EXHIBIT 99.2
Crown Castle International Corp.
510 Bering Drive
Suite 500
Houston, Texas 77057
July 1, 1999
BellSouth Personal Communications, Inc.
BellSouth Carolinas PCS L.P.
c/o Joel Peterson
BellSouth Corporation
1155 Peachtree Street
Atlanta, Georgia 30309
Re: The acquisition of certain Subleasehold Interests in Existing and
Future Communications Tower Facilities and Related Infrastructure and
Reservation of certain Related Interests by BellSouth Personal
Communications, Inc. ("DCS"), BellSouth Carolinas PCS L.P. (the
"Carolinas Partnership"), by Crown Castle South, Inc. ("TowerCo")
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Dear Mr. Peterson:
This letter of agreement ("Letter Agreement") reflects the terms of a
transaction (the "Transaction") among DCS, the Carolinas Partnership and TowerCo
regarding the acquisition by TowerCo of certain rights to lease, sublease,
design, develop, construct, operate, market and manage certain communications
tower sites owned by DCS or the Carolinas Partnership or to be constructed on
behalf of DCS or the Carolinas Partnership in its wireless telecommunications
business in Eastern Tennessee, North Carolina, South Carolina and Georgia (the
"DCS Territory").
As part of the Transaction, each of DCS and the Carolinas Partnership
will sublease to TowerCo certain portions of their existing Sites (the "DCS
Sites"), other than the Reserved Space (as defined in the DCS Sublease) of those
DCS Sites, which DCS or the Carolinas Partnership, as applicable, is not legally
precluded from subleasing to TowerCo ("Subleased Sites"). The terms and
conditions of the sublease of DCS Sites by DCS and the Carolinas Partnership to
TowerCo are to be set forth in the Sublease (the "DCS Sublease") between DCS,
for itself and as general partner of the Carolinas Partnership, and TowerCo and
Crown Castle International Corp. ("CCIC" and collectively, the "Parties"). The
Transaction also consists of an agreement by TowerCo to perform certain
management services on behalf of DCS and the Carolinas Partnership at those DCS
Sites which are not Subleased Sites and which are designated by DCS or the
Carolinas Partnership, in its discretion, to be made part of the DCS Site
Maintenance Agreement between the Parties. The Transaction further consists of
a Build to Suit
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 2
Agreement (the "DCS Build to Suit Agreement") whereby, subject to DCS's existing
build to suit agreements, TowerCo shall develop and construct all towers built
in the Territory on behalf of DCS and the Carolinas Partnership for a period of
three (3) years, provided that there shall be no minimum number of towers that
must be constructed during such period.
The Parties recognize that the Transaction will require further
documentation, as set forth herein, including the preparation, acceptance and
delivery of a definitive agreement (the "DCS Agreement to Sublease") on the same
terms and conditions as the Agreement to Sublease dated as of June 1, 1999 (the
"BMI Agreement") among BellSouth Mobility, Inc., BellSouth Telecommunications,
Inc., CCIC and TowerCo, with only such changes as are required to be made
therein pursuant to this Letter Agreement. Capitalized terms used herein and
not otherwise defined herein are used as defined in the BMI Agreement. The
Parties are executing this Letter Agreement to set forth their agreement to
enter into the DCS Agreement to Sublease and related documents consistent with
the terms of this Letter Agreement.
1. The terms and conditions of the DCS Agreement to Sublease and related
documents include the following:
a. Agreements. The Parties have executed and delivered the BMI
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Agreement to Sublease and the Sublease, Build to Suit Agreement and Site
Maintenance Agreement referred to therein (collectively the "BMI Agreements"),
and agree that the terms and conditions of the DCS Agreement to Sublease and the
related DCS Sublease, the DCS Build to Suit Agreement and the DCS Site
Maintenance Agreement (collectively the "DCS Agreements") shall be the same as
the respective BMI Agreements, with only such changes as are required to be made
therein pursuant to this Letter Agreement. The parties shall execute and
deliver the DCS Agreements on or before the Initial Closing Date.
