<PAGE> 1
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): May 1, 1997
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INTERCEL, INC.
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(Exact Name of Registrant
as Specified in its Charter)
Delaware 0-23102 58-1944750
- --------------------------------------------------------------------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
1233 O.G. Skinner Dr., West Point, GA 31833
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (706) 645-2000
----------------
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 1, 1997 (the "Closing Date"), pursuant to an Asset Purchase
Agreement dated December 23, 1996 (the "Agreement"), Unity Cellular Systems,
Inc. ("Unicel") and InterCel Licenses, Inc. ("Licensee"), each a wholly owned
subsidiary of InterCel, Inc. ("InterCel"), respectively, sold and assigned to
MRCC, Inc., a wholly owned subsidiary of Rural Cellular Corporation (the
"Purchaser"): (i) substantially all of the assets and rights of Unicel,
including Unicel's 51% general partnership interest in the Northern Maine
Cellular Partnership (the "Partnership") which Partnership is licensed to
provide cellular service in Maine RSA2; and (ii) the FCC licenses held by
Licensee to provide cellular and microwave service in the Bangor, Maine MSA and
Maine RSA3 and to provide microwave service in Maine RSA2. This transaction
(the "Maine Disposition") constituted a sale by InterCel of all of its cellular
telephone operations in the State of Maine.
The Agreement provided for a cash purchase price ("Purchase Price") of
$77,355,250.00 (which amount is subject to certain post-closing adjustments)
for the above-referenced assets of Unicel and Licensee. The Purchase Price was
arrived at through arm's length negotiations by the parties and was determined
to be fair and reasonable by the Boards of Directors of InterCel, Unicel and
Licensee based upon various factors, including the results of operations of
Unicel and the recent market prices of similar assets sold by others. On the
Closing Date, the Purchaser paid Unicel $71,799,124.86 in cash and paid
$5,405,000.00 into escrow. The amount paid into escrow will be held to satisfy
claims that may be made under the indemnity and purchase price adjustment
provisions of the Agreement. Such amount will be released from escrow as set
forth in the Agreement. Prior to the closing of the transaction contemplated
by the Agreement (the "Closing"), the parties agreed to reduce the Purchase
Price by $151,125.14, and the Purchaser paid InterCel, in addition to the
Purchase Price, $247,558.67 in cash at the Closing for capital expenditures
made by Unicel after December 23, 1996 and prior to the Closing Date.
Prior to the execution of the Agreement, there were no material
relationships between either the Purchaser or MRCC, Inc. and Unicel, Licensee,
InterCel or any of their affiliates, directors or officers, or any associate of
any such director or officer. The descriptions set forth herein of the terms
and conditions of the Agreement and the transactions contemplated thereby are
qualified in their entirety by reference to the full text of: (i) the Agreement
and the exhibits related thereto (filed as Exhibit 99.1 to InterCel's Current
Report on Form 8-K dated December 23, 1996 and filed January 8, 1997); and (ii)
the Closing Memorandum, a copy of which is filed as an Exhibit to this Current
Report on Form 8-K. Descriptions of the Partnership and related rights and
obligations of the partners are qualified in their entirety by reference to the
full text of the Partnership Agreement (filed as Exhibit 10(qq) to InterCel's
Registration Statement on Form S-1 (File No. 33-72734)).
ITEM 5. OTHER EVENTS.
InterCel previously announced the closing into escrow of the sale of
50,000 shares of Series C and 50,000 shares of Series D Convertible Preferred
Stock to two investors for an aggregate of $45 million (the "Escrowed Amount").
The Escrowed Amount was to be released to InterCel upon the closing of a
proposed offering of debt, provided such closing occurred on or before April
30, 1997. As previously announced, InterCel elected not to proceed with the
proposed debt offering due to adverse market conditions. Accordingly, the
Escrowed Amount has been returned to the investors.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
2.1 The following unaudited pro forma financial statements for
InterCel and its subsidiaries are included with this Report:
<TABLE>
<CAPTION>
Page
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<S> <C>
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Unaudited Pro Forma Consolidated Statement of Operations for the
Year Ended December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Unaudited Pro Forma Consolidated Financial Statements . . . . . . . . . . . . . . . . . 7
</TABLE>
(C) EXHIBITS.
