SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 9, 1998
CROWN CASTLE INTERNATIONAL CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-43873 76-0470458 (State or Other (Commission File (IRS Employer Jurisdiction of Number) Identification Incorporation) Number) 510 Bering Drive Suite 500 Houston, TX 77057 (Address of Principal Executive Office) |
Registrant's telephone number, including area code: (713) 570-3000
Forward-Looking Statements
This document includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Other than statements of historical fact, all statements regarding industry prospects and the Company's expectations regarding the future performance of its businesses and its financial position are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to the uncertainties relating to capital expenditures decisions to be made in the future by wireless communications carriers and broadcasters and the risks and uncertainties described in "Risk Factors" in the Company's Registration Statement on Form S-1, as amended (Reg. No. 333-57283) (the "Registration Statement") filed with the Securities and Exchange Commission.
# # #
Capitalized terms used but not defined herein shall have the meaning assigned thereto in the Registration Statement.
ITEM 5. OTHER EVENTS
On December 9, 1998, Crown Castle International Corp. ("CCIC" or the "Company") announced that it is offering (the "Offering") $200 million of its senior exchangeable pay-in-kind preferred stock in a Rule 144A/Regulation S distribution. A copy of the press release issued by CCIC on December 9, 1998 with respect to the Offering is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The Company also announced that on December 8, 1998 it entered into an agreement (the "Formation Agreement") with Cellco Partnership, a Delaware general partnership doing business as Bell Atlantic Mobile ("BAM"), certain of the Transferring Partnerships (as defined in the Formation Agreement), the Company and CCA Investment Corp., a wholly owned subsidiary of the Company ("Company Sub"), to form a joint venture (the "Proposed JV") to own and operate a significant majority of BAM's wireless communications towers. The Company would own approximately 62.3% of the Proposed JV and BAM and the Transferring Partnerships would own the remaining 37.7% along with a 0.001% interest in the joint venture's operating subsidiary. For financial reporting purposes, the Company intends to consolidate the Proposed JV's results of operations and financial condition with its own.
The day-to-day operations of the Proposed JV will be managed by the Company. The Proposed JV will actively seek to add additional tenants to its towers in order to increase its revenues. The Proposed JV will also construct and own new towers that are needed by BAM's wireless communications business. The Proposed JV will have regional offices that will be staffed primarily with employees of the Company to perform marketing, billing, operations and maintenance functions.
Although the Proposed JV is expected to be formed during the first quarter of 1999, the Formation Agreement is subject to a number of significant conditions. There can be no assurance that the Proposed JV will be formed on the terms described in this document or at all.
Communication Site Footprints
The following table indicates, as of September 30, 1998, the type and geographic concentration of the Company's and the Proposed JV's owned and managed towers and revenue producing rooftop sites:
U.S. Total The Proposed After % of CCIC JV Proposed JV U.S. Total Towers: ---- ------------ ----------- ---------- Pennsylvania........................ 213 212(a) 320 16.5 Texas............................... 154 43 197 10.2 South Carolina...................... 12 161 173 9.0 Arizona............................. 12 152 164 8.5 North Carolina...................... 11 137 148 7.6 New Jersey.......................... 1 142 143 7.4 New York............................ -- 119 119 6.1 Maryland............................ -- 108 108 5.6 Massachusetts....................... -- 81 81 4.2 New Mexico.......................... 34 36 70 3.6 Virginia............................ -- 57 57 2.9 Connecticut......................... -- 39 39 2.0 Louisiana........................... 24 13 37 1.9 Mississippi......................... 21 8 29 1.5 Delaware............................ -- 24 24 1.2 New Hampshire....................... -- 23 23 1.2 Georgia............................. -- 21 21 1.1 West Virginia....................... 18 13(b) 19 1.0 Ohio................................ 19 -- 19 1.0 Puerto Rico......................... 14 -- 14 0.7 Rhode Island........................ -- 13 13 0.7 All Others.......................... 15 25(c) 40 1.9 --- ----- ----- ----- 548 1,427(d) 1,858 95.8 Rooftops(e).......................... 81 -- 81 4.2 --- ----- ----- ----- U.S. Total......................... 629 1,427(d) 1,939 100.0% === ===== ===== ===== |
(a)Includes 105 towers currently managed by the Company.
(b)Includes 12 towers currently managed by the Company.
(c)Includes 13 towers that have not yet been identified.
(d)Includes 117 towers currently managed by the Company.
(e) The Company manages an additional 1,286 rooftop sites throughout the
United States that do not currently produce revenue but are available for
leasing to its customers.
The following descriptions of the agreements related to the Proposed JV are summaries of the material portions of those agreements.
Formation Agreement
Formation of the Proposed JV. Pursuant to the Formation Agreement, Company Sub will contribute $250.0 million in cash and approximately 15.6 million shares of common stock (valued at $197.0 million) of the Company to the Proposed JV. BAM and the Transferring Partnerships will transfer approximately 1,427 towers along with related assets and liabilities to the Proposed JV. The Proposed JV will borrow $180.0 million under a committed $250.0 million revolving credit facility. The joint venture will make a $380.0 million cash distribution to BAM.
Concurrently with the formation of the joint venture, BAM and the Proposed JV will enter into a master build-to-suit agreement (the "Build-to-Suit Agreement"), a global lease agreement (the "Global Lease") and a transitional services agreement and the Company and the Proposed JV will enter into a services agreement.
Terms and Conditions. In connection with its contribution of assets and liabilities to the Proposed JV, BAM is making certain representations and warranties to the Proposed JV concerning the contributed assets and liabilities. In general, the Proposed JV will have until June 30, 2000, to raise any claims for indemnification for breaches of the representations and warranties by BAM. However, BAM's indemnification obligations are subject to a number of significant limitations including a per occurrence deductible of $25,000, an aggregate deductible of $7.5 million and an absolute cap of $195.0 million.
The formation of the Proposed JV is subject to a number of significant conditions. These conditions include:
. accuracy of the representations and warranties of BAM and the Company;
. receipt of bank financing by the Proposed JV;
. receipt of certain third party consents required for the transfer of the tower assets to the Proposed JV;
. receipt of regulatory approvals;
. absence of litigation;
. receipt of certain environmental studies; and
. absence of any material adverse effect with respect to the business, assets, operations, conditions (financial or otherwise) or prospects of the Company and its subsidiaries taken as a whole.
There can be no assurance that these conditions will be satisfied or waived. If they are not satisfied or waived, the Proposed JV may not be formed on the terms described in this document or at all.
Build-to-Suit Agreement
In connection with the formation of the Proposed JV, BAM and the Proposed JV will enter into the Build-to-Suit Agreement. Pursuant to the Build-to-Suit Agreement and subject to certain conditions, BAM and the Proposed JV have agreed that (i) the next 500 towers to be built for BAM's wireless communications business will be constructed and owned by the Proposed JV and (ii) immediately thereafter the Proposed JV will have a right of first refusal to construct the next 200 additional towers to be built for BAM. BAM is required to submit these 700 site proposals to the Proposed JV during the five-year period following the formation of the joint venture; however, the five-year period will be extended for additional one-year periods, until 700 site proposals are submitted to the Proposed JV. The Proposed JV will be required to build towers in the general vicinity of the locations proposed by BAM. Upon completion of a tower, it will become subject to the Global Lease (as discussed below). Space not leased by BAM or its affiliates on each tower is available for lease by the Proposed JV to third parties.
The Build-to-Suit Agreement sets out various time periods for BAM to identify its tower needs within certain search areas, and for the Proposed JV to locate sites and to thereafter complete site acquisition and development work, including permitting and construction.
Global Lease
In connection with the formation of the Proposed JV, BAM and the Proposed JV will enter into the Global Lease. All of the approximately 1,427 towers to be acquired by the Proposed JV from BAM and the Transferring Partnerships pursuant to the Formation Agreement, and all towers constructed by the Proposed JV pursuant to the Build-to-Suit Agreement, will be governed by the Global Lease. The average monthly rent on the 1,427 towers contributed to the Proposed JV by BAM will be approximately $1,850. Minimum monthly rents on the towers built pursuant to the Build-to-Suit Agreement will range from $1,250 to $1,833 depending on the region in which the tower is located. These rents may increase based on the amount of BAM's equipment to be installed at a site. Rents are subject to annual increase based on the consumer price index, subject to certain adjustments. For all sites, the initial lease term is ten years. BAM has the right to extend any lease for three additional five-year terms and one additional term of four years and eleven months. Each lease will automatically renew for an optional term unless BAM notifies the Proposed JV at least six months before the then current term expires. Space not leased by BAM or its affiliates on each tower is available for lease by the Proposed JV to third parties.
Operating Agreements
In connection with the formation of the Proposed JV, BAM and Company Sub would enter into limited liability company operating agreements that will establish and govern the limited liability companies comprising the Proposed JV.
Governance. The business and affairs of the Proposed JV will be managed by its managers under the supervision of a board of representatives. Each manager will be selected by Company Sub. Members of the board of representatives will be selected by each of BAM and Company Sub in proportion to their ownership interests in the Proposed JV. The board of representatives initially will have six members, with two selected by BAM and four selected by Company Sub. So long as BAM maintains at least a 5.0% interest in the Proposed JV, it will maintain the right to designate at least one member of the board of representatives.
The managers will operate the Proposed JV on a day-to-day basis. In general, the managers will have the power and authority to take all necessary or appropriate actions to conduct the Proposed JV's business in accordance with its then current business plan. Actions requiring the approval of the board of representatives generally will be authorized upon the affirmative vote of a majority of the members of the board of representatives. However, the following actions will require the mutual consent of BAM and Company Sub, either by written consent or by the approval of representatives of each of BAM and Company Sub at a meeting of the board of representatives:
. engaging in any business other than owning, acquiring, constructing, leasing and operating communications towers in the United States;
. taking any voluntary action that would cause the Proposed JV to be insolvent or voluntarily entering into a bankruptcy proceeding;
. incurring any debt other than (i) the revolving credit facility (the "Proposed JV Credit Facility") proposed to be entered into by the Proposed JV and committed to by Key Corporate Capital Inc. and (ii) ordinary course trade payables;
. incurring any liens;
. issuing any additional equity interests in the Proposed JV;
. becoming liable with respect to contingent obligations such as guarantees or the obligation to make take-or-pay or similar payments;
. failing to preserve the Proposed JV's existence under Delaware law or its qualification to do business in each jurisdiction in which such qualification is necessary or desirable;
. mergers or consolidations;
. sales of assets outside the ordinary course;
. entry into contracts with affiliates except in the ordinary course and on an arm's-length basis;
. any dividends or distributions; provided, if the Proposed JV has been dissolved and the Proposed JV Credit Facility has been repaid in full, BAM's consent will not be required;
. the determination of the methodology to be used in calculating payments under the management agreement and the services agreement pursuant to which the Company will manage and provide services to the Proposed JV;
. approval of the business plan;
. entry into contracts that (1) restrict the business activities of the
Proposed JV in any geographic area, (2) contain exclusivity provisions,
(3) are inconsistent with any of the agreements entered into in
connection with the formation of the Proposed JV or (4) provide for the
purchase or sale of goods or services involving an amount in excess of
$10.0 million per year; and
. exercising any voting rights with respect to the shares of common stock of the Company held by the Proposed JV; provided, if BAM and Company Sub do not agree as to how the shares should be voted, the shares will be voted pro rata with all shares of Common Stock of the Company voted on the matter.
Restrictions on Transfers of Interests; Rights of First Refusal; Tag-Along Rights. Except for transfers to wholly owned affiliates, neither BAM nor Company Sub may transfer its interest in the Proposed JV to a third party unless it first offers its interest to the other on terms and conditions, including price, no less favorable than the terms and conditions on which it proposes to sell its interest to the third party. In addition, if BAM or Company Sub wishes to transfer its interest in the Proposed JV to a third party, the other party will have the right to require the third party, as a condition to the sale, to purchase a pro rata portion of its interest in the Proposed JV on the same terms and conditions, including price. BAM may only transfer its 0.001% interest in the operating subsidiary of the Proposed JV to its wholly owned affiliates or in connection with a merger or consolidation transaction to which BAM or Bell Atlantic Corporation is a party.
Dissolution of the Proposed JV. BAM and the Company have agreed that upon a dissolution of the Proposed JV, in satisfaction of their respective interests in the Proposed JV, the Company would receive all the assets and liabilities of the Proposed JV other than the approximately 15.6 million shares of its common stock held by the Proposed JV and BAM would receive all of the shares of common stock of the Company held by the Proposed JV and a payment from the Company, equal to 14.0% of the fair market value of the assets and liabilities of the joint venture (other than the Company's common stock), to be made in cash or common stock of the Company (as elected by the Company). BAM would continue to retain its 0.001% interest in the joint venture's operating subsidiary. For so long as it retains such interest, the operations formerly included in the Proposed JV would remain subject to the operating restrictions set forth under "-- Governance". A dissolution of the Proposed JV may be triggered (1) by BAM at any time following the third anniversary of the formation of the Proposed JV and (2) by the Company at any time following the fourth anniversary of its formation; however, if the Company triggers the dissolution prior to the seventh anniversary, it may be required to make additional cash payments to BAM.
Transitional Services Agreement; Services Agreement
In connection with the formation of the Proposed JV, BAM and the Proposed JV are expected to enter into a transitional services agreement pursuant to which BAM will provide the Proposed JV with services necessary to ensure a smooth transition of the business to the Proposed JV. In addition, the Company and the Proposed JV are expected to enter into the services agreement pursuant to which the Company will provide the Proposed JV with certain services.