b. Site Marketing Agreement. The Site Marketing Agreement between
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BellSouth Mobility, Inc. and Crown Communication Inc. made on June 25, 1998, as
amended, shall be extended to DCS and the Carolinas Partnership and to the DCS
Territory effective the date the Transaction is announced (the amendment
accomplishing such extension, the "DCS Amendment"), provided that the Site
Marketing Agreement shall be deemed terminated as to DCS and the Carolinas
Partnership and to the Territory if this Letter Agreement is terminated.
c. Consideration. At each closing, TowerCo shall pay to DCS and the
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Carolinas Partnership the sum of $410,000 for each DCS Site leased or subleased
to TowerCo. Said sum shall be paid in cash at the applicable closing. Based on
approximately 773 Sites, the aggregate consideration will be $316,930,000.
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 3
DCS and the Carolinas Partnership will lease or sublease to TowerCo all
of their respective Sites, except (i) where legally prohibited from doing so,
(ii) for DCS Sites excluded pursuant to paragraph 1(i) below and (iii) for DCS
Sites that are otherwise excluded from the DCS Sublease pursuant to the DCS
Agreement to Sublease.
d. Closing Schedule. The parties shall use reasonable commercial
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efforts to cause the initial closing for the Transaction to occur as soon as
practicable (the "Initial Closing Date"). Each such transfer referred to as a
"closing." The DCS Agreement to Sublease shall include a procedure for
adjusting the closing schedule to address Sites that do not comply with the
requirements of the DCS Agreement to Sublease. DCS and the Carolinas
Partnership shall use commercially reasonable efforts to sublease at least
approximately two hundred fifty (250) Sites to TowerCo at each closing. The
parties anticipate that the final closing will occur not later than December 31,
1999.
e. Closing. The DCS Agreement to Sublease shall provide for closings to
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take place on a basis consistent with the BMI Agreement to Sublease.
f. Termination Right of DCS and the Carolinas Partnership. If the Parties
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fail to consummate any one of the closings contemplated herein due to CCIC's or
TowerCo's failure to comply with all the conditions, covenants and
representations to be complied with by each of them in order to consummate any
of the closings, in addition to any other remedies DCS or the Carolinas
Partnership may have at law or in equity, DCS and the Carolinas Partnership will
have the right to require CCIC to promptly pay DCS and the Carolinas Partnership
a termination fee of twenty million dollars ($20,000,000.00), whereupon the
agreements between the Parties shall be terminated (including the DCS Amendment
to Site Marketing Agreement, which shall be deemed terminated for CCI's
default), and, at the option of DCS (for itself and behalf of the Carolinas
Partnership), all prior closings shall be rescinded. If released to DCS (for
itself and behalf of the Carolinas Partnership), the Escrow Fund shall be
applied toward CCIC's obligation to pay the termination fee. If DCS (for itself
and behalf of the Carolinas Partnership) exercises its option to rescind the
prior closings, payment of the termination fee shall be made by netting it
against the amounts previously paid DCS and the Carolinas Partnership at the
previous closings, and DCS and the Carolinas Partnership shall pay to CCIC any
amounts paid to DCS and the Carolinas Partnership at the closings which are in
excess of the termination fee.
g. Remedies of CCIC. If the Parties fail to consummate any one of the
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closings contemplated herein due to the failure of DCS or the Carolinas
Partnership's to comply with all
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 4
the conditions, covenants and representations to be complied with by it, CCIC
shall, in addition to any other remedies that may be available to CCIC at law or
in equity, but subject to the limitations on liability to be set forth in the
BMI Agreement to Sublease, have the right to bring an action for specific
performance including attorneys' fees and costs of suit.
h. Guaranty of Performance. CCIC shall guarantee the performance of
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TowerCo, unconditionally, with respect to all agreements with DCS and the
Carolinas Partnership.
i. Minority Partner Rights. The Parties acknowledge and agree that the
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DCS Sites in the Carolinas Partnership shall not be included in the Transaction
unless and until each limited partner whose consent is required (if any is
required) has given its consent to such inclusion.
