration of the Exchange Offer, subject, however, to the rights of holders to withdraw such Old Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and accept all properly tendered Old Notes which have not been withdrawn. EXCHANGE AGENT The Bank of New York has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: By Mail: Overnight Courier: The Bank of New York The Bank of New York 101 Barclay Street 101 Barclay Street 21st Floor 21st Floor New York, New York 10286 New York, New York 10286 Attention: Corporate Trust Administration Attention: Corporate Trust Administration By Hand: Facsimile Transmission: The Bank of New York (212) 815-5915 101 Barclay Street 21st Floor New York, New York 10286 Attention: Corporate Trust Administration
Confirm by Telephone: (212) 815-5092 DELIVERY TO AN ADDRESS OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 43 51 FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Company. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telecopy, telephone or in person by officers and regular employees of the Company and its affiliates. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith. The cash expenses to be incurred in connection with the Exchange Offer will be paid by the Company. Such expenses include fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, among others. ACCOUNTING TREATMENT The New Notes will be recorded at the same carrying value as the Old Notes, which is face value, as reflected in the Company's accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized by the Company. The expenses of the Exchange Offer will be expensed over the term of the New Notes. CONSEQUENCES OF FAILURE TO EXCHANGE The Old Notes that are not exchanged for New Notes pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Old Notes may be resold only (i) to "qualified institutional buyers" (as defined in Rule 144A under the Securities Act) in compliance with Rule 144A, (ii) to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that, prior to such transfer, furnishes to the Trustee a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Notes (the form of which letter can be obtained from the Trustee) and, if such transfer is in respect of an aggregate principal amount of Notes at the time of transfer of less than $100,000, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act, (iii) outside the United States in compliance with Rule 904 under the Securities Act, (iv) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (v) pursuant to an effective registration statement under the Securities Act. RESALE OF THE NEW NOTES Based upon interpretations by the staff of the Commission set forth in certain no-action letters issued to third parties, the Company believes that the New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than a broker-dealer, as set forth below, or any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder has no arrangement or understanding with any person to participate in the distribution of such New Notes. See "The Exchange Offer -- Resale of the New Notes." Holders of Old Notes wishing to accept the Exchange Offer must represent to the Company, as required by the Registration Rights Agreement, that such conditions have been met and that such holder is not an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act. Each Participating Broker-Dealer must represent that the Old Notes tendered in exchange therefor were acquired as a result of market-making activities or other trading activities and must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by any broker-dealer (other than an affiliate of the Company) in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a 44 52 result of market-making activities or other trading activities. The Company has agreed that, for a period of up to 180 days after the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes or who is an affiliate of the Company may not rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liability under the Securities Act for which the holder is not indemnified by the Company. No affiliate of the Company may rely on such no-action letters and any such affiliate must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The Company has not entered into any arrangement or understanding with any person to distribute the New Notes to be received in the Exchange Offer. For a description of the procedures for such resales by Participating Broker-Dealers, see "Plan of Distribution." 45 53 DESCRIPTION OF THE NOTES GENERAL Each of the 2003 New Notes and the 2005 New Notes, like the Old Notes, will be a separate series of securities issued under the Indenture, dated as of May 26, 1998 (the "Indenture"), among the Company, the Initial Note Guarantors (as defined herein) and The Bank of New York, as trustee (the "Trustee"). Copies of the Indenture are available upon request from the Company. The following summary of certain provisions of the Indenture 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 certain terms therein and those terms made a part thereof by the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Whenever particular defined terms of the Indenture not otherwise defined herein are referred to, such defined terms are incorporated herein by reference. The form and terms of the New Notes are the same in all material respects as the form and terms of the Old Notes (which they replace) except that (i) the issuance of the New Notes have been registered under the Securities Act and, therefore, the New Notes will not bear legends restricting the transfer thereof, and (ii) the holders of New Notes will not be entitled to certain rights under the Registration Rights Agreement, including the provisions providing for an increase in the interest rate on the Old Notes in certain circumstances relating to the timing of the Exchange Offer, which rights will terminate when the Exchange Offer is consummated. A copy of the Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. Certain definitions of terms used in the following summary are set forth under "-- Certain Definitions" below. The Old Notes and the New Notes are sometimes referred to herein collectively as the "Notes." The 2003 New Notes and the 2005 New Notes will be senior unsecured obligations of the Company ranking pari passu in right of payment with all other existing and future unsubordinated unsecured obligations of the Company, initially limited to $100 million and $100 million aggregate principal amount, respectively, and will mature on May 15, 2003 and May 15, 2005, respectively, unless previously redeemed. Interest on the New Notes will accrue at the rates shown on the front cover of this Prospectus from the Closing Date or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semiannually (to Holders of record at the close of business on April 30 or October 31 immediately preceding the Interest Payment Date) on May 15 and November 15 of each year, commencing on November 15, 1998. Principal of, and premium, if any, and interest on, the Notes will be payable at the office or agency of the Company in the Borough of Manhattan, the City of New York (which initially will be the principal corporate trust office of the Trustee at 101 Barclay Street, Floor 21W, New York, New York 10286); provided, that, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses as they appear in the Security Register. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The New Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 principal amount and any integral multiple thereof. See "-- Book-Entry; Delivery and Form." No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. Subject to the covenants described below under "Covenants" and applicable law, the Company may issue additional Notes under the Indenture. The New Notes offered hereby, the Old Notes and any such additional Notes subsequently issued would be treated as a single class for all purposes under the Indenture. OPTIONAL REDEMPTION The New Notes will be redeemable at the option of the Company, in whole at any time or in part from time to time, on at least 30 days but not more than 60 days prior written notice mailed to the registered holders thereof, at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes to be 46 54 redeemed, and (ii) the sum, as determined by the Quotation Agent (as defined herein), of the present values of the principal amount and the remaining scheduled payments of interest on the Notes to be redeemed from the redemption date to May 15, 2003 in the case of the 2003 New Notes and May 15, 2005 in the case of the 2005 New Notes (the "Remaining Life"), in each case, discounted on a semiannual basis (assuming a 360-day year consisting of 30-day months) at the Treasury Rate (as defined herein) plus 10 basis points in the case of the 2003 New Notes and 15 basis points in the case of the 2005 New Notes, 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 of a particular series (or portions thereof) 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 such Notes (or such portion thereof) called for redemption. "Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the Remaining Life 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, 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 three such Reference Treasury Dealer Quotations, the average of all such quotations. "Quotation Agent" means the Reference Treasury Dealer appointed by the Company. "Reference Treasury Dealer" means (i) NationsBanc Montgomery Securities LLC, Chase Securities Inc. and J.P. Morgan Securities Inc. and their respective successors; provided, however, that if the foregoing shall cease to be primary U.S. Government securities dealers in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the Company. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, 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 5:00 p.m., New York City time, on the third business day preceding such redemption date. "Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semiannual yield to maturity 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. NOTE GUARANTEES The Indenture requires the Company to cause each of its Subsidiaries that guarantee, on the date hereof or in the future, indebtedness under the Credit Agreement and indebtedness under any future senior unsecured credit facility between the Company and the third party lenders thereunder to fully and unconditionally guarantee, as primary obligors and not merely as sureties, pursuant to a Note Guarantee, on an unsubordinated, unsecured basis, the due and punctual payment of the principal of, interest on and other amounts payable under the Notes, when and if the same shall become due and payable, whether at stated maturity, by declaration of acceleration, upon redemption or otherwise; provided, however, that in the event that any such Subsidiary is released from its guarantee of indebtedness under the Credit Agreement or such future credit facility, then such Subsidiary will also be immediately released from its obligations under its Note Guarantee without further action by any party. The Old Notes were initially guaranteed by WSB, Inc., a Delaware corporation ("WSB"), and WHIO, Inc., a Delaware corporation ("WHIO" and, together with WSB, the "Initial Note Guarantors"). 47 55 Each Note Guarantee will be limited to an amount not to exceed the maximum amount that can be guaranteed by the applicable Note Guarantor without rendering such Note Guarantee, as it relates to such Note Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting creditors' rights generally. CERTAIN COVENANTS The Indenture contains certain covenants including, among others, the following: Limitation on Liens. The Company will not, and will not permit any Restricted Subsidiary to, create, incur or assume any Lien (other than Permitted Liens) on Restricted Property to secure the payment of Indebtedness of the Company or any Restricted Subsidiary if, immediately after the creation, incurrence or assumption of such Lien, the aggregate outstanding principal amount of all Indebtedness of the Company and the Restricted Subsidiaries that is secured by Liens (other than Permitted Liens) on Restricted Property would exceed the greater of (i) $30 million or (ii) 15% of the aggregate outstanding principal amount of all Indebtedness of the Company and the Restricted Subsidiaries (whether or not so secured), unless effective provision is made whereby the Notes (together with, if the Company shall so determine, any other Indebtedness ranking equally with the Notes, whether then existing or thereafter created) are secured equally and ratably with (or prior to) such Indebtedness (but only for so long as such Indebtedness is so secured). The foregoing limitation does not apply to (i) Liens existing on the Closing Date; (ii) Liens granted after the Closing Date on any assets or Capital Stock of the Company or its Restricted Subsidiaries created in favor of the Holders; (iii) Liens with respect to the assets of a Restricted Subsidiary granted by such Restricted Subsidiary to the Company or another Restricted Subsidiary to secure Indebtedness owing to the Company or such other Restricted Subsidiary; (iv) Liens securing Indebtedness which is incurred to refinance secured Indebtedness which is permitted to be incurred under the "Limitation on Indebtedness of Restricted Subsidiaries" covenant; provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than the property or assets securing the Indebtedness being refinanced; (v) Liens securing Indebtedness permitted under the "Limitation on Indebtedness of Restricted Subsidiaries" covenant; or (vii) Permitted Liens. Limitation on Indebtedness of Restricted Subsidiaries. The Company 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 (i) $30 million or (ii) 15% of the aggregate outstanding principal amount of all Indebtedness of the Company and the Restricted Subsidiaries; provided that, in any event, a Restricted Subsidiary may incur Indebtedness to extend, renew or replace Indebtedness of such Restricted Subsidiary to the extent that the principal amount of the Indebtedness so incurred does not exceed the principal amount of the Indebtedness extended, renewed or replaced thereby immediately prior to such extension, renewal or replacement plus any premium, accrued and unpaid interest or capitalized interest payable thereon. Designation of Subsidiaries. The Company may designate a Restricted Subsidiary as an Unrestricted Subsidiary or designate an Unrestricted Subsidiary as a Restricted Subsidiary at any time, provided that (i) immediately after giving effect to such designation, the Leverage Ratio of the Restricted Group is not greater than 7:1 and the Company and the Restricted Subsidiaries are in compliance with the "Limitation on Liens" and "Limitation on Indebtedness of Restricted Subsidiaries" covenants, and (ii) an Officers' Certificate with respect to such designation is delivered to the Trustee within 75 days after the end of the fiscal quarter of the Company in which such designation is made (or, in the case of a designation made during the last fiscal quarter of the Company's fiscal year, within 120 days after the end of such fiscal year), which Officers' Certificate shall state the effective date of such designation. Mergers or Sales of Assets. The Indenture will provide that neither the Company nor any Note Guarantor may merge into or consolidate with another corporation or sell or lease all or substantially all 48 56 its assets to another corporation unless (i) either (A) the Company or such Note Guarantor is the surviving corporation or (B) the resulting, surviving or transferee corporation is organized under the laws of a state of the United States or the District of Columbia and expressly assumes all obligations under the Notes or the Note Guarantees, as applicable, and all other applicable covenants and conditions of the Indenture, and (ii) immediately after and giving effect to such transaction, no Event of Default has occurred. The Indenture will not contain any provisions affording holders of Notes any additional protection in the event that the Company enters into a highly leveraged transaction. DEFINITIONS "Asset Acquisition" means (i) an investment by the Company or any of its Restricted Subsidiaries in any other Person where such Person shall become a Restricted Subsidiary or shall be merged into or consolidated with the Company or any of its Restricted Subsidiaries; or (ii) an acquisition by the Company or any of its Restricted Subsidiaries of the property and assets of any Person other than the Company or any of its Restricted Subsidiaries that constitute substantially all of a division or line of business of such Person. "Asset Disposition" means the sale or other disposition by the Company or any of its Restricted Subsidiaries (other than to the Company or another Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of any Restricted Subsidiary or (ii) all or substantially all of the assets that constitute a division or line of business of the Company or any of its Restricted Subsidiaries. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Closing Date or issued thereafter. "Capitalized Lease" means, as applied to any Person, any lease of any property (whether real, personal or mixed) of which the discounted present value of the rental obligations of such Person as lessee, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person. "Closing Date" means the date on which the Old Notes were originally issued under the Indenture. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "GAAP" means such accounting principles as are generally accepted in the United States of America as of the date or time of any particular computation. "Indebtedness" means, without duplication, with respect to any Person: (i) any indebtedness of such Person (A) for borrowed money or (B) evidenced by a note, debenture or similar instrument (including a purchase money obligation) given in connection with the acquisition of any property or assets, including securities; (ii) any guarantee by such Person of any indebtedness of others described in the preceding clause (i); and (iii) any amendment, extension, renewal or refunding of any such indebtedness or guarantee. The term "Indebtedness" excludes (i) any indebtedness of the Company or any Restricted Subsidiary to the Company or another Restricted Subsidiary, (ii) any guarantee by the Company or any Restricted Subsidiary of indebtedness of the Company or another Restricted Subsidiary, (iii) trade accounts payable, (iv) money borrowed and set aside at the time of the incurrence of any Indebtedness in order to prefund the payment of the interest on such Indebtedness so long as such money is held to secure the payment of such interest, (v) liabilities for federal, state, local or other taxes and (vi) letters of credit, performance bonds and similar obligations issued in favor of governmental authorities as a term of any governmental franchise, license, permit or authorization held by such Person or any of its Subsidiaries. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation. The amount of Indebtedness issued with original issue discount is the face amount of 49 57 such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP. "Interest Rate Agreement" means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement. "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 (i) the aggregate outstanding principal amount of all Indebtedness of the Restricted Group as of such date to (ii) 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; provided that, in making the foregoing calculation, (A) pro forma effect shall be given to any Indebtedness to be incurred or repaid on the date of incurrence of any Indebtedness (the "Transaction Date"); (B) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions (including giving pro forma effect to the application of proceeds of any Asset Disposition) that occur from the beginning of the fiscal quarter through the Transaction Date (the "Reference Period"), as if they had occurred and such proceeds had been applied on the first day of such Reference Period and, in the case of any Asset Acquisition, giving pro forma effect to any cost reductions the Company anticipates if the Company delivers to the Trustee an officer's certificate executed by the Chief Financial Officer of the Company certifying to and describing and quantifying with reasonable specificity the cost reductions expected to be attained within the first year after such Asset Acquisition; and (C) pro forma effect shall be given to asset dispositions and asset acquisitions (including giving pro forma effect to the application of proceeds of any asset disposition) that have been made by any Person that has become a Restricted Subsidiary or has been merged with or into the Company or any Restricted Subsidiary during such Reference Period and that would have constituted Asset Dispositions or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary as if such asset dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the first day of such Reference Period; provided that to the extent that clause (B) or (C) of this sentence requires that pro forma effect be given to an Asset Acquisition or Asset Disposition, such pro forma calculation shall be based upon the fiscal quarter immediately preceding the Transaction Date of the Person, or division or line of business of the Person, that is acquired or disposed of for which financial information is available. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Permitted Liens" means: (i) Liens for taxes, assessments, governmental charges or claims that are not yet delinquent or are being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (ii) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations (including obligations under franchise agreements), bankers' acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); (v) easements, rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of the Company or any of its Restricted Subsidiaries; (vi) Liens upon real or personal property acquired after the Closing Date; provided that (a) such Lien is created solely for the purpose of securing Indebtedness incurred, in accordance with the "Limitation on Indebtedness of 50 58 Restricted Subsidiaries" covenant to finance the cost (including the cost of design, development, acquisition, installation, integration, improvement or construction) of the item of property or assets subject thereto and such Lien is created prior to, at the time of or within six months after the later of the acquisition, the completion of construction or the commencement of full operation of such property, (b) the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost and (c) any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item; (vii) Liens arising from filing Uniform Commercial Code financing statements regarding leases; (viii) Liens on property of, or on shares of Capital Stock or Indebtedness of, any Person existing at the time such Person becomes, or becomes a part of, any Restricted Subsidiary; provided that such Liens do not extend to or cover any property or assets of the Company or any Restricted Subsidiary other than the property or assets acquired; (ix) Liens in favor of the Company or any Restricted Subsidiary; (x) Liens arising from the rendering of a final judgment or order against the Company or any Restricted Subsidiary that does not give rise to an Event of Default; (xi) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof; (xii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (xiii) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, in each case, securing Indebtedness under Interest Rate Agreements and Currency Agreements and forward contracts, options, future contracts, futures options or similar agreements or arrangements designed solely to protect the Company or any of its Restricted Subsidiaries from fluctuations in interest rates, currencies or the price of commodities; (xiv) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business in accordance with industry practice; (xv) Liens resulting from deposits made in connection with any proposed Asset Acquisition; provided that such deposit does not exceed 10% of the estimated purchase price for such Asset Acquisition; and (xvi) Liens on or sales of receivables, including related intangible assets and proceeds thereof where, in the good faith determination of the Company, the Company has received the fair market value of such receivables. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Principal Property" means, as of any date of determination, any property or assets owned by any Restricted Subsidiary other than (i) any such property which, in the good faith opinion of the Board of Directors, is not of material importance to the business conducted by the Company and its Restricted Subsidiaries taken as a whole and (ii) any shares of any class of stock or any other security of any Unrestricted Subsidiary. "Restricted Group" means, as of any date of determination, the Company and the Restricted Subsidiaries as of such date. "Restricted Property" means, as of any date of determination, any Principal Property and any shares of stock of a Restricted Subsidiary owned by the Company or a Restricted Subsidiary. "Restricted Subsidiary" means each Subsidiary of the Company other than the Unrestricted Subsidiaries. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred). "Subsidiary" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of 51 59 directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that has been designated as an Unrestricted Subsidiary as permitted by the covenant described under "Designation of Subsidiaries" and not thereafter redesignated as a Restricted Subsidiary as permitted thereby and (ii) each Subsidiary of any Unrestricted Subsidiary. DEFAULTS An Event of Default with respect to the Notes of any series is defined in the Indenture as (i) a default in the payment of interest on such Notes when due, continued for 30 days, (ii) a default in the payment of principal of, or premium, if any, on, any such Note when due at its Stated Maturity, upon optional redemption, upon declaration or otherwise, (iii) the failure by the Company or the Note Guarantors to comply with their respective obligations under "-- Certain Covenants -- Mergers or Sales of Assets" above, (iv) the failure by the Company to comply within 60 days after notice with any of its other agreements contained in the Indenture, including its obligations under the covenants described above in "-- Certain Covenants" under "-- Limitation on Liens," "-- Limitation on Indebtedness of Restricted Subsidiaries" or "-- Designation of Subsidiaries," (v) Indebtedness of the Company or any Restricted Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds the greater of $25 million or 30% of the aggregate outstanding principal amount of all Indebtedness of the Company and the Restricted Subsidiaries, (vi) certain events of bankruptcy, insolvency or reorganization of the Company or a Restricted Subsidiary (the "bankruptcy provisions") or (vii) the Company or any Restricted Subsidiary shall fail within 60 days to pay, bond or otherwise discharge any uninsured judgment or court order for the payment of money in excess of $25 million, which is not stayed on appeal or is not otherwise being appropriately contested in good faith. However, a default under clause (iv) with respect to the 2003 New Notes or the 2005 New Notes will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of the outstanding Notes of such series notify the Company of the default and the Company does not cure such default within the time specified after receipt of such notice. If an Event of Default (other than one relating to the bankruptcy provisions) occurs and is continuing with respect to the 2003 New Notes or the 2005 New Notes, the Trustee or the holders of at least 25% in principal amount of the outstanding Notes of such series may declare the principal of and accrued but unpaid interest on all such Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. Under certain circumstances, the holders of a majority in principal amount of the outstanding 2003 New Notes or 2005 New Notes, as the case may be, may rescind any such acceleration with respect to such Notes and its consequences. If an Event of Default relating to the bankruptcy provisions occurs and is continuing, the principal of and interest on all such Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders of such Notes. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing thereunder, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of the holders of any Notes 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 holder of a Note may pursue any remedy with respect to the Indenture or the Notes unless (i) such holder has previously given the Trustee notice that an Event of Default is continuing, (ii) holders of at least 25% in principal amount of the outstanding 2003 New Notes or 2005 New Notes, as applicable, have requested the Trustee to pursue the remedy, (iii) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity and (v) the holders of a majority in principal amount of such outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject 52 60 to certain restrictions, the holders of a majority in principal amount of the 2003 New Notes or 2005 New Notes, as the case may be, 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 Note or that would involve the Trustee in personal liability. The Indenture provides that if a Default occurs and is continuing and is actually known to the Trustee, the Trustee must mail to each holder of the applicable Notes notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note, the Trustee may withhold notice if and so long as a committee of its trust officers determines that withholding notice is not opposed to the interest of the holders of such Notes. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Defaults, their status and what action the Company is taking or proposes to take in respect thereof. MODIFICATION AND WAIVER Modification and amendments of the Indenture may be made by the Company and the Trustee with the consent of the holders of a majority in aggregate principal amount of the Notes then outstanding of any series affected thereby (including consents obtained in connection with a tender offer or exchange for the Notes) and any past default or compliance with any provisions may also be waived with such a consent of the holders of a majority in principal amount of such Notes then outstanding; provided, however, that no such modification or amendment may, without the consent of the holder of each Note affected thereby, (a) change the Stated Maturity of the principal of, or any premium or installment of interest on, or any Liquidated Damages payable in respect of, any Note, (b) reduce the principal amount of, or the rate (or modify the calculation of such rate) of interest on, or any Liquidated Damages with respect to, or any premium payable upon redemption of, any Note, (c) change the obligation of the Company to pay Liquidated Damages with respect to any Note or reduce the amount of any Note provable in bankruptcy, (d) change the redemption provisions of any Note, (e) change the place of payment or the coin or currency in which the principal of, any premium or interest on or any Liquidated Damages with respect to any Note is payable, (f) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity of any Note (or, in the case of redemption, on or after the Redemption Date), (g) reduce the percentage and principal amount of the outstanding Notes, the consent of whose holders is required in order to take certain actions, (h) reduce the requirements for quorum or voting by holders of the Notes, (i) modify any of the provisions of the Indenture regarding the waiver of past defaults or the waiver of certain covenants by the holders of the Notes except to increase any percentage vote required or to provide that certain other provisions of the Indenture cannot be modified or waived without the consent of the holder or each Note affected thereby, (j) make any changes that adversely affect the right to exchange any Note for other securities in accordance with its terms, or (k) modify any of the above provisions. The Indenture may be amended or supplemented without the consent of any holder of a Note (i) to cure any ambiguity, defect or inconsistency in the Indenture or in the Notes of any series; (ii) to provide the assumption of all the obligations of the Company under the Notes or any Note Guarantor under its Note Guarantee and, in each case, the Indenture by any corporation in connection with a merger, consolidation, transfer or lease of such entity's property and assets as an entirety or substantially as an entirety, as provided for in the Indenture; (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iv) to make any change that does not adversely affect the rights of any holder of Notes; (v) to provide for the issuance of and establish the form and terms and conditions of a series of Notes or to establish the form of any certifications required to be furnished pursuant to the terms of the Indenture or any series of Notes; (vi) to add to rights of holders of Notes; or (vii) to secure any Notes as provided under "-- Certain Covenants -- Limitation on Liens" above. 53 61 The holders of a majority in aggregate principal amount of the Notes of any series may, on behalf of the holders of all Notes of such series, waive compliance by the Company with certain restrictive provisions of the Indenture. The holders of a majority in aggregate principal amount of Notes of any series may, on behalf of all holders of Notes of such series, waive any past default and its consequences under the Indenture with respect to the Notes of such series, except a default (a) in the payment of principal of (or premium, if any) or any interest on or any Liquidated Damages with respect to Notes of such series or (b) in respect of a covenant or provision of the Indenture that cannot be modified or amended without the consent of the holder of each Note of any series. Under the Indenture, the Company and the Note Guarantors are required to furnish the Trustee annually a statement as to the performance by the Company and the Note Guarantors of their respective obligations under the Indenture and as to any default in such performance. The Company is also required to deliver to the Trustee, within five days after occurrence thereof, written notice of any Event of Default or any event which after notice or lapse of time or both would constitute an Event of Default. The consent of the holders of the Notes is not necessary under the Indenture to approve 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, the Company is required to mail to holders of the related Notes a notice briefly describing such amendment. However, the failure to give such notice to all holders of such Notes, or any defect therein, will not impair or affect the validity of the amendment. DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE The Company may discharge certain obligations to holders of any series of Notes that have not already been delivered to the Trustee for cancellation and that either have become due and payable or will become due and payable within one year (or scheduled for redemption within one year) by depositing with the Trustee, in trust, funds in U.S. dollars in an amount sufficient to pay the entire indebtedness on such Notes with respect to principal (and premium, if any) and interest to the date of such deposit (if such Notes have become due and payable) or to the Maturity thereof as the case may be. The Indenture provides that, unless the following provisions are made inapplicable to the Notes of or within any series, the Company may elect either (a) to defease and be discharged from any and all obligations with respect to such Notes (except for, among other things, the obligation to pay Liquidated Damages, if any, and other obligations to register the transfer or exchange of such Notes, to replace temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office or agency with respect to such Notes and to hold moneys for payment in trust) ("defeasance"), or (b) to be released from its obligations with respect to such Notes under the covenants described under "Certain Covenants -- Limitation on Liens" and "-- Limitation on Indebtedness of Restricted Subsidiaries" above and its obligations with respect to any other specified covenant, and any omission to comply with such obligations shall not constitute a default or an Event of Default with respect to such Notes ("covenant defeasance"). Defeasance or covenant defeasance, as the case may be, shall be conditioned upon the irrevocable deposit by the Company with the Trustee, in trust of an amount in U.S. dollars or Government Obligations (as defined below), or both, which through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficient to pay the principal of (and premium, if any) and interest on such Notes on the scheduled due date therefor. Such a trust may only be established if, among other things, (i) the applicable defeasance or covenant defeasance does not result in a breach or violation of, or constitute a default under, the Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound, (ii) no Event of Default or event which with notice or lapse of time or bother would become an Event of Default with respect to the Notes to be defeased shall have occurred and be continuing on the date of establishment of such a trust and, with respect to defeasance only, at any time during the period ending on the 123rd day after such date and (iii) the Company has delivered to the Trustee an Opinion of Counsel (as specified in the Indenture) to the effect that the holders of such Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to U.S. federal income tax 54 62 on the same amounts, in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred, and such Opinion of Counsel, in the case of defeasance, must refer to and be based upon a letter ruling of the Internal Revenue Service received by the Company, a Revenue Ruling published by the Internal Revenue Service or a change in applicable U.S. federal income tax law occurring after the date of the Indenture. "Government Obligations" means securities which are (i) direct obligations of the United States of America, for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America which, in the case of clauses (i) and(ii), are not callable or redeemable at the option of the issuer or issuers thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or any other amount with respect to any such Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian with respect to the Government Obligation or the specific payment of interest on or principal of or any other amount with respect to the Government Obligation evidenced by such depository receipt. In the event the Company effects covenant defeasance with respect to any Notes and such Notes are declared due and payable because of the occurrence of any Event of Default other than an Event of Default relating to a breach of the related covenant (which would no longer be applicable to such Notes after such covenant defeasance) or with respect to any other covenant as to which there has been covenant defeasance, the Government Obligations on deposit with the Trustee will be sufficient to pay amounts due on such Notes at the time of the Stated Maturity but may not be sufficient to pay amounts due on such Notes at the time of the acceleration resulting from such Event of Default. However, the Company would remain liable to make payment of such amounts due at the time of acceleration. FORM, DENOMINATION AND REGISTRATION Old Notes will be exchanged for one or more permanent global New Notes in definitive, fully registered form without interest coupons (each a "Global Note"; and collectively, the "Global Notes") and will be deposited with the Trustee as custodian for, and registered in the name of a nominee of, DTC. The New Notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and integral multiples thereof thereafter. Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in the Global Notes will be shown on, and the transfer of these ownership interests will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). So long as DTC or its nominee is the registered owner or holder of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by such Global Note for all purposes under the Indenture and the Notes. In addition, no beneficial owner of an interest in a Global Note will be able to transfer that interest except in accordance with DTC's applicable procedures (in addition to those under the Indenture referred to herein). Payment on Global Notes will be made to DTC or its nominee, as the registered owner thereof. None of the Company, the Trustee or any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that DTC or its nominee will credit direct participants' accounts on the payment date with payments in respect of a Global Note in amounts proportionate to their respective beneficial interest in the principal amount of such Global Note as shown on the records of DTC or its nominee, unless DTC has 55 63 reason to believe that it will not receive payment on the payment date. The Company also expects that payments by participants to owners of beneficial interest in such Global Note held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in "street name." Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules. The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interest in a Global Note to such persons may be limited. Because DTC can only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of a person having a beneficial interest in a Global Note to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate of such interest. The Company believes that it is the policy of DTC that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more participants to whose account interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of the Notes as to which such participant or participants has or have given such direction. The Indenture provides that if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository or if the Depository ceases to be eligible under the Indenture and a successor depository is not appointed by the Company within 90 days, (ii) the Company determines that the Notes of any series shall no longer be represented by Global Notes and executes and delivers to the Trustee a Company Order to such effect or (iii) an Event of Default with respect to the Notes of any series shall have occurred and be continuing, the Global Notes will be exchanged for Notes in certificated form of like tenor and of an equal aggregate principal amount, in authorized denominations. Such certificated Notes shall be registered in such name or names as the Depository shall instruct the Trustee. It is expected that such instructions may be based upon directions received by the Depository from participants with respect to ownership of beneficial interests in Global Notes. DTC has advised the Company as follows: 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 Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants deposit with DTC and facilitates the settlement among participants through book-entry changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the Commission. Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants of DTC, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Company, the Note Guarantors and the Trustee will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations. CONCERNING THE TRUSTEE The Bank of New York is the Trustee under the Indenture (the "Trustee") and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. The holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that if an Event of Default occurs (and is 56 64 not cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of such Notes, unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the Indenture. GOVERNING LAW The Indenture and the Notes are 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. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS GENERAL The following is a summary of the material United States federal income, estate and gift tax consequences of the purchase, ownership and disposition of the Notes, but is not purported to be a complete analysis of all potential tax effects. This summary is based upon the Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed regulations promulgated thereunder, published rulings and court decisions, all as in effect and existing on the date hereof and all of which are subject to change at any time, which change may be retroactive or prospective. Unless otherwise specifically noted, this summary applies only to those persons that hold the Notes as capital assets within the meaning of Section 1221 of the Code. This discussion assumes that the Notes will be treated as indebtedness for United States federal income tax purposes. THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND DOES NOT ADDRESS THE TAX CONSEQUENCES TO TAXPAYERS WHO ARE SUBJECT TO SPECIAL RULES (SUCH AS FINANCIAL INSTITUTIONS, TAX-EXEMPT ORGANIZATIONS, INSURANCE COMPANIES, S CORPORATIONS, REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, BROKER-DEALERS, TAXPAYERS SUBJECT TO THE ALTERNATIVE MINIMUM TAX AND PERSONS THAT WILL HOLD THE NOTES AS PART OF A POSITION IN A "STRADDLE" OR AS PART OF A "HEDGING" OR "CONVERSION" TRANSACTION) OR ADDRESS ASPECTS OF FEDERAL TAXATION THAT MIGHT BE RELEVANT TO A PROSPECTIVE INVESTOR BASED UPON SUCH INVESTOR'S PARTICULAR TAX SITUATION. THIS SUMMARY DOES NOT ADDRESS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES FEDERAL TAX CONSEQUENCES OF OWNING AND DISPOSING OF THE NOTES (INCLUDING THE INVESTOR'S STATUS AS A UNITED STATES HOLDER OR A NON-UNITED STATES HOLDER), AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY STATE, MUNICIPALITY, FOREIGN COUNTRY OR OTHER TAXING JURISDICTION. EFFECT OF EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES The Company believes that the exchange of Old Notes for New Notes pursuant to the Exchange Offer will not be treated as an "exchange" for federal income tax purposes because the New Notes will not be considered to differ materially in kind or extent from the Old Notes. Rather, the New Notes received by a holder will be treated as a continuation of the Old Notes in the hands of such holder. As a result, there will be no federal income tax consequences to holders exchanging Old Notes for New Notes pursuant to the Exchange Offer. 57 65 UNITED STATES HOLDERS General The following is a general discussion of certain United States federal income tax consequences of the ownership and sale or other disposition of the Notes by a beneficial owner that, for United States federal income tax purposes, is a "United States person" (a "United States Holder"). For purposes of this discussion, a "United States person" means a citizen or individual resident (as defined in Section 7701(b) of the Code) of the United States; 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 provide otherwise; an estate the income of which is subject to United States federal income tax without regard to its source; or a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. Notwithstanding the preceding sentence, certain trusts in existence on August 20, 1996, and treated as United States persons prior to such date that elect to continue to be so treated also shall be considered United States persons. Payments of Interest Payments of interest on a Note generally will be taxable to a United States Holder as ordinary interest income at the time such payments are accrued or are received (in accordance with the United States Holder's regular method of tax accounting). Amortizable Bond Premium A United States Holder that purchases a Note for an amount in excess of its principal amount will be considered to have purchased the Note at a premium and may elect to amortize such premium, using a constant yield method, over the remaining term of the Note (or, if a smaller amortization allowance would result, by computing such allowance with reference to the amount payable on an earlier call date and amortizing such allowance over the shorter period to such call date). The amount amortized in any year will be treated as a reduction of the United States Holder's interest income from the Note. Bond premium on a Note held by a United States Holder that does not make such an election will decrease the gain or increase the loss otherwise recognized on disposition of the Note. The election to amortize bond premium on a constant yield method, once made, applies to all debt obligations held or subsequently acquired by the electing United States Holder on or after the first day of the first taxable year to which the election applies and may not be revoked without the consent of the Internal Revenue Service (the "Service"). Market Discount If a United States Holder purchases, subsequent to its original issuance, a Note for an amount that is less than its stated redemption price at maturity, the amount of the difference generally will be treated as "market discount," unless such difference is less than a specified de minimis amount. The United States Holder will be required to treat any gain recognized on the sale, exchange, redemption, retirement or other disposition of the Note as ordinary income to the extent of the accrued market discount that has not previously been included in income. In addition, the United States Holder may be required to defer, until the maturity date of the Note or its earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness incurred or continued to purchase or carry such Note. Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the Note, unless the United States Holder elects to accrue market discount on a constant interest method. A United States Holder of a Note may elect to include market discount in income currently as it accrues (under either the ratable or constant interest method). This election to include currently, once made, applies to all market discount obligations acquired in or after the first taxable year to which the election applies and may not be revoked without the consent of the Service. If the United States Holder of a Note makes such an election, the foregoing rules with respect to the recognition of ordinary income on sales and 58 66 other dispositions of such instruments, and with respect to the deferral of interest deductions on debt incurred or maintained to purchase or carry such debt instruments, would not apply. Sale, Exchange or Redemption of the Notes Generally, a sale, exchange or redemption of the Notes will result in taxable gain or loss equal to the difference between the amount of cash or other property received and the United States Holder's adjusted tax basis in the Note. A United States Holder's adjusted tax basis for determining gain or loss on the sale or other disposition of a Note will initially equal the cost of the Note to such Holder and will be increased by any market discount previously included in income by such United States Holder, and decreased by any amortized premium previously deducted from income by the United States Holder. Except as described above with respect to market discount, such gain or loss will be capital gain or loss. Capital gain or loss with be long-term gain or loss if the Note was held by the holder for more than one year and otherwise will be short-term. Any capital losses realized generally may be used by a corporate taxpayer only to offset capital gains, and by an individual taxpayer only to the extent of capital gains plus $3,000 of other income. Individuals will generally be taxed on net capital gain at a maximum rate of (i) 39.6% for property held 12 months or less, and (ii) 20% for property held more than 12 months. Special rules (and generally lower maximum rates) apply for individuals in lower tax brackets. The deductibility of capital losses is subject to limitations. Neither an exchange of the Notes for Exchange Securities of the Company with terms identical to those of the Notes nor the filing of a registration statement with respect to the resale of the Notes should be a taxable event to the United States Holders of the Notes, and such Holders should not recognize any taxable gain or loss or any interest income as a result of such an exchange or such a filing. FOREIGN HOLDERS The following is a general discussion of certain United States federal income and estate and gift tax consequences of the ownership and sale or other disposition of the Notes by any beneficial owner of a Note that is not a United States Holder (a "Non-United States Holder"). Resident alien individuals will be subject to United States federal income tax with respect to the Notes as if they were United States Holders. Interest Under current United States federal income tax law, and subject to the discussion of backup withholding below, interest paid on the Notes to a Non-United States Holder will not be subject to the normal 30% United States federal withholding tax; provided that (i) the interest is "effectively connected with the conduct of a trade or business in the United States" by the Non-United States Holder and the Non-United States Holder timely furnishes the Company with two duly executed copies of Internal Revenue Service Form 4224 (or any successor form), or (ii) all of the following conditions of the portfolio interest exception (the "Portfolio Interest Exception") are met: (A) the Non-United States Holder does not, actually or constructively, own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (B) the Non-United States Holder is not a controlled foreign corporation that is related, directly or indirectly, to the Company through stock ownership, (C) the Non-United States Holder is not a bank receiving interest pursuant to a loan agreement entered into in the ordinary course of its trade or business, and (D) either (1) the Non-United States Holder certifies to the Company or its agent, under penalties of perjury, that it is a Non-United States Holder and provides its name and address, or (2) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution"), and holds the Notes in such capacity, certifies to the Company or its agent, under penalties of perjury, that such statement has been received from the beneficial owner of the Notes by it or by a Financial Institution between it and the beneficial owner and furnishes the Company or its agent with a copy thereof. The foregoing certification may be provided by the Non-United States Holder on Internal Revenue Service Form W-8 (or any successor form). Such certificate is effective with respect to payments of interest 59 67 made after the issuance of the certificate in the calendar year of its issuance and the two immediately succeeding calendar years. On October 14, 1997, the final regulations were published in the Federal Register (the "1997 Final Regulations") that affect the United States federal income taxation of Non-United States Holders. The 1997 Final Regulations are effective for payments after December 31, 1999, regardless of the issue date of the instrument with respect to which such payments are made, subject to certain transition rules discussed below. The discussion under this heading and under "Backup Withholding Tax and Information Reporting," below, is not intended to be a complete discussion of the provisions of the 1997 Final Regulations. Prospective Holders of the Notes are urged to consult their tax advisors concerning the tax consequences of their investment in light of the 1997 Final Regulations. The 1997 Final Regulations provide documentation procedures designed to simplify compliance by withholding agents. The 1997 Final Regulations generally do not affect the documentation rules described above, but add other certification options. Under one such option, a withholding agent will be allowed to rely on an intermediary withholding certificate furnished by a "qualified intermediary" (as defined below) on behalf of one or more beneficial owners (or other intermediaries) without having to obtain the beneficial owner certificate described above. Qualified intermediaries include: (i) foreign financial institutions or foreign clearing organizations (other than a United States branch or United States office of such institution or organization), or (ii) foreign branches or offices of United States financial institutions or foreign branches or offices of United States clearing organizations, which, as to both (i) and (ii), have entered into withholding agreements with the Service. In addition to certain other requirements, qualified intermediaries must