2.1 Asset Purchase Agreement dated December 23, 1996, by and among
Rural Cellular Corporation, Unity Cellular Systems, Inc.,
InterCel Licenses, Inc. and InterCel, Inc. incorporated by
reference to Exhibit 99.1 to InterCel's Current Report on Form
8-K dated December 23, 1996 and filed January 8, 1997.
2.2 Closing Memorandum dated May 1, 1997 by and between Rural
Cellular Corporation, MRCC, Inc., Unity Cellular Systems,
Inc., InterCel Licenses, Inc. and InterCel, Inc.*
----------------------------
* The Registrant agrees to furnish supplementally a copy of any
omitted schedule or exhibit to Exhibit 2.2 to the Securities
and Exchange Commission upon request, as provided in Item
601(b)(2) of Regulation S-K.
3
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PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
statements have been prepared to give effect to the Maine Disposition and that
certain business combination whereby InterCel, Powertel PCS Partners, L.P. and
the owners of Powertel PCS Partners, L.P. (other than InterCel) exchanged their
ownership interest in Powertel PCS Partners, L.P. for an aggregate of 9,686,410
shares of InterCel common stock (the "Powertel Combination"). The accompanying
unaudited pro forma condensed consolidated balance sheet as of December 31,
1996 has been prepared as if such transactions were consummated as of that
date. The accompanying unaudited pro forma condensed consolidated statement of
operations of InterCel for the year ended December 31, 1996 gives effect to
such transactions as if they occurred at January 1, 1996. The pro forma
adjustments are based upon available information and certain assumptions that
management believes are reasonable under the circumstances.
These unaudited pro forma condensed consolidated financial statements
and notes thereto are provided for informational purposes only and do not
purport to be indicative of the results that would have actually been obtained
had the Maine Disposition and the Powertel Combination been completed on the
dates indicated or that may be expected to occur in the future.
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INTERCEL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
-----------
INTERCEL, INC.
HISTORICAL MAINE DISPOSITION(a) PRO FORMA
--------------- -------------------- ---------
(DOLLARS IN THOUSANDS)
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . $185,525 $ 71,799 $257,324
Cash held in escrow . . . . . . . . . . . . . -- 5,405 5,405
Short term investments . . . . . . . . . . . . 75,659 -- 75,659
Accounts receivable, net . . . . . . . . . . . 8,228 (2,085) 6,143
Inventories . . . . . . . . . . . . . . . . . 7,805 (586) 7,219
Prepaids and other . . . . . . . . . . . . . . 12,642 (164) 12,478
-------- -------- --------
289,859 74,369 364,228
-------- -------- --------
PROPERTY AND EQUIPMENT, AT COST: . . . . . . . 261,251 (16,045) 245,206
Less accumulated depreciation . . . . . . . . (9,982) 2,866 (7,116)
-------- -------- --------
251,269 (13,179) 238,090
-------- -------- --------
OTHER ASSETS:
Licenses, net of amortization . . . . . . . . 365,964 -- 365,964
Goodwill, net of amortization . . . . . . . . 22,670 (22,670) --
Deferred charges and other . . . . . . . . . . 17,355 (506) 16,849
-------- -------- --------
405,989 (23,176) 382,813
-------- -------- --------
Total assets . . . . . . . . . . . . . . . . $947,117 $ 38,014 $985,131
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . $ 7,723 $ (578) $ 7,145
Accrued expenses . . . . . . . . . . . . . . 24,317 (894) 23,423
Advance billings and customer deposits . . . . 1,352 (365) 987
Current portion of long-term obligations . . . 118 -- 118
-------- -------- --------
33,510 (1,837) 31,673
-------- -------- --------
LONG TERM OBLIGATIONS:
12% Senior Discount Notes due February 1, 2006 216,465 -- 216,465