A copy of the press release issued by CCIC and BAM on December 9, 1998 with respect to the Proposed JV is attached hereto as Exhibit 99.2 and is incorporated herein by reference. A copy of the Formation Agreement is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, after giving pro forma effect to the Offering, the Company would have had consolidated cash and cash equivalents of $322.3 million (including $18.2 million at CTI), consolidated long-term debt of $425.3 million, consolidated redeemable preferred stock of $200.0 million and consolidated stockholders' equity of $745.1 million. In addition, on December 8, 1998, the Company entered into a Formation Agreement with BAM in which the Company agreed to contribute $250.0 million in cash to the Proposed JV. As of September 30, 1998, after giving pro forma effect to the Offering and the Proposed JV, the Company would have had consolidated cash and cash equivalents of $114.0 million (including $18.2 million at CTI), consolidated long-term debt of $605.3 million, consolidated redeemable preferred stock of $200.0 million and consolidated stockholders' equity of $942.1 million.
As of November 1, 1998, CCI and its subsidiaries had no significant unused borrowing availability under the Senior Credit Facility, and CTI had unused borrowing availability under the CTI Credit Facility of approximately (Pounds)30.0 million ($51.0 million). As of September 30, 1998, after giving pro forma effect to the Offering, CCI and its subsidiaries and CTI and its subsidiaries would have had approximately $ 73.9 million and (Pounds)30.0 million ($51.0 million) of unused borrowing availability, respectively, under the Senior Credit Facility and the CTI Credit Facility. At formation of the joint venture, the Proposed JV will borrow $180.0 million under a committed $250.0 million credit facility. The Senior Credit Facility and the CTI Credit Facility require, and the Proposed JV Credit Facility will require, that the respective borrowers maintain certain financial covenants; in addition, all three credit facilities place restrictions on the ability of the Company and its subsidiaries to, among other things, incur debt and liens, pay dividends, make capital expenditures, undertake transactions with affiliates and make investments. These facilities also limit the ability of the Company's subsidiaries to pay dividends to CCIC.
The Company's business strategy contemplates substantial capital expenditures in connection with (i) the expansion of its tower footprints by partnering with wireless communications carriers to assume ownership of their existing towers and by pursuing build-to-suit opportunities and (ii) to acquire existing transmission networks globally as opportunities arise. The exact amount of such capital expenditures will depend on the
number of such opportunities that the Company is able to successfully consummate. In addition to the Proposed JV, the Company is currently pursuing other potential significant acquisitions, investments and joint venture opportunities that could require the Company to use all remaining proceeds of this Offering and to raise additional debt or equity financing in the near term. However, there can be no assurance that the Company will consummate any of these transactions in the near term or at all.
In addition, the Company anticipates that it will build, through the end of 1999, approximately 600 towers in the United States at a cost of approximately $135.0 million and approximately 200 towers in the United Kingdom at a cost of approximately $23.0 million. The Company also expects that the capital expenditure requirements related to the roll-out of digital broadcast transmission in the United Kingdom will be approximately (Pounds)110.0 million ($187.0 million). Capital expenditures were $77.7 million for the nine months ended September 30, 1998, of which $3.4 million was for CCIC, $62.1 million was for Crown and $12.2 million was for CTI. On a pro forma basis after giving effect to the Proposed JV, capital expenditures (excluding acquisitions) would have been $74.1 million for the year ended December 31, 1997 (of which $3.4 million would have been for CCIC and TEA, $27.1 million would have been for Crown, $17.6 million would have been for the Proposed JV and $26.0 million would have been for CTI), and $140.0 million for the nine months ended September 30, 1998 (of which $3.4 million would have been for CCIC, $62.1 million would have been for Crown, $2.5 million would have been for the Proposed JV and $72.0 million would have been for CTI). The Company has budgeted capital expenditures (excluding acquisitions) of $62.0 million for the three months ended December 31, 1998 and $337.0 million for the fiscal year ended December 31, 1999 (of which $37.0 million is budgeted for the Proposed JV).
To fund the execution of the Company's business strategy, the Company and its subsidiaries expect to use the net proceeds of the Offering, the borrowings available under the Senior Credit Facility, the borrowings available under the CTI Credit Facility and the remaining net proceeds from the 1997 Notes Offering and the initial public offering of the Company's Common Stock (the "IPO"). Whether the Company utilizes the Senior Credit Facility and the CTI Credit Facility to finance expansion opportunities will depend upon a number of factors, including (i) the attractiveness of the opportunities, (ii) the time frame in which they are identified, (iii) the number of pre-existing projects to which the Company is committed and (iv) the Company's liquidity at the time of any potential opportunity. In the event the Company does not otherwise have cash available (from the net proceeds of the 1997 Notes Offering, the IPO, this Offering or otherwise), or borrowings under the Senior Credit Facility or the CTI Credit Facility have otherwise been utilized, when an opportunity arises, the Company would be forced to seek additional debt or equity financing or to forego the opportunity. In the event the Company determines to seek additional debt or equity financing, there can be no assurance that any such financing will be available (on commercially acceptable terms or at all) or permitted by the terms of the Company's existing indebtedness. To the extent the Company is unable to finance future capital expenditures, it will be unable to achieve its currently contemplated business strategy.
For the nine months ended September 30, 1997 and 1998, the Company's net cash provided by (used for) operating activities was ($2.1 million) and $3.4 million, respectively. For the years ended December 31, 1995, 1996 and 1997, the Company's net cash provided by (used for) operating activities was $1.7 million ($0.5 million) and ($0.6 million), respectively. Since its inception, the Company has generally funded its activities (other than its acquisitions and investments) through excess proceeds from contributions of equity capital. The Company has financed its acquisitions and investments with the proceeds from equity contributions, borrowings under the Senior Credit Facility and the issuance of promissory notes to sellers. Since its inception, CTI has generally funded its activities (other than the acquisition of the BBC Home Service Transmission business from the BBC (the "BBC Home Service Transmission Business")) through cash provided by operations and borrowings under the CTI Credit Facility. CTI financed the acquisition of the BBC Home Service Transmission Business with the proceeds from equity contributions and the issuance of the CTI Bonds.
On August 18, 1998, the Company consummated the IPO at a price to the public of $13 per share. The Company sold 12,320,000 shares of its common stock and received proceeds of $151.0 million (after underwriting discounts of $9.1 million but before other expenses of the IPO, which are expected to total
approximately $3.8 million). The net proceeds from the IPO were contributed to an unrestricted subsidiary and are currently invested in short-term investments.
On August 18, 1998, the Company consummated a share exchange with certain shareholders of CTI, which increased the Company's ownership of CTI from approximately 34.3% to 80.0%. The Company issued 20,867,700 shares of its Common Stock and 11,340,000 shares of its Class A Common Stock, with such shares valued at an aggregate of $418.7 million (based on the price per share to the public in the IPO). The Company recognized goodwill of $343.9 million in connection with this transaction, which was accounted for as an acquisition using the purchase method. CTI's results of operations and cash flows are included in the consolidated financial statements for the period subsequent to the date the exchange was consummated.
In July 1998, all of the holders of the Company's Senior Convertible Preferred Stock converted such shares into an aggregate of 9,629,200 shares of the Company's common stock. Upon consummation of the IPO, all of the holders of the Company's then-existing shares of Class A Common Stock, Class B Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock converted such shares into an aggregate of 39,842,290 shares of the Company's common stock.
In August and October of 1997, CCIC issued shares of its Senior Convertible Preferred Stock for aggregate net proceeds of $29.3 million and $36.5 million, respectively. The proceeds from the August issuance were used to make a $25.0 million payment as part of the cash purchase price for the Crown Merger. On October 31, 1997, the Company entered into an amendment to the Senior Credit Facility. As amended, the Senior Credit Facility provides for available borrowings of $100.0 million and expires on December 31, 2004. On October 31, 1997, in connection with the October Refinancing, new borrowings under the Senior Credit Facility of $94.7 million, along with the proceeds from the October issuance of the Senior Convertible Preferred Stock, were used to repay the seller note issued in connection with the Crown Merger, to repay loans outstanding under a credit agreement at CCI and to pay related fees and expenses.
CCIC used the net proceeds from the 1997 Notes Offering to repay substantially all of its outstanding indebtedness, including borrowings under the Senior Credit Facility, and to pay related fees and expenses. The balance of the net proceeds from the 1997 Notes Offering is being used for general corporate purposes.
On October 8, 1998, the Company acquired all of the outstanding shares of Millennium Communications Limited ("Millennium") for aggregate consideration of $14.5 million, consisting of cash, CCIC common stock and the assumption of indebtedness. Millennium develops, owns and operates telecommunications towers and related assets in the United Kingdom. On the date of acquisition, Millennium owned 102 tower sites. Millennium is being operated as a subsidiary of CTI.
On February 28, 1997, CTI used the proceeds from equity contributions and borrowings under the CTI Credit Facility to finance the acquisition of the BBC Home Service Transmission Business. On May 21, 1997, CTI used the net proceeds from the sale of the CTI Bonds to repay substantially all of the outstanding borrowings under the CTI Credit Facility. On July 17, 1998, the lenders (acting through Credit Suisse First Boston, as agent) under the CTI Credit Facility waived a provision in the CTI Credit Facility that would have required the repayment of the CTI Credit Facility concurrently with the listing of the Company's Common Stock.
Prior to May 15, 2003, the Company's interest expense on the Notes will be comprised solely of the amortization of original issue discount. Thereafter, the Notes will require annual cash interest payments of approximately $26.7 million. Annual cash interest payments on the CTI Bonds are (Pounds)11.25 million ($19.1 million). In addition, the Senior Credit Facility and the CTI Credit Facility will require periodic interest payments on amounts borrowed thereunder. The Company's ability to make scheduled payments of principal of, or to pay interest on, its debt obligations, and its ability to refinance any such debt obligations (including the Notes and the CTI Bonds), will depend on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control.
As discussed above, the Company's business strategy contemplates substantial acquisitions and capital expenditures in connection with the expansion of its tower footprints. There can be no assurance that the Company will generate sufficient cash flow from operations in the future, that anticipated revenue growth will be realized or that future borrowings, equity contributions or loans from affiliates will be available in an amount sufficient to service its indebtedness and make anticipated capital expenditures. The Company anticipates that it may need to refinance all or a portion of its indebtedness (including the Notes and the CTI Bonds) on or prior to its scheduled maturity. There can be no assurance that the Company will be able to effect any required refinancings of its indebtedness (including the Notes and the CTI Bonds) on commercially reasonable terms or at all.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements (the "Pro Forma Financial Statements") are based on the historical financial statements of CCIC and the historical financial statements of the entities acquired by CCIC (including TEA and Crown) during the periods presented, adjusted to give effect to the following transactions (collectively, the "Transactions"): (i) the CTI Investment, (ii) the TEA Acquisition, (iii) the acquisition of TeleStructures (the "TeleStructures Acquisition"), (iv) the Crown Merger (together with the acquisitions described in clauses (i), (ii) and (iii), the "Historical Acquisitions"), (v) the 1997 Refinancing, (vi) the Roll-Up, (vii) the IPO, (viii) the Senior Preferred Conversion, (ix) the Offering and (x) the Proposed JV.
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 1997 gives effect to the Transactions as if they had occurred as of January 1, 1997, and the Unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 1998 gives effect to the Roll-Up, the IPO, the Senior Preferred Conversion, the Offering and the Proposed JV as if they had occurred as of January 1, 1998. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the Offering and the Proposed JV as if they had occurred as of September 30, 1998. The pro forma adjustments are described in the accompanying notes and are based upon available information and certain assumptions that management believes are reasonable.
Included in the notes accompanying the Pro Forma Financial Statements are tables summarizing the unaudited pro forma results of operations and balance sheet for CCIC and its Restricted Subsidiaries (as defined in the Indenture governing the Notes, the "Indenture"); such group of companies is hereinafter referred to as the "Restricted Group". The Restricted Group excludes CTI and the Proposed JV, both of which are designated as Unrestricted Subsidiaries (as defined in the Indenture).
The Pro Forma Financial Statements do not purport to represent what CCIC's results of operations or financial condition would actually have been had the Transactions in fact occurred on such dates or to project CCIC's results of operations or financial condition for any future date or period.