obtain withholding certificates, such as revised Internal Revenue Service Form W-8 (discussed below), from each beneficial owner. Under another option, an authorized foreign agent of a United States withholding agent will be permitted to act on behalf of the United States withholding agent (including the receipt of withholding certificates, the payment of amounts of income subject to withholding and the deposit of tax withheld) provided that certain conditions are met. For purposes of the certification requirements, the 1997 Final Regulations generally treat as the beneficial owners of payments on a Note those persons that, under United States federal income tax principles, are the taxpayers with respect to such payments, rather than persons such as nominees or agents legally entitled to such payments. In the case of payments to an entity classified as a foreign partnership under United States tax principles, the partners, rather than the partnership, generally must provide the required certifications to qualify for the withholding tax exemption described above (unless the partnership has entered into a special agreement with the Service). A payment to a United States partnership, however, is treated for these purposes as payment to a United States payee, even if the partnership has one or more foreign partners. The 1997 Final Regulations provide certain presumptions with respect to withholding for Holders not furnishing the required certifications to qualify for the withholding tax exemption described above. In addition, the 1997 Final Regulations will replace a number of current tax certification forms (including Internal Revenue Service Form W-8) with a single, revised Internal Revenue Service Form W-8 (which, in certain circumstances, requires information in addition to that previously required). Under the 1997 Final Regulations, this revised Form W-8 will remain valid until the last day of the third calendar year following the year in which the certificate is signed. The 1997 Final Regulations provide transition rules concerning existing certificates, such as Internal Revenue Service Form W-8. Valid withholding certificates that are held on December 31, 1999 will generally remain valid until the earlier of December 31, 2000 or the date of their expiration. Existing certificates that expire in 1999 will not be effective after their expiration. Certificates dated prior to January 1, 1998 will generally remain valid until the end of 1998, irrespective of the fact that their validity expires during 1998. In the event that the interest paid on the Notes is effectively connected with the conduct of a trade or business within the United States of the Non-United States Holder, the Non-United States Holder will generally be taxed on a net income basis (that is, after allowance for applicable deductions) at the graduated rates that are applicable to United States persons in essentially the same manner as if the Notes were held by a United States person, as discussed above. In the case of a Non-United States Holder that is a corporation, 60 68 such income may also be subject to the United States federal branch profits tax (which is generally imposed on a foreign corporation upon the deemed repatriation from the United States of effectively connected earnings and profits) at a 30% rate, unless the rate is reduced or eliminated by an applicable income tax treaty and the Non-United States Holder is a qualified resident of the treaty country. If the interest on the Notes is not "effectively connected" and does not qualify for the Portfolio Interest Exception, then the interest will be subject to United States federal withholding tax at a flat rate of 30% (or a lower applicable income tax treaty rate upon delivery of the appropriate certification of eligibility for treaty benefits). Gain on Sale or Other Disposition Subject to special rules applicable to individuals as described below, a Non-United States Holder will generally not be subject to regular United States federal income or withholding tax on gain recognized on a sale or other disposition of the Notes, unless the gain is effectively connected with the conduct of a trade or business within the United States of the Non-United States Holder or of a partnership, trust or estate in which such Non-United States Holder is a partner or beneficiary. Gains realized by a Non-United States Holder that are effectively connected with the conduct of a trade or business within the United States of the Non-United States Holder will generally be taxed on a net income basis (that is, after allowance for applicable deductions) at the graduated rates that are applicable to United States persons, as described above, unless exempt by an applicable income tax treaty. In the case of a Non-United States Holder that is a corporation, such income may also be subject to the United States federal branch profits tax (which is generally imposed on a foreign corporation upon the deemed repatriation from the United States of effectively connected earnings and profits) at a 30% rate, unless the rate is reduced or eliminated by an applicable income tax treaty and the Non-United States Holder is a qualified resident of the treaty country. In addition to being subject to the rules described above, an individual Non-United States Holder who holds the Notes as a capital asset will generally be subject to tax at a 30% rate on any gain recognized on the sale or other disposition of such Notes if (i) such gain is not effectively connected with the conduct of a trade or business within the United States of the Non-United States Holder, and (ii) such individual is present in the United States for 183 days or more in the taxable year of the sale or other disposition and either (A) has a "tax home" in the United States (as specially defined for purposes of the United States federal income tax), or (B) maintains an office or other fixed place of business in the United States and the gain from the sale or other disposition of the Notes is attributable to such office or other fixed place of business. Individual Non-United States Holders may also be subject to tax pursuant to provisions of United States federal income tax law applicable to certain United States expatriates (including certain former long-term residents of the United States). Under the 1997 Final Regulations, withholding of United States federal income tax may apply to payments on a taxable sale or other disposition of the Notes by a Non-United States Holder who does not provide appropriate certification to the withholding agent with respect to such transaction. Federal Estate and Gift Taxes A Note beneficially owned by an individual who is neither a United States citizen nor a domiciliary of the United States at the time of death will not be subject to United States federal estate tax as a result of such individual's death; provided that any interest thereon would have been eligible for the portfolio interest exemption within the meaning of Section 871(h)(1) of the Code, described above in "Interest," if such interest had been received by the individual at the time of death. An individual who is not a United States citizen will not be subject to United States federal gift tax on a transfer of Notes, unless such person is a domiciliary of the United States or such person is subject to provisions of United States federal gift tax law applicable to certain United States expatriates (including certain former long-term residents of the United States). 61 69 BACKUP WITHHOLDING TAX AND INFORMATION REPORTING Under current United States federal income tax law, information reporting requirements apply to interest paid to, and to the proceeds of sales or other dispositions before maturity by, certain non-corporate persons. In addition, a 31% backup withholding tax applies if a non-corporate person (i) fails to furnish such person's Taxpayer Identification Number ("TIN") (which, for an individual, is his or her Social Security Number) to the payor in the manner required, (ii) furnishes an incorrect TIN and the payor is so notified by the Service, (iii) is notified by the Service that such person has failed properly to report payments of interest and dividends, or (iv) in certain circumstances, fails to certify, under penalties of perjury, that such person has not been notified by the Service that such person is subject to backup withholding for failure properly to report interest and dividend payments. Backup withholding does not apply to payments made to certain exempt recipients, such as corporations and tax-exempt organizations. In the case of a Non-United States Holder, under current United States federal income tax law, backup withholding and information reporting do not apply to payments of interest with respect to a Note, or to payments on the sale or other disposition of a Note, if such Holder has provided to the Company or its paying agent the certification described in clause (ii)(D) of "Foreign Holders -- Interest" or has otherwise established an exemption. Under current United States federal income tax law, (i) interest payments with respect to a Note collected outside the United States by a foreign office of a custodian, nominee or broker acting on behalf of a beneficial owner of a Note, and (ii) payments on the sale or other disposition of a Note to or through a foreign office of a broker are not generally subject to backup withholding or information reporting. However, if such custodian, nominee or broker is a United States person, a controlled foreign corporation for United States tax purposes or a foreign person 50% of more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, such custodian, nominee or broker may be subject to certain information reporting (but not backup withholding) requirements with respect to such payments, unless such custodian, nominee or broker has in its records documentary evidence that the beneficial owner is not a United States person and certain conditions are met or the beneficial owner otherwise establishes an exemption. Backup withholding may apply to any payment that such custodian, nominee or broker is required to report if such person has actual knowledge that the payee is a United States person. Payments to or through the United States office of a broker will be subject to backup withholding and information reporting unless the Holder certifies, under penalties of perjury, that it is not a United States person or otherwise establishes an exemption. The 1997 Final Regulations modify certain of the certification requirements for backup withholding. These modifications generally will become effective for interest payments made beginning January 1, 2000. It is possible that the Issuer or its paying agent may request new withholding exemption forms from Holders in order to qualify for continued exemption from backup withholding when the 1997 Final Regulations become effective. Backup withholding tax is not an additional tax. Rather, any amounts withheld from a payment to a person under the backup withholding rules are allowed as a refund or a credit against such person's United States federal income tax; provided that the required information is furnished to the Service. 62 70 PLAN OF DISTRIBUTION Each Participating Broker-Dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer (other than an affiliate of the Company) in connection with resales of New Notes received in exchange for Old Notes where such Old Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that for a period of 90 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any Participating Broker-Dealer for use in connection with any such resale. The Company will not receive any proceeds from any sales of the New Notes by Participating Broker-Dealers. New Notes received by Participating Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Participating Broker-Dealer and/or the purchasers of any such New Notes. Any Participating Broker-Dealer that resells the New Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any Participating Broker-Dealer. The Company has agreed to pay all expenses incident to the Exchange Offer other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Old Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. The Initial Purchasers have indicated to the Company that they intend to effect offers and sales of the New Notes in market-making transactions at negotiated prices related to prevailing market prices at the time of sale, but are not obligated to do so, and such market-making activities may be discontinued at any time. The Initial Purchasers may act as principal or agent in such transactions. There can be no assurance that an active market for the New Notes will develop. The Company has not entered into any arrangements or understandings with any person to distribute the New Notes to be received in the Exchange Offer. LEGAL MATTERS The validity of the New Notes offered hereby will be passed upon for the Company by Dow, Lohnes & Albertson, PLLC, Washington, D.C. EXPERTS The consolidated financial statements of the Company incorporated in this Prospectus by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 have been audited by Deloitte & Touche LLP, independent auditors, stated in their report thereon, which is incorporated in this Prospectus by reference, and have been so incorporated by reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 63 71 The consolidated financial statements of NewCity Communications, Inc. incorporated in this Prospectus by reference to the Company's Current Report on Form 8-K dated April 14, 1997, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon incorporated by reference therein and incorporated herein by reference. Such financial statements are incorporated by reference herein in reliance upon the report of Ernst & Young LLP pertaining to such financial statements given upon the authority of such firm as experts in accounting and auditing. 64 72 (Cox Radio, Inc. Logo) 73 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS Reference is made to Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL"), which enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director for violations of the director's fiduciary duty, except (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividend) or (iv) for any transaction from which the director derived an improper personal benefit. The Company's Amended and Restated Certificate of Incorporation contains a provision which eliminates the liability of directors to the extent permitted by Section 102(b)(7) of the DGCL. Reference is made to Section 145 of the DGCL, which provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation (a "derivative action")), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, by-laws, disinterested director vote, stockholder vote, agreement or otherwise. The Amended and Restated Certificate of Incorporation of the Company provides that the Company shall indemnify its directors and officers to the fullest extent permitted by Delaware law. ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES 4.1 -- Indenture dated as of May 26, 1998 (previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (Commission file No. 1-12187) and incorporated herein by this reference) 4.2 -- Registration Rights Agreement dated May 26, 1998 5.1 -- Opinion of Dow, Lohnes & Albertson, PLLC regarding the validity of the New Notes 23.1 -- Consent of Deloitte & Touche LLP 23.2 -- Consent of Ernst & Young LLP 23.3 -- Consent of Dow, Lohnes & Albertson, PLLC (included in Exhibit 5.1) 25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, of The Bank of New York, as Trustee for the 2003 Notes 25.2 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, of The Bank of New York, as Trustee for the 2005 Notes 99.1 -- Letter of Transmittal* 99.2 -- Tender Instructions* 99.3 -- Notice of Guaranteed Delivery*
- --------------- * To be filed by amendment ITEM 22. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers and controlling persons of the Registrant pursuant to II-1 74 the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; and (2) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 75 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Cox Radio, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, on August 11, 1998. COX RADIO, INC. By: /s/ ROBERT F. NEIL ------------------------------------ Robert F. Neil President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the persons whose signatures appear below hereby constitutes and appoints Nicholas D. Trigony, Robert F. Neil, Maritza C. Pichon, James C. Kennedy and David E. Easterly, or any of them, his or her attorneys-in-fact and agents, with full power of substitution and resubstitution for him or her in any and all capacities, to sign a Registration Statement under the Securities Act of 1933, as amended (the "Registration Statement"), for the registration of $100,000,000 aggregate principal amount of 6.250% Notes due 2003 and $100,000,000 aggregate principal amount of 6.375% Notes due 2005 of Cox Radio, Inc. (the "Company"), any or all pre-effective amendments or post-effective amendments to the Registration Statement (which amendments may make such changes in and additions to the Registration Statement as such attorneys-in-fact may deem necessary or appropriate), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that each of such attorneys-in-fact and agents or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signatures appear on page II-4 A majority of the members of the Board of Directors of Cox Radio, Inc. has signed this Registration Statement in accordance with the requirements of the Securities Act of 1933, as amended. II-3 76
SIGNATURE TITLE DATE --------- ----- ---- /s/ NICHOLAS D. TRIGONY Chairman of the Board of August 11, 1998 - --------------------------------------------------- Directors Nicholas D. Trigony /s/ ROBERT F. NEIL President and Chief Executive August 11, 1998 - --------------------------------------------------- Officer, Director Robert F. Neil /s/ MARITZA C. PICHON Chief Financial Officer August 11, 1998 - --------------------------------------------------- (Principal Financial Officer Maritza C. Pichon and Principal Accounting Officer) /s/ DAVID E. EASTERLY Director August 11, 1998 - --------------------------------------------------- David E. Easterly /s/ PAUL M. HUGHES Director August 11, 1998 - --------------------------------------------------- Paul M. Hughes /s/ RICHARD A. FERGUSON Director August 11, 1998 - --------------------------------------------------- Richard A. Ferguson