12% Senior Discount Notes due May 1, 2006 . . 217,345 -- 217,345
Vendor Financing Agreement . . . . . . . . . . 69,514 -- 69,514
Other . . . . . . . . . . . . . . . . . . . . 741 (389) 352
-------- -------- --------
504,065 (389) 503,676
-------- -------- --------
MINORITY INTEREST IN SUBSIDIARY: . . . . . . . 2,535 (2,535) --
-------- -------- --------
STOCKHOLDERS' EQUITY:
Preferred stock . . . . . . . . . . . . . . . 2 -- 2
Common stock . . . . . . . . . . . . . . . . . 269 -- 269
Paid-in capital . . . . . . . . . . . . . . . 430,053 -- 430,053
Retained earnings (deficit) . . . . . . . . . (22,766) 42,775 20,009
Deferred compensation . . . . . . . . . . . . (206) -- (206)
Treasury stock . . . . . . . . . . . . . . . . (345) -- (345)
-------- -------- --------
407,007 42,775 449,782
-------- -------- --------
Total liabilities and stockholders' equity . $947,117 $ 38,014 $985,131
======== ======== ========
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
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INTERCEL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------
InterCel, Inc. POWERTEL MAINE
Historical COMBINATION DISPOSITION(b) PRO FORMA
------------ ----------- -------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUE AND SALES:
Service . . . . . . . . . . . . . . . . . . . . . . $ 31,875 $ 13,912 $ 17,963
Equipment . . . . . . . . . . . . . . . . . . . . . 7,250 2,172 5,078
----------- ----------- ------------
Total revenue . . . . . . . . . . . . . . . . 39,125 16,084 23,041
----------- ----------- ------------
OPERATING EXPENSES:
Cost of services . . . . . . . . . . . . . . . . . 5,811 1,818 3,993
Cost of equipment sold . . . . . . . . . . . . . . 11,653 1,787 9,866
Operations . . . . . . . . . . . . . . . . . . . . 9,927 2,039 7,888
Selling, general and administrative . . . . . . . . 30,264 $ 358 (c) 4,094 26,528
Depreciation and amortization . . . . . . . . . . . 10,101 1 (c) 4,190 5,912
----------- -------- ----------- ------------
Total operating expenses . . . . . . . . . . 67,756 359 13,928 54,187
----------- -------- ----------- ------------
OPERATING INCOME (LOSS): . . . . . . . . . . . . . . (28,631) (359) 2,156 (31,146)
----------- -------- ----------- ------------
OTHER EXPENSES (INCOME):
Interest income, net . . . . . . . . . . . . . . . (3,175)(d) (99)(c) -- (3,274)
Minority interest . . . . . . . . . . . . . . . . (474) -- (474) --
Other . . . . . . . . . . . . . . . . . . . . . . 1,700 (34)(c) -- 1,666
----------- -------- ----------- ------------
(1,949) (133) (474) (1,608)
----------- -------- ----------- ------------
Income (loss) before income taxes and cumulative
effect of change in accounting principle . . . . . (26,682) (226) 2,630 (29,538)
Income tax benefit . . . . . . . . . . . . . . . . . (1,654) -- -- (1,654)
----------- -------- ----------- ------------
Income (loss) before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . (25,028) (226) 2,630 (27,884)
Cumulative effect of change in accounting
principle . . . . . . . . . . . . . . . . . . . . . (2,583) -- (1,818) (765)
----------- -------- ----------- ------------
Net income (loss) . . . . . . . . . . . . . . . . . $ (27,611) $ (226) $ 812 $ (28,649)
=========== ======== =========== ============
EARNINGS PER SHARE:
Loss before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . $ (1.00) $ (1.11)
Cumulative effect of change in accounting
principle . . . . . . . . . . . . . . . . . . . . . (.10) (.03)
----------- ------------
Net loss per share . . . . . . . . . . . . . . . . . $ (1.10) $ (1.14)
=========== ============
Average common and common equivalent
shares outstanding . . . . . . . . . . . . . . . . 25,087,000 25,087,000
=========== ============
</TABLE>
The accompanying notes to unaudited pro forma consolidated financial statements
are an integral part of these statements.