The Historical Acquisitions, the Roll-Up and the Proposed JV are accounted for under the purchase method of accounting. The total purchase price for each Historical Acquisition, the Roll-Up and the Proposed JV have been allocated to the identifiable tangible and intangible assets and liabilities of the applicable acquired business based upon CCIC's preliminary estimate of their fair values with the remainder allocated to goodwill and other intangible assets. The allocations of the purchase prices are subject to revision when additional information concerning asset and liability valuations is obtained; however, the Company does not expect that any such revisions will have a material effect on its consolidated financial position or results of operations. The Company has recorded the purchase price for the Roll-Up based on (i) the number of shares of CCIC's Common Stock and Class A Common Stock exchanged for shares of CTI 's capital stock and (ii) the price per share received by CCIC from the IPO.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA FOR ADJUSTMENTS PRO HISTORICAL FOR FORMA FOR ACQUISITIONS, HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS 1997 ------------------------- ACQUISITIONS ACQUISITIONS HISTORICAL FOR REFINANCING, ADJUSTMENTS HISTORICAL AND 1997 AND 1997 CTI ROLL-UP AND ROLL-UP AND FOR CCIC(A) ACQUISITIONS(A) REFINANCING REFINANCING (J) IPO IPO OFFERING -------- --------------- ------------ ------------ ---------- ----------- ------------- ----------- Net revenues: Site rental and broadcast transmission..... $ 11,010 $ 4,550 $ -- $ 15,560 $110,922 $ -- $126,482 $ -- Network services and other........ 20,395 21,964 (1,068)(b) 41,291 13,558 (395)(k) 54,454 -- -------- ------- -------- -------- -------- ------- -------- -------- Total net revenues........ 31,405 26,514 (1,068) 56,851 124,480 (395) 180,936 -- -------- ------- -------- -------- -------- ------- -------- -------- Operating expenses: Costs of operations: Site rental and broadcast transmission..... 2,213 1,421 -- 3,634 53,806 -- 57,440 -- Network services and other........ 13,137 13,303 (1,134)(c) 25,306 5,990 -- 31,296 -- General and administrative... 6,824 4,430 -- 11,254 9,124 (395)(k) 19,983 -- Corporate development...... 5,731 -- (2,224)(d) 3,507 -- -- 3,507 -- Depreciation and amortization..... 6,952 1,058 5,179 (e) 13,189 34,627 17,138 (l) 64,954 -- -------- ------- -------- -------- -------- ------- -------- -------- 34,857 20,212 1,821 56,890 103,547 16,743 177,180 -- -------- ------- -------- -------- -------- ------- -------- -------- Operating income (loss)............ (3,452) 6,302 (2,889) (39) 20,933 (17,138) 3,756 -- Other income (expense): Equity in losses of unconsolidated affiliate........ (1,138) -- (136)(f) (1,274) -- 1,274(m) -- -- Interest and other income (expense)........ 1,951 (17) (1,165)(g) 769 552 -- 1,321 -- Interest expense and amortization of deferred financing costs.. (9,254) (943) (7,638)(h) (17,835) (20,473) -- (38,308) -- -------- ------- -------- -------- -------- ------- -------- -------- Income (loss) before income taxes and minority interests......... (11,893) 5,342 (11,828) (18,379) 1,012 (15,864) (33,231) -- Provision for income taxes...... (49) (1) -- (50) -- -- (50) -- Minority interests......... -- -- -- -- -- (1,320)(n) (1,320) -- -------- ------- -------- -------- -------- ------- -------- -------- Net income (loss)............ (11,942) 5,341 (11,828) (18,429) 1,012 (17,184) (34,601) -- Dividends on Preferred Stock... (2,199) -- (6,134)(i) (8,333) -- 8,333 (o) -- (24,011)(p) -------- ------- -------- -------- -------- ------- -------- -------- Net income (loss) after deduction of dividends on Preferred Stock... $(14,141) $ 5,341 $(17,962) $(26,762) $ 1,012 $(8,851) $(34,601) $(24,011) ======== ======= ======== ======== ======== ======= ======== ======== Loss per common share-basic and diluted.......... $ (2.27) $ (0.37) ======== ======== Common shares outstanding- basic and diluted (in thousands)... 6,238 93,988 ======== ======== PRO FORMA FOR PRO OFFERING FORMA HISTORICAL ADJUSTMENTS AND FOR PROPOSED FOR PROPOSED OFFERING JV(Q) PROPOSED JV JV --------- ---------- -------------- --------- Net revenues: Site rental and broadcast transmission..... $126,482 $ 6,480 $ 27,812 (r) $160,774 Network services and other........ 54,454 -- -- 54,454 --------- ---------- -------------- --------- Total net revenues........ 180,936 6,480 27,812 215,228 --------- ---------- -------------- --------- Operating expenses: Costs of operations: Site rental and broadcast transmission..... 57,440 15,131 -- (s) 72,571 Network services and other........ 31,296 -- -- 31,296 General and administrative... 19,983 -- -- (s) 19,983 Corporate development...... 3,507 -- -- 3,507 Depreciation and amortization..... 64,954 7,221 22,405 (t) 94,580 --------- ---------- -------------- --------- 177,180 22,352 22,405 221,937 --------- ---------- -------------- --------- Operating income (loss)............ 3,756 (15,872) 5,407 (6,709) Other income (expense): Equity in losses of unconsolidated affiliate........ -- -- -- -- Interest and other income (expense)........ 1,321 -- -- 1,321 Interest expense and amortization of deferred financing costs.. (38,308) -- (17,711)(u) (56,019) --------- ---------- -------------- --------- Income (loss) before income taxes and minority interests......... (33,231) (15,872) (12,304) (61,407) Provision for income taxes...... (50) -- -- (50) Minority interests......... (1,320) -- 7,205 (v) 5,885 --------- ---------- -------------- --------- Net income (loss)............ (34,601) (15,872) (5,099) (55,572) Dividends on Preferred Stock... (24,011) -- -- (24,011) --------- ---------- -------------- --------- Net income (loss) after deduction of dividends on Preferred Stock... $(58,612) $(15,872) $ (5,099) $(79,583) ========= ========== ============== ========= Loss per common share-basic and diluted.......... $ (0.62) $ (0.73) ========= ========= Common shares outstanding- basic and diluted (in thousands)... 93,988 109,563(x) ======== ======== |
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO PRO FORMA ADJUSTMENTS FORMA PRO FOR HISTORICAL FOR FOR ADJUSTMENTS FORMA HISTORICAL ADJUSTMENTS OFFERING AND ----------------- ROLL-UP AND ROLL-UP FOR FOR PROPOSED FOR PROPOSED CCIC CTI(J) IPO AND IPO OFFERING OFFERING JV(Q) PROPOSED JV JV -------- ------- ----------- -------- ----------- -------- ---------- ----------- ------------ Net revenues: Site rental and broadcast transmission...... $ 28,456 $84,714 $ -- $113,170 $ -- $113,170 $ 8,302 $22,986 (r) $144,458 Network services and other......... 23,805 12,514 (265)(k) 36,054 -- 36,054 -- -- 36,054 -------- ------- -------- -------- -------- -------- -------- ------- -------- Total net revenues......... 52,261 97,228 (265) 149,224 -- 149,224 8,302 22,986 180,512 -------- ------- -------- -------- -------- -------- -------- ------- -------- Operating expenses: Costs of operations: Site rental and broadcast transmission...... 8,398 35,901 -- 44,299 -- 44,299 12,285 -- (s) 56,584 Network services and other......... 14,234 7,916 -- 22,150 -- 22,150 -- -- 22,150 General and administrative.... 15,022 5,265 (265)(k) 20,022 -- 20,022 -- -- (s) 20,022 Corporate development....... 2,838 8 -- 2,846 -- 2,846 -- -- 2,846 Non-cash compensation charges........... 11,361 3,831 -- 15,192 -- 15,192 -- -- 15,192 Depreciation and amortization...... 17,105 25,684 11,463 (l) 54,252 -- 54,252 6,206 16,013 (t) 76,471 -------- ------- -------- -------- -------- -------- -------- ------- -------- 68,958 78,605 11,198 158,761 -- 158,761 18,491 16,013 193,265 -------- ------- -------- -------- -------- -------- -------- ------- -------- Operating income (loss)............. (16,697) 18,623 (11,463) (9,537) -- (9,537) (10,189) 6,973 (12,753) Other income (expense): Equity in earnings of unconsolidated affiliate......... 2,055 -- (2,055)(m) -- -- -- -- -- -- Interest and other income (expense).. 2,293 725 -- 3,018 -- 3,018 -- -- 3,018 Interest expense and amortization of deferred financing costs... (17,581) (13,378) -- (30,959) 2,587 (w) (28,372) -- (13,283)(u) (41,655) -------- ------- -------- -------- -------- -------- -------- ------- -------- Income (loss) before income taxes and minority interests.......... (29,930) 5,970 (13,518) (37,478) 2,587 (34,891) (10,189) (6,310) (51,390) Provision for income taxes.............. (218) -- -- (218) -- (218) -- -- (218) Minority interests.. (328) -- (1,194)(n) (1,522) -- (1,522) -- 3,659 (v) 2,137 -------- ------- -------- -------- -------- -------- -------- ------- -------- Net income (loss)... (30,476) 5,970 (14,712) (39,218) 2,587 (36,631) (10,189) (2,651) (49,471) Dividends on Preferred Stock.... (4,348) -- 4,348 (o) -- (17,751)(p) (17,751) -- -- (17,751) -------- ------- -------- -------- -------- -------- -------- ------- -------- Net income (loss) after deduction of dividends on Preferred Stock.... $(34,824) $ 5,970 $(10,364) $(39,218) $(15,164) $(54,382) $(10,189) $(2,651) $(67,222) ======== ======= ======== ======== ======== ======== ======== ======= ======== Loss per common share - basic and diluted....... $ (1.38) $ (0.42) $ (0.58) $ (0.61) ======== ======== ======== ======== Common shares outstanding - basic and diluted (in thousands).... 25,262 93,990 93,990 109,565(x) ====== ====== ====== ========== |
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) The historical results of operations for each of the entities acquired by CCIC in the Historical Acquisitions are included in CCIC's historical results of operations for the period from their respective dates of acquisition through the end of the period presented. The historical results of operations presented for each of the acquired entities are their pre-acquisition results of operations. Set forth below are the respective dates of each Historical Acquisition:
COMPANY DATE ------- ---- TEA........................................................ May 12, 1997 TeleStructures............................................. May 12, 1997 Crown...................................................... August 15, 1997 |
(b) Reflects the following adjustments to net revenues:
YEAR ENDED DECEMBER 31, 1997 ----------------- Elimination of intercompany sales between TEA and TeleStructures......................................... $(1,134) Addition of management fee payable to CCIC from CTI for the portion of the period preceding the CTI Investment(i).......................................... 66 ------- Total adjustments to net revenues.................... $(1,068) ======= |
(c) Reflects the elimination of intercompany transactions between TEA and TeleStructures.
(d) Reflects the elimination of (i) nonrecurring cash bonus awards of $913 paid to certain executive officers in connection with the CTI Investment and (ii) a nonrecurring cash charge of $1,311 related to the purchase by CCIC of shares of Class B Common Stock from CCIC's former chief executive officer in connection with the CTI Investment.
(e) Reflects the incremental amortization of goodwill and other intangible assets and the incremental depreciation of property and equipment as a result of the Historical Acquisitions. Goodwill is being amortized over twenty years and other intangible assets (primarily existing contracts) are being amortized over ten years.
(f) Reflects equity accounting adjustments to include CCIC's percentage in CTI's losses for the preinvestment period.
(g) Reflects the elimination of a nonrecurring success fee received by CCIC in connection with the CTI Investment.
(h) Reflects (i) additional interest expense of $5,291 attributable to the seller notes issued in connection with the Crown Merger and the TEA Acquisition and borrowings under the Senior Credit Facility prior to October 31, 1997 at interest rates ranging from 8.0% to 11.0%, and (ii) net increase in interest expense of $4,267 as a result of the issuance of the Notes in connection with the 1997 Refinancing at an interest rate on the Notes of 10.625% per annum. The adjustment also includes the elimination of $1,920 of nonrecurring financing fees charged to interest expense in September and October of 1997. Such fees related to an unfunded interim loan facility related to the Crown Merger and an unfunded revolving credit facility.
(i) Reflects additional dividends attributable to the Senior Convertible Preferred Stock prior to the dates of issuance.
(j) Reflects the historical results of operations of CTI (under U.S. GAAP) for the periods prior to the consummation of the Roll-Up in August 1998. Such results have been translated from pounds sterling to U.S. dollars at the average Noon Buying Rate for the period.
(k) Reflects the elimination of management fees payable to CCIC from CTI.
(l) Reflects the incremental amortization of goodwill as a result of the Roll- Up. Goodwill is being amortized over twenty years.
(m) Reflects the elimination of equity accounting adjustments to include CCIC's percentage in CTI's earnings and losses.
(n) Reflects the minority interest in dividends accrued on CTI's Redeemable Preference Shares.
(o) Reflects decrease in dividends attributable to the conversion of the outstanding shares of Senior Convertible Preferred Stock into shares of Common Stock in the Senior Preferred Conversion.
(p) Reflects dividends attributable to the Exchangeable Preferred Stock issued in the Offering.
(q) Reflects the historical results of operations of the tower operations to be contributed to the Proposed JV.
(r) Reflects additional revenues to be recognized by the Proposed JV pursuant to the Global Lease and the Formation Agreement.
(s) CCIC expects that the Proposed JV will incur incremental operating expenses as a stand-alone entity. Such incremental expenses are currently estimated to amount to approximately $5.2 million per year.
(t) Reflects the incremental depreciation of property and equipment as a result of the Proposed JV.
(u) Reflects additional interest expense attributable to borrowings under a credit facility to be entered into by the Proposed JV. Such borrowings are initially estimated to incur interest at a rate of 9.25%.
(v) Reflects the minority partner's 37.7% interest in the Proposed JV's operations.
(w) Reflects decrease in interest expense attributable to the repayment of borrowings under the Senior Credit Facility from a portion of the net proceeds of the Offering.
(x) Includes 15,575,046 shares of the Company's common stock, which is expected to be issued to the Proposed JV upon the formation of the Proposed JV.
The following tables summarize the unaudited pro forma results of operations for the Restricted Group. Such information is not intended as an alternative measure of operating results as determined in accordance with generally accepted accounting principles.