II-4 EX-4.2 2 REGISTRATION RIGHTS AGREEMENT DATED MAY 26, 1998 1 EXHIBIT 4.2 =============================================================================== =============================================================================== REGISTRATION RIGHTS AGREEMENT Dated as of May 26, 1998 among COX RADIO, INC. WSB, INC. WHIO, INC. and NATIONSBANC MONTGOMERY SECURITIES LLC CHASE SECURITIES INC. J.P. MORGAN SECURITIES INC. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into as of May 26, 1998 among COX RADIO, INC., a Delaware corporation (the "Company"), WSB, INC., a Delaware corporation ("WSB"), WHIO, INC., a Delaware corporation ("WHIO", and together with WSB, the "Initial Guarantors"), the subsidiaries of the Company made a party hereto (together with the Initial Guarantors, the "Guarantors") and NATIONSBANC MONTGOMERY SECURITIES LLC, CHASE SECURITIES INC. and J.P. MORGAN SECURITIES INC. (collectively, the "Initial Purchasers"). This Agreement is made pursuant to the Purchase Agreement dated May 26, 1998 (the "Purchase Agreement"), among the Company, as issuer of the 6.250% Notes due 2003 (the "2003" Notes) and the 6.375% Notes due 2005 (the "2005" Notes) (collectively, the "Senior Notes"), and the Initial Guarantors, as issuers of the Note Guarantees in respect of the Notes (the "Senior Guarantees") and the Initial Purchasers). The Senior Notes and the Senior Guarantees are collectively referred to as the "Securities". In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company and the Initial Guarantors have agreed, and the company has agreed to cause all Guarantors who are not Initial Guarantors, to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Advice" shall have the meaning set forth in the last paragraph of Section 3 hereof. "Affiliate" has the same meaning as given to that term in Rule 405 under the Securities Act or any successor rule thereunder. "Applicable Period" shall have the meaning set forth in Section 3(u) hereof. "Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed. "Closing Time" shall mean the Closing Time as defined in the Purchase Agreement. "Company" shall have the meaning set forth in the preamble to this Agreement and also includes the Company's successors and permitted assigns. 3 "Depositary" shall mean The Depository Trust Company, or any other depositary appointed by the Trust; provided, however, that such depositary must have an address in the Borough of Manhattan, in The City of New York. "Effectiveness Period" shall have the meaning set forth in Section 2(b) hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Exchange Offer" shall mean the offer by the Company and the Guarantors to the Holders to exchange all of the Registrable Securities (other than Private Exchange Securities) for a like amount of Exchange Securities pursuant to Section 2(a) hereof. "Exchange Offer Registration" shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof. "Exchange Offer Registration Statement" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form), and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein. "Exchange Period" shall have the meaning set forth in Section 2(a) hereof. "Exchange Securities" shall mean (i) with respect to the 2003 Notes, the 6.250% Notes due 2003 and the 2005 Notes, the 6.375% Notes due 2005 (collectively, the "Exchange Notes") containing terms substantially identical to the 2003 Notes and 2005 Notes, as the case may be (except that they will not contain terms with respect to the transfer restrictions under the Securities Act and will not provide for any Liquidated Damages thereon) and (ii) with respect to the Senior Guarantees, each Notes Guarantee of the Guarantors guarantee in respect of the Exchange Notes (the "Exchange Guarantee") containing terms substantially identical to the Senior Guarantees. "Guarantors" shall have the meaning set forth in the preamble to this Agreement and also includes a Guarantor's successors and permitted assigns; provided, however, that the foregoing defined term shall not apply to any party who is no longer required to be a guarantor of Notes under the Indenture. "Holder" shall mean each of the Initial Purchasers, for so long as it owns any Registrable Securities, and each of their respective successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture. "Indenture" shall mean the Indenture relating to the Senior Notes and the Exchange Notes, dated as of the Closing Time, between the Company, the Guarantors and The Bank of New York, as trustee, as the same may be amended from time to time in accordance with the terms thereof. 4 "Initial Guarantors" shall have the meaning set forth in the preamble to this Agreement and also includes an Initial Guarantor's successors and permitted assigns; provided, however, that the foregoing defined term shall not apply to any party who is no longer required to a guarantor of Notes under the Indenture . "Initial Purchasers" shall have the meaning set forth in the preamble to this Agreement. "Inspectors" shall have the meaning set forth in Section 3(o) hereof. "Issue Date" shall mean May 26, 1998, the date of original issuance of the Securities. "Liquidated Damages" shall have the meaning set forth in Section 2(e) hereof. "Majority Holders" shall mean the Holders of a majority of the aggregate principal amount of outstanding Notes. "Notes" shall collectively mean the Senior Notes and the Exchange Notes. "Participating Broker-Dealer" shall have the meaning set forth in Section 3(u) hereof. "Person" shall mean an individual, partnership, corporation, trust or unincorporated organization, limited liability corporation, or a government or agency or political subdivision thereof. "Private Exchange" shall have the meaning set forth in Section 2(a) hereof. "Private Exchange Notes" shall have the meaning set forth in Section 2(a) hereof. "Private Exchange Securities" shall have the meaning set forth in Section 2(a) hereof. "Prospectus" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to a prospectus, including post-effective amendments, and in each case including all documents incorporated by reference therein. "Purchase Agreement" shall have the meaning set forth in the preamble to this Agreement. "Records" shall have the meaning set forth in Section 3(o) hereof. "Registrable Securities" shall mean the Securities and, if issued, the Private Exchange Securities; provided, however, that Securities or Private Exchange Securities, as the case may be, shall cease to be Registrable Securities when (i) a Registration Statement with respect to such 5 Securities or Private Exchange Securities for the exchange or resale thereof, as the case may be, shall have been declared effective under the Securities Act and such Securities or Private Exchange Securities, as the case may be, shall have been disposed of pursuant to such Registration Statement, (ii) such Securities or Private Exchange Securities, as the case may be, shall have been sold to the public pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the Securities Act or are eligible to be sold without restriction as contemplated by Rule 144(k), (iii) such Securities or Private Exchange Securities, as the case may be, shall have ceased to be outstanding or (iv) with respect to the Securities, such Securities shall have been exchanged for Exchange Securities upon consummation of the Exchange Offer and are thereafter freely tradeable by the holder thereof (other than an Affiliate of the Company or any Guarantor). "Registration Expenses" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC or National Association of Securities Dealers, Inc. (the "NASD") registration and filing fees, including, if applicable, the fees and expenses of any "qualified independent underwriter" (and its counsel) that is required to be retained by any Holder of Registrable Securities in accordance with the rules and regulations of the NASD, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of one counsel for all underwriters or Holders as a group in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities) and compliance with the rules of the NASD, (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus and any amendments or supplements thereto, and in preparing or assisting in preparing, printing and distributing any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) the fees and disbursements of counsel for the Company and the Guarantors and of the independent certified public accountants of the Company, including the expenses of any "cold comfort" letters required by or incident to the performance of and compliance with this Agreement, (vi) the reasonable fees and expenses of the Trustees and their counsel and any custodian, and (vii) the fees and expenses of any special experts retained by the Company in connection with any Registration Statement; provided, however, that notwithstanding the foregoing, the Company and the Guarantors shall not be responsible for underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "Registration Statement" shall mean any registration statement of the Company and the Guarantors which covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement, and all amendments and supplements to any such Registration Statement, including posteffective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein. "Rule 144(k) Period" shall mean the period of two years (or such shorter period as may hereafter be referred to in Rule 144(k) under the Securities Act (or similar successor rule)) commencing on the Issue Date. 6 "SEC" shall mean the Securities and Exchange Commission. "Securities" shall have the meaning set forth in the preamble to this Agreement. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time. "Shelf Registration" shall mean a registration effected pursuant to Section 2(b) hereof. "Shelf Registration Event" shall have the meaning set forth in Section 2(b) hereof. "Shelf Registration Event Date" shall have the meaning set forth in Section 2(b) hereof. "Shelf Registration Statement" shall mean a "shelf" registration statement of the Company and the Guarantors pursuant to the provisions of Section 2(b) hereof which covers all of the Registrable Securities or all of the Private Exchange Securities, as the case may be, on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all documents incorporated by reference therein. "TIA" shall have the meaning set forth in Section 3(l) hereof. "Trustee" shall mean any and all trustees under the Indenture. 2. Registration Under the Securities Act. a. Exchange Offer. Except as set forth in Section 2(b) below, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, for the benefit of the Holders, at the cost of the Company and the Guarantors, use their best efforts to (i) cause an Exchange Offer Registration Statement to be declared effective under the Securities Act by the SEC not later than the date which is 180 days after the Issue Date, and (ii) keep such Exchange Offer Registration Statement effective for not less than 30 calendar days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders. Promptly after the effectiveness of the Exchange Offer Registration Statement, the Company and the Guarantors shall commence the Exchange Offer, it being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Securities for a like principal amount of Exchange Notes, together with the Exchange Guarantee, as applicable (provided that such Holder (i) is not an Affiliate of the Company or any Guarantor, (ii) is not a broker-dealer tendering Registrable Securities acquired directly from the Company or any Guarantor, (iii) acquires the Exchange Securities in the ordinary course of such Holder's business and (iv) has no 7 arrangements or understandings with any Person to participate in the Exchange Offer for the purpose of distributing the Exchange Securities), to transfer such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and under state securities or blue sky laws. In connection with the Exchange Offer, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, i. mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; ii. keep the Exchange Offer open for acceptance for a period of not less than 30 days after the date notice thereof is mailed to the Holders (or longer if required by applicable law) (such period referred to herein as the "Exchange Period"); iii. utilize the services of the Depositary for the Exchange Offer with respect to the Senior Notes represented by global certificates; iv. permit Holders to withdraw tendered Senior Notes at any time prior to the close of business, New York City time, on the last Business Day of the Exchange Period, by sending to the institution specified in the notice to Holders, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Senior Notes delivered for exchange, and a statement that such Holder is withdrawing his election to have such Senior Notes exchanged; v. notify each Holder that any Senior Note not tendered by such Holder in the Exchange Offer will remain outstanding and continue to accrue interest, but will not retain any rights under this Agreement (except in the case of the Initial Purchasers and Participating BrokerDealers as provided herein); and vi. otherwise comply in all respects with all applicable laws relating to the Exchange Offer. If any Initial Purchaser determines upon advice of its outside counsel that it is not eligible to participate in the Exchange Offer with respect to the exchange of Senior Notes constituting any portion of an unsold allotment in the initial placement, as soon as practicable upon receipt by the Company of a written request from such Initial Purchaser, the Company shall issue and deliver to such Initial Purchaser in exchange (the "Private Exchange") for the Senior Notes held by such Initial Purchaser a like principal amount of Exchange Notes (the "Private Exchange Notes"), and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, execute an Exchange Guarantee in respect of the Exchange Notes, in each case with terms that are identical (except that such securities may bear a customary legend with respect to restrictions on transfer pursuant to the Securities Act) to the Exchange Securities (the "Private Exchange Securities"), it being understood that the Exchange Notes, the Private Exchange Notes and the Senior Notes will vote and consent together on all 8 matters as one class and that none of the Exchange Securities, the Private Exchange Securities or the Securities will have the right to vote or consent as a separate class on any matter. The Private Exchange Notes shall be of the same series as the Exchange Notes and the Company will seek to cause the CUSIP Service Bureau to issue the same CUSIP numbers for the Private Exchange Notes as for the Exchange Notes issued pursuant to the Exchange Offer. As soon as practicable after the close of the Exchange Offer and, if applicable, the Private Exchange, the Company and the Guarantors, as applicable, shall: vii. accept for exchange all Senior Notes or portions thereof tendered and not validly withdrawn pursuant to the Exchange Offer or the Private Exchange; viii. deliver, or cause to be delivered, to the Trustee for cancellation all Senior Notes or portions thereof so accepted for exchange by the Company; and ix. (A) issue, and cause the Trustee to promptly authenticate and deliver to each Holder, new Exchange Notes or Private Exchange Notes, as applicable, equal in principal amount to the principal amount of Senior Notes surrendered by such Holder, or (B) will execute an Exchange Guarantee in respect of the Exchange Notes. Interest on each Exchange Note and Private Exchange Note issued pursuant to the Exchange Offer and in the Private Exchange will accrue from the last date on which interest was paid on the Senior Note surrendered in exchange therefor or, if no interest has been paid on such Senior Note, from the Issue Date. To the extent not prohibited by any law or applicable interpretation of the staff of the SEC, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, use their best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions other than the conditions referred to in Section 2(b)(i) and (ii) below and those conditions that are customary in similar exchange offers. Each Holder of Registrable Securities who wishes to exchange such Registrable Securities for Exchange Securities in the Exchange Offer will be required to make certain customary representations in connection therewith, including, in the case of any Holder of Senior Notes, representations that (i) it is not an Affiliate of the Company or any Guarantor, (ii) it is not a broker-dealer tendering Registrable Securities acquired directly from the Company or any Guarantor, (iii) the Exchange Securities to be received by it were acquired in the ordinary course of its business and (iv) at the time of the Exchange Offer, it has no arrangements or understandings with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes. The Company shall inform the Initial Purchasers, after consultation with the Trustee, of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders in order to facilitate the tender of Registrable Securities in the Exchange Offer. Upon consummation of the Exchange Offer in accordance with this Section 2(a), the provisions of this Agreement shall continue to apply, mutatis mutandis, solely with respect to Registrable Securities that are Private Exchange Notes and Exchange Notes held by Participating 9 BrokerDealers, and the Company and the Guarantors shall have no further obligation to register the Registrable Securities (other than Private Exchange Notes) held by any Holder pursuant to Section 2(b) of this Agreement. b. Shelf Registration. In the event that (i) the Company reasonably determines, after conferring with counsel, that the Exchange Offer Registration provided in Section 2(a) above is not available under applicable law and regulations and currently prevailing interpretations of the staff of the SEC, (ii) the Exchange Offer Registration Statement is not declared effective within 180 days of the Issue Date or (iii) upon the request of an Initial Purchaser with respect to any Registrable Securities held by it, if such Initial Purchaser is not permitted, in the reasonable opinion of Brown & Wood LLP, pursuant to applicable law or applicable interpretations of the staff of the SEC, to participate in the Exchange Offer and thereby receive securities that are freely tradeable without restriction under the Securities Act and applicable blue sky or state securities laws (any of the events specified in (i), (ii) or (iii) being a "Shelf Registration Event", and the date of occurrence thereof, the "Shelf Registration Event Date"), then in addition to or in lieu of conducting the Exchange Offer contemplated by Section 2(a), as the case may be, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, at the cost of the Company and the Guarantors, use their best efforts to cause to be filed as promptly as practicable after such Shelf Registration Event Date, as the case may be, and, in any event, within 45 days after such Shelf Registration Event Date (provided that in no event shall such filing date be required to be earlier than 90 days after the Issue Date), a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Securities, and shall use