SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from to
Commission file number 0-19179
CT COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1837282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
68 Cabarrus Ave. E., Concord, N.C. 28025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 782-7000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Class B Non-Voting Stock
(Title of Class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
Aggregate market value of voting stock held by
non-affiliates:
Registrant's stock is infrequently traded and there is no
established market for such shares. However, using the most
recent known trading price for non-voting and not granting a
premium for voting rights, the aggregate market value is
$18,993,923 (75,673 x 251.00).
Indicate the number of shares outstanding of common stock,
as of December 31, 1994. Common 75,673 . Common Class B
(Non-voting) 416,256 .
Item 1. Business.
Item 1 of the Registrant's Form 10-K filed March 31, 1995, is
hereby amended so that the section "Carolinas Personal
Communications, Inc." on pages 6 and 7 is replaced in its
entirety as follows:
" Carolinas Personal Communications, Inc.
In 1994, the Registrant joined a partnership known as
BellSouth Carolinas PCS Limited Liability Partnership (the
"Partnership"). This partnership's business is to acquire a
license, design, develop, construct and operate the system in the
Major Trading Area (MTA) and to market and provide Personal
Communication Service (PCS) services in the MTA. The license
sought by bidding in the FCC auction is for the Carolinas (MTA
006-A & B). The Registrant's ownership in this partnership is
less than 2% (approximately 1.47%). The Registrant's voting
interest in this partnership is also less than 2%
(approximately 1.47%).
The majority partner of the Partnership is BellSouth
Personal Communications, Inc. ("BellSouth"). BellSouth has an
equity interest in the Partnership of just under 67%, and a
voting interest in the Partnership of approximately 67.3%. Not
including the Registrant, the other partners in the Partnership
are as follows: Dukenet Communications, Inc., CaroNet Inc.,
Atlantic Telephone Membership Corporation, Bluffton Telephone
Company, Inc., Chesnee Telephone Company, Chester Telephone
Company, Citizens Telephone Company, Ellerbe Telephone Company,
Farmers Telephone Cooperative, Inc., Fort Mill Telephone Company,
Hargray Telephone Company, Inc., Hart Telephone Company,
Heath Springs Telephone Company, Home Telephone Company, Inc.,
Horry Telephone Cooperative, Inc., Lancaster Telephone Company,
Lexington Telephone Company, Lockhart Telephone Company, Mebtel,
Inc., North State Telephone Company, Palmetto Rural Telephone
Cooperative, Inc., Piedmont Rural Telephone Cooperative, Inc.,
Piedmont Telephone Membership Corporation, Pond Branch Telephone
Company, Inc., Ridge Telephone Company, Inc., Ridgeway Telephone
Company, Rock Hill Telephone Company, Sandhill Telephone
Cooperative, Inc., Skyline Telephone Membership Corporation, Star
Telephone Membership Corporation, Surry Telephone
Membership Corporation, Tri-County Telephone Membership
Corporation, West Carolina Rural Telephone Cooperative, Inc.,
Yadkin Valley Telephone Membership Corporation.
The Registrant was notified on March 13, 1995 that the
Partnership was successful in bidding for this license. Funding
of this venture is expected to start in the second quarter of
1995, and the system may be partially operational next year. As
a limited partner of the Partnership, the Registrant will make a
minimum capital contribution over the next four years of
$5,158,740. In 1995, the Registrant will incur initial capital
expenses of about $3.1 million which includes the Registrant's
pro rata share of the license fee and expenditures to construct
the system and will be paid out of current investments
and operations. The Registrant's currently projected capital
contributions for 1996 and 1997 are approximately $2.5 million
and $965,000, respectively.
The cost of this new service to the customer is expected to
be low as compared to cellular technology and based on the
public's rapid acceptance of cellular service, it is hoped that
this service will quickly become popular. However, like cellular
telephone service, capital requirements will be substantial and
aggressive marketing will be needed to insure its success. There
will be no revenues generated by this service in 1995 and only
a small amount of revenue during 1996.
A new subsidiary of the Registrant, Carolina
Personal Communications, Inc., has been formed to operate this
service. PCS is a group of customized wireless
telecommunications services and devices that are expected to
revolutionize business and personal communications. The first
stages of PCS have already come to the market place through
the use of portable cellular phones, car phones, and various
paging devices. As technology becomes more refined these devices
continue to become smaller in size and more sophisticated in the
features they offer. The demands of our mobile society has
caused the advanced development of many of the new PCS devices
coming to market today and are likely to see tomorrow.
With the advancement of PCS a telephone number will soon no
longer represent a physical place but, rather will represent an
individual or a specific telecommunications device. New PCS
devices will incorporate various communications methods in a
single device, including voice, data interface, and paging. With
PCS, a user will be able to customize their
telecommunications service to best suit their particular
requirements."
Item 7. Exhibits, Financial Statements and Reports on Form 8-K.
Item 7(c) is hereby amended so that the Index to Exhibits is replaced
in its entirety as follows:
" INDEX TO EXHIBITS
Exhibit No. Description Page No.
1. Not Applicable.
2. The Reorganization and Share Exchange Agreement by
and between The Concord Telephone Company and CT
Communications, Inc. dated as of August 1, 1993,
incorporated by reference to Exhibit 2.1 of
registrant's current report on Form 8-K filed
November 8, 1993.
3. (i) Articles of Incorporation of the Registrant
effective October 25, 1993, incorporated by
reference to Exhibit of the Registrant's Annual
Report Form 10-K dated March 29, 1994.
(ii) By laws of the Registrant effective October 25,
1993, incorporated by reference to Exhibit of
the Registrant's Annual Report Form 10-K dated
March 29, 1994.
4. (a) Indenture of Mortgage and Deed of Trust dated
August 1, 1958 incorporated by reference to
Registrant's Annual Report Form 10-K dated
March 27, 1992.
(b) 2nd Supplemental to Indenture of Mortgage and Deed
of Trust dated September 1, 1965 incorporated by
reference to Registrant's Annual Report Form 10-K
dated March 27, 1992.
(c) 3rd Supplemental to Indenture of Mortgage and Deed
of Trust dated March 1, 1967 incorporated by
reference to Registrant's Annual Report Form 10-K
dated March 27, 1992.
(d) The Registrant has other long-term debt
agreements, but these are not material in amount.
Copies of these agreements will be furnished to
the Commission on request.
5. Not Applicable.
6. Not Applicable.
7. Not Applicable.
8. Not Applicable.
9. Not Applicable.
10. (a) Partnership Agreement between Alltel Mobile
Communications of the Carolinas, Inc. (Alltel) and
The Concord Telephone Company dated September 15,
1989 incorporated by reference to Exhibit 10(a) to
Registrant's Annual Report Form 10-K dated March
28, 1991.
(b) Partnership Agreement between Alltel Mobile
Communications of the Carolinas, Inc. (Alltel)
and The Ellerbe-Concord Cellular Company dated
September 20, 1989 incorporated by reference to
Exhibit 10(b) to Registrant's Annual Report
Form 10-K dated March 28, 1991.
(c) North Carolina Utilities Commission order
approving the issuance and sale of Class B
non-voting common stock for use in an
Executive Stock Option Plan dated March 12,
1990 effective April 27, 1989 incorporated
by reference to Exhibit 10(c) to Registrant's
Annual Report Form 10-K dated March 31, 1993.
(d) 1989 Executive Stock Option Plan dated April 26,
1982. Incorporated by reference to Exhibit 10(d)
to Registrant's Annual Report Form 10-K dated
March 29, 1994.
(e) General Partnership Agreement of ITC Associates
dated December 13, 1993. Incorporated by
reference to Exhibit 10(e) to Registrant's Annual
Report Form 10-K dated March 29, 1994.
(f) Operating Agreement of InfiNet Multimedia
Services, LLC dated January 31, 1994.
Incorporated
by reference to Exhibit 10(f) to Registrant's
Annual Report Form 10-K dated March 29, 1994.
(g) Articles of Organization and the Operating
Agreement
for Embion of North Carolina, LLC.*
(h) Agreement BellSouth Carolinas PCS Limited
Partnership dated December 8, 1994. (Confidential
treatment has been requested for this Exhibit)
11. Computation of Earnings Per Share.*
12. None
13. None
14. Not Applicable
15. Not Applicable
16. None
17. Not Applicable
18. None
19. Not Applicable
20. None
21. Subsidiaries of the registrant:
The Concord Telephone Company, North Carolina
Concord Telephone Long Distance Company, North
Carolina
CT Cellular, Inc., North Carolina
Carolina Personal Communications, Inc., North
Carolina
22. None
23. None
24. None
25. Not Applicable
26. Not Applicable
27. None
28. None
99. None
_____________
* Previously Filed.
The following Exhibit is filed herewith:
Exhibit No. Description
10(h) Agreement BellSouth Carolinas PCS Limited
Partnership dated December 8, 1994.
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
there unto duly authorized.
(Registrant) CT COMMUNICATIONS, INC.
By: \S\ MICHAEL R. COLTRANE
Michael R. Coltrane
President and Chief Executive
Officer
July 14, 1995
Date
By: \S\ ROY W. LONG
Roy W. Long
Vice President, Treasurer and
Chief Financial Officer
July 14, 1995
Date
Pursuant to the requirements of the Securities and Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: \S\ MICHAEL R. COLTRANE
Michael R. Coltrane
President and Chief Executive
Officer
July 14, 1995
Date
By: \S\ L.D. COLTRANE III
L. D. Coltrane III
Chairman of the Board
July 14, 1995
Date
By: \S\ JOHN R. BOGER, JR.
John R. Boger, Jr.
Director
July 14, 1995
Date
By: \S\ PHIL W. WIDENHOUSE
Phil W. Widenhouse
Director
July 14, 1995
Date
By: \S\ JERRY H. MCCLELLAN
Jerry H. McClellan
Executive Vice President,
General Plant Manager,
Secretary and Director
July 14, 1995
Date
By:
Betty Gay Bivens
Director
July 14, 1995
Date
By:
Ben F. Mynatt
Director
July 14, 1995
Date
" INDEX TO EXHIBITS
Exhibit No. Description Page No.
1. Not Applicable.
2. The Reorganization and Share Exchange Agreement by
and between The Concord Telephone Company and CT
Communications, Inc. dated as of August 1, 1993,
incorporated by reference to Exhibit 2.1 of
registrant's current report on Form 8-K filed
November 8, 1993.
3. (i) Articles of Incorporation of the Registrant
effective October 25, 1993, incorporated by
reference to Exhibit of the Registrant's Annual
Report Form 10-K dated March 29, 1994.
(ii) By laws of the Registrant effective October 25,
1993, incorporated by reference to Exhibit of
the Registrant's Annual Report Form 10-K dated
March 29, 1994.
4. (a) Indenture of Mortgage and Deed of Trust dated
August 1, 1958 incorporated by reference to
Registrant's Annual Report Form 10-K dated
March 27, 1992.
(b) 2nd Supplemental to Indenture of Mortgage and Deed
of Trust dated September 1, 1965 incorporated by
reference to Registrant's Annual Report Form 10-K
dated March 27, 1992.
(c) 3rd Supplemental to Indenture of Mortgage and Deed
of Trust dated March 1, 1967 incorporated by
reference to Registrant's Annual Report Form 10-K
dated March 27, 1992.
(d) The Registrant has other long-term debt
agreements, but these are not material in amount.
Copies of these agreements will be furnished to
the Commission on request.
5. Not Applicable.
6. Not Applicable.
7. Not Applicable.
8. Not Applicable.
9. Not Applicable.
10. (a) Partnership Agreement between Alltel Mobile
Communications of the Carolinas, Inc. (Alltel) and
The Concord Telephone Company dated September 15,
1989 incorporated by reference to Exhibit 10(a) to
Registrant's Annual Report Form 10-K dated March
28, 1991.
(b) Partnership Agreement between Alltel Mobile
Communications of the Carolinas, Inc. (Alltel)
and The Ellerbe-Concord Cellular Company dated
September 20, 1989 incorporated by reference to
Exhibit 10(b) to Registrant's Annual Report
Form 10-K dated March 28, 1991.
(c) North Carolina Utilities Commission order
approving the issuance and sale of Class B
non-voting common stock for use in an
Executive Stock Option Plan dated March 12,
1990 effective April 27, 1989 incorporated
by reference to Exhibit 10(c) to Registrant's
Annual Report Form 10-K dated March 31, 1993.
(d) 1989 Executive Stock Option Plan dated April 26,
1982. Incorporated by reference to Exhibit 10(d)
to Registrant's Annual Report Form 10-K dated
March 29, 1994.
(e) General Partnership Agreement of ITC Associates
dated December 13, 1993. Incorporated by
reference to Exhibit 10(e) to Registrant's Annual
Report Form 10-K dated March 29, 1994.
(f) Operating Agreement of InfiNet Multimedia
Services, LLC dated January 31, 1994.
Incorporated
by reference to Exhibit 10(f) to Registrant's
Annual Report Form 10-K dated March 29, 1994.
(g) Articles of Organization and the Operating
Agreement for Embion of North Carolina, LLC.*
(h) Agreement BellSouth Carolinas PCS Limited
Partnership dated December 8, 1994. (Confidential
treatment has been requested for this Exhibit)
11. Computation of Earnings Per Share.*
12. None
13. None
14. Not Applicable
15. Not Applicable
16. None
17. Not Applicable
18. None
19. Not Applicable
20. None
21. Subsidiaries of the registrant:
The Concord Telephone Company, North Carolina
Concord Telephone Long Distance Company, North
Carolina
CT Cellular, Inc., North Carolina
Carolina Personal Communications, Inc., North
Carolina
22. None
23. None
24. None
25. Not Applicable
26. Not Applicable
27. None
28. None
99. None
_____________
* Previously Filed.
=================================================================
CONFIDENTIAL TREATMENT
BELL SOUTH CAROLINAS PCS, L.P.
LIMITED PARTNERSHIP
AGREEMENT
December 8, 1994
=================================================================
<PAGE>
BELLSOUTH CAROLINAS PCS, L.P.
LIMITED PARTNERSHIP
AGREEMENT
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . 7
1.1 "ACT". . . . . . . . . . . . . . . . . . . . . . . . . 7
1.2 "ADJUSTED CAPITAL ACCOUNT" . . . . . . . . . . . . . . 7
1.3 "AFFILIATE". . . . . . . . . . . . . . . . . . . . . . 7
1.4 "ANNOUNCEMENT DATE". . . . . . . . . . . . . . . . . . 7
1.5 "ANNUAL BUDGET". . . . . . . . . . . . . . . . . . . . 7
1.6 "APPLICABLE LAWS". . . . . . . . . . . . . . . . . . . 8
1.7 "APPRAISER'S FAIR VALUE" . . . . . . . . . . . . . . . 8
1.8 "AWARD DATE" . . . . . . . . . . . . . . . . . . . . . 8
1.9 "BUSINESS PLAN". . . . . . . . . . . . . . . . . . . . 8
1.10 "CAPITAL ACCOUNT" . . . . . . . . . . . . . . . . . . 8
1.11 "CAPITAL ACCOUNT ADJUSTMENT EVENT". . . . . . . . . . 9
1.12 "CAPITAL ACCOUNT ASSET VALUE" . . . . . . . . . . . . 9
1.13 "CAPITAL CONTRIBUTION PROGRAM". . . . . . . . . . . .10
1.14 "CARRIED INTEREST". . . . . . . . . . . . . . . . . .10
1.15 "CERTIFICATE" . . . . . . . . . . . . . . . . . . . .10
1.16 "CODE". . . . . . . . . . . . . . . . . . . . . . . .10
1.17 "DEPRECIATION". . . . . . . . . . . . . . . . . . . .10
1.18 "DISTRIBUTABLE PARTNERSHIP PROFITS" . . . . . . . . .11
1.19 "EQUITY INTEREST" . . . . . . . . . . . . . . . . . .11
1.20 "EXECUTIVE COMMITTEE" . . . . . . . . . . . . . . . .11
1.21 "FAIR VALUE". . . . . . . . . . . . . . . . . . . . .11
1.22 "FCC" . . . . . . . . . . . . . . . . . . . . . . . .12
1.23 "FCC AUCTION" . . . . . . . . . . . . . . . . . . . .12
1.24 "FISCAL YEAR" AND "FISCAL QUARTER". . . . . . . . . .12
1.25 "FREE CASH FLOW". . . . . . . . . . . . . . . . . . .12
1.26 "GENERAL PARTNER" . . . . . . . . . . . . . . . . . .12
1.27 "GUARANTEES". . . . . . . . . . . . . . . . . . . . .13
1.28 "INDEPENDENT APPRAISER" . . . . . . . . . . . . . . .13
1.29 "LICENSE" . . . . . . . . . . . . . . . . . . . . . .13
1.30 "LICENSE FEE" . . . . . . . . . . . . . . . . . . . .13
1.31 "LIMITED PARTNER" . . . . . . . . . . . . . . . . . .13
1.32 "MARKET VALUE". . . . . . . . . . . . . . . . . . . .13
1.33 "MINIMUM GAIN". . . . . . . . . . . . . . . . . . . .13
1.34 "MTA" . . . . . . . . . . . . . . . . . . . . . . . .13
1.35 "NET PROFITS" OR "NET LOSSES" . . . . . . . . . . . .13
1.36 "NONRECOURSE DEDUCTIONS". . . . . . . . . . . . . . .14
1.37 "OPERATING AGREEMENT" . . . . . . . . . . . . . . . .14
1.38 "OPERATING TELCO" . . . . . . . . . . . . . . . . . .14
1.39 "PARTITION AGREEMENT" . . . . . . . . . . . . . . . .14
1.40 "PARTITIONED AREA". . . . . . . . . . . . . . . . . .15
1.41 "PARTITIONED LICENSE" . . . . . . . . . . . . . . . .15
1.42 "PARTNERS". . . . . . . . . . . . . . . . . . . . . .15
1.43 "PARTNERSHIP" . . . . . . . . . . . . . . . . . . . .15
1.44 "PARTNERSHIP'S BUSINESS". . . . . . . . . . . . . . .15
1.45 "PARTNERSHIP MINIMUM GAIN". . . . . . . . . . . . . .15
1.46 "PARTNER NONRECOURSE DEBT". . . . . . . . . . . . . .15
1.47 "PARTNER NONRECOURSE DEBT MINIMUM GAIN" . . . . . . .15
1.48 "PARTNER NONRECOURSE DEDUCTIONS". . . . . . . . . . .15
1.49 "PCS" . . . . . . . . . . . . . . . . . . . . . . . .15
1.50 "PERSON". . . . . . . . . . . . . . . . . . . . . . .15
1.51 "POPS". . . . . . . . . . . . . . . . . . . . . . . .15
1.52 "REGULATIONS" . . . . . . . . . . . . . . . . . . . .15
1.53 "REGULATORY ALLOCATIONS". . . . . . . . . . . . . . .15
1.54 "SYSTEM". . . . . . . . . . . . . . . . . . . . . . .16
1.55 "TRANSACTION DOCUMENTS" . . . . . . . . . . . . . . .16
1.56 "UNRECOVERED CAPITAL CONTRIBUTIONS" . . . . . . . . .16
1.57 "VOTING INTEREST. . . . . . . . . . . . . . . . . . .16
1.58 "VOTING REPRESENTATIVE" . . . . . . . . . . . . . . .16
ARTICLE 2
FORMATION AND PURPOSES . . . . . . . . . .16
2.1 FORMATION. . . . . . . . . . . . . . . . . . . . . . .16
2.2 NAME . . . . . . . . . . . . . . . . . . . . . . . . .17
2.3 PRINCIPAL OFFICE: REGISTERED OFFICE; REGISTERED AGENT.17
2.4 TERM . . . . . . . . . . . . . . . . . . . . . . . . .17
2.5 BUSINESS OF THE PARTNERSHIP. . . . . . . . . . . . . .17
2.6 INITIAL BUSINESS PLAN. . . . . . . . . . . . . . . . .17
2.7 BIDDING. . . . . . . . . . . . . . . . . . . . . . . .18
2.8 TRANSFER OF LICENSE. . . . . . . . . . . . . . . . . .18
2.9 MFJ WAIVER . . . . . . . . . . . . . . . . . . . . . .18
2.10 OPERATIONS. . . . . . . . . . . . . . . . . . . . . .19
2.11 COMPLIANCE WITH APPLICABLE LAW. . . . . . . . . . . .20
2.12 CAPITALIZATION OF CARONET . . . . . . . . . . . . . .20
ARTICLE 3
CAPITAL CONTRIBUTIONS: ADJUSTMENTS: FINANCING . . . .21
3.1 INITIAL CAPITAL CONTRIBUTIONS. . . . . . . . . . . . .21
3.2 DILUTION . . . . . . . . . . . . . . . . . . . . . . .21
3.3 WITHDRAWAL . . . . . . . . . . . . . . . . . . . . . .22
3.4 PURCHASE OF AVAILABLE INTEREST . . . . . . . . . . . .22
3.5 RURAL TELCOS OPTION. . . . . . . . . . . . . . . . . .23
3.6 CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . . . . .24
3.7 PAYMENT TO APC . . . . . . . . . . . . . . . . . . . .24
3.8 SUBSEQUENT CAPITAL CONTRIBUTIONS . . . . . . . . . . .24
3.9 NO INTEREST ON CONTRIBUTIONS . . . . . . . . . . . . .25
3.10 LOANS . . . . . . . . . . . . . . . . . . . . . . . .25
3.11 LIMITATION. . . . . . . . . . . . . . . . . . . . . .26
3.12 CONTRIBUTION OF PROPERTY. . . . . . . . . . . . . . .26
3.13 CERTAIN EXPENSES. . . . . . . . . . . . . . . . . . .26
ARTICLE 4
PROFITS AND LOSSES . . . . . . . . . . .27
4.1 ALLOCATION OF NET PROFITS AND NET LOSSES . . . . . . .27