YEAR ENDED DECEMBER 31, 1997 NINE MONTHS ENDED SEPTEMBER 30, 1998 --------------------------------------------- --------------------------------------------- RESTRICTED RESTRICTED PRO EXCLUSION GROUP PRO PRO EXCLUSION GROUP PRO FORMA EXCLUSION OF OF CERTAIN FORMA FORMA EXCLUSION OF OF CERTAIN FORMA FOR UNRESTRICTED ADJUSTMENTS FOR FOR UNRESTRICTED ADJUSTMENTS FOR OFFERING SUBSIDIARY FOR ROLL-UP OFFERING OFFERING SUBSIDIARIES FOR ROLL-UP OFFERING -------- ------------ ----------- ---------- -------- ------------ ----------- ---------- Net revenues: Site rental and broadcast transmission......... $126,482 $(110,992) $ -- $ 15,560 $113,170 $(97,040) $ -- $ 16,130 Network services and other................ 54,454 (13,558) -- 40,896 36,054 (14,456) -- 21,598 -------- --------- ------- -------- -------- -------- ------- -------- Total net revenues.. 180,936 (124,480) -- 56,456 149,224 (111,496) -- 37,728 -------- --------- ------- -------- -------- -------- ------- -------- Operating expenses: Costs of operations: Site rental and broadcast transmission....... 57,440 (53,806) -- 3,634 44,299 (40,225) -- 4,074 Network services and other.............. 31,296 (5,990) -- 25,306 22,150 (9,847) -- 12,303 General and administrative....... 19,983 (9,124) 395 11,254 20,022 (6,017) 265 14,270 Corporate development.......... 3,507 -- -- 3,507 2,846 (8) -- 2,838 Non-cash compensation charges.............. -- -- -- -- 15,192 (5,808) -- 9,384 Depreciation and amortization......... 64,954 (34,627) (17,138) 13,189 54,252 (30,747) (11,463) 12,042 -------- --------- ------- -------- -------- -------- ------- -------- 177,180 (103,547) (16,743) 56,890 158,761 (92,652) (11,198) 54,911 -------- --------- ------- -------- -------- -------- ------- -------- Operating income (loss)................ 3,756 (20,933) 16,743 (434) (9,537) (18,844) 11,198 (17,183) Other income (expense): Interest and other income (expense)..... 1,321 (552) -- 769 3,018 (1,632) -- 1,386 Interest expense and amortization of deferred financing costs................ (38,308) 20,473 -- (17,835) (28,372) 15,055 -- (13,317) -------- --------- ------- -------- -------- -------- ------- -------- Income (loss) before income taxes and minority interests.... (33,231) (1,012) 16,743 (17,500) (34,891) (5,421) 11,198 (29,114) Provision for income taxes................. (50) -- -- (50) (218) -- -- (218) Minority interests..... (1,320) -- 1,320 -- (1,522) 328 1,194 -- -------- --------- ------- -------- -------- -------- ------- -------- Net income (loss)...... (34,601) (1,012) 18,063 (17,550) (36,631) (5,093) 12,392 (29,332) Dividends on Preferred Stock................. (24,011) -- -- (24,011) (17,751) -- -- (17,751) -------- --------- ------- -------- -------- -------- ------- -------- Net income (loss) after deduction of dividends on Preferred Stock.... $(58,612) $ (1,012) $18,063 $(41,561) $(54,382) $ (5,093) $12,392 $(47,083) ======== ========= ======= ======== ======== ======== ======= ======== |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
PRO FORMA ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS FOR OFFERING HISTORICAL FOR FOR PROPOSED FOR AND CCIC OFFERING OFFERING JV(E) PROPOSED JV PROPOSED JV ---------- ----------- ---------- ---------- ----------- ------------ ASSETS: Current assets: Cash and cash equivalents.......... $ 201,349 $121,000(a) $ 322,349 $ -- $(208,375)(f) $ 113,974 Receivables........... 34,499 -- 34,499 -- -- 34,499 Inventories........... 5,209 -- 5,209 -- -- 5,209 Prepaid expenses and other current assets............... 2,883 -- 2,883 48 -- 2,931 ---------- -------- ---------- ------- --------- ---------- Total current assets............. 243,940 121,000 364,940 48 (208,375) 156,613 Property and equipment, net.................... 544,486 -- 544,486 84,089 508,424(g) 1,136,999 Investments in affiliates............. 2,221 -- 2,221 -- -- 2,221 Goodwill and other intangible assets, net.................... 563,706 -- 563,706 -- -- 563,706 Deferred financing costs and other assets, net.. 15,586 -- 15,586 -- 4,625(h) 20,211 ---------- -------- ---------- ------- --------- ---------- $1,369,939 $121,000 $1,490,939 $84,137 $ 304,674 $1,879,750 ========== ======== ========== ======= ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable...... $ 30,271 $ -- $ 30,271 $ -- $ -- $ 30,271 Other current liabilities.......... 47,078 -- 47,078 -- -- 47,078 Long-term debt, current maturities... -- -- -- -- -- -- ---------- -------- ---------- ------- --------- ---------- Total current liabilities........ 77,349 -- 77,349 -- -- 77,349 Long-term debt, less current maturities..... 494,324 (69,000)(b) 425,324 -- 180,000(i) 605,324 Other liabilities....... 4,620 -- 4,620 -- -- 4,620 ---------- -------- ---------- ------- --------- ---------- Total liabilities... 576,293 (69,000) 507,293 -- 180,000 687,293 ---------- -------- ---------- ------- --------- ---------- Minority interests...... 38,529 -- 38,529 -- 11,811(j) 50,340 Redeemable preferred stock.................. -- 200,000 (c) 200,000 -- -- 200,000 Stockholders' equity.... 755,117 (10,000)(d) 745,117 84,137 112,863(k) 942,117 ---------- -------- ---------- ------- --------- ---------- $1,369,939 $121,000 $1,490,939 $84,137 $ 304,674 $1,879,750 ========== ======== ========== ======= ========= ========== |
See Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) Reflects the following adjustments to cash and cash equivalents:
(1) Increase resulting from the receipt of proceeds from the Offering.................................................. $ 200,000 (2) Decrease resulting from the payment of underwriting discounts and commissions and other fees and expenses related to the Offering................................... (10,000) (3) Decrease resulting from the repayment of borrowings under the Senior Credit Facility from a portion of the net proceeds of the Offering.................................. (69,000) --------- Total adjustments to cash and cash equivalents............. $ 121,000 ========= (b) Reflects the repayment of borrowings under the Senior Credit Facility from a portion of the net proceeds of the Offering. (c) Reflects the increase resulting from the receipt of proceeds from the Offering. (d) Reflects the decrease resulting from the payment of underwriting discounts and commissions and other fees and expenses related to the Offering (e) Reflects the historical amounts from the statement of net assets for the tower operations to be contributed to the Proposed JV. (f) Reflects the following adjustments to cash and cash equivalents: (1) Increase resulting from borrowings under a credit facility to be entered into by the Proposed JV............................................... $ 180,000 (2) Decrease resulting from distribution to minority partner... (380,000) (3) Decrease resulting from payment of defined financing costs for credit facility to be entered into by the Proposed JV........................................................ (4,625) (4) Decrease resulting from payment of fees and expenses related to the Proposed JV................................... (3,750) --------- Total adjustments to cash and cash equivalents............. $(208,375) ========= (g) Reflects the increase in basis of property and equipment contributed to the Proposed JV by the minority partner. (h) Reflects the deferred financing costs for the credit facility to be entered into by the Proposed JV. (i) Reflects the borrowings under a credit facility to be entered into by the Proposed JV. (j) Reflects the 37.7% minority interest in the Proposed JV. (k) Reflects the following adjustments to stockholders' equity: (1) Increase resulting from increase in basis of property and equipment contributed to the Proposed JV by the minority partner................................................... $ 508,424 (2) Decrease resulting from distribution to minority partner... (380,000) (3) Decrease resulting from minority interest.................. (11,811) (4) Decrease resulting from payment of fees and expenses related to the Proposed JV................................... (3,750) --------- Total adjustments to stockholders' equity.................. $ 112,863 ========= |
The following table summarizes the adjustments for the Offering, with increases to liabilities and stockholders' equity balances shown as negative amounts:
ADJUSTMENT REFERENCE -------------------------------- (A)(1),(A)(2),(C),(D) (A)(3),(B) TOTALS --------------------- ---------- --------- Cash and cash equivalents.. $ 190,000 $(69,000) $ 121,000 Long-term debt, less cur- rent maturities........... -- 69,000 69,000 Redeemable preferred stock..................... (200,000) -- (200,000) Stockholders' equity....... 10,000 -- 10,000 --------- -------- --------- $ -- $ -- $ -- ========= ======== ========= |
The following table summarizes the adjustments for the Proposed JV, with increases to liabilities and stockholders' equity balances shown as negative amounts:
ADJUSTMENT REFERENCE ---------------------------------------------------------------- (G)(J),(K)(1), (F)(1),(I) (F)(2),(K)(2) (F)(3),(H) (F)(4),(K)(4) (K)(3) TOTALS ---------- ------------- ---------- ------------- -------------- --------- Cash and cash equivalents............ $180,000 $(380,000) $(4,625) $(3,750) $ -- $(208,375) Property and equipment, net.................... -- -- -- -- 508,424 508,424 Deferred financing costs and other assets, net.. -- -- 4,625 -- -- 4,625 Long-term debt, less current maturities..... (180,000) -- -- -- -- (180,000) Minority interests...... -- -- -- -- (11,811) (11,811) Stockholders' equity.... -- 380,000 -- 3,750 (496,613) (112,863) -------- --------- ------- ------- --------- --------- $ -- $ -- $ -- $ -- $ -- $ -- ======== ========= ======= ======= ========= ========= |
The following table summarizes the unaudited pro forma balance sheet for the Restricted Group. Such information is not intended as an alternative measure of financial position as determined in accordance with generally accepted accounting principles.
AS OF SEPTEMBER 30, 1998 ----------------------------------------------------------- RESTRICTED GROUP PRO RESTRICTED FORMA PRO FORMA EXCLUSION OF GROUP PRO ADJUSTMENTS FOR OFFERING FOR UNRESTRICTED FORMA FOR FOR AND OFFERING SUBSIDIARIES OFFERING PROPOSED JV PROPOSED JV ---------- ------------ ---------- ----------- ------------ ASSETS: Current assets: Cash and cash equivalents.......... $ 322,349 $(272,414) $ 49,935 $ -- $ 49,935 Receivables........... 34,499 (21,357) 13,142 -- 13,142 Inventories........... 5,209 (3,854) 1,355 -- 1,355 Prepaid expenses and other current assets............... 2,883 (1,329) 1,554 -- 1,554 ---------- --------- ---------- -------- ---------- Total current assets............. 364,940 (298,954) 65,986 -- 65,986 Property and equipment, net.................... 544,486 (402,275) 142,211 -- 142,211 Investments in affiliates............. 2,221 -- 2,221 -- 2,221 Investments in Unrestricted Subsidiaries........... -- 750,875 750,875 197,000 947,875 Goodwill and other intangible assets, net.................... 563,706 (417,591) 146,115 -- 146,115 Deferred financing costs and other assets, net.. 15,586 (2,207) 13,379 -- 13,379 ---------- --------- ---------- -------- ---------- $1,490,939 $(370,152) $1,120,787 $197,000 $1,317,787 ========== ========= ========== ======== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities..... Accounts payable...... $ 30,271 $ (23,696) $ 6,575 $ -- $ 6,575 Other current liabilities.......... 47,078 (42,470) 4,608 -- 4,608 Long-term debt, current maturities... -- -- -- -- -- ---------- --------- ---------- -------- ---------- Total current liabilities........ 77,349 (66,166) 11,183 -- 11,183 Long-term debt, less current maturities..... 425,324 (261,521) 163,803 -- 163,803 Other liabilities....... 4,620 (3,936) 684 -- 684 ---------- --------- ---------- -------- ---------- Total liabilities... 507,293 (331,623) 175,670 -- 175,670 ---------- --------- ---------- -------- ---------- Minority interests...... 38,529 (38,529) -- -- -- Redeemable preferred stock.................. 200,000 -- 200,000 -- 200,000 Stockholders' equity.... 745,117 -- 745,117 197,000 942,117 ---------- --------- ---------- -------- ---------- $1,490,939 $(370,152) $1,120,787 $197,000 $1,317,787 ========== ========= ========== ======== ========== |
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits Exhibit No. Description ----------- ----------- 99.1 Press Release issued by CCIC dated December 9, 1998 99.2 Press Release issued by CCIC and Bell Atlantic Mobile dated December 9, 1998 99.3 Formation Agreement dated as of December 8, 1998, by and among Cellco Partnership, a Delaware general partnership doing business as Bell Atlantic Mobile, the Transferring Partnerships (as defined therein), Crown Castle International Corp. and CCA Investment Corp. (excluding most exhibits) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorize.
CROWN CASTLE INTERNATIONAL CORP.,
By: /s/ Wesley D. Cunningham ------------------------------------ Vice President, Corporate Controller and Chief Accounting Officer December 9, 1998 |
EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- ----------------------- 99.1 Press Release issued by CCIC on December 9, 1998 99.2 Press Release issued by CCIC and Bell Atlantic Mobile dated December 9, 1998 99.3 Formation Agreement dated as of December 8, 1998, by and among Cellco Partnership, a Delaware general partnership doing business as Bell Atlantic Mobile, the Transferring Partnerships (as defined therein), Crown Castle International Corp. and CCA Investment Corp. (excluding most exhibits) |
FOR RELEASE AT 6:00 P.M. EST EXHIBIT 99.1
Client: Crown Castle International Corp.
Contacts: Charles C. Green, III, CFO
Crown Castle International
713-570-3000
Ken Dennard, Easterly I.R.
Kdennard@easterly.com
713-529-6600
December 9, 1998 -- Houston, Texas -- Crown Castle International Corp. ("CCIC") (NASDAQ: TWRS), announced today that it is offering in a Rule 144A/Regulation S distribution $200 million of its senior exchangeable pay-in- kind preferred stock. CCIC has the option to exchange the exchangeable preferred stock for its senior subordinated pay-in-kind exchange debentures. The offering is expected to close later this month. The net proceeds of the offering are anticipated to be used for the proposed joint venture with Bell Atlantic Mobile, to repay outstanding bank borrowings and for general corporate purposes.
The exchangeable preferred stock has not been registered under the Securities Act of 1933 or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act
of 1933 and applicable state securities laws.
Exhibit 99.2
[LOGO] Bell Atlantic Mobile
http://www.bam.com [LOGO] CROWN
CASTLE
INTERNATIONAL
NEWS RELEASE
FOR IMMEDIATE RELEASE Contacts: For: Bell Atlantic Mobile Maggie Aloia Rohr 908-306-7757 / maloia@mobile.bam.com For: Crown Castle International Corp. Ken Dennard, Easterly Investor Relations 713-529-6600 / kdennard@easterly.com |
BELL ATLANTIC MOBILE AND CROWN CASTLE INTERNATIONAL
TEAM TO EXPAND AND MANAGE CARRIER'S TOWER NETWORK
Companies to Form Joint Venture to Grow Wireless Tower Business
BEDMINSTER, NJ & HOUSTON, TX - Bell Atlantic (NYSE:BEL) Mobile and Crown Castle International Corp. (NASDAQ:TWRS) today announced an agreement to form a joint venture company which will be majority owned and operated by Crown Castle International ("CCIC"). The new company will own, operate, and actively advance the leasing of space on Bell Atlantic Mobile's existing extensive network of high-quality wireless towers throughout the country. In addition, the joint venture company will help Bell Atlantic Mobile respond to the soaring popularity of its DigitalChoice SingleRate(sm) service by building hundreds of new towers for the carrier. Bell Atlantic Mobile will lease back space on the towers under a global lease agreement.