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) Reflects the $77.2 million of proceeds received in connection with the
Maine Disposition (including $5.4 million held in escrow, subject to
indemnification and purchase price reduction claims that may be made
pursuant to the Agreement) and the elimination of the assets and
liabilities related thereto. The selling price exceeded the net asset
value of Unicel and, therefore, represented a pro forma gain to
InterCel of $42.8 million. InterCel anticipates that net operating
loss carryforwards, as well as currently generated taxable losses
will more than offset the tax liability associated with this gain.
Accordingly, no tax effect related to the gain is reflected in the
accompanying proforma financial statements. InterCel's gain related
to the Maine Disposition, which is nonrecurring in nature, is not
reflected on the pro forma statement of operations as this statement
is intended to reflect InterCel's ordinary operations.
(b) Reflects the elimination of the statement of operations items relating
to the Maine Disposition.
(c) Reflects expenses related to the Powertel PCS Partners, L.P.
transaction.
(d) For the year ended December 31, 1996, interest income on a pro forma
basis would have been $7.5 million, which reflects an estimated $4.3
million of interest income that would have been earned on the proceeds
received from the Maine Disposition.
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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 authorized.
INTERCEL, INC.
By: /s/ Allen E. Smith
------------------------------------
Allen E. Smith
Chief Executive Officer
Dated: May 12, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
2.1 Asset Purchase Agreement dated December 23, 1996, by and among
Rural Cellular Corporation, Unity Cellular Systems, Inc.,
InterCel Licenses, Inc. and InterCel, Inc. (incorporated by
reference to Exhibit 99.1 to InterCel's Current Report on Form
8-K dated December 23, 1996 and filed January 8, 1997) . . . . . . . .
2.2 Closing Memorandum dated May 1, 1997 by and between Rural
Cellular Corporation, MRCC, Inc., Unity Cellular Systems, Inc.,
InterCel Licenses, Inc. and InterCel, Inc.* . . . . . . . . . . . . . 10
</TABLE>
------------------------------
* The Registrant agrees to furnish supplementally a copy of any
omitted schedule or exhibit to Exhibit 2.2 to the Securities
and Exchange Commission upon request, as provided in Item
601(b)(2) of Regulation S-K.
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EXHIBIT 2.2
CLOSING MEMORANDUM
This Closing Memorandum dated May 1, 1997 is entered into by and
between RURAL CELLULAR CORPORATION, MRCC, INC., UNITY CELLULAR SYSTEMS, INC.,
INTERCEL LICENSES, INC. and INTERCEL, INC.
RECITALS
The parties hereto (other than MRCC, Inc.) entered into an Asset
Purchase Agreement dated December 23, 1996 (the "Agreement"). The rights of the
Purchaser under the Agreement have been assigned to MRCC, Inc., a Maine
corporation, pursuant to Section 5.12 of the Agreement and all references
herein to "Purchaser" shall mean MRCC, Inc. In connection with the closing of
the transactions contemplated by the Agreement, the parties desire to confirm
and memorialize certain agreements and amend and supplement the Agreement in
certain respects, all as set forth herein.
In consideration of the premises, the parties therefore agree as
follows:
AGREEMENT
1. Amendment of Agreement. Except as set forth herein, the
Agreement shall remain in full force and effect. All capitalized terms used
and not defined in this Closing Memorandum shall have the meanings assigned to
them in the Agreement. In the event of any conflict as to any matter between
the Agreement and this Closing Memorandum, the terms of this Closing Memorandum
shall control. In all other respects, this Closing Memorandum shall be
considered a supplement to and construed as part of the Agreement. The
disclosure set forth herein shall be deemed to update all Schedules to the
Agreement as of the Date of Closing.