4.2 NONRECOURSE DEDUCTIONS . . . . . . . . . . . . . . . .27
4.3 PARTNER NONRECOURSE DEDUCTIONS . . . . . . . . . . . .27
4.4 LIMITATION ON ALLOCATIONS. . . . . . . . . . . . . . .27
4.5 QUALIFIED INCOME OFFSET. . . . . . . . . . . . . . . .28
4.6 GROSS INCOME ALLOCATION. . . . . . . . . . . . . . . .28
4.7 MINIMUM GAIN CHARGEBACK. . . . . . . . . . . . . . . .28
4.8 PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK . . .28
4.9 SECTION 754 ADJUSTMENTS. . . . . . . . . . . . . . . .28
4.10 CURATIVE ALLOCATIONS. . . . . . . . . . . . . . . . .29
4.11 VARYING PARTNERSHIP INTEREST. . . . . . . . . . . . .29
4.12 CONTRIBUTED AND REVALUED PROPERTY . . . . . . . . . .29
4.13 TAX ITEMS . . . . . . . . . . . . . . . . . . . . . .30
4.14 ALLOCATIONS UPON DISSOLUTION. . . . . . . . . . . . .30
ARTICLE 5
DISTRIBUTIONS OF CASH FLOW . . . . . . . . .30
5.1 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . .30
5.2 LIABILITY OF GENERAL PARTNER . . . . . . . . . . . . .31
ARTICLE 6
RIGHTS POWERS AND OBLIGATIONS OF
GENERAL PARTNER, EXECUTIVE COMMITTEE. . . . . . .31
6.1 AUTHORITY OF THE GENERAL PARTNER . . . . . . . . . . .31
6.2 LIMITATION ON AUTHORITY OF GENERAL PARTNER . . . . . .32
6.3 REIMBURSEMENT OF GENERAL PARTNER . . . . . . . . . . .32
6.4 LIABILITY AND INDEMNIFICATION OF GENERAL PARTNER . . .32
6.5 EXECUTIVE COMMITTEE. . . . . . . . . . . . . . . . . .33
6.6 OTHER MANAGEMENT MATTERS . . . . . . . . . . . . . . .37
6.7 OPERATIONS COMMITTEE . . . . . . . . . . . . . . . . .37
6.8 NO RETURN OF CONTRIBUTION. . . . . . . . . . . . . . .37
6.9 RESELLER ARRANGEMENTS. . . . . . . . . . . . . . . . .38
ARTICLE 7
POWERS RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS . .42
7.1 POWERS AND RIGHTS. . . . . . . . . . . . . . . . . . .42
ARTICLE 8
ACCOUNTING, BOOKS AND RECORDS . . . . . . . .42
8.1 ACCOUNTING METHOD. . . . . . . . . . . . . . . . . . .42
8.2 BOOKS AND RECORDS; AUDIT . . . . . . . . . . . . . . .42
8.3 FINANCIAL REPORTS AND TAX RETURNS. . . . . . . . . . .43
8.4 SPECIAL BASIS ADJUSTMENT . . . . . . . . . . . . . . .43
8.5 TAX MATTERS PARTNER. . . . . . . . . . . . . . . . . .44
ARTICLE 9
WITHDRAWAL RETIREMENT AND DISQUALIFICATION OF PARTNERS . .44
9.1 LIMITED PARTNERS . . . . . . . . . . . . . . . . . . .44
9.2 GENERAL PARTNER. . . . . . . . . . . . . . . . . . . .44
9.3 DISQUALIFICATION . . . . . . . . . . . . . . . . . . .45
ARTICLE 10
PLEDGES; TRANSFERS . . . . . . . . . . .45
10.1 PLEDGES . . . . . . . . . . . . . . . . . . . . . . .45
10.2 TRANSFERS BY PARTNERS . . . . . . . . . . . . . . . .45
10.3 ADDITIONAL RESTRICTIONS ON TRANSFERS BY RURAL TELCOS.46
10.4 RIGHT OF FIRST REFUSAL. . . . . . . . . . . . . . . .46
10.5 RESTRICTION ON TRANSFERS OF PARTNERSHIP INTERESTS . .50
10.6 TAKE ALONG/TAG ALONG. . . . . . . . . . . . . . . . .50
10.7 TRANSFERS OF PARTNERSHIP ASSETS . . . . . . . . . . .51
10.8 RURAL TELCO TRANSFERS . . . . . . . . . . . . . . . .51
10.9 CHANGE OF CONTROL . . . . . . . . . . . . . . . . . .52
10.10 APC BUYOUT . . . . . . . . . . . . . . . . . . . . .53
ARTICLE 11
EVENTS OF DEFAULT . . . . . . . . . . .54
11.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . .54
11.2 PARTNERSHIP'S REMEDIES UPON DEFAULT . . . . . . . . .54
11.3 CONSEQUENCES OF EXERCISING REMEDY . . . . . . . . . .55
ARTICLE 12
DISSOLUTION OF PARTNERSHIP . . . . . . . . .56
12.1 EVENTS OF DISSOLUTION . . . . . . . . . . . . . . . .56
ARTICLE 13
DISTRIBUTIONS UPON DISSOLUTION . . . . . . . .56
13.1 LIQUIDATION . . . . . . . . . . . . . . . . . . . . .56
13.2 DEFICIT CAPITAL ACCOUNT . . . . . . . . . . . . . . .58
13.3 NO FURTHER CLAIM. . . . . . . . . . . . . . . . . . .58
13.4 NO ACTION FOR DISSOLUTION . . . . . . . . . . . . . .58
<PAGE>
ARTICLE 14
NON-COMPETITION. . . . . . . . . . . .59
14.1 NON-COMPETITION . . . . . . . . . . . . . . . . . . .59
14.2 REASONABLENESS. . . . . . . . . . . . . . . . . . . .61
14.3 NO OTHER RESTRICTIONS . . . . . . . . . . . . . . . .61
ARTICLE 15
MISCELLANEOUS. . . . . . . . . . . . .61
15.1 ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . .61
15.2 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . .61
15.3 NOTICES . . . . . . . . . . . . . . . . . . . . . . .61
15.4 SEVERABILITY. . . . . . . . . . . . . . . . . . . . .61
15.5 SUCCESSORS. . . . . . . . . . . . . . . . . . . . . .62
15.6 COUNTERPARTS; EXECUTION BY FACSIMILE. . . . . . . . .62
15.7 HEADINGS. . . . . . . . . . . . . . . . . . . . . . .62
15.8 ACCEPTANCE OF PRIOR ACTS. . . . . . . . . . . . . . .62
15.9 PARTNERSHIP PROPERTY. . . . . . . . . . . . . . . . .62
15.10 GENDER AND NUMBER. . . . . . . . . . . . . . . . . .62
15.11 WAIVER OF PARTITION. . . . . . . . . . . . . . . . .63
15.12 EQUITABLE REMEDIES . . . . . . . . . . . . . . . . .63
15.13 DISPUTE RESOLUTION . . . . . . . . . . . . . . . . .63
15.14 TERMINATION OF FORMATION AGREEMENT AND OTHER . . . .65
AGREEMENTS
15.15 PARTNERS' ACKNOWLEDGEMENT. . . . . . . . . . . . . .65
15.16 NON-DISCLOSURE COVENANT. . . . . . . . . . . . . . .65
15.17 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . .65
<PAGE>
BELLSOUTH CAROLINAS PCS, L.P.
LIMITED PARTNERSHIP
AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT (this "Agreement"), made
and entered into as of the 8th day of December, 1994, by and
among BELLSOUTH PERSONAL COMMUNICATIONS, INC., a Delaware
corporation ("BellSouth"), AMERICAN PCS L.P., a Delaware limited
partnership ("APC"), DUKENET COMMUNICATIONS, INC., a North
Carolina corporation ("DukeNet"), CARONET, INC., a North Carolina
corporation ("CaroNet"), and the rural telephone companies (or
affiliates thereof) whose names are set forth in the signatures
pages hereof (collectively, the "Rural Telcos"),
W I T N E S S E T H:
IN CONSIDERATION of the mutual covenants and agreements
contained herein, and in order to form a limited partnership
under the Delaware Revised Uniform Limited Partnership Act, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms have the
following meanings (all terms used in this Agreement that are not
defined in this Article 1 shall have the meanings set forth
elsewhere in this Agreement):
1.1 "ACT" means the Delaware Revised Uniform Limited
Partnership Act, Del. Code. Ann. tit. 6, Sections 17-101 et seq.
1.2 "ADJUSTED CAPITAL ACCOUNT" means a Partner's Capital
Account computed without regard to any allocations pursuant to
Sections 4.2 through 4.10, and by computing Net Profits and Net
Losses without any adjustments provided in Section 1.35(e).
1.3 "AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under
common control with, such Person, whether through the ownership
of voting securities, by contract or otherwise.
1.4 "ANNOUNCEMENT DATE" means the date on which the FCC
announces that BellSouth is the highest bidder for the License.
1.5 "ANNUAL BUDGET" means a document, approved by the
Executive Committee as part of the Business Plan, which sets
forth budgeted revenues and expenditures, including but not
limited to, capital expenditures and operating revenues and
expenditures, to be made by the Partnership for all of its
operations during a particular Fiscal Year.
1.6 "APPLICABLE LAWS" means (i) all applicable laws,
regulations, rules, writs, orders, judgments, rulings, decrees
and ordinances, including (x) the Communications Act of 1934, as
amended, and the rules and regulations promulgated thereunder,
and (y) the Modification of Final Judgment (as defined in Section
2.9 hereof), and (ii) the terms and conditions of the License
awarded to the Partnership, and if the Option Closing (as defined
in the Partition Agreement) occurs, any Partitioned Licenses
granted to the Operating Telcos under the Partition Agreement.
1.7 "APPRAISER'S FAIR VALUE" means the price that would be
paid by a willing buyer, under no compulsion to buy and in
possession of the information considered by an Independent
Appraiser to be all information necessary for an informed
decision as to the purchase, and which a willing seller under no
compulsion to sell would accept, for the asset or interest that
is the subject of the purchase and sale transaction. In
determining the Appraiser's Fair Value of any interest that is
the subject of a purchase and sale transaction under this
Agreement, no control premium or discount for a minority interest
shall be applied, nor shall any deduction be made for the
otherwise non-liquid nature of the interest being appraised.
1.8 "AWARD DATE" means the date, if any, on which the grant
of the License to BellSouth in the FCC Auction becomes final.
1.9 "BUSINESS PLAN" means a document adopted by the
Executive Committee from time to time that sets forth the
business plan for the Partnership, including the Capital
Contribution Program and the Annual Budgets for the Partnership
(including capital expenditures for network construction) for the
next succeeding full five Fiscal Years. Each Business Plan shall
include all of the items included in the Initial Business Plan
(as defined in Section 2.6 hereof) including, without limitation,
an Annual Budget for each of the Fiscal Years covered by such
Business Plan.
1.10 "CAPITAL ACCOUNT" of a Partner consists of the cash and
the Capital Account Asset Value of property contributed by such
Partner to the Partnership (net of liabilities secured by such
contributed property that the Partnership is considered to assume
or take subject to under Code section 752), plus such Partner's
share of Net Profits and items of income and gain specially
allocated to such Partner, less (a) all distributions to and
withdrawals by such Partner (not including the repayment of
Partner loans and any interest thereon) and (b) such Partner's
share of Net Losses and items of deduction and loss specially
allocated to such Partner. In the event of a distribution of
property other than cash, the Capital Account of the distributee
Partner shall be charged with the Capital Account Asset Value of
the distributed property (net of liabilities secured by such
distributed property that such Partner is considered to assume or
take subject to under Code section 752). Upon the transfer of
all or part of an Equity Interest hereunder, other than a
transfer which terminates the Partnership within the meaning of
Code section 708(b)(1)(B), the relevant part of the Capital
Account of the transferor Partner that is attributable to the
transferred Equity Interest shall carry over to the transferee
Partner. In the event of a transfer of all or part of an Equity
Interest that causes a termination of the Partnership within the
meaning of Code section 708(b)(1)(B), the Capital Accounts of the
Partners shall be adjusted in accordance with Treasury
Regulations section 1.704-1(b)(2)(iv)(1). The foregoing
provisions of this Section 1.10 and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations section 1.704-l(b), and shall
be interpreted and applied in a manner consistent with such
Regulations. In the event that the General Partner shall
determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including
without limitation, debits or credits relating to liabilities
which are secured by contributed or distributed property or which
are assumed by the Partnership or any Partner) are computed to
comply with such Regulations, the General Partner may make such
modification, provided that the modification is not likely to
have a material effect on the amounts distributable to any
Partner pursuant to Article 13 hereof upon the dissolution of the
Partnership. The General Partner also shall make (i) any
adjustments necessary to maintain equality between the Capital
Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for
book purposes in accordance with Regulations section
1.704-l(b)(2)(iv)(q), and (ii) any appropriate modifications in
the event that unanticipated events might otherwise cause this
Agreement not to comply with Regulations section 1.704-l(b).
1.11 "CAPITAL ACCOUNT ADJUSTMENT EVENT" shall mean an event
described in Section 1.12(c) pursuant to which the Partnership
adjusts the Capital Account Asset Value of Partnership assets to
reflect their Market Value.
1.12 "CAPITAL ACCOUNT ASSET VALUE" with respect to any
Partnership asset means the value placed on such asset in
connection with the maintenance of Capital Accounts and shall be
that asset's adjusted basis for federal income tax purposes
except as follows:
(a) The Capital Account Asset Value of assets contributed
to the capital of the Partnership by a Partner shall be the
Market Value of the contributed assets on the date of
contribution.
(b) The Partnership shall increase or decrease the Capital
Account Asset Value of Partnership assets to reflect any
adjustments to the adjusted basis of the assets pursuant to Code
section 734(b) or 743(b), but only to the extent that the
adjustments are taken into account in determining Capital
Accounts pursuant to Regulations section 1.704-1(b)(2)(iv)(m);
provided, however, that the Partnership shall not adjust the
Capital Account Asset Values of Partnership assets pursuant to
this subsection to the extent that the General Partner determines
that an adjustment pursuant to Section 1.12(c) hereof is
appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this subsection;
(c) The Partnership shall adjust the Capital Account Asset
Value of all Partnership assets to equal their respective Market
Values upon the occurrence of any of the following events: (i)
the acquisition of an additional Equity Interest by any new or
existing Partner in exchange for more than a DE MINIMIS capital
contribution (other than a capital contribution required under
the Capital Contribution Program); (ii) the distribution by the
Partnership to a Partner of more than a DE MINIMIS amount of
Partnership assets as consideration for all or a portion of a
Partner's Equity Interest; or (iii) the liquidation of the
Partnership within the meaning of Regulations section
1.704-1(b)(2)(ii)(g);
(d) The Partnership shall adjust the Capital Account Asset
Value of any Partnership asset distributed to any Partner to the
Market Value of the asset on the date of distribution; and
(e) The Partnership shall reduce the Capital Account Asset
Value of any Partnership asset by any Depreciation with respect
to such asset.
1.13 "CAPITAL CONTRIBUTION PROGRAM" means the five-Fiscal
Year capital contribution program, beginning January 1, 1995 and
ending December 31, 1999, set forth in SCHEDULE 1.13, subject to
adjustment pursuant to Section 3.8(e).
1.14 "CARRIED INTEREST" means the non-voting Equity Interest
of APC equal to one-half of one percent (0.5%). Such Equity
Interest shall not be subject to any recalculation, increase or
dilution.
1.15 "CERTIFICATE" means the certificate of limited
partnership required to be filed pursuant to the Act.
1.16 "CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
1.17 "DEPRECIATION" means, for each Fiscal Year, an amount
equal to the depreciation, amortization or other cost recovery
deduction allowable for federal income tax purposes with respect
to an asset for such year or other period; provided, however,
that if the Capital Account Asset Value of an asset differs from
that asset's adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year or other period, Depreciation
shall be an amount that bear~ the same ratio to the beginning
Capital Account Asset Value of such asset as the federal income
tax depreciation, amortization or other cost recovery deduction
for such Fiscal Year bears to the beginning adjusted tax basis of
such year; provided, further, that if the federal income tax
depreciation, amortization or other cost recovery deduction for
such year is zero, Depreciation shall be determined with
reference to such beginning Capital Account Asset Value using a
reasonable method selected by the General Partner.
1.18 "DISTRIBUTABLE PARTNERSHIP PROFITS" means as of the end
of any Fiscal Quarter the excess of cumulative Net Profits over
cumulative Net Losses through such Fiscal Quarter; provided that
for purposes of this Section 1.18, Net Profits and Net Losses
shall be determined without any adjustment described in Section
1.35(b), 1.35(c), 1.35(d) or 1.35(e).
1.19 "EQUITY INTEREST" means (a) the interest of a Partner
(other than APC with respect to the Carried Interest) in the
Partnership, determined from time to time, equal to such
Partner's Voting Interest, multiplied by (i) ninety-nine and
one-half percent (99.5%), so long as there a is a Carried
Interest and (ii) thereafter, one-hundred percent (100%) and (b)
with respect to APC, the Carried Interest. The Initial Equity
Interests of the Partners are set forth in SCHEDULE 1.19 attached
hereto, subject to adjustment from time to time as provided
hereunder.
1.20 "EXECUTIVE COMMITTEE" means the committee described in
Article 6 hereof.
1.21 "FAIR VALUE" means the value of any asset or interest,
determined by appraisal as follows:
(a) Each party to a purchase and sale transaction relating
to an asset or interest hereunder will select an Independent
Appraiser who will separately determine the Appraiser's Fair
Value of the asset or interest that is the subject of the
purchase and sale transaction.
(b) The two Independent Appraisers selected by the parties
will mutually select a third Independent Appraiser, who will
determine the Appraiser's Fair Value, as defined in paragraph (c)
below, of the asset or interest that is the subject of the
purchase and sale transaction. The median value of the three
appraisals will be deemed to be the Fair Value of the asset or
interest to be transferred for purposes of the purchase and sale
transaction.
(c) Each of the parties to a purchase and sale transaction
hereunder shall bear one-half (1/2) of the costs, fees and
expenses payable in connection with such appraisal, including
without limitation any costs, fees and expenses payable to the
foregoing Independent Appraisers.
1.22 "FCC" means the Federal Communications Commission, an
agency of the United States government, or any successor thereto.
1.23 "FCC AUCTION" means the FCC auction scheduled to begin
in December 1994 for the broadband PCS licenses in the A and B
bands, in which the License is to be awarded.
1.24 "FISCAL YEAR" AND "FISCAL QUARTER" of the Partnership
means the calendar year and each calendar quarter thereof,
respectively, provided that the first Fiscal Year shall begin on
the date of this Agreement and end on December 31, 1994 and the
first Fiscal Quarter shall begin on the date of this Agreement
and end on the last day of the then-current calendar quarter.
1.25 "FREE CASH FLOW" for a Fiscal Year or Fiscal Quarter of
the Partnership means all cash received during such Fiscal Year
or Fiscal Quarter (as the case may be) by the Partnership plus
any cash that becomes available from reserves during such Fiscal
Year or Fiscal Quarter, after deducting therefrom the following
items:
(a) the sum of all cash operating expenses of the
Partnership, as determined in accordance with sound accounting
principles and procedures, including interest paid on all
Partnership indebtedness;
(b) all amounts paid by the Partnership for capital
expenditures that are not deductible on a current basis;
(c) all payments of principal on indebtedness of the
Partnership for borrowed money, including loans by Partners;
(d) all security and other types of refundable deposits
received; and
(e) an amount which the Executive Committee reasonably
determines to be a reasonable reserve for (i) working capital
needs, or (ii) the payment of other costs and expenses incident
to the purposes of the Partnership which shall become due and
payable within any period and for which the cash to make such
payments may not be generated by the Partnership during such
period.