The transaction, in which Bell Atlantic Mobile is expected to contribute in excess of 1,400 existing towers, is valued at approximately $650 million. In addition, the joint venture intends to raise $180 million of debt, the proceeds of which will be distributed to Bell Atlantic Mobile. CCIC will own 62.3% and Bell Atlantic Mobile will own 37.7% of the new company. In addition, the agreement between CCIC and Bell Atlantic Mobile provides CCIC with the opportunity to significantly increase its stake after the fourth anniversary of the formation of the joint venture.
The new company will also be responsible for procuring available land through lease or purchase, pursuing and obtaining all regulatory approvals, and performing all related site design and construction activities. Bell Atlantic Mobile will retain control and ownership of all shelters, cell site equipment, facilities, and switching infrastructure.
"The formation of this joint venture will enable Bell Atlantic Mobile to more efficiently employ capital on our core wireless operations and should also enhance our ability to rapidly expand our geographic coverage to our subscriber base," said Dave Benson, vice president and CFO for Bell Atlantic Mobile. "We have made a considerable investment to build the best engineered and highest quality wireless network and this transaction allows us to maximize the value of our extensive portfolio of towers. After evaluating a number of competitive proposals from different operators, we selected Crown Castle because we believe Crown Castle is the right partner to maintain our high network quality and to expand the tower portfolio based on their significant operational expertise and broad industry knowledge."
"We are proud to have been selected as the partner of choice for the first major tower transaction in the US involving one of the most attractive footprints available," stated Ted B. Miller, Jr., Crown Castle International CEO. "We believe this transaction establishes Crown Castle as one of the premier independent tower operators in the U.S. as well as world-wide. Our analysis suggests that Bell Atlantic Mobile's significant tower clusters are extremely well positioned for meaningful build-out and lease-up, offering significant earnings growth potential and upside value to our shareholders as additional operators are attracted to current and future sites. The explosive growth of wireless communications is shifting tower economics towards this type of infrastructure partnership in order for carriers to cost-effectively meet the demands of their customers."
The agreements relating to the formation and operation of the joint venture company will be included as exhibits to a Form 8-K to be filed soon by CCIC with the Securities and Exchange Commission.
This press release contains various forward-looking statements and information that are based on management's belief as well as assumptions made by and information currently available to management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.
###
EXHIBIT 99.3
FORMATION AGREEMENT
relating to the formation of
CROWN ATLANTIC COMPANY LLC,
CROWN ATLANTIC HOLDING SUB LLC, and
CROWN ATLANTIC HOLDING COMPANY LLC
Dated: December 8, 1998
STEEL CO.
FORMATION AGREEMENT
Table of Contents
Page ARTICLE 1 - CERTAIN DEFINITIONS.....................................................................-2- ARTICLE 2 - FORMATION OF OPCO......................................................................-11- 2.1 Purpose of OpCo..................................................................-11- 2.2 Formation of OpCo................................................................-11- 2.3 Contribution of BAM Contributed Assets and BAM Assumed Liabilities...............-12- 2.3.1 Transfer of BAM Contributed Assets......................................-12- 2.3.2 Excluded Assets.........................................................-12- 2.3.3 Assumption of BAM Assumed Liabilities...................................-13- 2.3.4 Limitations on Assumption of Liabilities................................-14- 2.3.5 Assignment or Subcontracting of Purchased Contracts.....................-14- 2.3.6 Consent of Third Parties................................................-15- 2.3.7 Bulk Transfer Laws......................................................-15- 2.3.8 Certain Apportionments..................................................-15- 2.4 Contribution of Bidder Contributed Cash..........................................-16- 2.5 Global Lease Agreement...........................................................-16- 2.6 Build-to-Suit Agreement..........................................................-16- 2.7 Bidder Services Agreement........................................................-16- 2.8 Transitional Services Agreement..................................................-17- ARTICLE 3 - FORMATION OF HOLDCO SUB AND HOLDCO, ANTICIPATED FINANCING..............................-17- 3.1 Purpose of HoldCo and HoldCo Sub.................................................-17- 3.2 Formation of HoldCo Sub..........................................................-17- 3.3 Management Agreement.............................................................-17- 3.4 Contributed Cash Distribution....................................................-17- 3.5 Formation of HoldCo..............................................................-18- 3.6 Financing........................................................................-19- 3.7 BAM-Sub Guarantee................................................................-19- 3.8 Adjustments Based Upon Number of Included Tower Structures.......................-19- 3.9 Adjustments Based Upon Revenue Run Rate of Included Towers.......................-21- 3.10 Adjustment Based Upon Revenues Receivable under Certain Third Party Leases.......-22- ARTICLE 4 - CLOSING................................................................................-22- 4.1 Closing..........................................................................-22- 4.2 Items to be Delivered and Actions to be Taken at Closing.........................-22- 4.3 Further Assurances...............................................................-24- ARTICLE 5 - REPRESENTATIONS AND WARRANTIES.........................................................-25- 5.1 Representations and Warranties of BAM............................................-25- 5.1.1 Corporate...............................................................-25- 5.1.2 Authorization...........................................................-25- 5.1.3 Consents and Approvals..................................................-25- |
5.1.4 Title to and Condition of Assets and Related Matters....................-26- 5.1.5 Real Property...........................................................-26- 5.1.6 Legal Proceedings and Compliance with Law...............................-27- 5.1.7 Governmental Permits....................................................-27- 5.1.8 Contracts...............................................................-27- 5.1.9 Employees and Employee Relations........................................-28- 5.1.10 Employee Benefit Plans..................................................-28- 5.1.11 Environmental Matters...................................................-29- 5.1.12 Absence of Certain Changes or Events...................................-29- 5.1.13 Availability of Documents...............................................-29- 5.1.14 Purchase for Investment.................................................-29- 5.1.15 Broker or Finder........................................................-30- 5.1.16 No Other Warranties.....................................................-30- 5.2 Representations and Warranties of Transferring Partnerships......................-30- 5.2.1 Partnership.............................................................-30- 5.2.2 Authorization...........................................................-30- 5.2.3 Consents and Approvals..................................................-30- 5.3 Representations and Warranties of Bidder and Bidder Member.......................-31- 5.3.1 Corporate...............................................................-31- 5.3.2 Authorization...........................................................-31- 5.3.3 Consents and Approvals..................................................-31- 5.3.4 Broker or Finder........................................................-31- 5.3.5 Capital Stock...........................................................-31- 5.3.6 SEC Reports.............................................................-32- 5.3.7 Absence of Certain Changes..............................................-32- 5.3.8 Bidder Articles and Bylaws..............................................-32- 5.3.9 Threatened or Pending Litigation........................................-33- 5.3.10 No Impact of Bidder Agreements on OpCo, HoldCo or HoldCo Sub............-33- 5.3.11 Bidder Contributed Shares...............................................-33- 5.3.12 Share Ownership Limitations.............................................-33- 5.3.13 Bidder Financing........................................................-33- 5.3.14 Funds Available for Bidder Contribution.................................-34- 5.3.15 Purchase for Investment.................................................-34- 5.3.16 No Other Representations or Warranties..................................-34- ARTICLE 6 - AGREEMENTS PENDING CLOSING..........................................................-34- 6.1 Agreements of BAM Pending the Closing............................................-34- 6.1.1 Business in the Ordinary Course.........................................-34- 6.1.2 Update Schedules........................................................-34- 6.1.3 Conduct of Business.....................................................-35- 6.1.4 Sale of Assets; Negotiations............................................-35- 6.1.5 Access..................................................................-35- 6.1.6 Press Releases..........................................................-35- 6.1.7 Required BAM Phase I Environmental Reports..............................-36- 6.2 Agreements of Bidder and Bidder Member Pending the Closing.......................-37- 6.2.1 Update Schedules........................................................-37- 6.2.2 Conduct of Business.....................................................-37- 6.2.3 Access..................................................................-37- 6.2.4 Press Releases..........................................................-37- 6.2.5 Optional Bidder Phase I Environmental Reports...........................-38- |
6.2.6 No Modification of Commitment Letter or Forms of Financing Documents....-38- 6.2.7 Rights Agreement Amendment..............................................-38- 6.3 Agreements of BAM and Bidder Pending Closing....................................-38- 6.3.1 Approvals and Consents and Regulatory Filings...........................-38- 6.3.2 Identified Employees....................................................-39- ARTICLE 7 - CONDITIONS PRECEDENT TO THE CLOSING....................................................-39- 7.1 Conditions Precedent to BAM's Obligations........................................-39- 7.1.1 Representations and Warranties True as of the Closing Date..............-39- 7.1.2 Compliance with this Agreement..........................................-40- 7.1.3 Closing Certificate.....................................................-40- 7.1.4 Financing...............................................................-40- 7.1.5 No Threatened or Pending Litigation.....................................-40- 7.1.6 Consents and Approvals..................................................-40- 7.1.7 Optional Bidder Phase I Reports.........................................-40- 7.1.8 Fundamental Transactions................................................-40- 7.1.9 Bidder Services Agreement...............................................-40- 7.1.10 Management Agreement....................................................-41- 7.1.11 Transitional Services Agreement.........................................-41- 7.1.12 Rights Agreement Amendment..............................................-41- 7.2 Conditions Precedent to the Obligations of Bidder................................-41- 7.2.1 Representations and Warranties True as of the Closing Date..............-41- 7.2.2 Compliance with this Agreement..........................................-41- 7.2.3 Closing Certificate.....................................................-41- 7.2.4 Financing...............................................................-41- 7.2.5 No Threatened or Pending Litigation.....................................-41- 7.2.6 Consents and Approvals..................................................-42- 7.2.7 Required BAM Phase I Reports............................................-42- 7.2.8 Bidder Services Agreement...............................................-42- 7.2.9 Management Agreement....................................................-42- 7.2.10 Transitional Services Agreement.........................................-42- ARTICLE 8 - CERTAIN POST-CLOSING COVENANTS OF THE PARTIES..........................................-42- 8.1 Post-Closing Covenants Related to OpCo...........................................-42- 8.1.1 Conduct of Business.....................................................-42- 8.1.2 Solvency................................................................-43- 8.1.3 Bankruptcy..............................................................-43- 8.1.4 Indebtedness............................................................-43- 8.1.5 Liens...................................................................-43- 8.1.6 Issuance of Interests...................................................-43- 8.1.7 Contingent Obligations..................................................-43- 8.1.8 Preservation of Existence...............................................-44- 8.1.9 Merger or Sale of Assets................................................-44- 8.1.10 Dealings with Affiliates................................................-44- 8.1.11 Dividends; Distributions................................................-44- 8.2 Post-Closing Covenants Related to HoldCo, HoldCo Sub and OpCo....................-45- 8.2.1 Conduct of Business.....................................................-45- 8.2.2 Use of Proceeds.........................................................-45- 8.2.3 Solvency................................................................-45- 8.2.4 Bankruptcy..............................................................-45- |
8.2.5 Indebtedness............................................................-45- 8.2.6 Liens...................................................................-45- 8.2.7 Contingent Obligations..................................................-46- 8.2.8 Issuance of Interests...................................................-46- 8.2.9 Preservation of Existence...............................................-46- 8.2.10 Merger or Sale of Assets................................................-46- 8.2.11 Dealings with Affiliates................................................-46- 8.2.12 Business Plan and Annual Budget.........................................-46- 8.2.13 Certain Contracts.......................................................-48- 8.2.14 Action as Members of HoldCo Sub.........................................-48- 8.2.15 Voting of Bidder Contributed Shares.....................................-48- 8.3 Delivery of Financial Statements.................................................-48- 8.4 HoldCo, HoldCo Sub and OpCo Boards of Representatives............................-49- 8.5 Covenants Are For Benefit of Members.............................................-49- 8.6 Agreement Regarding Identified Employees.........................................-49- ARTICLE 9 - CERTAIN ANCILLARY ARRANGEMENTS OF THE PARTIES..........................................-49- 9.1 Restriction on Sales by Bidder...................................................-49- 9.2 Restriction on Sales by BAM......................................................-50- 9.3 BAM Right of First Refusal.......................................................-50- 9.4 Bidder Member's Right of First Refusal...........................................-51- 9.5 Right of Participation in Sales..................................................-52- 9.6 Transfer of BAM Retained Interest................................................-53- 9.7 Nomination of Director...........................................................-53- 9.8 Registration Rights..............................................................-53- 9.9 Specific Performance.............................................................-53- ARTICLE 10 - INDEMNIFICATION......................................................................-54- 10.1 Indemnification by BAM...........................................................-54- 10.2 Indemnification by Bidder........................................................-54- 10.3 Indemnification by OpCo..........................................................-55- 10.4 Indemnification by Bidder Member.................................................-55- 10.5 Procedure for Claims.............................................................-55- 10.6 Certain Limitations..............................................................-56- 10.7 Non-Third Party Claims...........................................................-57- 10.8 Claims Period....................................................................-57- 10.9 Third Party Claims...............................................................-57- 10.10 Effect of Investigation or Knowledge.............................................-57- 10.11 Losses Net of Insurance, Etc.....................................................-58- 10.12 Sole Remedies....................................................................-58- ARTICLE 11 - MISCELLANEOUS.........................................................................-58- 11.1 Dispute Resolution...............................................................-58- 11.1.1 Submission to Arbitration...............................................-58- 11.1.2 Authority of Arbitrators...............................................-59- 11.1.3 Confidentiality........................................................-59- 11.1.4 Cost of Arbitration....................................................-59- 11.2 Bidder's Reasonable Best Efforts Regarding Bidder Member's Performance...........-59- 11.3 Survival of Representations and Warranties.......................................-59- 11.4 Transfer Taxes...................................................................-59- |
11.5 Termination......................................................................-59- 11.6 Expenses.........................................................................-60- 11.7 Contents of Agreement; Parties in Interest; etc..................................-60- 11.8 Assignment and Binding Effect....................................................-61- 11.9 Notices..........................................................................-61- 11.10 Tax Reporting....................................................................-62- 11.11 Delaware Law to Govern...........................................................-63- 11.12 No Benefit to Others.............................................................-63- 11.13 Table of Contents; Headings......................................................-63- 11.14 Schedules and Exhibits...........................................................-63- 11.15 Severability.....................................................................-63- 11.16 Counterparts.....................................................................-63- 11.17 Force Majeure....................................................................-63- 11.18 Directly or Indirectly...........................................................-63- 11.19 Interpretation...................................................................-63- |
CROWN ATLANTIC COMPANY LLC
CROWN ATLANTIC HOLDING SUB LLC
CROWN ATLANTIC HOLDING COMPANY LLC
FORMATION AGREEMENT
EXHIBITS:
Exhibit A - Transferring Partnerships
Exhibit AA - Example Calculations Under Section 3.8(c)
Exhibit A-1 - Apportionments of BAM and Transferring Partnerships
Exhibit B - Form of Joinder
Exhibit 2.2 - OpCo Operating Agreement
Exhibit 2.5 - Global Lease
Exhibit 2.6 - Build-to-Suit Agreement
Exhibit 2.7 - Letter Agreement Regarding Service Agreements
Exhibit 3.2 - HoldCo Sub Operating Agreement
Exhibit 3.5 - HoldCo Operating Agreement
Exhibit 3.6 - Commitment Letter
Exhibit 3.7 - BAM-Sub Guarantee
Exhibit 8.2.12 - Business Plan and Annual Budget
Exhibit 9.8 - Registration Rights
ANNEXES
Annex I - Owned Sites and Leased Sites
Annex II - Site Leases
Annex III - Tower Leases
LIST OF SCHEDULES
Schedule 2.3.2(b)...................................... -12- Schedule 3.10.......................................... -22- Schedule 5.1.3......................................... -25- Schedule 5.1.4......................................... -26- Schedule 5.1.6......................................... -27- Schedule 5.1.7......................................... -27- Schedule 5.1.8......................................... -27- Schedule 5.1.9......................................... -28- Schedule 5.1.10........................................ -28- Schedule 5.1.11........................................ -29- Schedule 5.1.12........................................ -29- Schedule 5.2.3......................................... -30- Schedule 5.3.3......................................... -31- Schedule 5.3.5......................................... -32- Schedule 5.3.7......................................... -32- Schedule 6.1.7......................................... -36- Schedule 7.1.6......................................... -40- |
CROWN ATLANTIC COMPANY LLC
CROWN ATLANTIC HOLDING SUB LLC
CROWN ATLANTIC HOLDING COMPANY LLC
FORMATION AGREEMENT
PREAMBLE
services; and (xi) cause Bidder, HoldCo Sub and OpCo to enter into a Bidder Services Agreement (hereinafter defined) pursuant to which Bidder will offer to OpCo and HoldCo Sub certain services with respect to the tower structures owned by OpCo and HoldCo Sub. The parties hereto desire to provide in this Agreement for the terms and conditions under which BAM, the Transferring Partnerships and Bidder Member will contribute the BAM Contributed Assets and the BAM Assumed Liabilities, the Bidder Contributed Cash and the Bidder Contributed Shares, respectively, and OpCo, HoldCo Sub and HoldCo will be organized and operated. The provisions of this Preamble are subject to the provisions of Section 3.8.