2. Confidentiality. Except as provided in this Letter Agreement and as
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required by law and only, to the extent time permits, after prior consultation,
each of DCS and the Carolinas Partnership and CCIC shall keep this Letter
Agreement and all matters related hereto confidential and shall disclose this
Letter Agreement and the terms hereof and related matters only to such
employees, affiliates, representatives, agents and advisors, including but not
limited to attorneys, accountants, investment bankers, lenders and financial
advisors who require such information in connection with the Transaction and who
are informed as to the confidential nature of disclosure. CCIC shall request
confidential treatment of the material price and other business terms with
respect to any filings with the U.S. Securities and Exchange Commission.
3. Access to Information. To permit TowerCo to conduct its due diligence
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investigation with respect to the DCS Sites and for so long as this Letter
Agreement remains in effect, DCS and the Carolinas Partnership will provide to
TowerCo and respective agents and attorneys reasonable access to the books and
records of DCS and the Carolinas Partnership relating to the DCS Sites. CCIC
will provide DCS and the Carolinas Partnership and their respective agents and
attorneys reasonable access to information concerning CCIC and TowerCo,
including without limitation their financial condition and operations.
4. News Releases. Upon the effectiveness of this Letter Agreement pursuant to
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Paragraph 6, DCS and the Carolinas Partnership and CCIC will each have the right
to issue a news release or other announcement concerning the Transaction;
provided, however, that no party will issue any news release or other
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announcement at any time with respect to the Transaction without the prior
approval of the other party as to the contents of the announcement and its
release, which approval shall not be unreasonably withheld or delayed.
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 5
5. Term of Letter Agreement. This Letter Agreement shall terminate only upon
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the earliest to occur of: (a) the execution and delivery by the Parties of the
DCS Agreement to Sublease, (b) the notification by either party to the other
party of its election to terminate this Letter Agreement if the DCS Agreement to
Sublease has not been entered into by the Parties on or before thirty (30) days
after the date hereof; or (c) the notification by either party to the other
party to terminate this Letter Agreement because of the material departure by
the other party from the covenants, representations or warranties of the other
party set forth in this Letter Agreement. Except as set forth in Paragraph 6 or
7, any such termination shall be without further obligation.
6. Earnest Money. On the date of this Letter Agreement, CCIC has deposited $20
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million as earnest money (together with interest thereon, the "Escrow Funds")
with Kilpatrick Stockton LLP, as escrow agent pursuant to that certain Escrow
Agreement of even date herewith, with the understanding and agreement that the
Escrow Fund will be transferred to Bank of America or another commercial bank,
as escrow agent, on July 1, 1999 or as soon thereafter as practicable. DCS and
the Carolinas Partnership will not be entitled to the Escrow Funds unless each
of BellSouth Corporation's Board of Directors (or any applicable committee
thereof) and the Executive Committee of the Carolinas Partnership has approved
the Transaction. If, after such approvals, the parties fail to execute the DCS
Agreement to Sublease by the date set forth in clause (b) of Paragraph 5, or if
the DCS Agreement to Sublease is executed and if the first closing under the DCS
Agreement to Sublease fails to occur as a result of any breach of the Agreement
to Sublease by CCIC or TowerCo or a failure by CCIC or TowerCo to satisfy
closing conditions set forth in the Agreement to Sublease, the Escrow Funds will
be distributed to DCS (for itself and for the benefit of the Carolinas
Partnership). If the DCS Agreement to Sublease is executed and the first
closing occurs, the Escrow Funds will be released to CCIC. If the foregoing
approvals of the Transaction are not obtained within thirty (30) after the date
hereof, the Escrow Funds will be released to CCIC. If the Parties do not
execute the DCS Agreement to Sublease by the date set forth in clause (b) of
Paragraph 5, the Escrow Funds are distributed to DCS (for itself and for the
benefit of the Carolinas Partnership), and CCIC demonstrates to a court of
competent jurisdiction that DCS and the Carolinas Partnership negotiated the DCS
Agreements in bad faith, then the Parties intend that the Escrow Funds, with
interest since the date paid to DCS (for itself and for the benefit of the
Carolinas Partnership), be repaid to CCIC. The Parties agree that said
liquidated damages do not constitute a penalty and are in lieu of actual damages
which would be difficult to ascertain. Said liquidated damages represent the
sole remedy of DCS and the Carolinas Partnership's for TowerCo's breach of this
Letter Agreement.