1.26 "GENERAL PARTNER" means BellSouth and also means any
Person who becomes a General Partner in accordance with the
provisions of Article 9 hereof.
1.27 "GUARANTEES" means, collectively, the guarantees, dated
the date hereof, executed by BellSouth Enterprises, Inc. and
Church Street Capital Corp. of the obligations of BellSouth and
DukeNet, respectively, and any other guarantee required to be
executed pursuant to Section 10.2(c), each in the form of the
applicable guarantee set forth in SCHEDULE 10.2(C).
1.28 "INDEPENDENT APPRAISER" means an independent appraiser
who is qualified as an appraiser and experienced in valuing
assets and interests in the telecommunications industry.
1.29 "LICENSE" means the PCS license, issued by the FCC, to
construct and operate the System in the MTA that the Partnership
will acquire and operate pursuant to this Agreement and the
Transaction Documents.
1.30 "LICENSE FEE" means the total amount payable to the FCC
in respect of the award of the License, notwithstanding the
division of such amount into installment payments.
1.31 "LIMITED PARTNER" means APC, DukeNet, CaroNet and each
of the Rural Telcos, together with any Person to whom all or any
portion of a limited partner's interest is assigned and who is
admitted to the Partnership in accordance with the terms and
conditions of Article 10 hereof, and any other Person who is
admitted to the Partnership as a Limited Partner pursuant to
Article 10.
1.32 "MARKET VALUE" means the Appraiser's Fair Value of any
asset or interest, as agreed to by the Partnership and each
Partner having an economic interest in such asset or interest, or
if they cannot agree, by an Independent Appraiser selected by the
General Partner and approved pursuant to Section 6.5(h)(xi). The
Partnership shall bear one-half (1/2), and the other such parties
shall bear one-half (1/2) (allocated among them pro rata in
accordance with their respective Equity Interests), of the costs,
fees and expenses payable in connection with such appraisal,
including without limitation any costs, fees and expenses payable
to such Independent Appraiser.
1.33 "MINIMUM GAIN" means the sum of Partnership Minimum
Gain and Partner Nonrecourse Debt Minimum Gain. A Partner's
share of Minimum Gain shall be the sum of its share of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain.
1.34 "MTA" means the Carolinas M-6 Major Trading Area as
defined by the FCC.
1.35 "NET PROFITS" or "NET LOSSES" means the Partnership's
taxable income or loss determined in accordance with Code section
703(a) (provided that items required to be stated separately
shall be included in such taxable income or loss) for each of its
Fiscal Years or other periods, with the following adjustments:
(a) Such Net Profits or Net Losses shall be computed as if
items of tax-exempt income and nondeductible, noncapital
expenditures (under Code Sections 705(a)(1)(B) and 705(a)(2)(B))
were included in the computation of taxable income or loss. For
purposes of calculating Net Profits or Net Losses, the following
items shall be treated as Code section 705(a)(2)(B) expenditures:
(i) amounts paid or incurred to organize the Partnership or to
promote the sale of or to sell the Interests, except for amounts
with respect to which an election is properly made under Code
section 709(b); and (ii) any deduction for a loss on a sale or
exchange of Partnership property that is disallowed to the
Partnership under Code Sections 267(a)(1) or 707(b).
(b) In the event that the Capital Account Asset Value of any
Partnership asset is adjusted pursuant to Section 1.12(b),
1.12(c) or 1.12(d), the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset
for purposes of computing Net Profits or Net Losses.
(c) Gain or loss resulting from any disposition of any
Partnership asset with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by
reference to the Capital Account Asset Value of the Partnership
asset disposed of, notwithstanding that the adjusted tax basis of
such Partnership asset differs from its Capital Account Asset
Value.
(d) The Partnership shall deduct Depreciation in lieu of any
depreciation, amortization and other cost recovery deductions
allowed by the Code.
(e) Notwithstanding any other provision of this Section, any
items that are specially allocated pursuant to Sections 4.2
through 4.10 shall not be taken into account in computing Net
Profits or Net Losses.
1.36 "NONRECOURSE DEDUCTIONS" has the meaning specified in
Regulations section 1.704-2(b)(1).
1.37 "OPERATING AGREEMENT" means the Operating Agreement to
be entered into by the Partnership and the Operating Telcos as
contemplated by the Partition Agreement.
1.38 "OPERATING TELCO" means any Rural Telco that has
acquired a Partitioned License pursuant to the Partition
Agreement and which operates a portion of the System in its
Partitioned Area pursuant to the Operating Agreement.
1.39 "PARTITION AGREEMENT" means that certain Agreement to
Partition License of even date herewith among the Partnership and
the Rural Telcos.
1.40 "PARTITIONED AREA" has the meaning specified in the
Partition Agreement.
1.41 "PARTITIONED LICENSE" means a PCS license covering the
Partitioned Area of an Operating Telco, and granted to such
Operating Telco pursuant to the Partition Agreement.
1.42 "PARTNERS" means, collectively, all of the Limited
Partners and the General Partner (or, if pursuant to Section 9.2,
there shall be more than one General Partner, all of such General
Partners); reference to a "Partner" means any of the Partners.
1.43 "PARTNERSHIP" means the limited partnership formed
pursuant to this Agreement.
1.44 "PARTNERSHIP'S BUSINESS" has the meaning set forth in
Section 2 5.
1.45 "PARTNERSHIP MINIMUM GAIN" shall have the meaning
specified in and shall be determined in accordance with
Regulations section 1.704-2(d).
1.46 "PARTNER NONRECOURSE DEBT" has the meaning specified in
Regulations section 1.704-2(b)(4).
1.47 "PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning
specified in Regulations section 1.704-2(i)(3).
1.48 "PARTNER NONRECOURSE DEDUCTIONS" has the meaning
specified in Regulations Section 1.704-2(i)(2).
1.49 "PCS", which stands for Personal Communications
SerVICES, means any radio telecommunications services provided by
using one or more of the three 30 MHz bands of spectrum in the
following frequency ranges: (1) the "A" block: 1850-1865
MHz/19301945 MHz, (2) the "B" block: 1870-1885 MHz/1950-1965 MHz,
or (3) the "C" block: 1895-1910 MHz/1975-1990 MHz.
1.50 "PERSON" means an individual, partnership, joint
venture, association, corporation, limited liability company,
trust or any other legal entity.
1.51 "POPs" means, with respect to any geographical area,
the population of such area as set forth in the April 1, 1990
U.S. Census, U.S. Department of Commerce, Bureau of the Census.
1.52 "REGULATIONS" means Treasury Regulations promulgated
under the Code as such Regulations may be amended from time to
time (including corresponding provisions of succeeding
Regulations).
1.53 "REGULATORY ALLOCATIONS" means the allocations of items
of income, gain, loss or deduction pursuant to Sections 4.2
through 4.9.
1.54 "SYSTEM" means the PCS system that the Partnership will
acquire and operate in the MTA pursuant to this Agreement.
1.55 "TRANSACTION DOCUMENTS" refers collectively to this
Partnership Agreement, the Partition Agreement, the Guarantees,
that certain Service Provider Agreement to be entered into by the
Partnership and each of the Rural Telcos (the "Service Provider
Agreement"), and the Operating Agreement.
1.56 "UNRECOVERED CAPITAL CONTRIBUTIONS" means the excess of
all capital contributions made by the Partners pursuant to
Article 3 hereof over the cumulative distributions pursuant to
Section 5.1(a)(ii) on account of Unrecovered Capital
Contributions.
1.57 "VOTING INTEREST" means the interest of a Partner in
the Partnership, determined from time to time, equal to, (i)
until a Capital Account Adjustment Event, a fraction (expressed
as a percentage), the numerator of which is the aggregate capital
contributed to the Partnership by such Partner, and the
denominator of which is the aggregate capital contributed to the
Partnership by all of the Partners and (ii) after the occurrence
of a Capital Account Adjustment Event, and until the occurrence
of a subsequent Capital Account Adjustment Event, a fraction
(expressed as a percentage), the numerator of which is such
Partner's Adjusted Capital Account balance determined immediately
after such Capital Account Adjustment Event and the denominator
of which is the Adjusted Capital Account balances of all Partners
(other than APC with respect to the Carried Interest) immediately
after such Capital Account Adjustment Event. "Voting Interests"
means the Voting Interests of all Partners, collectively. The
initial Voting Interests of the Partners are set forth in
SCHEDULE 1.57 attached hereto, subject to adjustment from time to
time as provided hereunder.
1.58 "VOTING REPRESENTATIVE" means an individual appointed
to the Executive Committee by a Partner and authorized to vote
such Partner's Voting Interest at any meeting or proceeding of
the Executive Committee.
ARTICLE 2
FORMATION AND PURPOSES
2.1 FORMATION. The Partners hereby form a limited
partnership under the laws of the State of Delaware, and hereby
agree to conduct the Partnership as a limited partnership
pursuant to the terms hereof. The General Partner shall promptly
execute a Certificate and cause it to be filed as required by the
Act and shall from time to time execute and file elsewhere a
similar certificate when required by applicable law or permitted
by applicable law and advisable for the Partnership to do so.
2.2 NAME. The name of the Partnership shall be, and the
business of the Partnership shall be conducted under, the firm
name and style: BELLSOUTH CAROLINAS PCS, L.P.
2.3 PRINCIPAL OFFICE; REGISTERED OFFICE; REGISTERED AGENT.
The registered office of the Partnership shall be at 32
Loockerman Square, Suite L-100, City of Dover, Delaware 19904,
County of Kent; or at such other place as the Executive Committee
shall from time to time determine. The principal office of the
Partnership shall be at 3353 Peachtree Road, Suite 400, Atlanta,
Georgia 30326 or at such other place as the Executive Committee
shall from time to time determine. The Partnership may have such
additional offices at such other places as the Executive
Committee shall determine. The initial registered agent for
service of process shall be The Prentice-Hall Corporation System,
Inc.
2.4 TERM. The Partnership shall commence at 8:00 o'clock
a.m. on the date hereof and shall continue until December 8,
2084, unless sooner terminated under Section 12.1 hereof.
2.5 BUSINESS OF THE PARTNERSHIP. The business of the
Partnership (the "Partnership's Business") shall be as follows:
(a) to acquire the License; (b) to design, develop, construct and
operate the System in the MTA, and to market and provide PCS
services in the MTA; (c) to engage in such other business
endeavors as the Executive Committee may determine pursuant to
Section 6.5(h)(iii); and (d) to engage in such other activities
related either directly or indirectly to the foregoing as may be
necessary, advisable or convenient, in the opinion of the
Executive Committee, to the promotion or conduct of the business
of the Partnership, as described in clauses (a), (b) and (c)
above. The Partnership and the Partners will be committed to an
aggressive roll-out of PCS services in the entire MTA (including
the Partitioned Area, if any), both in urban and in rural areas,
that will compete with wireless and wireline services. Prior to
the Option Closing (as defined in the Partition Agreement), the
Executive Committee of the Partnership will implement a build-out
schedule for the System in accordance with the Business Plan then
in effect, and the Partnership will construct the System in
accordance with that schedule. The implementation of such
build-out plan will result in the coverage of at least 80% of the
POPs in the System by the fifth anniversary of the Award Date, as
described in the Business Plan.
2.6 INITIAL BUSINESS PLAN. The Business Plan covering the
first five full Fiscal Years of the Partnership, beginning
January 1, 1995 and ending December 31, 1999 (the "Initial
Business Plan"), attached hereto as SCHEDULE 2.6, and the Capital
Contribution Program are hereby approved and adopted.
2.7 BIDDING. BellSouth shall bid, for its own account, for
the License in the FCC Auction. BellSouth shall determine all
bidding strategies and bid amounts in its sole discretion,
provided, however, that BellSouth will provide the Limited
Partners with information concerning the bidding process in a
timely manner. If the License is awarded to BellSouth, promptly
after the conclusion of the FCC Auction for the License,
BellSouth shall give each Limited Partner written notice by
facsimile transmission (the "Announcement Notice") of such award
and BellSouth's final per POP bid for the License.
2.8 TRANSFER OF LICENSE. If BellSouth obtains the License
in the FCC Auction, BellSouth shall transfer and assign to the
Partnership, and the Partnership shall acquire, all of
BellSouth's rights in, to and under the License, within ten (10)
days after the FCC approves such transfer. Promptly after the
Award Date, BellSouth shall apply to the FCC for the transfer of
the License to the Partnership and shall use all reasonable
efforts in good faith to seek the FCC's approval of such
transfer. In consideration thereof, the Partnership shall
reimburse BellSouth for installments of the License Fee having
been paid by BellSouth as of the date of such transfer and
assignment (together with interest thereon from the date each
such installment was paid until the date BellSouth is reimbursed,
at the Prime Rate (as defined in Section 3.10(c)) in effect on
the date hereof) and shall pay and assume all of BellSouth's
other liabilities and obligations under or relating to the award
of the License, including, without limitation, the obligation to
pay the balance of the License Fee as and when due. Prior to
such transfer, BellSouth shall pay all installments of the
License Fee that are due prior to the date of such transfer, on a
timely basis. BellSouth shall cause its Affiliates to dispose of
their cellular interests in the MTA to the extent required by the
cellular/PCS cross-ownership rules of the FCC in accordance with
the time periods prescribed therein. In no event shall
BellSouth's transfer of the License be deemed to be a capital
contribution for any purpose of this Agreement.
2.9 MFJ WAIVER. Within 30 days after the Award Date,
BellSouth will file a request with the Department of Justice (the
"DOJ") for a waiver (the "MFJ Waiver") of the Modification of
Final Judgment entered in UNITED STATES V. AT&T, 552 F. Supp. 131
(D.D.C. 1982), as in effect from time to time (the "Modification
of Final Judgment"), or otherwise seek a determination from the
Department of Justice or the U.S. District Court for the District
of Columbia that the Partnership's performance under the
Transaction Documents would be consistent with the Modification
of Final Judgment, so as to permit the provision by the
Partnership to the Operating Telcos of telecommunications
equipment in the manner contemplated by the Transaction
Documents. Thereafter, BellSouth shall act in good faith to seek
the MFJ Waiver and use all reasonable efforts in connection
therewith and the Limited Partners shall fully support BellSouth
in such efforts. If the MFJ Waiver, appropriate legislative
relief or an MFJ Legal Opinion (as hereinafter defined) is not
received on or before the third anniversary of the Award Date,
(i) the Executive Committee shall seek an alternative for
accomplishing the goal of partitioning the License as
contemplated in the Partition Agreement, subject to Applicable
Laws and the efficient operation of the System; and (ii)
BellSouth shall no longer be obligated to pursue the MFJ Waiver.
An "MFJ Legal Opinion" means a legal opinion of BellSouth's
outside legal counsel, in form and substance reasonably
acceptable to the Executive Committee, to the effect that the
Partnership's performance under the Transaction Documents would
be consistent with the Modification of Final Judgment, so as to
permit the provision by the Partnership to the Operating Telcos
of telecommunications equipment in the manner contemplated by the
Transaction Documents.
2.10 OPERATIONS. All components of the System will be
operated in accordance with marketing and other guidelines
established by the Partnership for the entire territory covered
by the License, which will include appropriate local, regional
and national strategies, in order to facilitate the offering of
seamless service to a wide market. To that end, it is
contemplated that the Partnership and, if the Option Closing
occurs, the Operating Telcos may, if they wish, affiliate the
System with the systems of other regional and national operators
to provide a larger area of service to customers in the System.
The Operating Telcos will cooperate with the Partnership in the
establishment of joint marketing, branding (including co-branding
or multiple branding), pricing, billing, and service policies.
The initial network technology deployed in the entire System
under the Initial Business Plan shall be DCS 1900 (based on GSM).
It is anticipated that no roaming charges would be imposed on
customers of the System calling within the System. Local
strategies may be developed and implemented by Rural Telcos under
the Service Provider Agreement (as defined in Section 1.55) or
Operating Telcos, as appropriate, as long as such strategies are
not inconsistent with the Partnership's strategies. Before the
Option Closing occurs, the Partnership, in consultation with the
Rural Telcos, shall determine the locations of base station
controllers and cell sites in the entire System. Subject to the
provisions of Section 6.5(h)(vi), each Partner (other than APC)
has entered into this Agreement with the expectation that their
facilities, resources and assets will be utilized by the
Partnership including, but not limited to, infrastructure,
marketing capabilities and co-branding of telecommunication
services to customers. Subject to Section 6.5(h)(vi), the
Partnership may obtain goods, services or facilities from
Partners or Affiliates of Partners, so long as they are obtained
on commercially competitive terms and conditions. If after
January 1, 1997 the Option Closing has not occurred and another
PCS provider is demonstrably competitive with any of the PCS
services offered by the Partnership (by such PCS provider's
advertising of the offering of such services or otherwise), in an
area for which a Rural Telco would have a Partitioned License if
the Option Closing occurs, and the Partnership does not provide
PCS services in such area, the Partnership, at such Rural Telco's
request, will cooperate in good faith with such Rural Telco to
provide PCS service in such area as soon as reasonably
practicable after receiving such request, provided that such
Rural Telco advances to the Partnership any additional capital
required to build out the System in such area and compensates the
Partnership for any incremental costs that the Partnership incurs
in providing such service, either directly or through the Service
Provider Agreement. Any such advance shall bear interest at the
Prime Rate in effect on the date of the advance minus two percent
(2%) per annum from the date made until the date repaid.
2.11 COMPLIANCE WITH APPLICABLE LAW. (a) The Partnership
and, if the Option Closing occurs, each Operating Telco, shall
construct, maintain and operate the System in a manner that
causes them at all times to be in compliance with all Applicable
Laws. The Partnership shall at all times conduct the
Partnership's Business in compliance with all Applicable Laws.
The Partnership shall use all reasonable efforts to cause each
Partner (other than BellSouth with respect to the Modification of
Final Judgment) at all times to be in compliance with Applicable
Laws, to the extent requested by such Partner to achieve such
compliance provided that a Partner shall reimburse the
Partnership for any additional costs, fees or expenses incurred
by the Partnership to achieve such compliance for such Partner.
(b) The Partnership shall operate and conduct the
Partnership's Business in a manner which would not cause
BellSouth or any of its Affiliates (including the Partnership) to
be in violation of the Modification of Final Judgment, as
reasonably interpreted by BellSouth's outside legal counsel and
communicated to the Partners in the Partnership, and which would
not make it necessary or appropriate for BellSouth or any of its
affiliates to obtain a further waiver or consent under the
Modification of Final Judgment, other than the MFJ Waiver, as
described in Section 2.9.
2.12 CAPITALIZATION OF CARONET. CaroNet represents and
warrants that CaroNet is a wholly-owned subsidiary of Carolina
Power & Light Company and agrees that, within thirty (30) days
after BellSouth gives the Announcement Notice, Carolina Power &
Light Company is obligated to capitalize CaroNet in an amount
sufficient to make its capital contributions required to be made
under Section 3.6 and the Capital Contribution Program (the
"Capitalization Amount"). In connection with such
capitalization, CaroNet shall loan or advance to Carolina Power &
Light Company the Capitalization Amount, to be evidenced by
Carolina Power & Light Company's promissory note (the "Note")
which shall be payable on CaroNet's demand to meet CaroNet's
obligations under this Agreement. CaroNet further represents and
warrants that: (i) it shall make demand under the Note to meet
its financial obligations pursuant to this Agreement and shall
not relieve or discharge Carolina Power & Light Company of any of
its obligations under the Note, and (ii) it shall not transfer,
pledge or hypothecate the Note to any Person so long as it has
any financial obligations under this Agreement. The Note shall
be in form and substance reasonably acceptable to the
Partnership.
ARTICLE 3
CAPITAL CONTRIBUTIONS; ADJUSTMENTS; FINANCING
3.1 INITIAL CAPITAL CONTRIBUTIONS. The initial capital of
the Partnership shall be $1,000.00. Upon execution of this
Agreement, each Partner shall contribute its pro rata portion of
the Partnership's initial capital, based on such Partner's Voting
Interest on the date hereof (its "Initial Voting Interest") set
forth opposite its name on SCHEDULE 1.57 attached hereto.
BellSouth shall make such initial capital contributions to the
Partnership on behalf of the other Limited Partners, as a loan to
each of them. Each such loan shall bear interest from the date
made to the date repaid, at the Prime Rate (as defined in Section
3.10(c)) in effect on the date of such loans. On the
Contribution Date (as defined in Section 3.6), each Partner shall
repay BellSouth for the principal amount so loaned to it,
together with interest thereon calculated as set forth above.