their best efforts to have such Shelf Registration Statement declared effective by the SEC as soon as practicable. No Holder of Registrable Securities shall be entitled to include any of its Registrable Securities in any Shelf Registration pursuant to this Agreement unless and until such Holder agrees in writing to be bound by all of the provisions of this Agreement applicable to such Holder and furnishes to the Company in writing, within 15 days after receipt of a request therefor, such information as the Company may, after conferring with counsel with regard to information relating to Holders that would be required by the SEC to be included in such Shelf Registration Statement or Prospectus included therein, reasonably request for inclusion in any Shelf Registration Statement or Prospectus included therein. Each Holder as to which any Shelf Registration is being effected agrees to furnish to the Company all information with respect to such Holder necessary to make the information previously furnished to the Company by such Holder not materially misleading. The Company and the Initial Guarantors agree, and the Company shall cause each Guarantor other than the Initial Guarantors to agree, to use their best efforts to keep the Shelf Registration Statement continuously effective and the Prospectus included therein usable for resales for (a) the Rule 144(k) Period in the case of a Shelf Registration Statement filed pursuant to Section 2(b)(i) or (ii) or (b) one year in the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iii) (subject in each case to extension pursuant to the last paragraph of 10 Section 3 hereof), or for such shorter period which will terminate when all of the Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or cease to be Registrable Securities (the "Effectiveness Period"). The Company and the Guarantors shall not permit any securities other than Registrable Securities to be included in the Shelf Registration. The Company will, in the event a Shelf Registration Statement is declared effective, provide to each Holder a reasonable number of copies of the Prospectus which is a part of the Shelf Registration Statement, notify each such Holder when the Shelf Registration has become effective and take certain other actions as are required to permit certain unrestricted resales of the Registrable Securities. The Company and the Guarantors further agree, if necessary, to supplement or amend the Shelf Registration Statement and the Prospectus, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for shelf registrations, and the Company agrees to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. c. Expenses. The Company, as issuer of the Senior Notes, shall pay all Registration Expenses in connection with any Registration Statement filed pursuant to Section 2(a) and/or 2(b) hereof. Each Holder shall pay all expenses of its counsel, underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement. d. Effective Registration Statement. An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to such Exchange Offer Registration Statement or Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Exchange Offer Registration Statement or Shelf Registration Statement will be deemed not to have been effective during the period of such interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. The Company and the Guarantors will be deemed not to have used their best efforts to cause the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if either of them voluntarily takes any action that would result in any such Registration Statement not being declared effective or that would result in the Holders of Registrable Securities covered thereby not being able to exchange or offer and sell such Registrable Securities during that period, unless such action is required by applicable law. e. Liquidated Damages. In the event that: (1) a Shelf Registration Statement is not filed with the SEC on or prior to the 45th day after the Shelf Registration Event Date in respect of a Shelf Registration Event (provided that in no event 11 shall such filing date be required to be earlier than 90 days after the Issue Date), then commencing on the day after the applicable required filing date, liquidated damages ("Liquidated Damages") shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum; or (2) neither the Exchange Offer Registration Statement is declared effective by the SEC on or prior to the 180th day after the Issue Date nor a Shelf Registration Statement is declared effective by the SEC on or prior to the later of (A) the 40th day after the date such Shelf Registration Statement was required to be filed and (B) the 180th day after the Issue Date, in respect of a Shelf Registration Event, then, commencing on the day after the applicable required effectiveness date, Liquidated Damages shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum; (3) (A) the Company has not exchanged Exchange Notes for all Senior Notes, validly tendered, or any Guarantor has failed to execute an Exchange Guarantee in respect of the Exchange Notes, in accordance with the terms of the Exchange Offer on or prior to the 45th day after the date on which the Exchange Offer Registration Statement was declared effective or (B) if applicable, the Shelf Registration Statement in respect of Shelf Registration Event has been declared effective and such Shelf Registration Statement ceases to be effective or the Prospectus included therein usable for resales (whether as a result of an event contemplated by Section 3(e) or otherwise) at any time prior to the expiration of the Rule 144(k) Period (other than after such time as all Securities have been disposed of thereunder or otherwise cease to be Registered Securities), then Liquidated Damages shall accrue on the principal amount of Senior Notes at a rate of 0.25% per annum commencing on (x) the 46th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective or the Prospectus included therein usable for resales, in the case of (B) above; provided, however, that the Liquidated Damages rate on the Senior Notes may not exceed in the aggregate 0.25% per annum; provided, further, however, that (1) upon the filing of the Shelf Registration Statement (in the case of clause (i) above), (2) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the exchange of Exchange Notes for all Senior Notes validly tendered and execution of the Exchange Guarantees (in the case of clause (iii)(A) above), or at such time as the Shelf Registration Statement which had ceased to remain effective or usable for resales again becomes effective and usable for resales (in the case of clause (iii)(B) above), Liquidated Damages on the principal amount of the Senior Notes as a result of such clause (or the relevant subclause thereof) shall cease to accrue. Any amounts of Liquidated Damages due pursuant to Section 2(e)(i), (ii) or (iii) 12 above will be payable in cash on the next succeeding May 15 or November 15 as the case may be, to Holders on the relevant record dates for the payment of interest pursuant to the Indenture. f. Specific Enforcement. Without limiting the remedies available to the Holders, the Company and the Guarantors acknowledge that any failure by the Company or the Guarantors to comply with its obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Holders for which there is no adequate remedy at law, that it would not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Holder may obtain such relief as may be required to specifically enforce the obligations of the Company and the Guarantors under Section 2(a) and Section 2(b) hereof. 3. Registration Procedures. In connection with the obligations of the Company and the Guarantors with respect to the Registration Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than Initial Guarantors to, use their best efforts (unless otherwise stated below) to: (a) prepare and file with the SEC a Registration Statement or Registration Statements as prescribed by Sections 2(a) and 2(b) hereof within the relevant time period specified in Section 2 hereof on the appropriate form under the Securities Act, which form (i) shall be selected by the Company, (ii) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and, in the case of an Exchange Offer, be available for the exchange of Registrable Securities, and (iii) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their best efforts to cause such Registration Statement to become effective and remain effective (and, in the case of the Prospectus included in a Shelf Registration Statement, usable for resales) in accordance with Section 2 hereof; provided, however, that if (1) such filing is pursuant to Section 2(b), or (2) a Prospectus contained in an Exchange Offer Registration Statement filed pursuant to Section 2(a) is required to be delivered under the Securities Act by any Participating BrokerDealer who seeks to sell Exchange Securities, before filing any Registration Statement or Prospectus or any amendments or supplements thereto, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, furnish to and afford the Holders of the Registrable Securities and each such Participating BrokerDealer, as the case may be, 13 covered by such Registration Statement, their counsel and the managing underwriters, if any, a reasonable opportunity to review copies of all such documents (including copies of any documents to be incorporated by reference therein and all exhibits thereto) proposed to be filed. Neither, the Company nor any Guarantor shall file any Registration Statement or Prospectus or any amendments or supplements thereto ("Filing") in respect of which the Holders must be afforded an opportunity to review prior to the filing of such document if the Majority Holders or such Participating BrokerDealer, as the case may be, their counsel or the managing underwriters, if any, shall reasonably object in a timely manner, unless such filing, in the opinion of the Company's or Guarantors' counsel, is required under the Securities Act or Exchange Act or the SEC's interpretation thereto; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the Effectiveness Period or the Applicable Period, as the case may be; and cause each Prospectus to be supplemented, if so determined by the Company or requested by the SEC, by any required prospectus supplement and as so supplemented to be filed pursuant to Rule 424 (or any similar provision then in force) under the Securities Act, and comply with the provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder applicable to it with respect to the disposition of all securities covered by each Registration Statement during the Effectiveness Period or the Applicable Period, as the case may be, in accordance with the intended method or methods of distribution by the selling Holders thereof described in this Agreement (including sales by any Participating BrokerDealer); (c) in the case of a Shelf Registration, (i) notify each Holder of Registrable Securities included in the Shelf Registration Statement, at least three Business Days prior to filing, that a Shelf Registration Statement with respect to the Registrable Securities is being filed and advising such Holder that the distribution of Registrable Securities will be made in accordance with the method selected by the Majority Holders; and (ii) furnish to each Holder of Registrable Securities included in the Shelf Registration Statement and to each underwriter of an underwritten offering of Registrable Securities, if any, without charge, as many 14 copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto, and such other documents as such Holder or underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities included in the Shelf Registration Statement in connection with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement thereto; (d) in the case of a Shelf Registration, register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions by the time the applicable Registration Statement is declared effective by the SEC as any Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable Securities shall reasonably request in writing in advance of such date of effectiveness, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder and underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process in any jurisdiction where it would not otherwise be subject to such service of process or (iii) subject itself to taxation in any such jurisdiction if it is not then so subject; (e) (1) in the case of a Shelf Registration or (2) if Participating BrokerDealers from whom the Company has received prior written notice that they will be utilizing the Prospectus contained in the Exchange Offer Registration Statement as provided in Section 3(u) hereof, are seeking to sell Exchange Securities and are required to deliver Prospectuses, promptly notify each Holder of Registrable Securities, or such Participating BrokerDealers, as the case may be, their counsel and the managing underwriters, if any, and promptly confirm such notice in writing (i) when a Registration Statement has become effective and when any post-effective amendments thereto become effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement 15 or Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the qualification of the Registrable Securities or the Exchange Securities to be offered or sold by any Participating Broker-Dealer in any jurisdiction described in paragraph 3(d) hereof or the initiation of any proceedings for that purpose, (iv) in the case of a Shelf Registration, if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company and the Guarantors contained in any purchase agreement, securities sales agreement or other similar agreement cease to be true and correct in all material respects, (v) of the happening of any event or the failure of any event to occur or the discovery of any facts, during the Effectiveness Period, which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which causes such Registration Statement or Prospectus to omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (vi) of the reasonable determination of the Company that a posteffective amendment to the Registration Statement would be appropriate; (f) commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities included within the coverage of such Shelf Registration Statement, without charge, at least one conformed copy of each Registration Statement relating to such Shelf Registration and any posteffective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and in such denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders or the underwriters may reasonably request at least two Business Days prior to the closing of any sale of Registrable Securities pursuant to 16 such Shelf Registration Statement; (i) in the case of a Shelf Registration or an Exchange Offer Registration, promptly after the occurrence of any event specified in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, prepare a supplement or post-effective amendment to such Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and to notify each Holder to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and each Holder hereby agrees to suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission; (j) in the case of a Shelf Registration, a reasonable time prior to the filing of any document which is to be incorporated by reference into a Registration Statement or a Prospectus after the initial filing of a Registration Statement, provide a reasonable number of copies of such document to the Holders; and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Holders of Registrable Securities or the Initial Purchaser on behalf of such Holders available for discussion of such document; (k) obtain a CUSIP number for all Exchange Notes and the Senior Notes not later than the effective date of a Registration Statement, and provide the Trustee with certificates for the Exchange Notes or the Registrable Securities, as the case may be, in a form eligible for deposit with the Depositary; (l) cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, and effect such changes to such documents as may be required for them to be so qualified in accordance with the terms of the TIA and execute, and cause the Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable such documents to be so qualified in a 17 timely manner; (m) in the case of a Shelf Registration, enter into such agreements (including underwriting agreements) as are customary in underwritten offerings and take all such other appropriate actions in connection therewith as are reasonably requested by the Holders of at least 25% in aggregate principal amount of the Registrable Securities in order to expedite or facilitate the registration or the disposition or the Registrable Securities; (n) in the case of a Shelf Registration, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, if requested by (x) an Initial Purchaser, in the case where such Initial Purchaser holds Securities acquired by it as part of its initial placement and (y) Holders of at least 25% in aggregate principal amount of the Registrable Securities covered thereby: (i) make such representations and warranties to Holders of such Registrable Securities and the underwriters (if any), with respect to the business of the Company and the subsidiaries of the Company as then conducted and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when requested; (ii) obtain opinions of counsel to the Company and the Guarantors and updates thereof (which may be in the form of a reliance letter) in form and substance reasonably satisfactory to the managing underwriters (if any) and the Holders of a majority in amount of the Registrable Securities being sold, addressed to each selling Holder and the underwriters (if any) covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such underwriters (it being agreed that the matters to be covered by such opinion may be subject to customary qualifications and exceptions); (iii) obtain "cold comfort" letters and updates thereof in form and substance reasonably satisfactory to the managing underwriters from the independent certified public accountants of the Company and the Guarantors (and, if necessary, any other independent certified public accountants of any business acquired by the Company and the Guarantors for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to 18 each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings and such other matters as reasonably requested by such underwriters in accordance with Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable than those set forth in Section 4 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Registrable Securities covered by such Registration Statement and the managing underwriters) customary for such agreements with respect to all parties to be indemnified pursuant to said Section (including, without limitation, such underwriters and selling Holders); and in the