7. Certain Obligations of DCS and the Carolinas Partnership. (a) In
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consideration of CCIC's entering into this Letter Agreement and undertaking to
investigate the businesses of DCS
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 6
and the Carolinas Partnership and to incur expenses in connection therewith,
each of DCS and the Carolinas Partnership agrees that, until 5:00 p.m. Eastern
Standard Time on the day that is thirty (30) days after the date of this Letter
Agreement, neither DCS and the Carolinas Partnership nor any of their respective
affiliates, nor their respective affiliates' officers, directors, key managers,
agents, or advisors shall, directly or indirectly, solicit or entertain offers
from, negotiate with or in any manner encourage, discuss, accept, or consider
any proposal of any other person or entity relating to the sale, lease, sublease
or assignment of DCS or the Carolinas Partnership's Subleased Property in the
Territory. In addition, each of DCS and the Carolinas Partnership agrees
immediately to cease and cause to be terminated any previously undertaken or
ongoing activities, discussions or negotiations with any other person or entity
with respect to any transaction of the type described in the preceding sentence.
Furthermore, if DCS or the Carolinas Partnership or any of their respective
affiliates, or its or its affiliates' officers, directors, key managers, agents,
or advisors receives any communication regarding any offer or proposal of the
type described in the first sentence of this Paragraph between the date hereof
and the date that is 30 days after the date hereof, then DCS and the Carolinas
Partnership shall immediately notify CCIC of the receipt of such proposal and
shall promptly provide to CCIC a copy of such proposal (or if such proposal is
not in writing, a written summary of its terms).
(b) The Parties acknowledge that they have reached agreement as to the
terms and conditions of each of the DCS Agreements. Each of DCS and the
Carolinas Partnership acknowledges that this Letter Agreement and the DCS
Agreements sufficiently set forth the terms and conditions of the Transaction
that DCS can commence the process of seeking approval of the Transaction by
BellSouth Corporation's Board of Directors (or an appropriate committee thereof)
and by the Executive Committee of the Carolinas Partnership. Each of the
Parties shall use its reasonable best efforts to prepare the form of the DCS
Agreements.
(c) If either the Board of Directors of BellSouth Corporation or the
Executive Committee of the Carolinas Partnership does not approve the
Transaction by the date that is 30 days after the date of this Letter Agreement,
then, if at any time prior to the date that is one year after the date on which
this Letter Agreement expires or is terminated, either DCS or the Carolinas
Partnership transfers, sells, assigns, leases, subleases or otherwise disposes
of all or substantially all of its Subleased Property to any person not a
BellSouth Affiliate, DCS shall pay in cash to CCIC an amount equal to the
greater of (i) $5 million, or (ii) one-half of the amount by which the total
consideration received by DCS and the Carolinas Partnership pursuant to such
transfer, sale, assignment, lease, sublease or other disposition of all or
substantially all of the Subleased Property exceeds the total amount of
consideration that would have been paid to DCS and the Carolinas Partnership by
CCIC under this Letter Agreement if such Sites had been leased or subleased to
TowerCo hereunder.
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 7
(d) Notwithstanding anything to the contrary in this Letter Agreement,
CCIC shall have no right to bring any claim or action against DCS or the
Carolinas Partnership based on a breach by DCS of its obligations to use its
reasonable best efforts to obtain the approvals referred to in Paragraph 7(b)
above, if each of the Board of Directors (or an appropriate committee thereof)
of BellSouth Corporation and the Executive Committee of the Carolinas
Partnership makes a decision with respect to the Transaction, either for or
against, at any time up to thirty (30) days after the date of this Letter
Agreement.