3.2 DILUTION. If BellSouth's final bid for the License is
in excess of $35.00 per POP, then each Limited Partner shall have
the right and option (the "Dilution Option") to elect to reduce
its Initial Voting Interest by such amount (expressed as a
percentage Voting Interest) as it may designate in its discretion
(the "Dilution Percentage"), provided that no Limited Partner may
designate any Dilution Percentage that would have the effect of
reducing its pro rata capital contribution to the Partnership in
respect of the License Fee (the "License Capital Contribution")
below the following respective amounts:
Each Rural Telco As provided in SCHEDULE 3.2
DukeNet $52,500,000
CaroNet $35,000,000
The Dilution Option may be exercised by delivering written notice
thereof to BellSouth (which notice shall specify such Limited
Partner's designated Dilution Percentage), within thirty (30)
days after BellSouth gives the Announcement Notice. Any Limited
Partner that does not exercise its Dilution Option shall retain
its entire Initial Voting Interest (subject to increase pursuant
to Section 3.4 and, in the case of the Rural Telcos, Section
3.5). The aggregate Dilution Percentages, if any, are referred
to herein as the "Dilution Interest."
3.3 WITHDRAWAL.
(a) Not later than December 12, 1994, each Limited Partner
shall give BellSouth written notice if its Maximum Bid (as
hereinafter defined) shall be greater than $45.00 per POP, which
notice shall set forth such Limited Partner's Maximum Bid. Any
Limited Partner failing to give such notice shall be deemed to
have chosen an initial Maximum Bid of $45.00 per POP. At any
time (and from time to time), a Limited Partner whose Maximum Bid
then in effect has not theretofore been exceeded by a BellSouth
bid for the License (on a per POP basis) may increase its Maximum
Bid by giving BellSouth written notice to such effect. "Maximum
Bid" means, for any Limited Partner, the per POP bid for the
License by BellSouth which, if exceeded, would result in such
Limited Partner's having the right to withdraw from the
Partnership pursuant to Section 3.3(b)
(b) Notwithstanding anything to the contrary herein, if
BellSouth's final bid for the License (on a per POP basis) is in
excess of a Limited Partner's Maximum Bid, then such Limited
Partner shall have the right, but not the obligation, to withdraw
from the Partnership. Any Limited Partner desiring so to
withdraw shall deliver written notice thereof to BellSouth not
later than thirty (30) days after BellSouth gives the
Announcement Notice (as defined in Section 2.7). The aggregate
Voting Interests of all withdrawing Limited Partners, together
with the Dilution Interest, are referred to herein as the
"Available Interest."
3.4 PURCHASE OF AVAILABLE INTEREST.
(a) BellSouth shall notify the Limited Partners of the
amount of the Available Interest, if any, within forty (40) days
after BellSouth gives the Announcement Notice (the "Availability
Notification Date"). Any Limited Partner that has (i) not
exercised the Dilution Option pursuant to Section 3.2 hereof, and
(ii) has not withdrawn from the Partnership pursuant to Section
3.3 hereof (each, an "Eligible Limited Partner"), shall have the
right and option (the "Eligible Limited Partner Option") to
acquire a portion of the Available Interest (the "Eligible
Limited Partner Portion") equal to a fraction (expressed as a
percentage), the numerator of which is the Initial Voting
Interest of such Eligible Limited Partner, and the denominator of
which is the aggregate Initial Voting Interests of all Eligible
Limited Partners.
(b) Each Eligible Limited Partner may exercise the Eligible
Limited Partner Option by giving BellSouth written notice thereof
within seven (7) business days after the Availability
Notification Date. The notice shall specify whether such
Eligible Limited Partner is exercising the Eligible Limited
Partner Option with respect to all or less than all of such
Eligible Limited Partner's Eligible Limited Partner Portion.
(c) Within three (3) business days after its receipt of all
proper and timely notices from the Eligible Limited Partners
pursuant to Section 3.4(b), BellSouth shall determine the portion
of the Available Interest, if any, that the Eligible Limited
Partners declined to acquire upon the exercise of the Eligible
Limited Partner Options (the "Declined Available Interest"), and
shall give written notice thereof to each Eligible Limited
Partner that exercised the Eligible Limited Partner Option as to
its entire Eligible Limited Partner Portion (the date of such
notice being referred to herein as the "Second Availability
Notification Date"). Each of such Eligible Limited Partners
shall have the right and option to acquire a portion of the
Declined Available Interest equal to a fraction (expressed as a
percentage), the numerator of which is the Initial Voting
Percentage of such Eligible Limited Partner and. the denominator
of which is the aggregate Initial Voting Interests of all
Eligible Limited Partners having exercised its option as to its
entire Eligible Limited Partner Portion. Each such Eligible
Limited Partner desiring to exercise such right and option shall
deliver a written notice thereof to BellSouth within five (5)
business days after the Second Availability Notification Date.
The above process of acquiring portions of the Declined Available
Interest shall be repeated as many times as necessary (each time
excluding each Eligible Limited Partner which did not acquire the
entire portion of the maximum Declined Available Interest
available to it in the immediately prior round) until the earlier
to occur (the date of such occurrence being referred to herein as
the "Interim Allocation Date") of the following: (i) the entire
Declined Available Interest (if any) have been acquired by
Eligible Limited Partners; or (ii) a portion of the Declined
Available Interest (the "Remaining Available Interest") remains
which no Eligible Limited Partner has exercised an option to
acquire pursuant to this Section 3.4. The Remaining Available
Interest, if any, shall be deemed to be immediately transferred
to BellSouth, without any payment therefor. BellSouth shall give
the Voting Representative of the Rural Telcos written notice of
the occurrence of the Interim Allocation Date promptly after the
occurrence thereof. The date on which such notice is given is
referred to as the "Interim Allocation Notice Date."
3.5 RURAL TELCOS OPTION. The Rural Telcos shall have the
right and option (the "Rural Telcos Option") to purchase from
BellSouth Voting Interests representing up to 2.3208% of the
total Voting Interests (the "Telcos Option Interest"), for an
aggregate purchase price equal to the capital contribution made
by BellSouth in respect of the Telcos Option Interest. The Rural
Telcos Option shall be exercisable by the Rural Telcos Voting
Representative by his tendering of a written notice thereof to
BellSouth at any time from the Interim Allocation Notice Date
until five (5) business days thereafter (the "Telcos Option
Period"). Such notice shall specify the portion of the Telcos
Option Interest hat each of the Rural Telcos has elected to
purchase. Upon the closing of the transfer of the Telcos Option
Interest to the Rural Telcos, SCHEDULES 1.57 AND 1.19 attached
hereto shall be revised to reflect the recalculated Voting
Interests and Equity Interests hereunder. Notwithstanding
anything herein to the contrary, the Rural Telcos shall determine
how the Telcos Option Interest, or portion thereof, shall be
allocated to the individual Rural Telcos, upon any such purchase
thereof.
3.6 CAPITAL CONTRIBUTIONS. On the date that is five (5)
business days after the expiration of the Telcos Option Period
(the "Contribution Date"), each Partner (other than APC with
respect to the Carried Interest) shall contribute an amount equal
to the product of (i) such Partner's Voting Interest (reflecting
adjustments pursuant to Sections 3.2, 3.3, 3.4 and 3.5
hereunder), multiplied by (ii) the sum of (x) the amount of the
License Fee and (y) the aggregate additional amount required to
be contributed on such date under the Capital Contribution
Program.
3.7 PAYMENT TO APC. Within five (5) days after the later of
(x) the Award Date or (y) the Contribution Date, the Partnership
shall pay to APC the sum of $2,000,000 as compensation for
services rendered and to be rendered by APC other than in its
capacity as a Partner.
3.8 SUBSEQUENT CAPITAL CONTRIBUTIONS.
(a) After the Contribution Date, each Partner (other than
APC with respect to the Carried Interest) (i) shall make capital
contributions to the Partnership as required under the Capital
Contribution Program and (ii) may make, but shall not be required
to make, other additional capital contributions to the
Partnership contemplated by the Business Plan then in effect or
as approved by the Executive Committee pursuant to Section
6.5(h)(x). The amount of each additional capital contribution to
be made by each Partner under this Section shall be determined by
multiplying such Partner's Voting Interest by the total capital
contribution required to be made.
(b) It shall be a Material Default (as defined in Section
11.2) for any Partner to fail to make a capital contribution
required under Section 3.6 or the Capital Contribution Program,
unless such Partner is a Rural Telco (the "Non-Paying Rural
Telco") and one or more of the other Rural Telcos (the "Paying
Rural Telcos") makes all, but not less than all, of such Rural
Telco's required capital contribution in place of such Rural
Telco within ten (10) days after the date on which such capital
contribution is due. If the Paying Rural Telcos shall elect to
make any such required capital contribution, the Rural Telcos'
voting representative on the Executive Committee shall give the
Partnership written notice thereof not later than five (5) days
after such capital contribution was due, specifying the Rural
Telcos comprising the Paying Rural Telcos and the respective
percentages of the required capital contribution of any
Non-Paying Rural Telco that they will pay. Upon the
Partnership's receipt of such payments, (i) the Voting Interests
and Equity Interests hereunder shall be recalculated to take into
account such payments by the Paying Rural Telcos, and (ii)
SCHEDULES 1.57 AND 1.19 attached hereto shall be revised to
reflect the recalculated Voting Interests and Equity Interests
hereunder, taking into account such payments by the Paying Rural
Telcos.
(c) The failure of a Partner (the "Non-Paying Partner") to
make any approved capital contribution (other than capital
contributions required under the Capital Contribution Program)
shall not constitute a breach of this Agreement. Each Limited
Partner having made a required capital contribution (a "Paying
Partner") shall have an option to make an additional capital
contribution equal to the product of (i) the contribution not
made by the Non-Paying Partner, and (ii) a fraction, the
numerator of which is such Paying Partner's Voting Interest and
the denominator of which is the aggregate Voting Interests of all
the Paying Limited Partners. BellSouth shall transfer to the
Partnership, as a capital contribution, loan, or a combination
thereof, an amount equal to the additional capital contribution
of any Non-Paying Partners less the sum of the additional capital
contributions made pursuant to this Section 3.9(c) by the Paying
Partners in respect of the Non-Paying Partners' declined capital
contributions. After the Non-Paying Partners have elected not to
make any such capital contribution and all of such declined and
additional capital contributions are made by Paying Partners and
BellSouth, (i) the Partners' Voting Interests and Equity
Interests shall be recalculated to take into account such
declined and additional capital contributions, and (ii) SCHEDULES
1.57 AND 1.19 attached hereto shall be revised to reflect the
recalculated Voting Interests and Equity Interests hereunder,
taking into account such additional capital contributions.
(d) Upon any transfer of any Voting Interests to any Partner
pursuant to Section 3.2, 3.3, 3.4, 3.5 or 3.8 hereof, or
otherwise, such Partner shall thereafter be responsible for any
capital contributions required to be made by the holder of such
Voting Interests.
(e) Upon the partitioning of the License as contemplated by
the Partition Agreement, the amounts required to be contributed
pursuant to the Capital Contribution Program shall be adjusted
downward by the Executive Committee to reflect the amount of
proceeds received by the Partnership from the Rural Telcos
pursuant to the Partition Agreement.
3.9 NO INTEREST ON CONTRIBUTIONS. No Partner shall be
entitled to receive interest on its capital contributions.
3.10 LOANS.
(a) The terms and conditions applicable to any loan by a
Partner to the Partnership having a principal amount in excess of
$5,000,000 or a term of more than a year shall be approved by the
Executive Committee pursuant to Section 6.5(h)(vi).
(b) If any Partner lends $5,000,000 or less to the
Partnership, where the term of such loan is one (1) year or less,
the interest rate on such loan shall not exceed a rate which
could be otherwise obtained from commercially available sources
on the same terms and conditions.
(c) Notwithstanding the foregoing, the Partners hereby
ratify and approve the loan by BellSouth to the Partnership with
respect to the upfront payment for the License Fee in the amount
of $5,581,391 which was made on November 18, 1994. Such loan
shall bear interest from the date made to the date repaid at the
Prime Rate (as hereinafter defined) in effect on the date hereof.
"Prime Rate" means the rate of interest publicly announced from
time to time by NationsBank of Georgia, N.A. as its "prime rate."
(d) The principal of and interest on any loan made by a
Partner to the Partnership shall be fully repaid before any
distribution of funds is made to the Partners (in their
capacities as Partners) under the provisions of this Agreement,
unless the promissory note, security deed or other document
executed in connection with such loan contains a specific
provision to the contrary. If a Partner lends money to the
Partnership hereunder, it shall be deemed to be an unrelated
creditor with respect to such loan to the extent allowed by law.
3.11 LIMITATION. Except as specifically and expressly set
forth in this Agreement, the Partners shall have no obligation or
liability to the Partnership or to the Partners to make any
contributions to the capital of the Partnership, to make any
loans to the Partnership, or to endorse or to guarantee the
payment or performance of any obligations of the Partnership.
3.12 CONTRIBUTION OF PROPERTY. The Partners contemplate
that no property would be contributed to the Partnership, other
than cash contributed by the Partners (other than APC).
3.13 CERTAIN EXPENSES. (a) If the License is awarded to
BellSouth, on the Contribution Date, the Partnership shall
reimburse up to $3,550,000 in reasonable or necessary expenses
relating to the License or the System paid or incurred by
BellSouth for the benefit of the Partnership prior to the date
hereof.
(b) If the License is awarded to BellSouth, on the
Contribution Date, the Partnership shall reimburse any expenses
paid or incurred by BellSouth following the date hereof, to the
extent paid or incurred in accordance with Section 6.3.
(c) Any expenses reimbursable to BellSouth pursuant to
Section 3.13(a) or (b) shall bear interest from the date paid or
incurred by BellSouth to the date reimbursed, at the Prime Rate
in effect on the date hereof.
(d) If the License is not awarded to the Partnership, no
fees or expenses will be reimbursed to any Partner.
ARTICLE 4
PROFITS AND LOSSES
4.1 ALLOCATION OF NET PROFITS AND NET LOSSES.
(a) The Partnership shall allocate Net Profits for each
Fiscal Year to the Partners pro rata in accordance with their
percentage Equity Interests.
(b) The Partnership shall allocate Net Losses for each
Fiscal Year to the Partners pro rata in accordance with their
respective percentage Equity Interests.
4.2 NONRECOURSE DEDUCTIONS. Notwithstanding any other
provisions of this Article 4, the Partnership shall allocate all
Nonrecourse Deductions to the Partners pro rata in accordance
with their respective Voting Interests.
4.3 PARTNER NONRECOURSE DEDUCTIONS. The Partnership shall
allocate any Partner Nonrecourse Deductions to the Partner who
bears the risk of loss with respect to the loan to which the
deductions are attributable, pursuant to the provisions of
Regulations section 1.704-2(i).
4.4 LIMITATION ON ALLOCATIONS. Any Net Losses or items of
loss or deduction allocated pursuant to this Article 4 shall not
exceed the maximum amount of such items that can be allocated
without causing the Limited Partners to have a negative Capital
Account balance, after adjustment of the negative Capital Account
balance to reflect any items described in Regulations sections
1.7041(b)(2)(ii)(d)(4), (5) and (6), in excess of the sum of (a)
the amount of the Partner's share of Minimum Gain and (b) the
amounts that the Partner is obligated to restore to the capital
of the Partnership, or the Partner is deemed to restore pursuant
to Regulations section 1.704-l(b)(2)(ii)(c)(1) and (2). The
Partnership shall allocate all Net Losses or items of loss or
deduction in excess of the limitations set forth in this
subsection first, to all Partners with positive Capital Account
balances in accordance with their respective Equity Interests,
provided that no Limited Partner shall be allocated any Net
Losses or items of loss or deduction in excess of the limitations
in the preceding sentence; and thereafter, to the General
Partner.
4.5 QUALIFIED INCOME OFFSET. In the event that any Partner
unexpectedly receives any adjustments, allocations or
distributions described in Regulations sections
1.704-l(b)(2)(ii)(d)(4), (5) or (6) that causes a deficit balance
in the Partner's Capital Account in excess of that Partner's
share of Minimum Gain, the Partnership shall allocate items of
Partnership income and gain to that Partner in an amount and
manner sufficient to eliminate the deficit balance as quickly as
possible.
4.6 GROSS INCOME ALLOCATION. In the event that any Partner
has a deficit balance in its Capital Account as of the end of any
Fiscal Year in excess of the sum of (a) the amount that such
Partner is obligated to restore to the capital of the Partnership
and (b) such Partner's share of Minimum Gain, the Partnership
shall allocate to each such Partner items of income and gain for
such Fiscal Year and subsequent Fiscal Years, if necessary, in an
amount to eliminate as quickly as possible such deficit. The
Partnership shall make an allocation pursuant to this Section 4.6
if and only to the extent that such Partner would have a deficit
balance in its Capital Account described in the first sentence of
this Section 4.6 after the Partnership tentatively has made all
other allocations pursuant to this Article 4 as if Section 4.5
and this Section 4.6 were not in this Agreement.
4.7 MINIMUM GAIN CHARGEBACK. If a net decrease in
Partnership Minimum Gain occurs during a Fiscal Year, determined
pursuant to Regulations section 1.704-2(d), the Partnership shall
allocate items of income and gain (as defined in Regulations
section 1.704-2(j)(2)(i)) to the Partners for the Fiscal Year
(and, if necessary, subsequent Fiscal Years) in the amounts and
in the manner determined in accordance with Regulations section
1.7042(f). The Partners intend that this subsection comply with
the minimum gain chargeback requirement in Regulations section
1.7042(f) and that any interpretation hereof be consistent
therewith.
4.8 PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. If
there is a net decrease in Minimum Gain attributable to a Partner
Nonrecourse Debt determined pursuant to Regulations section
1.7042(i)(3), during a Fiscal Year, the Partnership shall
allocate items of Partnership income and gain (as defined in
Regulations section 1.704-2(j)(2)(i)) to the Partners for the
Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount and in the manner determined in accordance with
Regulations section 1.704-2(i). The Partners intend that this
subsection comply with the minimum gain chargeback requirement in
Regulations section 1.704-2(i) and that any interpretation be
consistent therewith.
4.9 SECTION 754 ADJUSTMENTS. To the extent that the
Executive Committee makes a Section 754 Election pursuant to
Section 8 4 hereof, the amount of any adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code section
734(b) or 743(b) that is required, pursuant to Regulations
section 1.7041(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis of the asset) and the gain or
loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Regulations section.
4.10 CURATIVE ALLOCATIONS. It is the intent of the Partners
that, to the extent possible, the Partnership offset all
Regulatory Allocations made either with other Regulatory
Allocations or with special allocations pursuant to this
subsection. Therefore, notwithstanding any other provisions of
this Article 4 (other than the Regulatory Allocations), the
Partnership, acting reasonably and in good faith, shall make such
offsetting special allocations in whatever manner it determines
appropriate so that, after making such offsetting allocations,
each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the
Agreement and all allocations of Partnership items were pursuant
to the remaining sections of this Article 4. In exercising its
discretion pursuant to this subsection, the Partnership shall
take into account future Regulatory Allocations under Section 4.7
or Section 4.8 that, although not yet made, are likely to offset
other Regulatory Allocations previously made under Section 4.2 or
Section 4.3.
4.11 VARYING PARTNERSHIP INTEREST. In the event of the
transfer of an Equity Interest, or in the event that a Partner's
percentage equity interest attributable to his or her Equity
Interest changes during a Fiscal Year, the Net Profits, Net
Losses or items of income, gain, loss or deduction allocated to
such Equity Interest for the Fiscal Year during which the
transfer occurs shall (a) be prorated between the transferor and
transferee as of the date of the transfer, or (b) allocated
between the portion of such Fiscal Year prior to such change in
percentage equity interest and the portion of such Fiscal Year
after such change, using the interim closing of the books method,
applying such conventions as the General Partner determines in
good faith are appropriate.
4.12 CONTRIBUTED AND REVALUED PROPERTY. For Federal income
tax purposes, the Partnership shall allocate any income, gain,
loss or deduction with respect to property contributed by a
Partner to the Partnership that has a Market Value different from
its adjusted basis for Federal income tax purposes among the
Partners in accordance with Code section 704(c) and the Treasury
Regulations thereunder. With respect to any Partnership asset
revalued pursuant to Sections 1.12(b), 1.12(c), or 1.12(d),
subsequent allocations of income, gain, loss and deduction with
respect to the asset shall take into account any variation
between the adjusted basis of such asset for federal income tax
purposes and its Market Value at the time of revaluation in the
same manner as under Code Section 704(c) and the Treasury
Regulations thereunder. The General Partner shall determine the
method of making allocations pursuant to this subsection,
provided that such method shall be a reasonable method authorized
by Regulations section 1.704-3(b).