NOW, THEREFORE, in consideration of the Preamble and the terms, conditions, representations, warranties, covenants, agreements and provisions herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
For convenience, certain terms used in this Agreement or any Schedule or Transaction Document are listed in alphabetical order and defined or referred to below (such terms as well as any other terms defined elsewhere in this Agreement shall be equally applicable to both the singular and plural forms of the terms defined). The term "either party" shall, unless the context otherwise requires, refer to BAM and any of its Affiliates that are parties to this Agreement on the one hand, and Bidder and any of its Affiliates that are parties to this Agreement, on the other hand.
statutory or regulatory provision shall be deemed to be a reference to any successor statutory or regulatory provision.
"ISRA" is defined in Section 5.1.3. ---- "Law" means any administrative, judicial, legislative or other statute, --- |
law, ordinance, regulation, rule, order, decree, writ, award or decision (including without limitation the common law), including those covering environmental, energy, safety, health, transportation, bribery, recordkeeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters.
3.9. "Taxes" (and "Taxable", which shall mean subject to Tax) means all taxes, ----- ------- |
duties, charges, fees, levies or other assessments imposed by any taxing authority, whether domestic or foreign, including, without limitation, income (net, gross or other including recapture of any tax items such as investment tax credits), alternative or add-on minimum tax, capital gains, gross receipts, value-added, excise, withholding, personal property, real estate, sale, use, ad valorem, license, lease, service, severance, stamp, transfer, payroll, employment, customs, duties, alternative, add-on minimum, estimated and franchise taxes (including any interest, levies, charges, penalties or additions attributable to or imposed on or with respect to any such assessment).
ARTICLE 2
FORMATION OF OPCO
(a) all Tower Structures;
(b) all of BAM's rights to all Tower Sites;
(c) all Tower Related Assets;
(d) all rights under any Governmental Permits (excluding FCC licenses) held exclusively with respect to the ownership or use of the Tower Structures or Tower Sites and not used or useful by BAM or the respective Transferring Partnership in any other part of its business and operations, to the extent such Governmental Permits are transferable to OpCo.
The provisions of this Section 2.3.1 are subject to the provisions of Sections 2.3.8, 3.8 and 6.1.7. EXHIBIT A-1 is not attached to this Agreement as of the date hereof. EXHIBIT A-1 shall be prepared by BAM based upon the partnerships listed on EXHIBIT A that become Transferring Partnerships. BAM shall deliver EXHIBIT A-1 to Bidder and the Transferring Partnerships at the Closing.
(a) any communications antennae, microwave transmitters or receivers, wiring, devices, switches, generators or other communications equipment, or any buildings, shelters or other structures housing such equipment with respect to such Tower Structures and Tower Sites;
(b) BAM's (or the Transferring Partnerships') rights to the real estate listed in 3 SCHEDULE 2.3.2(B), being real estate on which switch equipment of BAM or its Affiliates is located;
(c) corporate seals, Charter Documents, minute books, stock books, tax returns, books of account and other financial records of BAM or the respective Transferring Partnership, sales and marketing catalogs, brochures and advertising
material, the names "NYNEX," "Bell Atlantic," "Bell Atlantic Mobile," "BAM," "Cellco," "Cellular One" and all other names under which BAM, any Transferring Partnership, or any of their respective Affiliates conducts business;
(d) all Intellectual Property of BAM or any Affiliate of BAM or any Transferring Partnership, other than plans and specifications of the Tower Structures and data (in electronic or machine-readable form) with respect to third party tenants and lessors with respect to the Tower Structures;
(e) any equipment or transmissions systems used by BAM for the remote monitoring of the Tower Structures;
(f) any assets, properties or rights which are not exclusively BAM Contributed Assets;
(g) the rights that accrue or will accrue to BAM under this Agreement or any of the other Transaction Documents, including the consideration paid or to be paid to BAM hereunder;
(h) any claims or rights against third parties except solely to the extent such claims or rights relate to Assumed Liabilities or the BAM Contributed Assets;
(i) any and all rights retained by and/or granted to BAM pursuant to the Global Lease;
(j) the assets specified in SCHEDULE 2.3.2;
(k) any of the assets specified in any of the Annexes that are owned or leased by any partnership which is listed on EXHIBIT A but does not become a Transferring Partnership; and
(l) any Tower Sites (and all Tower Structures, Tower Related Assets and other BAM Contributed Assets associated with such Tower Sites) excluded from the BAM Contributed Assets pursuant to Sections 2.3.5, 2.3.6 and 6.1.7 below.
The provisions of this Section 2.3.2 are subject to the provisions of Section 2.3.8.
(a) all Liabilities (other than any BAM Retained Liability) of BAM or the Transferring Partnerships under all Contracts and purchase orders included within the BAM Contributed Assets;
(b) all Liabilities (other than any BAM Retained Liability) of BAM or the Transferring Partnerships in respect of the BAM Contributed Assets existing as of the Closing Date; and
(c) the rents, revenues, Taxes, charges and payments that are apportioned for the account of OpCo pursuant to Section 2.3.8 hereof.
performance of all obligations and the right to receive all benefits thereunder. To the extent the consent of the counterparty to such subcontracting is required under the terms of any such Contract or asset, BAM will use commercially reasonable efforts to obtain such consent; and BAM will not subcontract as described in the immediately preceding sentence in those cases, if any, in which subcontracting is expressly prohibited. If BAM is precluded from subcontracting in accordance with the foregoing or entering into a substantially similar relationship, the subject Contract or asset shall not be included in the BAM Contributed Assets, and the Liabilities under such Contract shall not be included in the BAM Assumed Liabilities.
ARTICLE 3
FORMATION OF HOLDCO SUB AND HOLDCO, ANTICIPATED FINANCING
between BAM and the Transferring Partnerships and among the Transferring Partnerships as set forth on EXHIBIT A-1.
Bidder shall pay all expenses, taxes and other charges payable in connection with the preparation, issuance and delivery of share certificates evidencing the Bidder Contributed Shares. Bidder shall at its expense promptly file all necessary listing applications and other filings necessary to cause the Bidder Contributed Shares to be listed on The NASDAQ Stock Market. Bidder shall at its expense make all required state "Blue Sky" filings in connection with the issuance of the Bidder Contributed Shares and the contribution thereof to HoldCo in connection with the provisions of this Agreement. Each certificate for the Bidder Contributed Shares or successor securities shall bear the following legend:
THESE SECURITIES (I) HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR RESALE IN CONNECTION WITH THE DISTRIBUTION HEREOF, AND (II) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (B) TO THE EXTENT APPLICABLE, RULE 144 OR ANY OTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR ANY SIMILAR RULE UNDER THE SECURITIES ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (C) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT REGISTRATION UNDER THE SECURITIES ACT IS NOT REQUIRED.
Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to a registration statement under the Securities Act) shall also bear such legend unless, in the opinion of counsel selected by the holder of such certificate and reasonably acceptable to Bidder, the securities represented thereby need no longer be subject to restrictions on resale under the Securities Act.
(i) If as a result of the number of Included Tower Structures being less than 1,427, the Lender reduces the amount of the Closing Financing Amount, then the amount of the Financing Distribution shall be reduced by an amount equal to the amount by which the Closing Financing Amount was reduced; and
(x) the quotient of (1) the difference between (aa) the product
determined by multiplying (i) 90% by (ii) an amount equal to $650,000,000
less the Amount of Decrease in Consideration, less the amount of the BAM
Capital Distribution, and (bb) the product determined by multiplying 10% by
$250,000,000, being the amount of the Bidder Contributed Cash, divided by
(2) 110%; or
(y) the difference between (1) the product determined by multiplying (aa) 90% by (bb) an amount equal to $650,000,000 less the Amount of Decrease in Consideration, and (2) the amount of the BAM Capital Distribution; and
(iii) The BAM HoldCo Interest shall be decreased from a 37.7 Percentage Interest to such lower Percentage Interest that is equal to the quotient of (A) the difference between (1) $650,000,000 less the Amount of Decrease in Consideration and (2) the amount of the BAM Capital Distribution, divided by (B) an amount equal to (1) $650,000,000 less the Amount of Decrease in Consideration, plus (2) $250,000,000, being the amount of the Bidder Contributed Cash, plus (3) the Adjusted Aggregate Share Value, less (4) the amount of the BAM Capital Distribution.
(d) If any Tower Structure does not qualify as an Included Tower
Structure at Closing because at the Closing BAM or a Transferring
Partnership is unable to deliver to OpCo the interest of BAM or the
applicable Transferring Partnership in the economic benefits of a Tower
Structure (i) for which BAM has not secured a required consent or approval
to the assignment of the related Site Lease to OpCo, or (ii) which is
located on a Tower Site that is the subject of an Environmental Condition
that is being remediated by BAM pursuant to the provisions of Section
6.1.7, and, as a result, the consideration paid, distributed and issued to
BAM and the Transferring Partnerships at the Closing is decreased pursuant
to Section 3.8(c), and if BAM or the applicable Transferring Partnership is
subsequently able to deliver to OpCo the interest of BAM or the applicable
Transferring Partnership in the economic benefits of the Tower Structure,
then, effective as of the date that such economic benefits begin to be
delivered to OpCo, the decrease in consideration that was made pursuant to
Section 3.8(c) with respect to the Tower Structure shall be reversed and
shall be recalculated, counting the Tower Structure as an Included Tower
Structure.
(a) For purposes of this Section 3.9, the average annual aggregate rents receivable from third party tenants for each Tower Structure shall be $11,186 per year (determined by dividing (i) $15,962,000 by (ii) 1,427 Tower Structures).
(c) If at the Closing the Actual Third Party Rents for the Included Towers equal or exceed the Target Third Party Rents for the Included Towers, there shall be no amounts owing by BAM to OpCo, or by OpCo to BAM, on account of the amount of rents receivable from third party tenants for the Included Tower Structures.
(d) If at the Closing the Actual Third Party Rents for the Included Towers are less than the Target Third Party Rents for the Included Towers, then the following provisions of this subsection (d) shall apply from and after the Closing Date until such time that the Actual Third Party Rents for the Included Towers equal or exceed the Target Third Party Rents for the Included Towers. On the first day of each calendar month, OpCo shall calculate the difference between the Actual Third Party Rents for the
(e) Amounts payable by BAM under Section 3.10 below shall be counted as rents receivable from third party tenants for the Included Tower Structures for purposes of determining the Actual Third Party Rents for the Included Towers under this Section 3.9.