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2. Guilford. Seller will indemnify, defend and hold Purchaser
harmless, pursuant to Section 11.1 of the Agreement but without the need for
any further notice and without regard to the limitations set forth in Section
11.4 of the Agreement, from any and all Losses arising out of or relating to a
pending action in Piscataquis County Superior Court involving Donald H. Rice
and Donna K. Rice vs. Robert K. Gillespie, Joyce E. Gillespie, Unity Cellular
Systems d/b/a UNICEL, United States Cellular Corporation and J&S Tower, Inc.
3. Vassalboro Site. One of the Tower Space Leases transferred by
Seller to Purchaser relates to property located at Cook Hill, Vassalboro,
Kennebec County, Maine, and leased from Maine Microwave Associates, Inc. (the
"Vassalboro Lease"). Said Vassalboro Lease is the subject of an Amendment to
Lease Agreement dated May 1, 1997, a true and complete copy of which is
attached hereto as Exhibit A (the "Vassalboro Lease Amendment"). Seller shall
promptly pay all arrearages of rent accruing under the terms of the Vassalboro
Lease Amendment prior to the Date of Closing. In addition, Seller agrees to
reimburse Purchaser for all costs and expenses (including capital costs)
arising out of or connected with the performance by the Purchaser of tenant's
obligations under Sections 2(d) and 2(g) of the Vassalboro Lease Amendment.
Said expenditures pursuant to Section 2(d) and 2(g) shall be made in the first
instance by Purchaser or the Partnership and promptly reimbursed by Seller and
the limitations set forth in Section 11.4 of the Agreement shall not be
applicable. The Vassalboro Lease, as amended, shall be subject to the
applicable representations and warranties of Seller in the Agreement with
respect thereto.
4. Reimbursement of Approved Expenditures. Purchaser has
heretofore authorized Seller to make certain capital expenditures which were
desirable in the ordinary course of
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business (but not required under the terms of the Agreement) in connection with
the development of the cell sites listed on Exhibit B hereto. Purchaser has
agreed to reimburse Seller for such expenditures up to the limits for each such
site set forth on Exhibit B. Seller's known and determined expenditures to date
are listed on Exhibit B and Purchaser will reimburse Seller for such amounts at
the Closing concurrently herewith. Any additional expenditures by Seller prior
to the date hereof in connection with such sites (not to exceed the maximum
limit per site) will be promptly reimbursed by Purchaser to Seller as and when
documentation thereof is provided.
5. Adjustments to Purchase Price. The Purchase Price shall be
adjusted as follows:
(i) Seller's lease rights in and to the cell site
commonly referred to as "Wallagrass" will terminate in the near
future, and as required by in Section 7.22 of the Agreement, Seller
shall compensate Purchaser at the Closing for the estimated $132,500
cost of relocating and replacing the Wallagrass site and equipment
with a comparable nearby site and equipment; and
(ii) Other adjustments are reflected on Exhibit C hereto.
6. Tax Proration. All real estate taxes, personal property taxes
and any other similar governmental assessments against the Property for the tax
year in which the Closing occurs shall be prorated between Purchaser and Seller
as of the Date of Closing over the period of the tax year of the municipality
in which the Property is located. Said proration shall be made pursuant to
Subsection 2.4(a)(iii) of the Agreement. If the adjustment pursuant to said
Subsection 2.4(a)(iii) shall occur before the tax liability for the current
year has been established, then, unless otherwise agreed by the parties, the
tax proration shall be based on the tax rate for the preceding year applied to
the latest assessed valuation.