4.13 TAX ITEMS. Except as otherwise provided herein, any
allocation to a Partner of a portion of the Net Profits or Net
Losses for a Fiscal Year shall be deemed to be an allocation to
that Partner of the same proportionate part of each item of
income, gain, loss, deduction or credit that is earned, realized
or available by or to the Partnership for federal income tax
purposes.
4.14 ALLOCATIONS UPON DISSOLUTION. Upon the dissolution of
the Partnership pursuant to Article 12, the Partnership shall
allocate items of income, gain, loss, or deduction pursuant to
this Article prior to any distribution pursuant to Section
13.1(c).
ARTICLE 5
DISTRIBUTIONS OF CASH FLOW
5.1 DISTRIBUTIONS.
(a) There shall be no distributions of Free Cash Flow until
the Partnership has experienced two consecutive full Fiscal Years
of Free Cash Flow. Commencing in the first Fiscal Quarter after
the Partnership has experienced two consecutive full Fiscal Years
of positive Free Cash Flow, all Free Cash Flow shall be
distributed by the Partnership to the Partners on a quarterly
basis, as soon as practicable after the end of each Fiscal
Quarter, in the following order of priority:
(i) First, an amount equal to the excess of the
cumulative Distributable Partnership Profits over the cumulative
distributions pursuant to this Section 5.1(a)(i) for all prior
Fiscal Quarters, to all Partners in accordance with their
respective Equity Interests; provided that this Section 5.1(a)(i)
shall terminate upon the exercise by the Partnership (with
respect to the Carried Interest) or APC of their rights pursuant
to Section 10.10(b);
(ii) Second, to all Partners (other than APC with
respect to its Carried Interest) in proportion to such Partners'
percentage Equity Interests, until the cumulative distributions
pursuant to this Section 5.l(a)(ii) shall have reduced the
Unrecovered Capital Contribution balance to zero; and
(iii) Third, to all Partners in accordance with their
respective percentage Equity Interests.
(b) Notwithstanding the foregoing, upon the dissolution of
the Partnership as provided in Section 12.1 hereof, cash
distributions occurring thereafter shall be made in accordance
with Article 13 hereof.
5.2 LIABILITY OF GENERAL PARTNER. Upon the determination in
good faith to pay and distribute Free Cash Flow in the manner
herein provided, the General Partner shall incur no liability on
account of such distribution, even though such distribution may
result in the Partnership retaining insufficient funds for the
operation of its business, which insufficiency results in loss to
the Partnership or the borrowing of funds by the Partnership.
ARTICLE 6
RIGHTS, POWERS AND OBLIGATIONS OF
GENERAL PARTNER, EXECUTIVE COMMITTEE
6.1 AUTHORITY OF THE GENERAL PARTNER. Except as otherwise
expressly provided herein, all references to any action to be
taken by the Partnership shall mean action taken in the name of
the Partnership and on its behalf by the General Partner.
Subject to the limitations set forth in this Agreement, including
the specific limitations set forth in Sections 6.5(h) and (i),
but only to the extent such limitations are expressly applicable,
the General Partner shall have the rights, powers and authority
of a general partner as set forth in the Act. For purposes of
illustration, and without limiting the foregoing, the General
Partner shall have the power and authority, on behalf of the
Partnership:
(a) To execute and deliver all agreements and other
documents necessary to implement the purposes of the Partnership,
to take such actions as may be necessary to consummate the
transactions contemplated thereby, and to make all reasonably
necessary arrangements to carry out the Partnership's obligations
in connection therewith;
(b) Subject to Section 6.5(h)(viii), to employ personnel on
behalf of the Partnership to conduct its affairs;
(c) To draw, make, accept, endorse, sign and deliver any
notes, drafts or other negotiable instruments or commercial
paper;
(d) To prepay, in whole or in part, refinance, recast,
increase, modify, consolidate or extend any indebtedness of the
Partnership or security interest affecting any of the assets of
the Partnership;
(e) To establish, maintain and draw upon checking, savings
and other accounts in the name of the Partnership in such bank or
banks as the General Partner may from time to time select;
(f) To compromise any claim or liability due to the
Partnership;
(g) To select legal counsel for the Partnership;
(h) Subject to Section 8.4 hereof, to make any tax election
to be made by the Partnership;
(i) To execute, acknowledge or verify, and deliver any and
all instruments that the General Partner considers necessary or
desirable to effectuate any of the foregoing;
(j) To do any and all of the foregoing, discretionary or
otherwise, through agents selected by the General Partner and
compensated or uncompensated by the Partnership; and
(k) To do any and all of the foregoing upon such other terms
and conditions as the General Partner, in its discretion,
determines to be necessary, desirable or appropriate.
6.2 LIMITATION ON AUTHORITY OF GENERAL PARTNER.
Notwithstanding anything to the contrary herein, neither the
Partnership nor the General Partner shall do any act in
contravention of the provisions of this Agreement. Without
limiting the generality of the foregoing, neither the Partnership
nor the General Partner shall take any action described in
Sections 6.5(h) and 6.5(i) hereof unless such action has been
approved by the Executive Committee pursuant to those Sections.
6.3 REIMBURSEMENT OF GENERAL PARTNER. The Partnership shall
reimburse the General Partner for any expenses incurred by it in
the operation and management of the Partnership, provided that
such expenses are contemplated by the then-current Annual Budget
or are approved by the Executive Committee pursuant to Section
6.5(h)(vi) or are incurred or reimbursable pursuant to a binding
agreement approved pursuant to Section 6.5(h)(vi).
6.4 LIABILITY AND INDEMNIFICATION OF GENERAL PARTNER. The
General Partner shall have no liability to the Partnership or the
Limited Partners for any mistake or error in judgment or for any
act or omission believed by the General Partner in good faith to
be within the scope of authority conferred upon the General
Partner by this Agreement or the Act and to be in the best
interest of the Partnership, but shall have liability only for
acts or omissions involving the General Partner's intentional
misconduct, gross negligence, knowing violation of law,
intentional breach of its fiduciary duty as General Partner or
any transaction in which the General Partner received a personal
benefit in violation or breach of this Agreement. The
Partnership shall, to the extent of its assets, indemnify, defend
and hold the General Partner harmless from, against and in
respect of all liabilities, damages, losses, costs or expenses
(including attorneys' and accountants' fees) incurred by the
General Partner as a result of any act or omission with respect
to which the General Partner is protected under the provisions of
this Section 6.4. The doing of any act or the failure to do any
act by the General Partner, the effect of which may cause loss or
damage to the Partnership, if done pursuant to advice of
independent legal counsel retained by the Partnership, shall be
conclusively presumed not to constitute intentional misconduct, a
knowing violation of law on the part of the General Partner, or
an intentional breach of the General Partner's fiduciary duty as
General Partner, unless such advice was induced by the General
Partner's intentional misconduct, knowing violation of law or
non-disclosure of material facts known to the General Partner.
Notwithstanding the foregoing, no Limited Partner shall be liable
to the Partnership, any other Partner or any third party for any
amount beyond the amount of such Limited Partner's obligations
set forth in this Agreement.
6.5 EXECUTIVE COMMITTEE.
(a) The Partnership will have an Executive Committee,
comprised of:
(i) three (3) representatives of the General Partner,
provided that the General Partner shall from time to time
designate one of the three as the representative who will vote
for the General Partner at any meetings or proceedings of the
Executive Committee (the "General Partner Voter");
(ii) one Voting Representative of the Rural Telcos,
which, for purposes of this Section 6.5 shall be treated as a
single Limited Partner, provided that (x) the Rural Telcos hold a
Voting Interest of no less than 2.5%, or (y) BellSouth and the
other Limited Partners have sold or agreed to sell their Voting
Interests and Equity Interests to a third party pursuant to
Section 10.6; and
(iii) one Voting Representative of each other Limited
Partner which was a party hereto on the date of the Partnership's
formation and that holds at least 5% of the total Voting
Interests and one Voting Representative for each other Limited
Partner entitled to appoint a Voting Representative under Section
6.5(b).
(b) A transferee of all or any part of a Limited Partner's
Partnership interest may appoint a Voting Representative to the
Executive Committee for so long as such transferee continues to
hold a Voting Interest of (i) 5% or more of the total Voting
Interests, if such transferee became a Limited Partner pursuant
to Section 10.2(c) or (ii) 10% or more of the total Voting
Interests, in the case of any other permitted transfer.
(c) In addition to the Voting Representatives, if any, to
which they are entitled pursuant to Section 6.5(a) hereof, (i)
the Rural Telcos may name two non-voting observers who may attend
meetings of the Executive Committee, and (ii) DukeNet and CaroNet
may each name one non-voting observer who may attend meetings of
the Executive Committee. In addition, if the Voting Interest of
any Partner increases by four percent (4%) or more of the total
Voting Interests, such Partner shall be entitled to one
additional non-voting observer who may attend meetings of the
Executive Committee. Such observers shall be entitled to attend
and participate in any meeting or other proceeding of the
Executive Committee. Each Partner shall endeavor to provide the
General Partner with prior notice of the names of their
respective nonvoting observers.
(d) The Executive Committee may, in its sole discretion,
permit any Limited Partner not otherwise entitled to do so, to
name a non-voting observer who may attend meetings of the
Executive Committee.
(e) The Executive Committee shall have supervisory control
over the business and affairs of the Partnership. Without
limiting the generality of the foregoing, the Executive Committee
shall meet at least 45 days prior to the end of each Fiscal Year
(i) to consider amending any aspect of the Business Plan then in
effect or the provisions of the Annual Budget for the next Fiscal
Year as provided therein, or (ii) subject to Section 6.5(h)(i),
to adopt an extension of the Business Plan, such that the
Business Plan, as so extended, would cover at least five Fiscal
Years. If the Executive Committee fails to amend the provisions
of any Annual Budget previously approved for any Fiscal Year,
then such previously approved Annual Budget shall be the Annual
Budget for such Fiscal Year. If the Executive Committee fails
expressly to adopt a Business Plan that includes an Annual Budget
for any Fiscal Year, then the Annual Budget for the Fiscal Year
immediately preceding such Fiscal Year shall be deemed to be the
Annual Budget for such Fiscal Year.
(f) The Executive Committee shall meet as often as it deems
necessary, but not less than ten (10) times per year. The
General Partner may call any meeting of the Executive Committee.
In addition, Voting Representatives representing any Limited
Partner(s) which collectively hold(s) aggregate Voting Interests
of at least twenty percent (20%), may by written notice to the
General Partner cause a meeting of the Executive Committee to be
held. In each case, the General Partner shall fix the date and
time of the meeting, to be held within ten (10) days after the
date of such notice, and shall provide at least five (5) days'
notice of the meeting to the Voting Representatives, together
with notice of the agenda of the meeting, provided that no notice
shall be required to be sent to Voting Representatives who
attended any previous meeting with respect to any subsequent
meeting scheduled by the Executive Committee at such previous
meeting thereof. The presence or participation of a Voting
Representative, in person or by proxy, at a meeting of the
Executive Committee shall be deemed to waive any objection based
on lack of or insufficient notice unless such Voting
Representative attends such meeting solely for the purposes of
objecting, at the beginning thereof, to the holding of such
meeting due to lack of or insufficient notice. No action shall
be taken or business conducted by the Executive Committee unless
a quorum is present. A quorum shall consist of the General
Partner Voter and the Voting Representative of at least one
Limited Partner that is not an Affiliate of the General Partner.
If a quorum is not present at a meeting of the Executive
Committee duly called, then the meeting shall be postponed, and
the General Partner shall give at least five (5) days' notice of
the new date, time and agenda for the meeting to all members of
the Executive Committee. Meetings of the Executive Committee may
be held in person or by telephonic conference call. Any action
that could be taken by the Executive Committee at a meeting may
be taken by a written consent signed by all Voting
Representatives.
(g) Each Voting Representative of the Executive Committee
shall vote the Voting Interest of the Partner which he
represents. Except as set forth in Section 6.5(h) or Section
6.5(i) hereof and subject to the first sentence of Section
9.2(b), all decisions of the Executive Committee concerning the
Partnership or the Partnership's Business shall be approved by
the affirmative vote of Executive Committee members representing
a majority of all Voting Interests.
(h) Notwithstanding anything to the contrary in Section
6.5(g) hereof, the affirmative vote of the General Partner Voter
and the affirmative vote of the Voting Representative of at least
one Limited Partner that is not an Affiliate of the General
Partner shall be required to:
(i) adopt a Business Plan or make any material change
in the Business Plan, including but not limited to changes
required as a result of the exercise of any option described in
Section 10.10(a);
(ii) amend or modify the Operating Agreement;
(iii) make any material change in the Partnership's
Business as of the date hereof or as the same may change pursuant
to this Section 6.5;
(iv) change the targeted debt-equity ratio of the
Partnership from that set forth in the Initial Business Plan or
as otherwise may be in effect from time to time;
(v) change or deviate from the Partnership's cash flow
distribution policy as described in Section 5.1 hereof;
(vi) subject to Section 6.5(k), (x) make, authorize, or
adopt any agreement between the Partnership and any Partner or
any Affiliate of any Partner that provides for payments in excess
of $5,000,000 in the aggregate or is otherwise material to the
Partnership or (y) borrow from any Partner, or any Affiliate of
any Partner, any loan having a principal amount in excess of
$5~,000,000 or a term in excess of one (1) year;
(vii) acquire or dispose of any assets constituting a
business as a going concern;
(viii) appoint the Chief Executive Officer of the
Partnership;
(ix) appoint an accounting firm for the Partnership,
provided that the accounting firm of Coopers & Lybrand is hereby
selected as the initial accountants of the Partnership, or a law
firm to provide general representation to the Partnership;
(x) issue any capital call in excess of the capital
contribution program set forth in the Business Plan then in
effect; or
(xi) appoint an Independent Appraiser to determine
Market Value, as contemplated in Section 1.32.
(i) Notwithstanding anything to the contrary in Section
6.5(g) hereof, the affirmative vote of the General Partner Voter
and the affirmative vote of the Voting Representatives of at
least two Limited Partners that are not Affiliates of the General
Partner shall be required to:
(i) admit new Partners to the Partnership, provided
that this provision shall not apply to transfers permitted
pursuant to Article 10 hereof;
(ii) liquidate or dissolve the Partnership; or
(iii) sell, transfer or assign the License or all or
substantially all of the Partnership's assets.
(j) If any Voting Representative or non-voting observer on
the Executive Committee resigns, is removed or is unable or
unwilling to serve on the Executive Committee, the Partner that
designated such Voting Representative or observer (or the
permitted transferee or assign of such party) shall have the sole
right to designate a successor, whose succession shall be
effected without any further action, other than such designation,
being required.
(k) Notwithstanding anything to the contrary in Section
6.5(h), actions described in 6.5(h)(vi) in respect of any
transaction may be taken only after the interested Partner has
provided the Executive Committee with full and complete
disclosure of the material terms of such transaction.
6.6 OTHER MANAGEMENT MATTERS.
(a) Each Voting Representative, each member of any committee
designated by the Executive Committee and each officer or
employee of the Partnership, in the performance of his duties,
may rely in good faith upon the books of account or reports made
to the Partnership by any of its officials, or by an independent
certified public accountant, or by an.appraiser selected with
reasonable care by the Executive Committee or by any such
committee, or upon other records of the Partnership.
(b) Subject to Section 6.5(h)(viii), the Executive Committee
shall appoint such officers of the Partnership as it shall deem
beneficial to the conduct of the Partnership's Business. The
officers of the Partnership shall have such duties as the
Executive Committee shall prescribe to them.
(c) Any Voting Representative, officer or agent of the
Partnership or any member of any committee may resign at any time
by giving written notice to the Executive Committee, to the
Chairman of the Executive Committee or to the Secretary of the
Partnership. Any such resignation shall take effect at the time
specified therein, or if the time be not specified therein, then
upon receipt thereof. The acceptance of such resignation shall
not be necessary to make it effective.
6.7 OPERATIONS COMMITTEE. The Partnership shall establish
an Operations Committee to address the needs and resolve issues
of the Rural Telcos that do not withdraw from the Partnership
pursuant to Section 3.3 hereof. Each Limited Partner (other than
the Rural Telcos) will have one representative on the Operations
Committee. The Rural Telcos will have on the Operations
Committee two representatives for the Rural Telcos located in
North Carolina and two representatives for the Rural Telcos
located in South Carolina. The Operations Committee will consult
on and resolve matters such as technology for the System,
branding (including co-branding and multiple branding) and
switching. The Operations Committee will report to the Executive
Committee. Such Rural Telcos will have an opportunity to
participate in decisions as to operations through the Operations
Committee. Matters that cannot be resolved by the Operations
Committee will be referred to the Executive Committee for
resolution.
6.8 NO RETURN OF CONTRIBUTION. The General Partner shall at
no time be entitled to a return of all or any part of its
contribution(s) to the capital of the Partnership, except as
provided in Articles 5 and 13 hereof. The General Partner shall
have no right to demand and receive any property other than cash
in return for its contributions, and its rights to cash shall be
limited to the rights set forth in Articles 5 and 13.
6.9 RESELLER ARRANGEMENTS. (a) If a Partner or an Affiliate
of such Partner (the "Proposing Partner") desires to enter into
any resale, agency, dealer or distribution arrangement with the
Partnership, including the arrangement evidenced by the Service
Provider Agreement (as defined in Section 1.55) and any other
service provider arrangement between the Partnership and the
Rural Telcos (the "Proposed Arrangement"), such Proposing Partner
shall provide the Executive Committee with a full and complete
written disclosure of the material terms of such Proposed
Arrangement. The Proposing Partner shall submit to the Executive
Committee a copy of a draft of the definitive agreement for the
Proposed Arrangement and drafts of all related agreements.
Promptly after such submission of the Proposed Arrangement and
such drafts, the Executive Committee shall consider the Proposed
Arrangement and approve or disapprove the Proposed Arrangement by
the vote applicable thereto under Section 6.5. If the Executive
Committee approves the Proposed Arrangement, the Proposing
Partner and the Partnership shall enter into such Proposed
Arrangement and shall execute and deliver any documents
reasonably required for such Proposed Arrangement. If the
Executive Committee disapproves the Proposed Arrangement and the
Proposing Partner desires to contest the decision of the
Executive Committee, the Proposing Partner shall give the
Executive Committee written notice to such effect (the
"Arbitration Notice"), whereupon the Proposed Arrangement shall
be submitted for arbitration in accordance with Section 15.13,
subject to the provisions of paragraphs (b), (c), (d), (e), (f),
(g) and (m) of this Section 6.9.
(b) The Executive Committee shall instruct the Center for
Public Resources in Washington, D.C. to conduct the arbitration
in accordance with the rules and in compliance with the time
periods set forth in this Section 6.9. Not later than fifteen
(15) business days after the giving of the Arbitration Notice,
the Proposing Partner and the Voting Representatives of the other
Partners (the "Other Voting Representatives") shall each select
and appoint a neutral arbitrator from the list of distinguished
neutrals of the Center for Public Resources in Washington, D.C.
Not later than fifteen (15) days after the first date as of which
both such arbitrators shall have been appointed, such arbitrators
shall appoint a third neutral arbitrator from the list of
distinguished neutrals of the Center for Public Resources in
Washington, D.C.
(c) Not later than five (5) business days after the
appointment of the third arbitrator, (i) the Proposing Partner
shall submit the Proposed Arrangement to the arbitrators and (ii)
each of the Proposing Partner and the Other Voting
Representatives shall submit to the arbitrators any findings or
evidence as to generally prevailing market conditions and other
resale, agency, dealer, distribution or service provider
arrangements.
(d) The arbitrators shall evaluate the Proposed Arrangement
to determine whether it is consistent with similar arrangements
made under similar circumstances by unaffiliated third parties as
the product of arms' length negotiations, generally prevailing in
the marketplace (the "Market Test"). Not later than twenty-five
(25%) business days after the appointment of the third
arbitrator, the arbitrators shall determine whether the Proposed
Arrangement meets the Market Test.
(e) If the arbitrators determine that the Proposed
Arrangement meets the Market Test, they shall give prompt written
notice thereof to the Partnership and the Other Voting
Representatives. Promptly after the giving of such notice, the
Proposing Partner and the Partnership shall enter into such
Proposed Arrangement and shall execute and deliver any documents
reasonably required for such Proposed Arrangement. If the
arbitrators determine that the Proposed Arrangement does not meet
the Market Test, they shall give prompt written notice thereof
(the "Revised Arrangement Notice") to the Partnership and the
Other Voting Representatives. The Revised Arrangement Notice
shall set forth any changes to the Proposed Arrangement that the
arbitrators propose to be made such that the Proposed Arrangement
would meet the Market Test (the "Revised Arrangement").