(e) Nothing in this Paragraph 7 shall be deemed to limit either DCS or
the Carolinas Partnership from selling, leasing, subleasing, transferring,
assigning or otherwise disposing of their respective wireless communications
towers, or engaging in any of the activities of the types described in Paragraph
7(a) with respect to the wireless communications towers of DCS or the Carolinas
Partnership, in connection with the sale or transfer of all or part of a
wireless communications business activity, it being understood and agreed that
this Paragraph 7 shall restrict DCS and the Carolinas Partnership only with
respect to the sale or transfer of their towers as a separate tower business.
Accordingly, neither will be required to make any payment under Paragraph 7(c)
in respect of any transaction of the types described in the first or second
sentence of this Paragraph 7(c).
(f) None of the provisions of this Paragraph 7 will appear in the DCS
Agreement to Sublease. The Parties agree that said liquidated damages do not
constitute a penalty and are in lieu of actual damages which would be difficult
to ascertain. Said liquidated damages represent TowerCo's sole remedy for the
breach by DCS or the Carolinas Partnership of this Letter Agreement.
8. Commissions. Each party shall be responsible for any commissions or
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finder's, originator's or transaction fees payable to any person retained in
connection with the Transaction.
9. Costs and Expenses. Each party shall bear its own costs and expenses in
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connection with the Transaction.
10. Letter Agreement Binding. This Letter Agreement is intended to be, and
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shall be construed as, an agreement with respect to the conduct of each party
prior to the execution and delivery of the DCS Agreement to Sublease. This
Letter Agreement is intended to be, and shall be construed as, a binding,
enforceable agreement and that the obligations of the Parties hereunder shall be
binding upon each party upon the execution of this Letter Agreement. This
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 8
Letter Agreement may be executed in separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one agreement.
11. Counsel. Each party hereto warrants and represents that such party has
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been afforded the opportunity to be represented by counsel of its choice in
connection with the execution of this Letter Agreement and has had ample
opportunity to read, review and understand the provisions of this Letter
Agreement.
12. No Construction Against Preparer. No provision of this Letter Agreement
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shall be construed against or interpreted to the disadvantage of any party by
any court or other governmental or judicial authority by reason of such party's
having or being deemed to have prepared or imposed such provision.
13. Authority. Each of DCS, the Carolinas Partnership and CCIC warrants and
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represents that it has full and complete authority to enter into this Letter
Agreement and each individual executing this Letter Agreement on behalf of it
warrants and represents that he has been fully authorized to execute this Letter
Agreement on behalf of it and that it is bound by the signature of such
representative.
14. Limitation of Liability. Notwithstanding anything in this Letter Agreement
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to the contrary, neither Party shall be liable to the other Party for indirect,
incidental, special or consequential damages, including but not limited to lost
profits, however arising, even if a Party has been advised of the possibility of
such damages.
BellSouth Personal Communications, Inc.
BellSouth Carolinas DCS L.P.
c/o Joel Peterson
BellSouth Corporation
July 1, 1999
Page 9
If the foregoing terms are acceptable to DCS and the Carolinas Partnership,
please execute a copy of this letter in the place set forth below and return it
to CCIC on or before 5:00 p.m. Eastern Standard Time, July 1, 1999.
Sincerely,
CROWN CASTLE INTERNATIONAL CORP.
By: /s/ David Ivy
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Name: David Ivy
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Title: President
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Accepted and agreed:
BELLSOUTH PERSONAL
COMMUNICATIONS, INC.
By: /s/ Joel Peterson
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Name: Joel Peterson
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Title: Authorized Representative
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BELLSOUTH CAROLINAS DCS L.P.
By: BellSouth Personal Communications,
Inc., its general partner
By: /s/ Joel Peterson
---------------------------------
Name: Joel Peterson
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Title: Authorized Representative
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