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7. Hodgdon, Maine Public Sale. Seller agrees to use reasonable
commercial efforts to obtain the consent of the U.S. General Services
Administration to the assignment by Seller to Purchaser of its rights in and to
a bid on a "Former Remote Ground Center Communications Facility" in Hodgdon,
Maine, G.S.A. Invitation for Bid No. 1PR-97-03. In the event the bid rights
cannot be assigned, Seller agrees to continue to pursue acquisition of the
property following the Closing in its name but at Purchaser's direction and at
Purchaser's sole cost and expense, and then transfer the subject property to
Purchaser.
8. Originals of Faxed Documents. Following the Closing, Seller
shall obtain and furnish to Purchaser original executed copies of all lease
amendments and other real estate instruments which were furnished by Seller
only in fax form at the Closing, and Purchaser shall obtain and furnish to
Seller original executed copies of any document furnished by it in only fax
form at the Closing.
9. No Default. Purchaser acknowledges and agrees that by the
mutual consent of Purchaser and Seller: (i) consent has not been obtained to
assign the agreements listed below to Purchaser; (ii) the failure to obtain
consent to the assignment of such agreements shall not constitute a breach of
the Agreement; and (iii) Purchaser hereby waives any breach of the Agreement
that may arise from the failure to obtain the consent of the assignment of such
agreements:
(1) Switching Agreement dated December 11, 1996 between
Seller and the Partnership;
(2) License Agreement for the name "Unicel" between
Seller and the Partnership;
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(3) Use Agreement dated as of February 1, 1996 between
Licensee and the Partnership; and
(4) Agreement with Portland Cellular Partnership d/b/a
Maine Cellular re: contour extension from Seller's cell site in
Winthrop, Maine into the NECMA Market 279B and NECMA 152B dated March
8, 1994;
(5) Agreement with Portland Cellular Partnership d/b/a
Maine Cellular re: contour extension from Seller's cell site in
Westport, Maine into the NECMA Market 152B dated May 18, 1994;
(6) Agreement with Portland Cellular Partnership d/b/a
Maine Cellular re: contour extension from Seller's cell site in
Lewiston, Maine into the NECMA Market 465B dated August 7, 1995;
(7) Agreement with Portland Cellular Partnership d/b/a
Maine Cellular re: contour extension from Seller's cell site in
Turner, Maine into the NECMA Market 465B dated September 13, 1996; and
(8) Line Extension Contract with Maine Public Service
Company dated September 25, 1992.
Purchaser further acknowledges and agrees that the failure to obtain
consent by the date hereof to the assignment of the agreement referenced in
paragraph 7 of this Closing Memorandum shall not constitute a breach of the
Agreement, and Purchaser hereby waives any breach of the Agreement that may
arise from the failure to obtain consent to the assignment of such agreement by
the date hereof; provided, however, that nothing herein shall relieve Seller
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from its obligations under this Closing Memorandum to obtain consent to the
assignment of such agreement.
10. Smyrna Site.
(i) A survey that was performed with respect to the cell
site that is commonly known as the "Smyrna" site has shown that the
guy wires for the cell tower located at this site are not located
within the boundaries of the Real Estate that is leased by Seller.
Seller's landlord at the Smyrna site, Future Security, Inc., is the
holder of a lease that allows guy wires to be located on adjacent
property now or formerly belonging to Lilley Farms, a Maine
Corporation, which is the owner of the parcel of land on which the guy
wires for the Smyrna Cell Site tower are located. Accordingly, Seller
and Shareholder shall use reasonable efforts to obtain from Future
Security a sublease in favor of Purchaser in substantially the form of
Exhibit D hereto (the "Sublease") that will allow MRCC, Inc. to
maintain the guy wires on the property of Lilley Farms in locations
permitted under the current Lease Agreement between Future Security and
Lilley Farms, and Seller and Shareholder shall assist Future Security
in obtaining from Lilley Farms the necessary consent to the Sublease
(the "Consent"). If the Sublease and Consent are obtained, Section
10(ii) below shall be inapplicable.