(f) The Proposing Partner shall give the Executive Committee
written notice, not later than thirty (30) business days after
the arbitrators shall have given the Revised Arrangement Notice,
informing the Executive Committee as to whether or not the
Proposing Partner elects to enter into the Revised Arrangement.
If the notice sets forth the Proposing Partner's election to
enter Committee an Arbitration Notice to such effect, whereupon
the matter shall be submitted for arbitration in accordance with
Section 15.13, subject to the provisions of paragraphs (b), (g),
(k), (l) and (m) of this Section 6.9.
(g) Subject to paragraphs (h), (i), (j), (k) and (l) of
this Section 6.9, if a Proposing Partner and the Partnership
enter into a Proposed Arrangement or a Revised Arrangement (an
"Arrangement"), such Proposing Partner shall not be permitted to
seek a revision thereto or termination thereof pursuant to this
Section 6.9, unless and until such Arrangement expires, or may be
terminated by such Proposing Partner, under the terms of the
definitive agreements documenting such Arrangement.
(h) Notwithstanding Section 6.9(g), if a Proposing Partner
believes that the terms of any resale, agency, dealer or
distribution arrangement (a "Resale Arrangement") entered into
after the effective date of its Arrangement by another Partner or
any Affiliate of another Partner (the "Resale Partner") and the
Partnership are materially more favorable to the Resale Partner
than the terms of the Arrangement to which it is a party, except
where the terms of the Resale Arrangement are more favorable as
the result of volume commitments or volume usage by the Resale
Partner, such Proposing Partner may seek to cause the terms of
its Arrangement to be revised so as to be consistent with the
terms of the Resale Arrangement, prior to the expiration or
termination of the definitive agreements for such Arrangement,
provided that such Proposing Partner does not seek any such
revision prior to the six-month anniversary of the effective date
of its Arrangement. To seek such revision, the Proposing Partner
shall submit the matter to the Executive Committee by written
notice. Promptly after such submission, the Executive Committee
shall (i) consider the matter and approve or disapprove making
revisions to the Proposing Partner's Arrangement, by the vote
applicable thereto under Section 6.5 and (ii) give the Proposing
Partner written notice of its approval (setting forth the
approved revisions) or disapproval.
(i) If the Executive Committee approves making revisions to
a Proposing Partner's Arrangement and the Proposing Partner
agrees to such revisions, the Proposing Partner and the
Partnership shall enter into such revisions to such Arrangement
and shall execute and deliver any documents reasonably required
to give effect to such revisions. If either (i) the Executive
Committee disapproves the making of any revisions to the
Proposing Partner's Arrangement or (ii) the Proposing Partner
does not agree to any revisions to its Arrangement approved by
the Executive Committee, and the Proposing Partner desires to
contest the decision of the Executive Committee, the Proposing
Partner shall give the Executive Committee an Arbitration Notice
to such effect, whereupon the matter shall be submitted for
arbitration in accordance with Section 15.13, subject to the
provisions of paragraphs (b), (g), (k), (l) and (m) of this
Section 6.9.
(j) Not later than twenty-five (25) business days after the
appointment of the third arbitrator pursuant to Section 6.9(b),
the arbitrators selected under Section 6.9(b) shall determine any
revisions to the terms of the Arrangement that would cause such
terms to be consistent with the terms of the Resale Arrangement
provided that the arbitrators shall not determine any such
revisions (i) to the extent the terms of the Resale Arrangement
are the result of different volume commitments or volume usages,
(ii) if the terms of the Arrangement as so revised would not be
materially different from the terms of the Arrangement then in
effect or (iii) if the terms of the Arrangement as so revised
would not be materially different from the terms of the
Arrangement, as such terms would have been revised had the
Proposing Partner accepted revisions approved by the Executive
Committee pursuant to paragraphs (h) and (i) of this Section 6.9.
If the arbitrators determine that any revisions to the
Arrangement should be made as aforesaid, the arbitrators shall
give the Proposing Partner and the Partnership notice thereof.
(k) Not later than thirty (30) business days after the
giving of such notice, the Proposing Partner shall give the
Executive Committee notice of whether or not it elects to revise
the terms of its Arrangement in accordance with the terms
determined by the arbitrators. If it makes such election,
promptly after the giving of such notice, the Proposing Partner
and the Partnership shall enter into such revisions to such
Arrangement and shall execute and deliver any documents
reasonably required to give effect to such revisions. If the
arbitrators determine that no revisions should be made to the
terms of the Arrangement as aforesaid, the Proposing Partner
shall pay all costs and expenses incurred in connection with the
arbitration, including without limitation the fees and expenses
of the arbitrators and the legal fees and expenses of the
Partnership. If the arbitrators determine that revisions should
be made to the term of the Arrangement as aforesaid, the
Partnership shall pay all costs and expenses incurred in
connection with the arbitration, including without limitation the
fees and expenses of the arbitrators and the legal fees and
expenses of the Proposing Partner.
(l) Notwithstanding anything in this Section 6.9 to the
contrary, subject to Applicable Law, paragraphs (g), (h), (i),
(j) and (k) of this Section 6.9 shall be of no force or effect,
and no revisions shall be required to be made to any Arrangement
pursuant to such paragraphs, if by operation of Applicable Law
such paragraphs would permit a Person that is not a Partner or an
Affiliate of a Partner to seek or obtain any revision to the
terms of its resale, agency, dealer or distribution arrangement
with the Partnership. If a Proposing Partner elects not to enter
into any revision to its Arrangement in accordance with the terms
proposed by the arbitrators pursuant to Section 6.9(j) in respect
of any particular Resale Arrangement, such Proposing Partner
shall not be permitted to seek a revision to its Arrangement
pursuant to paragraphs (i), (j) and (k) of this Section 6.9 in
respect of such Resale Arrangement.
(m) Any decision of the arbitrators pursuant to this Section
6.9 shall be binding and unappealable.
<PAGE>
ARTICLE 7
POWERS, RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
7.1 POWERS AND RIGHTS. Except as expressly provided herein
and subject to the provisions of Article 6.5, without the consent
of the General Partner, neither the original Limited Partners nor
any future Limited Partners shall take any part in the conduct or
control of the Partnership business, nor shall they have any
right or authority to act or sign for, or to obligate the
Partnership. Notwithstanding the foregoing sentence, a Limited
Partner may provide services to the Partnership in its capacity
as a Limited Partner, as the General Partner may direct. Limited
Partners, except as otherwise provided herein, shall have all of
the rights of a limited partner under the Act. The Limited
Partners shall at no time be entitled to a return of all or any
part of their contribution(s) to the capital of the Partnership
except as provided in Articles 5 and 13 hereof. A Limited
Partner shall have no right to demand and receive any property
other than cash in return for its contributions, and its right to
cash shall be limited to the rights set forth in Articles 5 and
13 hereof.
ARTICLE 8
ACCOUNTING, BOOKS AND RECORDS
8.1 ACCOUNTING METHOD. The Partnership shall maintain its
books and records on the accrual basis of accounting.
8.2 BOOKS AND RECORDS; AUDIT.
(a) The General Partner shall keep, or cause to be kept, at
Partnership expense, full, complete and accurate books of account
and other records showing the assets, liabilities, costs,
expenditures, receipts, Net Profits, Net Losses (and items of
income, gain, loss and deduction not included in Net Profits or
Net Losses) and Free Cash Flow of the Partnership, the respective
Capital Accounts of the Partners and such other matters as are
set out in Section 17-305 of the Act or as shall be required by
the Executive Committee. Such books of account shall be the
property of the Partnership, shall be kept in accordance with
generally accepted accounting principles, consistently applied,
and shall be open to the inspection and examination by any
Limited Partner or its duly authorized representatives at
reasonable times upon at least ten (10) business days' prior
written notice. Such books of account shall be maintained at the
principal office of the Partnership or at such other reasonable
place as the Executive Committee shall determine.
(b) Not more frequently than once each Fiscal Year (but not
in December, January or February of any Fiscal Year), a
representative of each of the Limited Partners, acting
collectively upon the affirmative vote of Voting Representatives
representing at least a majority of the Voting Interests
represented on the Executive Committee by the Limited Partners,
may audit the books and records of the Partnership. Such Voting
Representatives shall give the General Partner not less than ten
(10) days' written notice of any such audit, together with
evidence, reasonably satisfactory to the General Partner, that
they have approved such audit pursuant to the first sentence of
this Section 8.2(b). Promptly after completion of the audit, the
Limited Partners requesting the audit shall reimburse the
Partnership on a pro rata basis (based on their respective Voting
Interests) for the cost of assisting in the audit, if two or more
employees of the Partnership devoted more than ten (10) business
days each to such assistance.
8.3 FINANCIAL REPORTS AND TAX RETURNS. On the fifteenth
(15th) day of each month, the General Partner shall deliver to
the Limited Partners a monthly management report (one month in
arrears), which will include matters such as revenues, net
income, cash flow and customer count. Within sixty (60) days
after the end of each Fiscal Year, the General Partner shall give
each Limited Partner notice of its estimate, based on all
available facts, of Partnership items of Net Profit, Net Loss,
income, gain, loss and deduction allocable to such Limited
Partner for such Fiscal Year. Within ninety (90) days after the
end of each Fiscal Year, the General Partner shall cause to be
prepared financial statements of the Partnership for such Fiscal
Year, including a balance sheet and a profit and loss statement.
The General Partner shall also cause, at Partnership expense, the
Partnership's tax returns and other governmental returns and
reports to be prepared and timely filed. The General Partner
shall deliver copies of such financial statements, Schedule K-1
of Form 1065 (or a comparable schedule) and other necessary
information for each Fiscal Year to each Partner within ninety
(90) days following the end of each Fiscal Year.
8.4 SPECIAL BASIS ADJUSTMENT. In connection with any
permitted transfer of an Equity Interest and Voting Interest, or
in connection with the retirement or withdrawal of any Partner,
the Executive Committee, in its reasonable discretion, may cause
the Partnership to elect pursuant to Code section 754 to adjust
the basis of Partnership property in the manner provided in
Sections 734(b) and 743(b); provided, however, that the Executive
Committee shall not make any election pursuant to Code section
754 unless the effect of such election (upon the request of the
transferor Partner) is to increase the basis of Partnership
property; and provided further, that the Executive Committee
shall make such election in the event of a transfer by a Partner
of a Voting Interest of 5% or more, or the redemption of such a
Voting Interest, so long as the transferee requests such election
and agrees in writing to pay the Partnership, on an ongoing
basis, all administrative expenses (including without limitation
accounting, bookkeeping and tax return preparation expenses)
incurred by the Partnership arising out of or relating to such
election.
8.5 TAX MATTERS PARTNER. The Tax Matters Partner for the
Partnership shall be BellSouth.
ARTICLE 9
WITHDRAWAL, RETIREMENT AND DISQUALIFICATION OF PARTNERS
9.1 LIMITED PARTNERS. The disqualification (as defined in
Section 9.3) of any Limited Partner shall not dissolve the
Partnership. Upon the disqualification of a Limited Partner, the
successor-in-interest of such Limited Partner shall become an
assignee of the Limited Partner's Equity Interest in the
Partnership and shall be credited or charged with and/or paid, as
the case may be, all further allocations and distributions on
account of the Equity Interest of the Limited Partner; provided
that no such successor-in-interest shall become a substituted
Limited Partner without first complying with the provisions of
Article 10 hereof.
9.2 GENERAL PARTNER. The General Partner shall not have the
right to withdraw from the Partnership. If the General Partner
becomes disqualified, the Partnership shall dissolve and
thereafter conduct only activities necessary to wind up its
affairs in accordance with the provisions of Article 13 hereof,
unless, within 90 days after the disqualification of the General
Partner, Voting Representatives representing a majority of the
Voting Interests held by the Limited Partners determine to
continue the Partnership pursuant to the terms and provisions of
this Agreement. If a decision to continue the Partnership is
made, then:
(a) One or more new General Partners shall be elected by
Partners owning at least a majority of the Voting Interests owned
by all Partners, effective as of the date of the General
Partner's disqualification. The new General Partner(s) shall
receive from the Partnership such Voting Interest and Equity
Interest as such Partners shall determine, but in no event will
such new General Partner(s) receive (collectively if there is
more than one new General Partner) less than a one percent (1~)
Voting Interest and Equity Interest.
(b) If, at the time of the General Partner's
disqualification, the General Partner is BellSouth, BellSouth
shall become a substituted Limited Partner for all purposes of
this Agreement, without qualifying as such pursuant to Article
10, provided that BellSouth's Voting Interest, solely for
purposes of voting under Section 6.S(g), shall equal the lesser
of (i) BellSouth's actual Voting Interest or (ii) forty-nine
percent (49%). If at the time of the General Partner's
disqualification the General Partner is not BellSouth, the Equity
Interest of the former General Partner shall become a Limited
Partner Equity Interest for all purposes thereafter, and the
former General Partner or its successor-in-interest shall be
entitled to receive allocations of Net Profits and Net Losses and
distributions of Free Cash Flow equal to what it would have been
entitled to but for its disqualification.
9.3 DISQUALIFICATION. For purposes of this Agreement, a
Partner shall be deemed to be "disqualified" upon the occurrence
of any of the following events: (i) its filing of a voluntary
petition in bankruptcy that is not dismissed within ninety (90)
days after filing; (ii) its adjudication as bankrupt or
insolvent; (iii) its making an assignment for the benefit of
creditors; or (iv) its becoming subject to involuntary
reorganization or liquidation proceedings.
ARTICLE 10
PLEDGES; TRANSFERS
10.1 PLEDGES. No Partner may pledge, mortgage, hypothecate
or otherwise transfer as security all or any part of its Equity
Interest or its Voting Interest in the Partnership, or transfer,
assign or endorse any debt owed by the Partnership to such
Partner, without the prior written consent of all other Partners,
provided that this Section 10.1 shall not apply to any agreement
to which any Rural Telco is a party, which (i) is in existence
prior to the date hereof and (ii) contains a provision
encumbering after-acquired property of the type described above.
10.2 TRANSFERS BY PARTNERS.
(a) Except as expressly permitted hereunder, from the date
hereof until the sixth anniversary of the Award Date, no Partner
may sell, transfer or assign its Equity Interest or its Voting
Interest to any Person without the prior written consent of
Partners holding aggregate Voting Interests of at least 51% of
the other Partners' Voting Interests; provided that any sale,
transfer, or assignment consented to by the Partners shall
nonetheless be subject to Section 10.4.
(b) After the sixth anniversary of the Award Date, subject
to Section 10.4, (i) the General Partner may transfer all or any
part of its Equity Interest and Voting Interest, subject to
Section 10.6, and (ii) each Limited Partner may transfer all or
any part of its Equity Interest and Voting Interest.
(c) Notwithstanding anything in this Agreement to the
contrary, any Partner may at any time transfer its Voting
Interest, Equity Interest and rights under this Agreement and the
Transaction Documents to which it is a party, and delegate its
obligations under this Agreement and such Transaction Documents,
to (i) in the case of any Partner other than APC, the ultimate
parent of such Partner or any direct or indirect wholly-owned
subsidiary or subsidiaries of such Partner or the ultimate parent
of such Partner, or (ii) in the case of APC, to the Washington
Post Company or American Personal Communications, Inc. or to any
other entity all of whose equity is owned by the Washington Post
Company, American Personal Communications, Inc., or both, in each
case free of any restriction or rights of other Partners
hereunder, including without limitation those under Section 10.4
and 10.6, provided that such Partner shall remain fully obligated
for the performance by its transferee of all obligations of such
Partner under this Agreement ~nd the Transaction Documents to
which it is a party or the ultimate parent of any such Partner
whose obligations hereunder and~thereunder are not, immediately
prior to such transfer, guaranteed under a Guarantee, shall
deliver a Guarantee, in the form of SCHEDULE 10.2(C), of its
ultimate parent or another credit-worthy Affiliate acceptable to
the Executive Committee exercising reasonable judgment, unless
the Executive Committee determines in its reasonable judgment
that no such Guarantee is necessary.
10.3 ADDITIONAL RESTRICTIONS ON TRANSFERS BY RURAL TELCOS.
No Rural Telco may sell, transfer or assign its rights under its
Partitioned License (if any), its rights under any of the
Transaction Documents to which it ia a party, or all or any
material portion of its Operating Assets (as defined in the
Partition Agreement), if any, (i) except in compliance with this
Section 10.3 or (ii) if such sale, transfer or assignment would
have an adverse effect on its Partitioned License, if any.
Notwithstanding anything to the contrary herein, in connection
with any permitted transfer and assignment by a Rural Telco to
any Person of its Equity Interest and its Voting Interest, such
Rural Telco shall simultaneously transfer and assign to such
Person all of such Rural Telco's Operating Assets, if any and in
connection with any permitted transfer and assignment by an
Operating Telco to any Person of its Operating Assets, if any,
such Operating Telco shall simultaneously transfer and assign to
such Person its Equity Interest and its Voting Interest.
10.4 RIGHT OF FIRST REFUSAL. Subject to the restrictions on
the transfer and assignment of Equity Interests and Voting
Interests specified in this Article 10:
(a) Any Partner (the "Seller") desiring to sell, transfer,
assign or otherwise dispose of all or any portion of its Equity
Interest or its Voting Interest (the "Offered Interest") or, in
the case of a Rural Telco, its Operating Assets (the "Offered
Assets"), shall first obtain a bona fide written offer (the
"Outside Offer"), from a Person which is not Affiliated with the
Seller (a "Third Party") to purchase all (but not less than all)
of the Offered Interest and the Offered Assets for cash payable
at the closing of such sale or on a deferred basis (or a
combination thereof). Subject to Section 10.4(f), before the
Seller may accept the Outside Offer, it shall first offer to sell
the Offered Interest and the Offered Assets to the Partnership at
the price and upon the terms contained in the Outside Offer. The
Seller's offer to the Partnership shall be in writing, shall be
accompanied by a copy of the Outside Offer and the full names and
addresses of the Third Party, and shall remain open for thirty
(30) days after delivery. The Seller's offer may not be revoked
by the Seller for any reason, including without limitation the
withdrawal or termination of the Outside Offer. The Partnership
shall be entitled to acquire all (but not less than all) of the
Offered Interest and the Offered Assets at the price and upon the
terms contained in the Outside Offer. If the Seller's offer is
accepted by the Partnership as to all of the Offered Interest and
the Offered Assets, the closing shall be at the principal offices
of the Partnership within thirty (30) days (subject to extension
to the extent required for any FCC approval of such transfer)
after the Seller's receipt of acceptance. At the closing, the
Seller shall deliver to the Partnership written instruments of
transfer of the Offered Interest and the Offered Assets in form
and substance reasonably satisfactory to the Partnership. The
Offered Interest and the Offered Assets shall be transferred and
assigned to the Partnership free and clear of all claims, liens,
encumbrances, restrictions and security interests (except for the
restrictions created by this Agreement), with full warranties of
title. Upon the delivery of such instrument of transfer, the
Partnership shall pay the purchase price to the Seller in
immediately available funds in accordance with the terms and
conditions of the Outside Offer.
(b) If the Seller's offer is not accepted by the Partnership
as to all of the Offered Interest and the Offered Assets, then,
except if the Seller is a Rural Telco, the Seller shall offer to
sell the Offered Interest and the Offered Assets to the other
Partners at the price and upon the terms contained in the Outside
Offer. The Partners shall be entitled to acquire all (but not
less than all) of the Offered Interest and the Offered Assets at
the price and upon the terms contained in the Outside Offer, in
amounts proportionate to their own respective Voting Interests
(unless: (i) otherwise agreed among them, or (ii) one or more of
them declines the offer, in which event the remaining Partners
shall be entitled to purchase the Offered Interest and the
Offered Assets in amounts proportionate to their own respective
Voting Interests or as otherwise agreed among them), and shall
have thirty (30) days after receipt of the Seller's written offer
in which to accept such offer by delivering a written notice to
that effect to the Seller. If the Seller's offer is accepted by
the other Partners as to all of the Offered Interest and the
Offered Assets, the closing shall be at the principal offices of
the Partnership within thirty (30) days (subject to extension to
the extent required for any FCC approval of such transfer) after
the Seller's receipt of acceptance. At the closing, the Seller
shall deliver to the other Partners written instruments of
transfer of the Offered Interest and the Offered Assets in form
and substance reasonably satisfactory to the Partnership. The
Offered Interest and the Offered Assets shall be transferred and
assigned to the other Partners free and clear of all claims,
liens, encumbrances, restrictions and security interests (except
for the restrictions created by this Agreement), with full
warranties of title. Upon the delivery of such instrument of
transfer, the other Partners shall pay the purchase price to the
Seller in immediately available funds in accordance with the
terms and conditions of the Outside Offer.