case of an underwritten registration, the above requirements shall be satisfied at each closing under the related underwriting agreement or as and to the extent required thereunder; (o) if (1) a Shelf Registration is filed pursuant to Section 2(b) or (2) a Prospectus contained in an Exchange Offer Registration Statement filed pursuant to Section 2(a) is required to be delivered under the Securities Act by any Participating BrokerDealer who seeks to sell Exchange Notes during the Applicable Period, make reasonably available for inspection by any selling Holder or Registrable Securities or Participating BrokerDealer, as applicable, who certifies to the Company that it has a current intention to sell Registrable Securities pursuant to the Shelf Registration, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorney, accountant or other agent retained by any such selling Holder, Participating BrokerDealer, as the case may be, or underwriter (collectively, the "Inspectors"), at the offices where normally kept, during the Company's normal business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable them to exercise any applicable due diligence responsibilities, and cause the officers, directors and employees of the Company and its subsidiaries to supply all relevant information in each case reasonably requested by any such Inspector in connection with such Registration Statement; records and information which the Company determines, in good faith, to be 19 confidential and any Records and information which it notifies the Inspectors are confidential shall not be disclosed to any Inspector except where (i) the disclosure of such Records or information is necessary to avoid or correct a material misstatement or omission in such Registration Statement, (ii) the release of such Records or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or is necessary in connection with any action, suit or proceeding or (iii) such Records or information previously has been made generally available to the public; each selling Holder of such Registrable Securities and each such Participating BrokerDealer will be required to agree in writing that Records and information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or the Guarantors unless and until such is made generally available to the public through no fault of an Inspector or a selling Holder; and each selling Holder of such Registrable Securities and each such Participating BrokerDealer will be required to further agree in writing that it will, upon learning that disclosure of such Records or information is sought in a court of competent jurisdiction, or in connection with any action, suit or proceeding, give notice to the Company and allow the Company at its expense to undertake appropriate action to prevent disclosure of the Records and information deemed confidential; (p) comply with all applicable rules and regulations of the SEC so long as any provision of this Agreement shall be applicable and make generally available to its securityholders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) (i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to underwriters in a firm commitment or best efforts underwritten offering and (ii) if not sold to underwriters in such an offering, commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods, provided that the obligations under this paragraph (p) shall be satisfied by the timely filing of 20 quarterly and annual reports on Forms 10-Q and 10-K under the Exchange Act; (q) upon consummation of an Exchange Offer or a Private Exchange, if requested by the Trustee, obtain an opinion of counsel to the Company addressed to the Trustee for the benefit of all Holders of Registrable Securities participating in the Exchange Offer or the Private Exchange, as the case may be, substantially to the effect that (i) each of the Company and each Guarantor, as applicable, has duly authorized, executed and delivered the Exchange Securities and Private Exchange Securities, and (ii) each of the Exchange Securities or the Private Exchange Securities, as the case may be, constitutes a legal, valid and binding obligation of the Company or a Guarantor, as the case may be, enforceable against such party, in accordance with its respective terms; (r) if an Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Registrable Securities by Holders to the Company (or to such other Person as directed by the Company), in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company or the Guarantors, as applicable, shall mark, or cause to be marked, on such Registrable Securities delivered by such Holders that such Registrable Securities are being cancelled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; it being understood that in no event shall such Registrable Securities be marked as paid or otherwise satisfied; (s) cooperate with each seller of Registrable Securities covered by any Registration Statement and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD; (t) take all other steps necessary to effect the registration of the Registrable Securities covered by a Registration Statement contemplated hereby; (u) (A) the case of the Exchange Offer Registration Statement (i) include in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," which section shall be reasonably acceptable to the Initial Purchaser or another representative of the Participating BrokerDealers, and which shall contain a summary statement of the positions taken or policies made by the staff of the SEC with respect to the potential "underwriter" status of any brokerdealer 21 that holds Registrable Securities acquired for its own account as a result of market-making activities or other trading activities (a "Participating BrokerDealer") and that will be the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Securities to be received by such broker-dealer in the Exchange Offer, whether such positions or policies have been publicly disseminated by the staff of the SEC or such positions or policies, in the reasonable judgment of the Initial Purchasers or such other representative, represent the prevailing views of the staff of the SEC, including a statement that any such broker-dealer who receives Exchange Securities for Registrable Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the Company the notice referred to in Section 3(e), without charge, as many copies of each Prospectus included in the Exchange Offer Registration Statement, including any preliminary Prospectus, and any amendment or supplement thereto, as such Participating Broker-Dealer may reasonably request (each of the Company and the Initial Guarantors hereby consents, and each Guarantor other than the Initial Guarantors shall be deemed to consent, to the use of the Prospectus forming part of the Exchange Offer Registration Statement or any amendment or supplement thereto by any Person subject to the prospectus delivery requirements of the Securities Act, including all Participating BrokerDealers, in connection with the sale or transfer of the Exchange Securities covered by the Prospectus or any amendment or supplement thereto), (iii) use their best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein in order to permit such Prospectus to be lawfully delivered by all Persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such Persons must comply with such requirements under the Securities Act and applicable rules and regulations in order to resell the Exchange Securities; provided, however, that such period shall not be required to exceed 90 days (or such longer period if extended pursuant to the last sentence of Section 3 hereof) (the "Applicable Period"), and (iv) include in the transmittal letter or similar 22 documentation to be executed by an exchange offeree in order to participate in the Exchange Offer (x) the following provision: "If the exchange offeree is a broker-dealer holding Registrable Securities acquired for its own account as a result of market-making activities or other trading activities, it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of Exchange Securities received in respect of such Registrable Securities pursuant to the Exchange Offer"; and (y) a statement to the effect that by a broker-dealer making the acknowledgment described in clause (x) and by delivering a Prospectus in connection with the exchange of Registrable Securities, the broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act; and (i) in the case of any Exchange Offer Registration Statement, the Company and the Initial Guarantors agree to, and the Company shall cause each Guarantor other than the Initial Guarantors to, deliver to the Initial Purchasers or to another representative of the Participating BrokerDealers, if requested by an Initial Purchaser or such other representative of Participating Broker-Dealers, on behalf of the Participating BrokerDealers upon consummation of the Exchange Offer (i) an opinion of counsel in form and substance reasonably satisfactory to the Initial Purchasers or such other representative of the Participating Broker-Dealers, covering the matters customarily covered in opinions requested in connection with Exchange Offer Registration Statements and such other matters as may be reasonably requested, (ii) an officers' certificate containing certifications substantially similar to those set forth in Section 5(c) of the Purchase Agreement and such additional certifications as are customarily delivered in a public offering of debt securities and (iii) as well as upon the effectiveness of the Exchange Offer Registration Statement, a comfort letter, in each case, in customary form if permitted by Statement on Auditing Standards No. 72. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such seller as may be required by the staff of the SEC to be included in a Registration Statement. The 23 Company may exclude from such registration the Registrable Securities of any seller who unreasonably fails to furnish such information within a reasonable time after receiving such request. The Company shall have no obligation to register under the Securities Act the Registrable Securities of a seller who so fails to furnish such information. In the case of a Shelf Registration Statement, or if Participating BrokerDealers who have notified the Company that they will be utilizing the Prospectus contained in the Exchange Offer Registration Statement as provided in this Section 3(u) hereof, are seeking to sell Exchange Securities and are required to deliver Prospectuses, each Holder agrees that, upon receipt of any notice from the Company of the occurrence of any event specified in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities or Exchange Securities, as the case may be, current at the time of receipt of such notice. If the Company shall give any such notice to suspend the disposition of Registrable Securities or Exchange Securities, as the case may be, pursuant to a Registration Statement, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, use their best efforts to file and have declared effective (if an amendment) as soon as practicable after the resolution of the related matters an amendment or supplement to the Registration Statement and shall extend the period during which such Registration Statement is required to be maintained effective and the Prospectus included therein usable for resales pursuant to this Agreement by the number of days in the period from and including the date of the giving of such notice to and including the date when the Company shall have made available to the Holders (x) copies of the supplemented or amended Prospectus necessary to resume such dispositions or (y) the Advice. 4. Indemnification and Contribution. (a) In connection with any Registration Statement, the Company and the Initial Guarantors shall, and the Company shall cause each Guarantor other than the Initial Guarantors to, jointly and severally, indemnify and hold harmless the Initial Purchasers, each Holder, each underwriter who participates in an offering of the Registrable Securities, each Participating BrokerDealer, each Person, if any, who controls any of such parties within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each of their respective directors, officers, employees and agents, as follows: 1) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto), 24 covering Registrable Securities or Exchange Securities, as applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein, in the light of the circumstances under which they were made, not misleading; 2) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 4(d) hereof) any such settlement is effected with the prior written consent of the Company and the Guarantors; and 3) against any and all expenses whatsoever, as incurred (including the reasonable fees and disbursements of counsel chosen by such Holder, such Participating BrokerDealer, or any underwriter), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) of this Section 4(a); provided, however, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished in writing to the Company or any Guarantor by an Initial Purchaser or such Holder, underwriter or Participating BrokerDealer for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) and, provided, further, that this indemnity shall not inure to the benefit of any Initial Purchaser or Holder to the extent that any such losses, liabilities, claims, damages or expenses result from the fact that such Initial Purchaser or Holder (or other person so indemnified) sold Senior Notes to a person to whom there was not sent or given by or on behalf of the Initial Purchasers a copy of any amended or 25 supplemented Prospectus at or prior to the written confirmation of the sale of Senior Notes to such person if the Company shall have furnished such amendment or supplement to the Prospectus to the Initial Purchasers a reasonable amount of time in advance of the required delivery thereof and if the losses, liabilities, claims, damages or expenses result from an untrue statement or alleged untrue statement or an omission contained in the Prospectus that was corrected in such amendment or supplement to the Prospectus. a. The Initial Purchasers and each Holder, underwriter or Participating Broken-Dealer agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, their respective directors and officers (including each officer of the Company and the Guarantors who signed the Registration Statement) and each Person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense whatsoever described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use in such Registration Statement (or any amendment thereto) or any such Prospectus (or any amendment or supplement thereto); provided, however, that in the case of a Shelf Registration Statement, no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement. b. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have under this Section 4 to the extent that it is not materially prejudiced by such failure as a result thereof, and in any event shall not relieve it from liability which it may have otherwise on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 4(a) or (b) above, counsel to the indemnified parties shall be selected by such parties and, in the case of parties indemnified pursuant to Section 4(c), counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to local counsel), separate from their own counsel, for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect 26 to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. c. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. d. If any of the indemnity provisions set forth in this Section 4 is for any reason unavailable or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, the Company and the Guarantors, on the one hand, and the Holders, on the other hand, shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement incurred by such indemnified party, as incurred, in such proportion as shall be appropriate to reflect the relative fault of the Company and Guarantors, on the one hand, and the Holders, on the other hand, with respect to the statements or omissions which resulted in any such loss, liability, claim, damage or expense, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors, on the one hand, and of the Holders, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantors, on the one hand, or by or on behalf of the Holders, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and the Holders of the Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 4 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the relevant equitable considerations. For purposes of this Section 4, each Affiliate of a Holder, and each director, officer and employee and Person, if any, who controls a Holder or such Affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Holder, and each director of the Company or any Guarantor and each Person, if any, who controls the Company or any Guarantor within the 27 meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as each of the Company or the Guarantors. 5. Participation in an Underwritten Registration. No Holder may participate in an underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in the underwriting arrangement approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents reasonably required under the terms of such underwriting arrangements. 6. Selection of Underwriters. The Holders of Registrable Securities covered by the Shelf Registration Statement who desire to do so may sell the Securities covered by such Shelf Registration in an underwritten offering, subject to the provisions of Section 3(m) hereof. In any such underwritten offering, the underwriter or underwriters and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of the Registrable Securities included in such offering; provided, however, that such underwriters and managers must be reasonably satisfactory to the Company and the Guarantors. 7. Miscellaneous. a. Rule 144 and Rule 144A. For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the Exchange Act and any Registrable Securities remain outstanding, the Company will file the reports required to be filed by it under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules and regulations adopted by the SEC thereunder; provided, however, that if the Company ceases to be so required to file such reports, it will, upon the request of any Holder of Registrable Securities (a) make publicly available such information as is necessary to permit sales of its securities pursuant to Rule 144 under the Securities Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales of its securities pursuant to Rule 144A under the Securities Act, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such rule may be amended from time to time, (ii) Rule 144A under the Securities Act, as such rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. b. No Inconsistent Agreements. Neither the Company nor any Guarantor has entered into, nor will the Company or any Guarantor on or after the date of this Agreement enter into, any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the other issued and outstanding securities of the Company or any 28 Guarantor under any such agreements. c. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company and the Guarantors have obtained the written consent of Holders of a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure; provided that no amendment, modification or supplement or waiver or consent to the departure with respect to the provisions of Section 4 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder of Registrable Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be amended, without the consent of any Holder of Registrable Securities, by written agreement signed by the Company, the Guarantors and the Initial Purchasers, to cure any ambiguity, correct or supplement any provision of this Agreement that may be inconsistent with any other provision of this Agreement or to make any other provisions with respect to matters or questions arising under this Agreement which shall not be inconsistent with other provisions of this Agreement, (ii) this Agreement may be amended, modified or supplemented, and waivers and consents to departures from the provisions hereof may be given, by written agreement signed by the Company, the Guarantors and the Initial Purchasers to the extent that any such amendment, modification, supplement, waiver or consent is, in their reasonable judgment, necessary or appropriate to comply with applicable law (including any interpretation of the Staff of the SEC) or any change therein and (iii) to the extent any provision of this Agreement relates to an Initial Purchaser, such provision may be amended, modified or supplemented, and waivers or consents to departures from such provisions may be given, by written agreement signed by such Initial Purchaser, the Company and the Guarantors. d. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered firstclass mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company or the Guarantors by means of a notice given in accordance with the provisions of this Section 7(d), which address initially is, with respect to an Initial Purchaser, the address set forth in the Purchase Agreement; and (ii) if to the Company or the Guarantors, initially at the Company's address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 7(d). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands, or other communications shall be 29 concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. e. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of the Initial Purchasers, including, without limitation and without the need for an express assignment, subsequent Holders; provided, however, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities, such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. f. Third Party Beneficiaries. Each Holder and any Participating Broker-Dealer shall be third party beneficiaries of the agreements made hereunder among the Initial Purchasers, the Company and the Guarantors, and the Initial Purchasers shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. g. Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. h. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. i. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF SUCH SUIT, ACTION 30 OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. j. Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. k. Securities Held by the Company, the Guarantors or its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company, the Guarantors or any Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. l. This Agreement shall terminate with respect to any Guarantor (including the Initial Guarantors) immediately upon termination of such Guarantor's Guarantee in accordance with the terms and conditions of the Indenture. 31 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. COX RADIO, INC. By: /s/ Richard J. Jacobson ------------------------------ Name: Richard J. Jacobson Title: Treasurer WSB, INC. By: /s/ Andrew A. Merdek ------------------------------ Name: Andrew A. Merdek Title: Secretary WHIO, INC. By: /s/ Andrew A. Merdek ------------------------------ Name: Andrew A. Merdek Title: Secretary Confirmed and accepted as of the date first above written: NATIONSBANC MONTGOMERY SECURITIES LLC CHASE SECURITIES INC. J.P. MORGAN SECURITIES INC. By: NATIONSBANC MONTGOMERY SECURITIES LLC By: /s/ Charles P. Drakos ------------------------------------- Authorized Signatory For itself and the other Initial Purchasers EX-5.1 3 OPINION OF DOW, LOHNES & ALBERTSON, PLLC 1 EXHIBIT 5.1 August 11, 1998 Cox Radio, Inc. 1400 Lake Hearn Drive Atlanta, Georgia 30319 Cox Radio, Inc. Registration Statement on Form S-4 for $100,000,000 Aggregate Principal Amount of 6.250% Notes due 2003 and $100,000,000 Aggregate Principal Amount of 6.375% Notes due 2005 Ladies and Gentlemen: We have acted as special counsel for Cox Radio, Inc., a Delaware corporation ("Cox" or the "Company"), in connection with the preparation of the above-referenced registration statement (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Act"), to register the $100,000,000 aggregate principal amount of 6.250% Notes due 2003 (the "2003 Notes") and $100,000,000 aggregate principal amount of 6.375% Notes due 2005 (the "2005 Notes" and, collectively with the 2003 Notes, the "Notes"). In preparing this opinion, we have examined and reviewed such documents and made such investigation of law as we have considered necessary or appropriate to render the opinions expressed below. We have reviewed (a) the Registration Statement; (b) Cox's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws; (c) the Indenture entered into on May 26, 1998 by Cox and The Bank of New York, as Trustee, providing for the issuance of the Notes (the "Indenture"); and (d) such other documents, corporate records, certificates of public officials, certificates of officers of the Company and other instruments relating to the authorization and issuance of the Notes as we deemed relevant or necessary for the opinion herein expressed. As to matters of fact relevant to our opinion, we have relied upon certificates of officers of Cox without further investigation. With respect to the foregoing documents, we have assumed (i) the authenticity of all documents submitted to us as originals, the conformity with authentic original documents of all documents submitted to us as copies or forms, the genuineness of all signatures and the legal capacity of natural persons, and (ii) that the foregoing documents, in the forms thereof submitted for our review, have not been altered, amended or repealed in any respect material to our opinion as stated herein. We have not reviewed any documents other than the documents listed above for 2 Cox Radio, Inc. August 11, 1998 Page 2 our purposed of rendering our opinion as expressed herein, and we assume that the documents submitted to us for our review have not been altered, amended or repealed in any respect material to our opinion as stated herein. We have not reviewed any documents other than the documents listed above for purposes of rendering our opinion as expressed herein, and we assume that there exists no provision of any such other document that bears upon or is inconsistent with our opinion as expressed herein. We have conducted no independent factual investigation of our own, but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we assume to be true, complete and accurate in all material respects. Our opinion is limited to matters of law of the District of Columbia, the General Corporation Law of the State of Delaware, and the United States of America, insofar as such laws apply, and we express no opinion as to conflicts of law rules, or the laws of any states or jurisdictions, including federal laws regulating securities or other federal laws, or the rules and regulations of stock exchanges or any other regulatory body, other than as specified above. Based upon and subject to the forgoing and any other qualifications stated herein, we are of the opinion that the Notes, when duly executed, authenticated and delivered in accordance with the provisions of the Indenture against payment therefor and under the terms and conditions described in the Registration Statement and the Indenture, will constitute valid and binding obligations of Cox, subject, as to enforcement, (i) to any applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar law relating to or affecting creditor's rights general and (ii) to general principles of equity and judicial discretion. We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration Statement and to all references to our firm in the Registration Statement; provided, however, that in giving such consent we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act or the Rules and Regulations of the Commission thereunder. Except as provided for hereinabove, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person or entity for any purpose. DOW, LOHNES & ALBERTSON, PLLC By: /s/ Stuart A. Sheldon ___________________________________ Stuart A. Sheldon Member EX-23.1 4 CONSENT OF DELOITTE & TOUCHE LLP 1 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Cox Radio, Inc. on Form S-4 of our report dated February 6, 1998 (March 17, 1998 as to the KONO-FM/AM Acquisition described in Note 4) appearing in the Annual Report on Form 10-K of Cox Radio, Inc. for the year ended December 31, 1997 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP - -------------------------- Atlanta, Georgia August 7, 1998 EX-23.2 5 CONSENT OF ERNST & YOUNG LLP 1 Exhibit 23.2 Consent of Independent Auditors We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-4) dated August 11, 1998 for the registration of 6.25% and 6.375% Senior Notes due 2003 and 2005, respectively and to the incorporation by reference therein of our report dated March 7, 1997, with respect to the financial statements of NewCity Communications, Inc. for the three years in the period ended December 31, 1996 included in the Current Report on Form 8-K dated April 14, 1997 also incorporated herein by reference. /s/ Ernst & Young LLP Ernst & Young LLP Stamford, Connecticut August 11, 1998 EX-25.1 6 FORM T-1 1 EXHIBIT 25.1 =============================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ---------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------ COX RADIO, INC. (Exact name of obligor as specified in its charter) Delaware 58-1620022 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1400 Lake Hearn Drive, N.E. Atlanta, Georgia 30319 (Address of principal executive offices) (Zip code) ---------------------- 6.250% Senior Notes due 2003 (Title of the indenture securities) =============================================================================== 2 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------------------------------------- Name Address - ------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York New York, N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 3 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. 4 SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 5th day of August, 1998 . THE BANK OF NEW YORK By: /s/ Michael Culhane ------------------------------ Name: Michael Culane Title: Vice President 5 EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin... $ 6,397,993 Interest-bearing balances ........................... 1,138,362 Securities: Held-to-maturity securities ......................... 1,062,074 Available-for-sale securities ....................... 4,167,240 Federal funds sold and Securities purchased under agreements to resell................................. 391,650 Loans and lease financing receivables: Loans and leases, net of unearned income...36,538,242 LESS: Allowance for loan and lease losses.....631,725 LESS: Allocated transfer risk reserve...............0 Loans and leases, net of unearned income, allowance, and reserve............................. 35,906,517 Assets held in trading accounts ....................... 2,145,149 Premises and fixed assets (including capitalized leases) ............................................. 663,928 Other real estate owned ............................... 10,895 Investments in unconsolidated subsidiaries and associated companies ............................ 237,991 Customers' liability to this bank on acceptances outstanding ......................................... 992,747 Intangible assets ..................................... 1,072,517 Other assets .......................................... 1,643,173 ----------- Total assets .......................................... $55,830,236 =========== LIABILITIES Deposits: In domestic offices ................................. $24,849,054 Noninterest-bearing .......................10,011,422 Interest-bearing ..........................14,837,632
6 In foreign offices, Edge and Agreement subsidiaries, and IBFs .................. 15,319,002 Noninterest-bearing ..........................707,820 Interest-bearing ..........................14,611,182 Federal funds purchased and Securities sold under agreements to repurchase............................. 1,906,066 Demand notes issued to the U.S. Treasury............... 215,985 Trading liabilities ................................... 1,591,288 Other borrowed money: With remaining maturity of one year or less.......... 1,991,119 With remaining maturity of more than one year through three years................................ 0 With remaining maturity of more than three years..... 25,574 Bank's liability on acceptances executed and outstanding ......................................... 998,145 Subordinated notes and debentures ..................... 1,314,000 Other liabilities ..................................... 2,421,281 ----------- Total liabilities ..................................... 50,631,514 ----------- EQUITY CAPITAL Common stock .......................................... 1,135,284 Surplus ............................................... 731,319 Undivided profits and capital reserves................. 3,328,050 Net unrealized holding gains (losses) on available-for-sale securities........................ 40,198 Cumulative foreign currency translation adjustments.......................................... (36,129) ----------- Total equity capital .................................. 5,198,722 ----------- Total liabilities and equity capital................... $55,830,236 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi [ ] Alan R. Griffith Directors [ ] J. Carter Bacot [ ] EX-25.2 7 FORM T-1 1 EXHIBIT 25.2 =============================================================================== FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------- COX RADIO, INC. (Exact name of obligor as specified in its charter) Delaware 58-1620022 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1400 Lake Hearn Drive, N.E. Atlanta, Georgia 30319 (Address of principal executive offices) (Zip code) ---------------------- 6.375% Senior Notes due 2005 (Title of the indenture securities) =============================================================================== 2 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------------------------------------- Name Address - ------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 3 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. 4 SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 5th day of August, 1998 . THE BANK OF NEW YORK By: /s/ Michael Culhane -------------------------- Name: Michael Culane Title: Vice President 5 EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin... $ 6,397,993 Interest-bearing balances ........................... 1,138,362 Securities: Held-to-maturity securities ......................... 1,062,074 Available-for-sale securities ....................... 4,167,240 Federal funds sold and Securities purchased under agreements to resell................................. 391,650 Loans and lease financing receivables: Loans and leases, net of unearned income...36,538,242 LESS: Allowance for loan and lease losses.....631,725 LESS: Allocated transfer risk reserve...............0 Loans and leases, net of unearned income, allowance, and reserve............................. 35,906,517 Assets held in trading accounts ....................... 2,145,149 Premises and fixed assets (including capitalized leases) ............................................. 663,928 Other real estate owned ............................... 10,895 Investments in unconsolidated subsidiaries and associated companies ............................ 237,991 Customers' liability to this bank on acceptances outstanding ......................................... 992,747 Intangible assets ..................................... 1,072,517 Other assets .......................................... 1,643,173 ----------- Total assets .......................................... $55,830,236 =========== LIABILITIES Deposits: In domestic offices ................................. $24,849,054 Noninterest-bearing .......................10,011,422 Interest-bearing ..........................14,837,632
6 In foreign offices, Edge and Agreement subsidiaries, and IBFs .................. 15,319,002 Noninterest-bearing ..........................707,820 Interest-bearing ..........................14,611,182 Federal funds purchased and Securities sold under agreements to repurchase............................. 1,906,066 Demand notes issued to the U.S. Treasury............... 215,985 Trading liabilities ................................... 1,591,288 Other borrowed money: With remaining maturity of one year or less.......... 1,991,119 With remaining maturity of more than one year through three years................................ 0 With remaining maturity of more than three years..... 25,574 Bank's liability on acceptances executed and outstanding ......................................... 998,145 Subordinated notes and debentures ..................... 1,314,000 Other liabilities ..................................... 2,421,281 ----------- Total liabilities ..................................... 50,631,514 ----------- EQUITY CAPITAL Common stock .......................................... 1,135,284 Surplus ............................................... 731,319 Undivided profits and capital reserves................. 3,328,050 Net unrealized holding gains (losses) on available-for-sale securities........................ 40,198 Cumulative foreign currency translation adjustments.......................................... (36,129) ----------- Total equity capital .................................. 5,198,722 ----------- Total liabilities and equity capital................... $55,830,236 ===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi [ ] Alan R. Griffith [ ] Directors J. Carter Bacot [ ] -----END PRIVACY-ENHANCED MESSAGE-----