(ii) If the Sublease and the Consent are not obtained,
Seller and Shareholder agree to indemnify and defend Purchaser
pursuant to Article 11 of the Agreement from and against all Losses
arising out of or resulting from the fact that the guy wires for
the tower at the Smyrna cell site are not located within the boundaries
of the Real Estate at such site, provided that:
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(a) The requirement that Losses first exceed the
Threshold Amount shall not apply;
(b) Notwithstanding Section 11.1(i) of the
Agreement, said indemnification shall remain in effect for a
period of five (5) years from the date hereof;
(c) In addition to the definition set forth in
the Agreement, the term "Losses" as used in this Section 10
shall include (but not be limited to) costs of acquiring and
relocating to a substitute cell site acceptable to Purchaser
if necessary and lost profits for a period not to exceed three
(3) months in the event service is interrupted; provided,
however, that Purchaser shall be obligated to take all
commercially reasonable actions to mitigate its Losses and to
avoid an interruption of service; and
(d) If a claim is made by Purchaser against
Seller, Shareholder or Licensee with respect to the matter
referenced in this Section 10, Seller, Shareholder and
Licensee shall be entitled, without the consent of Purchaser,
to pursue in the name of Purchaser, and Purchaser shall assist
Seller, Shareholder and Licensee in pursuing, any and all
claims that Purchaser may have with respect to the matter
referenced in this Section 10.
11. Augusta (Western Avenue) Site. The legal description of
Seller's drainage easement for the parcel of Real Estate located on Western
Avenue, Augusta, Maine is inaccurate. Seller and Shareholder shall, at their
expense, prepare a corrective drainage easement and any necessary related
documents and shall use their commercially reasonable efforts to obtain the
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execution of such instrument by all persons and parties necessary to grant a
valid and enforceable corrective drainage easement. If such consent is
obtained, Seller shall record the corrective drainage easement. If such
corrective drainage easement is not obtained, no further action shall be
required of Seller or Shareholder, and neither Seller, Shareholder or Licensee
shall have any further liability or obligation with respect to such matter;
provided, however, that in such event, Seller shall instruct its legal counsel
to forward to Purchaser's legal counsel copies of the corrective drainage
easement and all related documentation (including correspondence).
12. Liberty Site.
(i) The legal description attached to the current
Memorandum of Lease for the Real Estate of Seller that is commonly
known as the "Liberty" cell site is inaccurate. Seller and
Shareholder shall use commercially reasonable efforts to obtain
consent to and to record the Memorandum of Lease attached as Exhibit E
hereto which has a correct legal description of the leased premises
attached. If Seller is able to obtain consent to and to record the
corrected Memorandum of Lease, then Section 12(ii) below shall be
inapplicable.
(ii) If Seller is unable to obtain and record the
corrected Memorandum of Lease referenced in Section 12(i) above,
Seller and Shareholder agree to indemnify and defend Purchaser
pursuant to Article 11 of the Agreement from and against all Losses
arising out of or resulting from the fact that such corrected
Memorandum of Lease has not been obtained and recorded, provided that:
(a) The requirement that Losses first exceed the
Threshold Amount shall not apply;
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(b) Notwithstanding Section 11.1(i) of the
Agreement, said indemnification shall remain in effect for a
period of five (5) years from the date hereof;
(c) In addition to the definition set forth in
the Agreement, the term "Losses" as used in this Section 12
shall include (but not be limited to) costs of acquiring and
relocating to a substitute cell site acceptable to Purchaser
if necessary and lost profits for a period not to exceed three
(3) months in the event service is interrupted; provided,
however, that Purchaser shall be obligated to take all
commercially reasonable actions to mitigate its Losses and to
avoid an interruption of service;
(d) If a claim is made by Purchaser against
Seller, Shareholder or Licensee with respect to the matter
referenced in this Section 12, Seller, Shareholder and
Licensee shall be entitled, without the consent of Purchaser,
to pursue in the name of Purchaser, and Purchaser shall assist
Seller, Shareholder and Licensee in pursuing, any and all
claims that Purchaser may have with respect to the matter
referenced in this Section 12; and
(e) From and after the date that is sixty (60)
days following the date of this Closing Memorandum, Seller
shall have the right and option (but not the obligation) to
record the current, uncorrected version of the Memorandum of
Lease and may obtain title insurance for Purchaser with
respect thereto; provided, however, that in the event Seller
records such uncorrected Memorandum of Lease, Seller and
Shareholder shall indemnify Purchaser upon the terms set forth
in
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Sections 12(ii)(a)-(d) hereof against all Losses that arise
from such filing as a result of the incorrect legal
description.