(c) If the Seller's offer is not accepted by another Rural
Telco (in the case of an offer to the Rural Telcos pursuant to
Section 10.4(f)), the Partnership or the other Partners as to all
of the Offered Interest and the Offered Assets, then the Seller
shall be free to sell, transfer or assign all (but not less than
all) of the Offered Interest and the Offered Assets to the Third
Party at the price and upon the terms and conditions contained in
the Outside Offer; provided, however, that the sale and transfer
of such Offered Interest and the Offered Assets shall not violate
the provisions of any applicable securities laws.
(d) If the Offered Interest and the Offered Assets so
offered to Rural Telcos, the Partnership or the other Partners,
but not accepted by one or more of them, has not been sold,
transferred or assigned to the Third Party in accordance with the
terms and conditions of the Outside Offer within ninety (90) days
after the expiration of the Seller's offer to the other Partners,
then the restrictions provided in this Section shall again become
effective with respect to such Offered Interest and the Offered
Assets.
(e) Notwithstanding anything to the contrary in this
Section, subject only to the approval of the General Partner
(which shall not be unreasonably withheld), the rights of first
refusal provided in this Section shall not apply to any sale,
transfer or assignment by a Rural Telco of its Operating Assets,
its Equity Interest and its Voting Interest to another Rural
Telco.
(f) If the Seller is a Rural Telco, before the Seller may
accept the Outside Offer, it shall first offer to sell the
Offered Interest and the Offered Assets to the other Rural Telcos
at the price and upon the terms contained in the Outside Offer.
The Seller's offer to the other Rural Telcos shall be in writing,
shall be accompanied by a copy of the Outside Offer and the full
names and addresses of the Third Party, and shall remain open for
thirty (30) days after delivery. The Seller shall send a copy of
such offer to the Voting Representative of such Rural Telco. The
Seller's offer may not be revoked by the Seller for any reason,
including without limitation the withdrawal or termination of the
Outside Offer. The Rural Telcos shall decide amongst themselves
which single Rural Telco, if any, shall purchase the Seller's
Offered Interest and Offered Assets. Such Rural Telco shall be
entitled to acquire all (but not less than all) of the Offered
Interest and the Offered Assets at the price and upon the terms
contained in the Outside Offer. If the Seller's offer is not
accepted by a Rural Telco, the Voting Representative of the Rural
Telcos shall give the Partnership notice thereof, and the date of
such notice shall be deemed to be the date on which the Seller
shall have first notified the Partnership of the Outside Offer
for purposes of Section 10.4(a). If the Seller's offer is
accepted by such Rural Telco as to all of the Offered Interest
and the Offered Assets, the closing shall be at the principal
offices of the Partnership within thirty (30) days (subject to
extension to the extent required for any FCC approval of such
transfer) after the Seller's receipt of acceptance. At the
closing, the Seller shall deliver to such Rural Telco written
instruments of transfer of the Offered Interest and the Offered
Assets in form and substance reasonably satisfactory to the Rural
Telco. The Offered Interest and the Offered Assets shall be
transferred and assigned to such Rural Telco free and clear of
all claims, liens, encumbrances, restrictions and security
interests (except for the restrictions created by this
Agreement), with full warranties of title. Upon the delivery of
such instrument of transfer, such Rural Telco shall pay the
purchase price to the Seller in immediately available funds in
accordance with the terms and conditions of the Outside Offer.
(g) Notwithstanding anything to the contrary in this
Section, subject only to the approval of the General Partner
(which shall not be unreasonably withheld), the rights of first
refusal provided in this Section shall not apply to any transfer
or assignment by Concord Telephone Company ("Concord") or Ellerbe
Telephone Company ("Ellerbe") of their respective Equity
Interests and Voting Interests to a corporation or partnership,
all of whose equity is held, legally and beneficially, by Concord
and Ellerbe (the "Transferee Entity"), provided that such
assignment or transfer is effected not later than seventy-five
(75) days after the date hereof. If Concord and Ellerbe do not
desire to effect any such assignment or transfer, Ellerbe shall
have the right to withdraw from the Partnership without penalty
or liability, so long as Ellerbe gives the Partnership written
notice of withdrawal not Later than forty-five (45) days after
the date hereof. If Concord and Ellerbe desire to effect any
such assignment or transfer, Concord and Ellerbe, not later than
forty-five (45) days after the date hereof, shall deliver to the
General Partner any information reasonably requested concerning
the Transferee Entity and the arrangements of Concord and Ellerbe
with respect thereto, including without limitation (i) copies of
all the proposed constituent documents of such Transferee Entity
or documents setting forth the arrangements between Concord and
Ellerbe, (ii) financial information, (iii) evidence of adequate
capitalization and (iv) information respecting the effect of such
transfer or assignment on partitioning. Not later than
sixty-five (65) days after the date hereof, the General Partner
shall give Concord and Ellerbe written notice of its approval or
disapproval of the proposed assignment or transfer.
Notwithstanding the foregoing, if the General Partner shall not
approve (not to be unreasonably withheld) such transfer or
assignment, Ellerbe shall be permitted to withdraw from the
Partnership without penalty or liability, so long as such
withdrawal is effected not later than ten (10) days after the
date on which the General Partner gives notice of disapproval.
Upon any such withdrawal from the Partnership, Ellerbe's Equity
Interest and Voting Interest shall be deemed immediately
transferred to BellSouth without any payment therefor.
10.5 RESTRICTION ON TRANSFERS OF PARTNERSHIP INTERESTS. No
sale, transfer or assignment of an Equity Interest and Voting
Interest by a Partner to any Person otherwise permitted by the
terms of this Article 10 shall be made (i) unless the Equity
Interest and Voting Interest are sold, transferred or assigned
simultaneously to the same Person, (ii) unless made in accordance
with Applicable Law, (iii) if such sale, assignment or transfer
would have an adverse effect on the right of the Partnership, as
determined by the Partnership in its reasonable judgment, to hold
the License and (iv) unless such Person executes a written
agreement, in form and substance reasonably satisfactory to the
General Partner, to assume and be bound by all of the duties and
obligations of such Partner relating to the sold, transferred or
assigned Equity Interest and Voting Interest under this Agreement
and each of the other Transaction Documents to which such Partner
is a party. Each Partner and the Partnership shall, without
further consideration, execute and deliver any such instruments
of assignment, transfer, assumption, or conveyance and any such
receipts, acknowledgements, acceptances and assurances, as may be
reasonably requested in connection with any sale, transfer or
assignment of an Equity Interest and Voting Interest complying
with the requirements of this Article 10. Any Person to which an
Equity Interest or Voting Interest is sold, assigned or
transferred in accordance with this Article 10, including without
limitation this Section 10.5, shall be deemed to be admitted to
the Partnership for purposes of this Agreement.
10.6 TAKE ALONG/TAG ALONG.
(a) Subject to Section 10.4, if, after the sixth anniversary
of the Award Date, BellSouth desires to sell, transfer and assign
to an unaffiliated third-party purchaser, in an arm's length
transaction, (i) its entire Equity Interest and Voting Interest
in the Partnership, or (ii) less than all of such interests where
such interests represent more than fifty percent (50%) of the
Equity Interests and Voting Interests held by all Partners,
BellSouth shall give each of the Limited Partners notice thereof
(the "10.6 Notice"), which 10.6 Notice shall set forth the
portion of its Equity Interest and Voting Interest that it
desires to sell, the price and other material terms and
conditions for such sale and the expected closing date for the
transaction.
(b) BellSouth shall have the right to require all of the
Limited Partners (other than the Rural Telcos) to sell their
entire Equity Interests and Voting Interests to such third party
purchaser, on the same terms and conditions (including price) as
apply to BellSouth's sale to such purchaser. If BellSouth
desires to exercise such right, BellSouth shall notify the
Limited Partners of such exercise in the 10.6 Notice.
(c) If BellSouth shall have given the Limited Partners a
10.6 Notice, and if BellSouth shall not have exercised the rights
referred to in Section 10.6(b), each Limited Partner (including
without limitation the Rural Telcos) shall have the right to
require BellSouth to include all, but not less than all, of such
Limited Partner's Equity Interest and Voting Interest in
BellSouth's sale to the third-party purchaser, on the same terms
and conditions (including price) as apply to BellSouth's sale to
such purchaser, provided, that no Rural Telco shall be permitted
to exercise such right unless all Rural Telcos exercise such
right. Each such Limited Partner desiring to exercise such right
shall deliver to BellSouth written notice thereof, not later than
thirty (30) days following BellSouth's delivery of the 10.6
Notice to the Limited Partners. Following receipt of such
notice, BellSouth shall require the documentation for such
transaction to reflect the inclusion of such Limited Partners'
Equity Interests and Voting Interests therein.
(d) If either BellSouth exercises it rights under Section
10.6(b) or the Limited Partners exercise their rights under
Section 10.6(c), the closing of the sale of the Equity Interests
and Voting Interests of the Partners shall take place
simultaneously, on such date and at such place as BellSouth and
the purchaser thereof shall agree.
10.7 TRANSFERS OF PARTNERSHIP ASSETS. The Partnership will
not sell, transfer or assign the License or all or any material
portion of its assets without the affirmative vote contemplated
in Section 6.5(i)(iii) hereof. In the event of any such sale,
transfer or assignment by the Partnership to any Person in
accordance with Section 6.5(i)(iii) hereof, and simultaneously
therewith, the Partnership will require such Person to execute a
written agreement, in form and substance reasonably satisfactory
to the General Partner, to assume and be bound by all of the
duties and obligations of the Partnership relating to the sold,
transferred or assigned assets under each of the Transaction
Documents to which the Partnership is a party.
10.8 RURAL TELCO TRANSFERS.
(a) A Rural Telco may at any time transfer and assign all,
but not less than all, of its Equity Interest and its Voting
Interest to any Person controlling, or under direct or indirect
common control with such Rural Telco or to any Family Affiliate
of such Rural Telco. For purposes of this Section 10.8, (i) a
Person shall be deemed to "control" another if it possesses,
directly or indirectly, the exclusive power to direct or cause
the direction of the management or policies of such other Person
through the ownership of voting securities or interests, (ii)
"common control" means that the Rural Telco and the other Person
are both ultimately controlled by the same Person or Persons,
(iii) "Family Affiliate" means any single individual who is a
Family Member or any single partnership, corporation, limited
liability company, trust, estate or other entity, more than
seventy-five (75%) of whose equity is held by Family Members, and
(iv) "Family Members" means the then-current equity holders of a
Rural Telco and members of the immediate families (including
grandchildren) of such equity holders and trusts, where ninety
percent (90%) or more of the investments of the trust (based on
their actuarial value) are held for the sole benefit of any one
or more of the foregoing. Notwithstanding anything to the
contrary herein, no Rural Telco may sell, transfer or assign its
Equity Interest or its Voting Interest to a Person (including a
Family Affiliate) whose participation would have an adverse
effect on the right of the Partnership to hold the License.
(b) Subject to Sections 10.3 and 10.5 and receipt of the
prior approval of the General Partner (not to be unreasonably
withheld), (i) a Rural Telco may at any time transfer and assign
all, but not less than all, of its Equity Interest and its Voting
Interest to (x) any Person which is controlled by (A) one or more
Rural Telcos, (B) one or more Family Affiliates which control one
or more Rural Telcos, or (C) one or more Persons controlled by
one or more Rural Telcos (the "Holding Company"); or (y) any
Person controlled or under direct or indirect common control of
such Holding Company; and (ii) a Rural Telco (which is a
cooperative) may at any time transfer and assign all, but not
less than all, of its Equity Interest and its Voting Interest to
a cooperative which is established by such Rural Telco to hold
such Equity Interests and Voting Interests.
10.9 CHANGE OF CONTROL.
(a) Upon any change of control (as defined in clause (i) of
the second sentence of Section 10.8(a)) of a Partner or the
ultimate parent of a Rural Telco, the Partnership will have the
right and option, but not the obligation, to purchase the Voting
Interest and Equity Interest of such Partner or such Rural Telco,
as the case may be, its interest in each of the Transaction
Documents to which it is a party and, if such Rural Telco holds a
Partitioned License, the Operating Assets of such Rural Telco, at
a price equal to their Fair Value. For purposes of this Section,
a "change of control" will not be deemed to have occurred if (i)
the capital stock of a Partner or a Rural Telco is transferred to
a Person controlling, controlled by or under common control with
such Partner or such Rural Telco, as the case may be, (ii) there
occurs a change of control of (x) any Partner's ultimate parent
company that is a public company or (y) any Partner that is a
public company or (iii) there occurs a change of control of a
Rural Telco as a result of its merger with another Rural Telco or
the transfer of its capital stock to another Rural Telco, if the
General Partner shall have approved such merger or transfer (such
approval not to be unreasonably withheld).
(b) For purposes of this Section 10.9, a "change of control"
will not be deemed to occur with respect to a transfer made in
accordance with Section 10.8 or the establishment of a Holding
Company in accordance with Section 10.8(b).
10.10 APC BUYOUT.
(a) On the fourth anniversary of the date hereof and on each
successive anniversary of the date hereof thereafter, (i) the
Partnership will have the right and option to purchase all, but
not less than all, of the Carried Interest at a price equal to
the Fair Value of the Carried Interest, and (ii) APC will have
the right and option to require the Partnership to purchase all,
but not less than all, of the Carried Interest at a price equal
to the Fair Value of the Carried Interest. If the Partnership or
APC desires to exercise such option, it shall give the other
written notice of such exercise not less than ninety (90) days
prior to the applicable anniversary. The closing for the
purchase and sale transaction shall occur at the principal office
of the Partnership on the applicable anniversary, or, if such
anniversary is not a business day, on the first business day
following the applicable anniversary.
(b) If either the Partnership or APC exercises its rights
pursuant to Section 10.10(a), the Partnership shall use
reasonable efforts to borrow, on commercially reasonable terms,
an amount sufficient to pay APC the purchase price of the Carried
Interest, determined pursuant to this Section 10.10; provided,
that the obligation of the Partnership to purchase the Carried
Interest following the exercise by the Partnership or APC of its
rights under Section 10.10(b) shall be absolute and shall not be
contingent on the Partnership's ability to borrow such amount.
(c) At the closing of any purchase and sale pursuant to
Section 10.10(a), APC shall transfer to the Partnership, and the
Partnership shall purchase, the Carried Interest, and the
Partnership shall pay APC the purchase price therefor, by wire
transfer in immediately available funds to such bank account or
accounts as APC shall designate. Each party to such purchase and
sale shall execute such instruments of assignment, transfer and
assumption as the other party shall reasonably request.
<PAGE>
ARTICLE 11
EVENTS OF DEFAULT
11.1 EVENTS OF DEFAULT. The occurrence of any one or more
of the following events by or with respect to a Partner (the
"Defaulting Partner") will constitute an event of default under
this Agreement (an "Event of Default"):
(a) the Defaulting Partner defaults in the performance of
any obligation hereunder to be performed by the Defaulting
Partner and such default is not cured or waived in writing within
forty (40) days following the giving of written notice by the
Partnership;
(b) the occurrence of an Event of Default respecting a
Defaulting Partner under a Transaction Document to which it is a
party, where such Transaction Document contains a definition of
an "Event of Default" thereunder; or
(c) the Defaulting Partner defaults in the performance of
any obligation to be performed by the Defaulting Partner under
any Transaction Document to which such Defaulting Partner is a
party, where such Transaction Document does not contain a
definition of "Event of Default" and such default is not cured or
waived in writing following the giving of any notice or the
expiration of any cure period set forth in such Transaction
Document, or if none is set forth in such Transaction Document,
within forty (40) days following the giving of written notice by
the Partnership.
The Partnership shall give the General Partner notice of any
event under Section 11.1(a), (b) or (c) respecting the General
Partner, if Voting Representatives representing at least a
majority of the Voting Interests held by Limited Partners that
are not Affiliates of the General Partner approve such notice, at
an Executive Committee meeting duly called or at a meeting
attended by such Voting Representatives of such Limited Partners.
11.2 PARTNERSHIP'S REMEDIES UPON DEFAULT.
(a) Upon the occurrence of any Material Default (as
hereinafter defined), in addition to any rights provided by law,
the Partnership shall have the right to purchase, and to require
the Defaulting Partner to sell, the Defaulting Partner's Voting
Interest and Equity Interest for an amount equal to the balance
of the Defaulting Partner's Capital Account as of the time of the
Material Default (without giving effect to any adjustment in such
Capital Account pursuant to Section 1.12(c) that would otherwise
occur by virtue of such sale), and, if the Defaulting Partner is
a Rural Telco, the Partnership shall have the right to purchase
from such Operating Telco, and to require such Operating Telco to
sell, such Operating Telco's Operating Assets (including its
Partitioned License) for an amount equal to the depreciated book
value of such Operating Assets (including the depreciated book
value of its Partitioned License). For purposes of this Section
11.2, "Material Default" means any Event of Default arising out
of or resulting from (i) any breach by a Partner of its
obligations set forth in Article 10 or 14, (ii) any breach by a
Partner under Section 3.6 or 3.8(b) or (iii) any breach by a
Rural Telco of any of its obligations under the Operating
Agreement the breach of which would constitute a material breach
as defined therein.
(b) Upon the occurrence of any Event of Default not
constituting a Material Default, the Partnership shall have any
and all rights and remedies as shall be available under
Applicable Law or under the Transaction Documents.
(c) If the Partnership exercised its remedies under Section
11.2(a) and, as a result thereof, acquires the Voting Interest,
Equity Interest and Operating Assets of any Operating Telco, the
Partnership thereafter shall offer such Voting Interest, Equity
Interest and Operating Assets for sale to the Operating Telcos
for a price equal to the Fair Value thereof. Such offer shall be
made in a writing delivered to the Operating Telcos not more than
thirty (30) days after the Partnership acquires such Voting
Interest, Equity Interest and Operating Assets. The Operating
Telcos shall decide amongst themselves which Operating Telco, if
any, shall purchase such Voting Interest, Equity Interest and
Operating Assets, and the Voting Representative of the Rural
Telcos shall give the Partnership written notice thereof not
later than thirty (30) days after the Partnership gives them the
notice of such sale. Promptly after such Voting Representative
gives the Partnership such notice, the Fair Value of the Voting
Interest, Equity Interest and Operating Assets shall be
determined. Not more than thirty (30) days after the Fair Value
of the Voting Interest, Equity Interest and Operating Assets
shall be determined, the Partnership shall sell to such Operating
Telco, and such Operating Telco shall purchase, such Operating
Assets for a price payable in immediately available funds equal
to Fair Value, as so determined.
11.3 CONSEQUENCES OF EXERCISING REMEDY. Upon the purchase,
pursuant to Section 11.2(a), of a Defaulting Partner's Voting
Interest and Equity Interest, or of the Operating Assets of such
Defaulting Partner if such Defaulting Partner is an Operating
Telco:
(a) the Voting Interests and Equity Interest of the Partners
hereunder shall be recalculated as of the date of the Event of
Default to take into account the acquisition by the Partnership
of the Defaulting Partner's Voting Interest and Equity Interest
(i.e., by reducing the Voting Interest and Equity Interest of
such Defaulting Partner to zero);
(b) SCHEDULES 1.57 AND 1.19 attached hereto shall be revised
to reflect the recalculated Voting Interests and Equity Interests
hereunder; and
(c) if the Defaulting Party is an Operating Telco then each
of the Transaction Documents shall be terminated as it relates to
such Operating Telco.
ARTICLE 12
DISSOLUTION OF PARTNERSHIP
12.1 EVENTS OF DISSOLUTION. The Partnership shall be
dissolved, and shall terminate for tax purposes, upon the first
to occur of any of the following events:
(a) The sale or other disposition of all or substantially
all of the Partnership's assets;
(b) The failure of the Partners to continue the Partnership
after the disqualification of the General Partner in accordance
with the provisions of Section 9.2 hereof;
(c) The sale of Equity Interests and Voting Interests, in
accordance with this Agreement, by one or more Partners such that
100% of the Equity Interests and Voting Interests in the
Partnership are held by a single Person; or
(d) The expiration of the term of the Partnership set forth
in Section 2.4 hereof;
(e) The affirmative vote of the General Partner Voter on the
Executive Committee plus the affirmative votes of the Voting
Representatives of at least two of the Limited Partners to
dissolve the Partnership, as contemplated by Section 6.5(i)(ii);
or
(f) The final award of the PCS licenses respecting the MTA
for both the A block and the B block (as described in the
definition of PCS) to Persons other than BellSouth.