ARTICLE 4
CLOSING
(a) BAM, the Transferring Partnerships and Bidder Member shall form OpCo by executing and delivering the OpCo Operating Agreement;
(b) BAM and the Transferring Partnerships shall deliver to OpCo such deeds, assignments, bills of sale and other good and sufficient instruments and documents of conveyance and transfer as shall be necessary and effective (in the reasonable opinion of counsel to Bidder Member, consistent with the provisions of this Agreement) to transfer and assign to, and vest in, OpCo all of the right, title and interest of BAM and the Transferring Partnerships in and to the BAM Contributed Assets to the extent and as provided in this Agreement, and OpCo shall deliver to BAM and the Transferring Partnerships an undertaking whereby OpCo will assume and agree to pay, discharge or perform, as appropriate, the BAM Assumed Liabilities to the extent and as provided in this Agreement;
(c) Bidder Member shall deliver to OpCo the Bidder Contributed Cash, as provided in this Agreement;
(d) OpCo, BAM and each of the Transferring Partnership shall execute and deliver the Global Lease;
(e) OpCo and BAM (for itself and on behalf of the Transferring Partnerships) shall execute and deliver the Build-to-Suit Agreement;
(f) BAM, the Transferring Partnerships and Bidder Member shall form HoldCo Sub by executing and delivering the HoldCo Sub Operating Agreement and contributing to HoldCo Sub the BAM OpCo Interest and the Bidder OpCo Interest;
(g) HoldCo Sub and OpCo shall execute and deliver the Management Agreement;
(h) HoldCo Sub shall deliver to HoldCo cash in an amount equal to the Contributed Cash Distribution, and HoldCo shall then immediately deliver to BAM and the Transferring Partnerships the Contributed Cash Distribution by wire transfer of immediately available funds to such accounts as BAM shall specify in writing;
(i) BAM, the Transferring Partnerships and Bidder Member shall form HoldCo by executing and delivering the HoldCo Operating Agreement and contributing to HoldCo all of their respective interests in HoldCo Sub and by Bidder Member contributing the Bidder Contributed Shares to HoldCo.;
(i) Loan Agreement among HoldCo Sub, the Lender, as agent, and the financial institutions listed therein;
(ii) Promissory Note issued by HoldCo Sub to the Lender and such other financial institutions party to the Loan Agreement;
(iii) Security Agreement between HoldCo Sub and the Lender, as agent;
(iv) Pledge Agreement between HoldCo and the Lender, as agent;
(v) Tower Subsidiary Guarantee between OpCo and the Lender, as agent;
(vi) Tower Subsidiary Security Agreement between OpCo and the Lender, as agent;
(vii) Tower Subsidiary Pledge Agreement among HoldCo Sub, BAM and the Lender, as agent;
(viii) BAM-Sub Guarantee between BAM Sub and the Lender, as agent;
(ix) Agreement between the Lender, as agent, and BAM pursuant to which BAM is granted the right to purchase the position of the Lender and such financial institutions under all of the Financing Documents and related documents and instruments upon an event of default by HoldCo Sub, the right of first offer to purchase any collateral under any foreclosure action, and certain rights of notice; and
(x) Subordination, Non-Disturbance and Attornment Agreement between BAM (for itself and on behalf of the Transferring Partnerships) and the Lender;
(k) HoldCo Sub shall deliver to HoldCo cash in an amount equal to the Financing Distribution, and HoldCo shall then immediately deliver to BAM and the Transferring Partnerships the Financing Distribution by wire transfer of immediately available funds to such accounts as BAM shall specify in writing;
(l) Bidder, HoldCo Sub and OpCo shall execute and deliver the Bidder Services Agreement;
(m) If BAM and Bidder determine that such an agreement should be entered into, BAM, HoldCo Sub and OpCo shall execute and deliver the Transitional Service Agreement; and
(n) At or prior to the Closing, the parties hereto shall also deliver to each other the agreements, opinions, certificates and other documents and instruments referred to in Article 7 hereof.
more effectively in HoldCo or to put HoldCo more fully in possession of, the Bidder Contributed Shares. Each of the parties hereto will cooperate with the other and execute and deliver to the other parties hereto such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party hereto as necessary to carry out, evidence and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
(a) Contracts which are Site Leases, disclosing for each the location of the related Tower Site, the identity of the lessor, the expiration date of the initial term under the lease, and the amount of the rental paid to the lessor by BAM thereunder for the month ended not more than forty-five (45) days prior to the date of this Agreement;
(b) Contracts which are Tower Leases, disclosing for each the location of the related Tower Site, the identity of the lessee, the expiration date of the initial term under the lease, and the amount of the rental paid by the lessee to BAM thereunder for the month ended not more than forty-five (45) days prior to the date of this Agreement;
(c) Contracts which are Tower Equipment Leases, disclosing for each the location of the related Tower Site, the type of equipment leased, the identity of the lessor, the expiration date of the initial term under the lease and the amount of the rental paid to the lessor by BAM thereunder for the month ended not more than forty-five (45) days prior to the date of this Agreement;
(d) Contracts which are Tower Service Contracts, disclosing for each the location of the related Tower Site, the identity of the service provider, the type of service provided, the expiration date of the initial term under the Contract and the amount of the fees paid by BAM to the
service provider thereunder for the month ended not more than forty-five (45) days prior to the date of this Agreement;
(e) Contracts under which any Encumbrances, other than Permitted Encumbrances, exist with respect to the BAM Contributed Assets; and
(f) Contracts (other than Minor Contracts and those described in any of (a) through (e) above) (i) which relate to the Tower Structures or Tower Sites which were entered into after December 31, 1997 and which were not made in the ordinary course of the business of BAM or (ii) which were made in the ordinary course of business and involve remaining payments under any such Contract of more than $500,000.
(b) All such Benefit Plans conform (and at all times have conformed) in all material respects to, and are being administered and operated (and have at all times been administered and operated) in material compliance with, the requirements of ERISA, the Code and all other applicable Laws.
(c) Any such Benefit Plan that is intended to be qualified under
Section 401(a) of the Code and exempt from tax under Section 501(a) of the Code
has been determined by the Internal Revenue Service to be so qualified and such
determination remains in effect and has not been revoked. Nothing has occurred
since the date of any such determination that is reasonably likely to
affect adversely such qualification or exemption, or result in the imposition of excise Taxes or income Taxes on unrelated business income under the Code or ERISA with respect to any such Benefit Plan.
(d) There are no pending or, to BAM's knowledge, threatened claims by or on behalf of any such Benefit Plans, or by or on behalf of any Covered Persons under any such Benefit Plans, alleging any breach of fiduciary duty on the part of BAM or any of its officers, directors or employees under ERISA or any other applicable regulations, or claiming benefit payments (other than those made in the ordinary operation of such plans), nor is there, to BAM's knowledge, any basis for any such claim. Such Benefit Plans are not the subject of any pending or, to BAM's knowledge, threatened investigation or audit by the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation.
(e) BAM has timely made all required contributions under such Benefit Plans.
(f) BAM has not taken any action that may result in OpCo being a party to, bound by or subject to any Liability on account of, any such Benefit Plan following the consummation of the Transactions.
sions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law.
result in the creation or imposition of any Encumbrance upon the BAM Contributed Assets owned by such Transferring Partnership, other than Permitted Encumbrances.
shares of which were reserved for future option grants). Except for the 358,678 shares issued in connection with the acquisition of Millennium Communications Limited, since September 30, 1998, to the date of this Agreement, no additional shares of capital stock have been reserved for issuance by Bidder and the only issuances of shares of capital stock of Bidder have been issuances of Bidder Common Stock upon the exercise of outstanding Bidder stock options as listed in 3 SCHEDULE 5.3.5 or as permitted under Section 7.1.9(d). As of the date of this Agreement, there are no existing subscriptions, options, warrants, convertible securities, calls, commitments, agreements, conversion rights or other rights of any character (contingent or otherwise) calling for or requiring the issuance, transfer, sale or other disposition of any shares of the capital stock of Bidder, or calling for or requiring the issuance of any securities or rights convertible into or exchangeable for shares of capital stock of Bidder, in any case except as set forth in SCHEDULE 5.3.5. Bidder Member is an indirect wholly- owned subsidiary of Bidder.
obligations and requirements that are set forth in the Commitment Letter and applicable to Bidder and Bidder Member.
ARTICLE 6
AGREEMENTS PENDING CLOSING
connection with obtaining a required consent to or approval of the transactions contemplated by the Agreement from the third party so notified.
reports and estimates solely in connection with its internal consideration of the transactions contemplated by this Agreement and the Financing Documents and not in any way adverse to BAM and (b) keep all such reports and estimates strictly confidential at all times..
(a) Each party hereto agrees to use commercially reasonable efforts to comply with all legal requirements which may be imposed on such party with respect to the transactions contemplated by the Transaction Documents and to obtain all consents, orders and approvals of Governmental Entities and non- governmental third parties that may be or become necessary for (i) the
consummation of the transactions contemplated by the Transaction Documents and
(ii) the ownership of OpCo, HoldCo Sub and HoldCo by Bidder Member and BAM, and
each party will cooperate fully with the other parties in promptly seeking to
obtain all such authorizations, consents, orders and approvals. Without
limitation, if required by applicable law, Bidder, Bidder Member and BAM shall
each make an appropriate filing of a Notification and Report Form pursuant to
the HSR Act no later than twenty (20) days after the date hereof and shall
promptly respond to any request for additional information with respect thereto.
Each such filing shall request early termination of the waiting period imposed
by the HSR Act.
(b) Notwithstanding anything else to the contrary contained in this Agreement, none of OpCo, HoldCo Sub, HoldCo nor BAM nor any Transferring Partnership shall have any obligation to oppose, challenge or appeal any suit, action or proceeding by any Governmental Entity before any court or governmental authority, agency or tribunal, domestic or foreign or any order or ruling by any such body (i) seeking to restrain or prohibit or restraining or prohibiting the consummation of the transactions contemplated by the Transaction Documents, (ii) seeking to prohibit or limit or prohibiting or limiting the ownership, operation or control by Bidder Member or BAM of HoldCo, HoldCo Sub or OpCo or (iii) seeking to compel or compelling Bidder or BAM any of their respective Affiliates to dispose of, grant rights in respect of, or hold separate any portion of the business or assets of Bidder or BAM or any of their respective Affiliates.
ARTICLE 7
CONDITIONS PRECEDENT TO THE CLOSING
ARTICLE 8
CERTAIN POST-CLOSING COVENANTS OF THE PARTIES
(a) Contingent Obligations of OpCo arising under the BAM Assumed Liabilities and successor liabilities thereto;
(b) Contingent Obligations resulting from endorsement of negotiable instruments for collection in the ordinary course of business;
(c) Contingent Obligations under the Management Agreement, Build- to-Suit Agreement and Global Lease;
extent that such amounts had not been paid pursuant to the Management Agreement;
provided, however, that the consent of BAM shall not be required as a condition
to OpCo taking any of the aforesaid actions under this Section 8.1.11 if (a) BAM
has disposed of all of its percentage interest in HoldCo and (b)(i) there are no
further loans or other obligations outstanding under the Financing Documents,
(ii) all commitments in connection with the Financing Documents have been
terminated and (iii) no letters of credit issued under the Financing Documents
are outstanding.
members for review and, subject to the second following sentence, comment and shall be adopted only with the mutual consent of BAM and Bidder Member. HoldCo shall use commercially reasonable efforts to, and cause each of HoldCo Sub and OpCo to, conduct their respective businesses in accordance with the then current Business Plan.
If by the first date of any year the proposed Business Plan for that year has not been adopted, the Business Plan for such year shall be deemed to be the expense portion of the Business Plan in effect for the preceding year increased, at the discretion of Bidder Member, to an amount not to exceed the sum of:
(b) the sum of (x) with respect to all contractual price increases with respect to contracts and agreements to which OpCo is a party and all increases in Taxes with respect to OpCo Towers, the amount of such increase and (y) with respect to all other expense items in the previous year's budget, (A) the amount of such expenses multiplied by (B) the sum of 1 plus an amount equal to the percentage increase in the CPI during the previous year.
If BAM and Bidder Member are unable to mutually agree on the Business Plan for the year commencing January 1, 2000, the Business Plan for such year shall be deemed to be the quotient of (a) the expense portion of the initial Business Plan for the period ending December 31, 1999, increased as contemplated by the foregoing sentence, multiplied by 365 (b) divided by the number of days elapsed between the Closing Date and December 31, 1999 (including both the Closing Date and December 31, 1999).
Notwithstanding the foregoing, each Business Plan that is implemented pursuant to the foregoing two paragraphs of this Section 8.2.12 because BAM and Bidder Member are unable to mutually agree on the Business Plan must provide for the payment by OpCo, prior to the allocation of revenues pursuant to such two paragraphs, of: (i) any and all costs, expenses or payments reasonably necessary to fulfill OpCo's obligations under the Global Lease Agreement; (ii) any and all costs, expenses or payments reasonably necessary to fulfill OpCo's obligations under the Build-to-Suit Agreement; (iii) any and all taxes of any kind due and owing by OpCo; (iv) any payments or expenditures required under any lease of real estate, grant of easement, right of way or similar agreement to which OpCo is a party; (v) any and all costs, expenses or payments reasonably necessary to fulfill OpCo's obligations under any lease or sublease of tower space or real estate to any third party; (vi) insurance premiums (including without limitation, any payments pursuant to premium financing) and/or deductibles of OpCo; (vii) payments to third parties for equipment or any other goods and services required to perform OpCo's obligations under existing agreements including, without limitation, payments required to satisfy any mechanics's liens; (viii) salaries, commissions, compensation, benefits, and payments or obligations of a similar nature; and (ix) any and all costs, expenses and payments required to comply with, or payable pursuant to any applicable laws, rule, regulations, ordinances, permits or licenses. Further, any such Business Plan
may have the effect of reducing amounts payable under the Management Agreement so long as the Anticipated Financing remains outstanding.
(a) within thirty (30) days of the end of each month, HoldCo shall deliver to Bidder Member and BAM an unaudited income statement and schedule as to the sources and application of funds for such month and an unaudited balance sheet as of the end of such month, in reasonable detail and prepared in accordance with GAAP (except as permitted by Form 10-Q under the Exchange Act), with respect to each of HoldCo, HoldCo Sub and OpCo, together with an analysis by management of HoldCo's financial condition and results of operations during such period and explanation by management of any differences between such condition or results and the budget and business plan for such period.