13. Northport.
(i) Seller and Shareholder shall undertake, following the
Closing, to have a Memorandum of Lease for the Northport Land Lease
executed by Nancy L. Weser as well as Lester R. Weser, in the form of
Exhibit F hereto.
(ii) If Seller is unable to obtain and record the
corrected Memorandum of Lease referenced in Section 13(i) above,
Seller and Shareholder agree to indemnify and defend Purchaser
pursuant to Article 11 of the Agreement from and against all Losses
arising out of or resulting from the fact that such corrected
Memorandum of Lease has not been obtained and recorded, provided that:
(a) The requirement that Losses first exceed the
Threshold Amount shall not apply;
(b) Notwithstanding Section 11.1(i) of the
Agreement, said indemnification shall remain in effect for a
period of five (5) years from the date hereof;
(c) In addition to the definition set forth in
the Agreement, the term "Losses" as used in this Section 13
shall include (but not be limited to) costs of acquiring and
relocating to a substitute cell site acceptable to Purchaser
if necessary and lost profits for a period not to exceed three
(3) months in the event service is interrupted; provided,
however, that Purchaser shall be obligated to take
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all commercially reasonable actions to mitigate its Losses and
to avoid an interruption of service;
(d) If a claim is made by Purchaser against
Seller, Shareholder or Licensee with respect to the matter
referenced in this Section 13, Seller, Shareholder and
Licensee shall be entitled, without the consent of Purchaser,
to pursue in the name of Purchaser, and Purchaser shall assist
Seller, Shareholder and Licensee in pursuing, any and all
claims that Purchaser may have with respect to the matter
referenced in this Section 13; and
(e) From and after the date that is sixty (60)
days following the date of this Closing Memorandum, Seller
shall have the right and option (but not the obligation) to
record the current, Memorandum of Lease (executed by Mr. Weser
only) and may obtain title insurance for Purchaser with
respect thereto.
14. Status and Cooperation. From the date of this Closing
Memorandum until the matters set forth in Sections 10, 11, 12 and 13 are
resolved as set forth herein: (i) Seller and Purchaser shall instruct their
respective attorneys to discuss via conference call at least once per week the
status of such matters; and (ii) Purchaser agrees to reasonably cooperate with
Seller and Shareholder and agrees to execute any such documents and to do all
such things as Seller or Shareholder shall reasonably request in order to
resolve the matters referenced in this Closing Memorandum.
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IN WITNESS WHEREOF, the parties have executed the Closing Memorandum
this 1st day of May, 1997.
PURCHASER: UNITY:
RURAL CELLULAR CORPORATION UNITY CELLULAR SYSTEMS, INC.
By: /s/ Richard P. Ekstrand By: /s/ Allen E. Smith
----------------------- -------------------------
Richard P. Ekstrand Allen E. Smith
Its President Its Chief Executive
Officer
MRCC, INC. SHAREHOLDER:
INTERCEL, INC.
By: /s/ Richard P. Ekstrand
-----------------------
Richard P. Ekstrand
Its President By: /s/ Allen E. Smith
-------------------------
Allen E. Smith
Its Chief Executive
Officer
LICENSEE:
INTERCEL LICENSES, INC.
By: /s/ Allen E. Smith
-------------------------
Allen E. Smith
Its Chief Executive
Officer
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