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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 Xxxxxx X. Xxxx
and Xxxxx X. Xxxx vs. Xxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxxxx, 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 Xxxx 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 Xxxxxx 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 Xxxxxx Farms in locations
permitted under the current Lease Agreement between Future Security and
Xxxxxx Farms, and Seller and Shareholder shall assist Future Security
in obtaining from Xxxxxx 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 Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxx 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 Xxxxx X. Xxxxx as well as Xxxxxx X. Xxxxx, 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 Xx. Xxxxx
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/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxxxx Xxxxx X. Xxxxx
Its President Its Chief Executive
Officer
MRCC, INC. SHAREHOLDER:
INTERCEL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Its President By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Its Chief Executive
Officer
LICENSEE:
INTERCEL LICENSES, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Its Chief Executive
Officer
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