(b) as soon as practicable, but in any event within ninety (90) days after the end of each fiscal year of HoldCo, a consolidated income statement for such fiscal year, a consolidated balance sheet of HoldCo, HoldCo Sub and OpCo as of the end of such year, and a schedule as to the cash flow and changes in members' equity for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with GAAP, and audited and certified by HoldCo's independent public accountants;
(c) as soon as practicable, but in any event within thirty (30) days after the end of each of the first three (3) quarters of each fiscal year of HoldCo, an unaudited consolidated profit or loss statement and schedule as to consolidated cash flow for such fiscal quarter and an unaudited consolidated balance sheet of HoldCo, HoldCo Sub and OpCo as of the end of such fiscal quarter, in reasonable detail
and prepared in accordance with GAAP (except as permitted by Form 10-Q under the Exchange Act); and
(d) such other information relating to the financial condition, business, prospects or corporate affairs of HoldCo, HoldCo Sub and OpCo as BAM may from time to time reasonably request.
ARTICLE 9
CERTAIN ANCILLARY ARRANGEMENTS OF THE PARTIES
complied with the procedures described in this Article 9 and (i) the transfer is
made subject to the right of first refusal described in Section 9.3 hereof and
(ii) to the extent BAM does not exercise its right of first refusal described in
Section 9.3 hereof, the transfer is made subject to the right of participation
in sales described in Section 9.5(a) hereof. For purposes of the foregoing,
Bidder Member shall not be deemed to have indirectly transferred any of the
Bidder HoldCo Interest if Bidder or any other parent corporation of Bidder
Member is a party to any merger or consolidation transaction, whether or not
such parent corporation is the surviving entity in such merger. Any purported
transfer of the Bidder HoldCo Interest in violation of this Section 9.1 shall be
void.
prior offer pursuant to this Section. In the event Bidder Member terminates any such agreement prior to closing, Bidder Member shall be prohibited from consummating a transaction for the sale and purchase of the Bidder HoldCo Interest with the proposed purchaser or transferee for two (2) years from the date of such termination, and shall be prohibited from consummating a transaction for the sale and purchase of the Bidder HoldCo Interest with any other party for six (6) months from the date of such termination. In the event that any Bidder Offer includes any non-cash consideration, BAM may in its sole discretion elect to pay a cash amount equal to the fair market value of such non-cash consideration in lieu of such non-cash consideration. The closing of the sale and purchase contemplated by any agreement for the sale and purchase of any portion of the Bidder HoldCo Interest entered into between BAM and Bidder Member pursuant to this Section 9.3 shall be consummated within sixty (60) days after the date that such agreement becomes valid, legally binding and enforceable as aforesaid, subject to extension to the extent necessary to secure required approvals or consents from Governmental Authorities. Each of BAM and Bidder Member shall use its reasonable best efforts to obtain such required approvals or consents from Governmental Authorities.
(b) In the event that BAM does not purchase the Bidder HoldCo Interest
offered by Bidder Member pursuant to the Bidder Offer, such Bidder HoldCo
Interest not so purchased may be sold by the Bidder Member at any time within
ninety (90) days after the expiration of the Bidder Offer, subject to the
provisions of Section 9.5 below. Any such sale shall be to the same proposed
purchaser or transferee, at not less than the price and upon other terms and
conditions, if any, not more favorable to the purchaser than those specified in
the Bidder Offer. If such Bidder HoldCo Interest is not sold within such ninety
(90)-day period, it shall again become subject to the requirements of a prior
offer pursuant to this Section. In the event that such Bidder HoldCo Interest
is sold pursuant to this Section to any purchaser other than BAM, such Bidder
HoldCo Interest shall continue to be subject to the restrictions imposed by this
Section 9.3 with the same effect as though such purchaser were Bidder Member for
purposes of this Section.
Section. In the event BAM terminates any such agreement prior to closing, BAM
shall be prohibited from consummating a transaction for the sale and purchase of
the BAM HoldCo Interest with the proposed purchaser or transferee for two (2)
years from the date of such termination, and shall be prohibited from
consummating a transaction for the sale and purchase of the BAM HoldCo Interest
with any other party for six (6) months from the date of such termination. In
the event that any BAM Offer includes any non-cash consideration, Bidder Member
may in its sole discretion elect to pay a cash amount equal to the fair market
value of such non-cash consideration in lieu of such non-cash consideration. The
closing of the sale and purchase contemplated by any agreement for the sale and
purchase of any portion of the BAM HoldCo Interest entered into between BAM and
Bidder Member pursuant to this Section 9.4 shall be consummated within sixty
(60) days after the date that such agreement becomes valid, legally binding and
enforceable as aforesaid, subject to extension to the extent necessary to secure
required approvals or consents from Governmental Authorities. Each of BAM and
Bidder Member shall use its reasonable best efforts to obtain such required
approvals or consents from Governmental Authorities.
(b) In the event that Bidder Member does not purchase the BAM HoldCo Interest offered by BAM pursuant to the BAM Offer, such BAM HoldCo Interest not so purchased may be sold by BAM at any time within ninety (90) days after the expiration of the BAM Offer. Any such sale shall be to the same proposed purchaser or transferee, at not less than the price and upon other terms and conditions, if any, not more favorable to the purchaser than those specified in the BAM Offer. If such BAM HoldCo Interest is not sold within such ninety (90)- day period, such BAM HoldCo Interest shall continue to be subject to the requirements of a prior offer pursuant to this Section. In the event that such BAM HoldCo Interest is sold pursuant to this Section to any purchaser other than Bidder Member, such portion of the BAM HoldCo Interest shall continue to be subject to the restrictions imposed by this Section 9.4 with the same effect as though such purchaser were BAM for purposes of this Section.
other Party, in addition to any other relief available to them, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damages.
ARTICLE 10
INDEMNIFICATION
(b) OpCo acknowledges and agrees that BAM shall not have any Liability under any provision of this Agreement for any Loss to the extent that such Loss relates to the failure to act or any action taken by OpCo or any other Person (other than BAM or any of its Affiliates in breach of this Agreement) or any Transaction Document after the Closing Date.
(c) OpCo shall take and shall cause its Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach which gives rise to the Loss.
(d) Nothing herein shall be deemed to limit or restrict in any manner any rights or remedies which OpCo has or may have, at law, in equity or otherwise, against BAM based on a willful misrepresentation or willful breach of any warranty, covenant or agreement by BAM hereunder.
(b) BAM shall take and cause its Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach which gives rise to the Loss.
(c) Nothing herein shall be deemed to limit or restrict in any manner any rights or remedies which BAM has or may have, at law, in equity or otherwise, against Bidder and Bidder Member based on a willful misrepresentation or willful breach of any, covenant or agreement of warranty by Bidder and Bidder Member hereunder.
(a) From and after the Closing, OpCo shall indemnify and hold harmless each Indemnified BAM Party from and against any Losses that such Indemnified BAM Party may sustain, suffer or incur and that result from, arise out of or relate to (i) any BAM Assumed Liability or (ii) events occurring after the Closing Date in connection with OpCo's business, including, without limitation, the use, ownership, possession or operation of the BAM Contributed Assets from and after the Closing Date.
(b) BAM shall take and cause its Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach which gives rise to the Loss.
(c) Nothing herein shall be deemed to limit or restrict in any manner any rights or remedies which BAM has or may have, at law, in equity or otherwise, against OpCo based on a willful breach of any covenant or agreement hereunder.
(a) From and after the Closing, Bidder Member shall indemnify and hold harmless each Indemnified BAM Party from and against any Losses that such Indemnified BAM Party may sustain, suffer or incur and that result from, arise out of or relate to any breach of any of the representations, warranties, covenants or agreements of Bidder Member contained in this Agreement.
(b) BAM shall take and cause its Affiliates to take all reasonable steps to mitigate any Loss upon becoming aware of any event which would reasonably be expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach which gives rise to the Loss.
(c) Nothing herein shall be deemed to limit or restrict in any manner any rights or remedies which BAM has or may have, at law, in equity or otherwise, against Bidder and Bidder Member based on a willful misrepresentation or willful breach of any, covenant or agreement of warranty by Bidder and Bidder Member hereunder.
(b) Any Loss that is finally determined in the manner set forth in
Section 10.5(a) shall be paid by the Indemnitor to the Indemnified Party within
thirty (30) days after (a) the last day of the Claim Response Period or (b) the
date on which such settlement, compromise or arbitration described in the last
sentence of Section 10.5(a) shall have been deemed to be finally determined, as
the case may be. If any Indemnitor fails to pay all or part of any
indemnification obligation when due, then such Indemnitor shall also be
obligated to pay to the applicable Indemnified Party interest on the unpaid
amount for each day during which the obligation remains unpaid at an annual rate
equal to the Prime Rate plus two percent (2%) per annum, and the Prime Rate in
effect on the first (1st) business day of each calendar quarter shall apply to
the amount of the unpaid obligation during such calendar quarter.
indemnification of OpCo by BAM for BAM Retained Liabilities pursuant to Section 10.1(a)(ii) shall not be subject to the Deductible Amount or any other deductible, the Maximum Indemnification limitation, or the limitation under the immediately preceding sentence.
representation or warranty shall be made by any Indemnified OpCo Party under
Section 10.1(a) or any Indemnified BAM Party under Sections 10.2 (a), 10.3(a) or
10.4(a) if (i) such claim is based on an event occurring prior to the Closing
(whether or not also occurring prior to the date of this Agreement), (ii) either
(a) such event was disclosed by BAM, Bidder or Bidder Member, as the case may
be, prior to the Closing in a writing which describes such event in reasonable
detail or (b) Bidder, Bidder Member or BAM, as the case may be, had actual
knowledge of such event or such misrepresentation or breach of warranty prior to
the Closing, and (iii) the Closing occurs.
ARTICLE 11
MISCELLANEOUS
relevant to the claim, who have had more than ten (10) years of relevant experience in such areas, who have previously acted as arbitrators, and who are generally held in the highest regard among professionals in fields or businesses related or pertinent to such area. Judgment upon the award rendered by the arbitrators may be entered pursuant to applicable arbitration statutes.
(a) Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated by written notice of termination at any time before the Closing Date only as follows:
(i) by mutual consent of Bidder and BAM;
(ii) by BAM, upon written notice to Bidder given at any time after June 30, 1999 (or such later date as shall have been specified in a writing authorized on behalf of Bidder and BAM) if all of the conditions precedent set forth in Article 7 hereof have not been met;
(iii) by Bidder, upon written notice to BAM given at any time after June 30, 1999 (or such later date as shall have been specified in a writing authorized on behalf of Bidder and BAM) if all of the conditions precedent set forth in Article 7 hereof have not been met;
(iv) by Bidder at any time prior to the Closing if BAM shall have breached any of its representations, warranties or other obligations under this Agreement in any respect which would have a material and adverse effect on either (A) the Contributed BAM Assets and Assumed BAM Liabilities taken as a whole, or (B) on the ability of BAM to consummate the transactions contemplated hereby and such breach shall not have been cured within thirty (30) days after notice of such breach; or
(v) by BAM at any time prior to the Closing if Bidder or Bidder Member shall have breached any of its representations, warranties or other obligations under this Agreement in any material respect and such breach shall not have been cured within thirty (30) days after notice of such breach.
(b) In the event of the termination and abandonment hereof pursuant to the provisions of this Section 11.5, this Agreement (except for Sections 5.1.15, 5.3.4, 6.1.6, 6.1.7, 6.2.4, 6.2.6 and 11.6 which shall continue) shall become void and have no effect, without any liability on the part of any of the parties or their directors, officers, stockholders, partners or representatives in respect of this Agreement, unless the termination was the result of the representations and warranties of a party being materially incorrect when made or the material breach by such party of a covenant hereunder in which event the party whose representations and warranties were incorrect or who breached such covenant shall be liable to the other party for all costs and expenses of the other party in connection with the preparation, negotiation, execution and performance of this Agreement.
(a) If to BAM:
Bell Atlantic Mobile
180 Washington Valley Road
Bedminster, NJ 07921
Attention: David Benson, CFO
Fax. No.: 908-306-4350
with required copies to:
Bell Atlantic Corporation
1717 Arch Street
Philadelphia, PA 19103
Attention: Philip R. Marx, Senior Attorney, Mergers &
Acquisitions
Fax No.: 215-963-9195
and
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: N. Jeffrey Klauder
Fax No.: 215-963-5299
(b) If to Bidder or Bidder Member:
Crown Castle International Corp.
510 Bering Drive, Suite 500
Houston, TX 77057
Attention: David L. Ivy, President Fax No.: 713-570-3150
with required copies to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Philip A. Gelston
Fax. No.: 212-474-3700
particular provision of this Agreement. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first written.
CROWN CASTLE INTERNATIONAL CORP.
/s/ David L. Ivy By: __________________________________ Name: David L. Ivy Title: President |
CCA INVESTMENT CORP.
/s/ David L. Ivy By: __________________________________ Name: David L. Ivy Title: President |
CELLCO PARTNERSHIP
By: Bell Atlantic Mobile, Inc., its
managing general partner
/s/ David H. Benson By: __________________________________ Name: David H. Benson Title: Chief Financial Officer |
TRANSFERRING PARTNERSHIPS:
ORANGE COUNTY-POUGHKEEPSIE MSA
LIMITED PARTNERSHIP
By: NYNEX Mobile Limited Partnership 2, its managing general partner
By: Cellco Partnership, its
managing general partner
By: Bell Atlantic Mobile, Inc., its managing general partner
/s/ David H. Benson By: __________________________________ Name: David H. Benson Title: Chief Financial Officer |
EXHIBIT A
Allentown SMSA Limited Partnership
Anderson Cellular Telephone Company
Columbia Cellular Telephone Company
New York SMSA Limited Partnership
Orange County - Poughkeepsie MSA Limited Partnership
Pennsylvania RSA No. 6 (II) Limited Partnership
Pittsburgh SMSA Limited Partnership
Washington, DC SMSA Limited Partnership