ARTICLE 13
DISTRIBUTIONS UPON DISSOLUTION
13.1 LIQUIDATION.
(a) Upon the dissolution of the Partnership, the Partnership
immediately shall commence to wind-up its affairs. A reasonable
period of time shall be allowed for the orderly termination of
the Partnership's business, the discharge of its liabilities and
the distribution or liquidation of its remaining assets so as to
enable the Partnership to minimize the normal losses attendant to
the liquidation process. A full accounting of the assets and
liabilities of the Partnership shall be taken and a written
statement thereof shall be furnished to each Partner within 30
days after the dissolution. At the election of the Executive
Committee, such accounting and statement shall be prepared at
Partnership expense by a liquidating trustee selected by the
Executive Committee.
(b) In the event of a dissolution on account of a sale or
other disposition of all or substantially all of the
Partnership's assets and payment of a portion of the proceeds
from the sale or disposition is deferred, through the Partnership
receiving a purchase money note or otherwise, the Partnership
shall not be finally liquidated until the deferred portion of the
purchase price is collected in full (or deemed worthless by the
General Partner or the liquidating trustee) and the General
Partner shall not be required to distribute the indebtedness
representing the deferred portion of the purchase price to the
Partners. In the event that following a sale of all or
substantially all of the Partnership's assets, the Partnership
reacquires title to all or a portion of the assets, by
foreclosure, sale under power of sale, deed in lieu thereof or
otherwise, the Partnership shall be reformed and reinstated on
the terms contained in this Agreement, notwithstanding the prior
dissolution under Article 12 hereof.
(c) The Partnership's property and assets and/or the
proceeds from the liquidation thereof shall be applied in the
following order of priority:
(i) Payment of the debts and liabilities of the
Partnership, in the order of priority provided by law (but
excluding any loans by the Partners to the Partnership), and
payment of the expenses of liquidation;
(ii) Setting up of such reserves as the liquidating
trustee may deem reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Partnership or any
obligation or liability not then due and payable; provided, any
unspent balance of such reserve, at the expiration of such period
as the liquidating trustee shall deem advisable, shall be
distributed in the manner hereinafter provided;
(iii) Payment, on a pro rata basis, of any loans from
or debts owed to Partners;
(iv) Payment to APC of the positive balance of APC's
Capital Account, adjusted to the date of payment, including,
without limitation, adjustments pursuant to Section 4.14; and
(v) Payment to all Partners on a pro rata basis of the
remaining positive balances of their Capital Accounts, adjusted
to the date of payment, including, without limitation,
adjustments pursuant to Section 4.14.
(d) In the event that the Partnership is liquidated within
the meaning of Regulations section 1.704-1(b)(2)(ii)(g), the
distributions made pursuant to this Section 13.1 shall be made in
compliance with 1.704-l(b)(2)(ii)(b)(2). In the event that the
Partnership is liquidated within the meaning of Regulations
section 1.704-1(b)(2)(ii)(g), but the Partnership has not
dissolved pursuant to Section 12.1 above, the Partnership shall
be deemed to distribute the Partnership's property to the
Partners, who shall be deemed to assume and take such property
subject to the Partnership's liabilities, all in accordance with
the balances of their respective Capital Accounts. Immediately
thereafter, the Partners shall be deemed to recontribute such
property in kind to the Partnership, who shall be deemed to
assume and take such property subject to all such liabilities.
13.2 DEFICIT CAPITAL ACCOUNT. In the event that the
Partnership or the Equity Interest of the General Partner is
"liquidated" within the meaning of Regulations section
1.7041(b)(2)(ii)(g), and the General Partner has a deficit
Capital Account balance (after giving effect to all
contributions, distributions, and allocations for all Fiscal
Years, including such Fiscal Year in which such liquidation
occurs), the General Partner shall contribute to the capital of
the Partnership an amount of cash necessary to restore such
deficit Capital Account balance to zero in compliance with
Regulations section 1.7041(b)(2)(ii)(b)(3), but only to the
extent required by Delaware law. Notwithstanding anything in
this Agreement to the contrary, no Limited Partner shall have any
obligation to restore any negative or deficit balance in its
Capital Account upon dissolution or liquidation of the
Partnership, or otherwise.
13.3 NO FURTHER CLAIM. Except as expressly provided in this
Agreement, each Partner shall look solely to the assets of the
Partnership for the return of its investment in the Partnership
(including capital contributions and loans from a Partner to the
Partnership), and no Partner shall have any liability or
obligation to the Partnership or to any other Partner to repay
any unreturned capital contributions or loans made by any Partner
to the Partnership.
13.4 NO ACTION FOR DISSOLUTION. The Partners acknowledge
that irreparable damage would be done to the goodwill and
reputation of the Partnership if any Partner should bring an
action in court to dissolve the Partnership. This Agreement has
been drawn carefully to provide fair treatment of all parties and
equitable payments in liquidation of the Equity Interests and
Voting Interests of all Partners. Accordingly, each Partner
hereby waives and renounces his right to initiate legal action to
seek dissolution, or to seek the appointment of a receiver or
trustee to liquidate the Partnership.
ARTICLE 14
NON-COMPETITION
14.1 NON-COMPETITION. (a) Except to the extent permitted by
this Agreement or any of the Transaction Documents, each of the
Partners agrees that for a period commencing on the date of this
Agreement and continuing until the earlier to occur of (A) three
(3) years after it ceases to be a Partner of the Partnership or
(B) the dissolution of the Partnership pursuant to Section
12.1(f), neither it nor any of its Affiliates will, directly or
indirectly, individually or on behalf of any Person other than
the Partnership, (i) engage in, consult with or own, control,
manage, take an equity interest in, or otherwise participate in
the ownership, control or management of a PCS business operating
under the other 30 MHz PCS license for the MTA, (ii) solicit,
divert or appropriate customers to any PCS business operating
under the other 30 MHz PCS license for the MTA, or (iii) except
for BellSouth's bid for the License as contemplated hereby, (x)
bid on either PCS License in the A or B band for the MTA, (y) if
the License is awarded, bid on any 30 MHz PCS license in the C
band for any BTA included within the geographical area covering
the MTA, or (z) pending the award of the License, enter into any
binding agreement with any Person that is not a Partner
respecting any bid for any PCS license in any such BTA.
Notwithstanding the foregoing, Duke Engineering & Services, Inc.
shall not be prohibited from providing consulting engineering
services (including without limitation site selection and
construction oversight) to a PCS business. Nothing contained in
this Section 14.1 shall be construed to prohibit any Partner or
Affiliate of any Partner from (A) engaging in, consulting with or
owning, controlling, managing, taking an equity interest in, or
otherwise participating in the ownership, control or management
of, or selling, leasing or otherwise providing real estate, goods
or services or any combination thereof to, any cellular, paging
or mobile data business, (B) bidding on any of the 10 MHz
Licenses (as hereinafter defined) for the BTAs included within
the MTA or (C) selling, leasing or otherwise providing to a
competitor of the Partnership infrastructure facilities,
including but not limited to towers and fiber optic cable lines.
Notwithstanding the foregoing, the ownership of less than five
percent (5%) of any publicly traded company shall not constitute
a breach of this Section 14.1. "10 MHz Licenses" means any
licenses issued by the FCC for any radio telecommunications
services provided by using one or more of the three 10 MHz bands
of spectrum in the following frequency ranges: the "D" block:
1865-1870/1945-1950; the "E" block: 1885-1890/1965-1970; and the
"F" block: 1890-1895/1970-1975.
(b) Notwithstanding anything to the contrary in Section
14.1(a), if a Partner who is then a Partner in the Partnership or
an Affiliate of such Partner seeks to pursue the development or
acquisition of an opportunity to provide mass-market voice
communication services over or through one or more 10 MHz
Licenses within the MTA (collectively, the "Opportunity"), such
Partner (the "Offering Partner") shall develop a business plan
for such Opportunity, which business plan shall set forth in
reasonable detail how such Partner intends to pursue and develop
the Opportunity, including without limitation the funding
requirements for such Opportunity (the "Opportunity Business
Plan"). The Offering Partner shall give written notice to the
Partnership of its intention to pursue and develop the
Opportunity, which notice shall include a copy of the Opportunity
Business Plan and any other information reasonably required for
the Partnership to evaluate the Opportunity. Not later than
thirty (30) days following the Partnership's receipt of such
notice, Opportunity Business Plan and other information, the
Partnership shall give the Offering Partner written notice that
the Partnership has either (i) elected itself to pursue and
develop the Opportunity in accordance with the Opportunity
Business Plan or (ii) declined to pursue and develop the
Opportunity in accordance with the Opportunity Business Plan. If
the Partnership makes the election to pursue and develop the
Opportunity, the Partnership thereafter shall pursue and develop
the Opportunity in accordance with the Opportunity Business Plan,
and the Partners shall perform their obligations with respect
thereto as set forth in Section 14.1(c) hereof. If the
Partnership does not give the Offering Partner notice of its
election to pursue and develop the Opportunity as set forth
above, the Offering Partner shall be free to pursue and develop
the Opportunity without restriction.
(c) The Partnership shall not elect to pursue or develop the
Opportunity as contemplated by Section 14.1(b) unless (i) one or
more of the Partners (other than the Offering Partner) (the
"Funding Partners") agree in writing to fund any capital
commitments required under the Opportunity Business Plan, other
than the pro rata share of the Offering Partner (based on its
Voting Interest) and (ii) the Partnership shall have approved the
pursuit and development of the Opportunity by the affirmative
vote of the General Partner Voter and at least two (2) Voting
Representatives not affiliated with the General Partner. Any
failure of a Funding Partner to fund such capital commitments
shall constitute a Material Default, subjecting such Funding
Partner to the remedies set forth in Section 11.2(a). The
failure of any Partner other than the Offering Partner or a
Funding Partner to fund any such capital commitments shall result
in the dilution of such Partner as contemplated by Section
3.8(c).
(d) In considering and voting on the Partnership's decision
as to the pursuit and development of any Opportunity offered by
an Offering Partner, the Voting Representative of such Offering
Partner shall be deemed to have voted in favor of the
Partnership's pursuit and development of the Opportunity and to
have committed to fund its pro rata share (based on its Voting
Interest) of any capital commitments required under the
Opportunity Business Plan.
14.2 REASONABLENESS. The Partners agree that the
restrictions contained in Section 14.1 are reasonable and
necessary for the protection of the Partnership's investment in
the License and the System and its good will.
14.3 NO OTHER RESTRICTIONS. The Partners may become in the
future a partner (either general or limited) in other
partnerships or become associated in some other manner with other
businesses, any or all of which may be engaged in a business that
is the same as or similar to the Partnership's Business. Except
as specifically set forth above in this Article 14, the Partners
hereby agree that each of them may engage in or sell, lease or
otherwise provide real estate, goods or services or any
combination thereof, to all such other business enterprises, and
neither the Partnership nor any of the other Partners shall have
any right in and to any such independent ventures or the income
or profits derived therefrom as a result of entering into this
Agreement.
ARTICLE 15
MISCELLANEOUS
15.1 ADDITIONAL DOCUMENTS. At any time and from time to
time after the date of this Agreement, upon the request of the
Executive Committee or the General Partner, the Partners shall do
and perform, or cause to be done and performed, all such
additional acts and deeds, and shall execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, all
such additional instruments and documents, as may be required to
best effectuate the purposes and intent of this Agreement.
15.2 APPLICABLE LAW. This Agreement shall be governed by,
construed under, and enforced and interpreted in accordance with
the laws of the State of Delaware.
15.3 NOTICES. Any notices or other communications required
or permitted by this Agreement shall be in writing and shall be
deemed to have been duly given and delivered when delivered in
person, sent by facsimile transmission or sent via a nationally
recognized overnight courier (such as Federal Express) to the
recipient Partner to the address or facsimile number as shown in
SCHEDULE 15.3, or to the most recent address or facsimile number
of the recipient Partner as shown on the records of the
Partnership, or to such other address or facsimile number of
which the Partnership subsequently shall have been notified in
writing by such Partner.
15.4 SEVERABILITY. It is the intention of the parties
hereto that, if any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction,
the section of this Agreement containing such invalid provision
shall be construed as if such provision had not been included in
the Agreement; provided, however, that if the invalidity of such
provision is caused by the length of any period of time, the size
of any territory, the scope of any prohibited activity or the
scope of nondisclosure, then the same shall be considered to be
reduced to such period of time, size of territory, scope of
prohibited activity or scope of disclosure as would cure such
invalidity. The parties hereto agree that the covenants and
obligations contained in this Agreement are severable and
divisible, that none of such covenants or obligations depend on
any other covenant or obligation for its enforceability, and that
each such covenant and obligation constitutes a separate
enforceable obligation between the Partnership and the parties
hereto. The existence of any claim or cause of action by any
party against the Partnership or another party, whether
predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Partnership or such other party
of the covenants and obligations contained in this Agreement.
15.5 SUCCESSORS. Subject to the provisions hereof imposing
limitations and conditions upon the transfer, sale or other
disposition of the Equity Interests, Voting Interests and
Operating Assets, all the provisions hereof shall inure to the
benefit of and be binding upon the successors, legal
representatives and assigns of the parties hereto.
15.6 COUNTERPARTS; EXECUTION BY FACSIMILE. This Agreement
may be executed in counterparts, each of which shall for all
purposes be deemed an original, and all of such counterparts
shall together constitute one and the same agreement. Any
counterpart of this Agreement may be executed by facsimile, and
any such counterpart shall be deemed to be an original document.
15.7 HEADINGS. Section and other headings contained in this
Agreement are for reference purposes only and are in no way
intended to define, interpret, describe or limit the scope,
extent or intent of this Agreement or any provision hereof.
15.8 ACCEPTANCE OF PRIOR ACTS. Each Person becoming a
Partner, by becoming a Partner, ratifies, affirms and confirms,
and agrees to be bound by, all actions duly taken by BellSouth or
the Partnership, pursuant to the terms of this Agreement, prior
to the date such Person becomes a Partner.
15.9 PARTNERSHIP PROPERTY. The legal title to the real or
personal property or interests therein now or hereafter acquired
by the Partnership shall be owned, held and operated in the name
of the Partnership, and no Partner, individually, shall have any
ownership of such Property.
15.10 GENDER AND NUMBER. Where the context shall so
require, the use of a pronoun of one gender shall be deemed to
include a pronoun of the appropriate gender or the neuter, and
words in the singular shall be deemed to include the plural and
the plural to include the singular.
15.11 WAIVER OF PARTITION. Except as expressly provided by
this Agreement or by the Transaction Documents, no Partner shall,
either directly or indirectly, take any action to require a
partition or appraisement of the Partnership or of any of its
assets or properties or cause the sale of any Partnership
property, and notwithstanding any provisions of applicable law to
the contrary, each Partner (and its legal representatives,
successors, or assigns) hereby irrevocably waives and renounces,
to the fullest extent permitted by law, any and all rights to
maintain any action for partition or to compel any sale with
respect to its Interest or with respect to any assets or
properties of the Partnership.
15.12 EQUITABLE REMEDIES. The rights and remedies of the
parties hereunder shall be cumulative, and the exercise of one or
more of the provisions hereof shall not preclude the exercise of
any other provision hereof. Each of the parties confirms that
damages at law may be an inadequate remedy for breach or
threatened breach of this Agreement and each party agrees that,
in the event of a breach of any provision hereof, including,
without limitation, Article 14, the respective rights and
obligations hereunder shall be enforceable by specific
performance, injunction or other equitable remedy. Nothing
herein contained is intended to, nor shall it, limit or affect
any right or rights at law, by statute or otherwise of the party
aggrieved as against any other party for a breach or threatened
breach of any provision hereof, it being the intention of the
parties that the respective rights and obligations of the parties
hereunder shall be enforceable in equity as well as at law or
otherwise.
15.13 DISPUTE RESOLUTION.
(a) Any and all disputes arising out of or in connection
with the execution, interpretation, performance or nonperformance
of this Agreement shall be solely and finally settled by
arbitration, which shall be conducted in Washington, D.C., by a
panel of three neutral arbitrators selected by the Center for
Public Resources. The arbitrators shall be impartial and
familiar with the telecommunications industry, and shall not have
been employed by or affiliated with any of the parties hereto or
any of their respective Affiliates. The arbitration procedure
may be initiated by any party by written notice to the other
parties, and such notice shall specify in reasonable detail the
dispute being submitted to arbitration. The parties hereby
renounce all recourse to litigation and agree that the award of
the arbitrators shall be final and subject to no judicial review.
The arbitrators shall conduct the proceedings, including
arguments and briefs, pursuant to the Rules of the Center for
Public Resources, as now or hereafter amended (the "Rules");
provided that the provisions of this Agreement shall prevail in
the event of any conflict between the Rules and the provisions of
this Agreement. The panel of arbitrators shall decide the issues
submitted to them in accordance with the provisions and
commercial purposes of this Agreement, provided that all
substantive questions of law shall be determined under the laws
of the State of Delaware (without regard to the principles of
conflicts of laws of such jurisdiction). All questions and
issues in connection with the dispute, including procedural
issues, shall be decided by the concurrence of at least two
arbitrators, and all decisions shall be in writing and submitted
to all parties.
(b) In no event shall any party be entitled to receive, and
the arbitrators shall not be empowered to award, punitive or
exemplary damages. Each party hereby irrevocably waives any
claim or right for or to punitive or exemplary damages.
(c) The parties shall facilitate the arbitration by: (i)
making available to one another and to the arbitrators for
examination, inspection and extraction all documents, books,
records and personnel under their control if determined by the
arbitrators to be relevant to the dispute; (ii) conducting
arbitration hearings to the greatest extent possible on
successive days; and (iii) observing strictly the time periods
established by the Rules or by the arbitrators for submission of
evidence or briefs.
(d) In the final award, the panel of arbitrators shall
divide all costs, other than fees of counsel incurred in
conducting the arbitration, in such manner as the panel deems
just and equitable under the circumstances. Judgment on the
award of the panel of arbitrators may be entered in any court
having jurisdiction over the party against which enforcement of
the award is being sought. Each party hereby irrevocably submits
and consents to the jurisdiction of any such court for the
purpose of rendering a judgment on any such award.
(e) Each party agrees that any award of the panel of
arbitrators against it and on which judgment is entered as
provided in the preceding subsection (d) may be executed against
the assets of such party or its Affiliates in any jurisdiction.
By execution of this Agreement, each party hereby irrevocably
submits to the jurisdiction of any court in any such jurisdiction
in any legal action or proceeding relating to such executions.
(f) Each party hereby irrevocably waives, to the fullest
extent permitted by law, any objection it may now or hereafter
have to any suit, action or proceeding arising out of or relating
to this Agreement that is brought in any of the jurisdictions
designated in the preceding subsections (d) and (e) for the
purposes envisioned by those subsections, and hereby further
irrevocably waives any claim that any such suit, action or
proceeding so brought has been brought in an inconvenient forum.
15.14 TERMINATION OF FORMATION AGREEMENT AND OTHER
AGREEMENTS. The letter agreement dated October 31, 1994 between
BellSouth and Carolina Power & Light Company is hereby terminated
and, from and after the date hereof, shall be of no further force
or effect. The Carolinas Formation Agreement dated as of October
26, 1994 among the Partners (other than CaroNet) and The
Washington Post is hereby terminated and, from and after the date
hereof, shall be of no further force or effect, except, as to
parties thereto which are not parties hereto, for provisions
which survive the termination or expiration of such Carolinas
Formation Agreement pursuant to the express terms thereof.
15.15 PARTNERS' ACKNOWLEDGEMENT. Each of the Partners
acknowledges that is has been furnished with or has had access to
all financial and other information pertaining to the Partnership
and its investment therein and such information constitutes all
information necessary to inform each of them regarding the merits
and risks of such investment. Each of the Partners understands
that no offering statement, prospectus or offering circular
respecting the Partnership or the sale of Voting Interests or
Equity Interests has been or is to be prepared, and each Partner
has made its own inquiry and analysis with regard to the
Partnership and its investment therein.
15.16 NON-DISCLOSURE COVENANT. Each Partner agrees to
comply with the terms and conditions of those certain
non-disclosure covenants set forth in SCHEDULE 15.16 hereof, as
if such terms and conditions were set forth herein.
15.17 ENTIRE AGREEMENT. This Agreement and the Transaction
Documents constitute the entire agreement between the parties and
supersede any prior understanding or agreement among them
respecting the subject matter hereof. There are no
representations, arrangements, understandings or agreements, oral
or written, among the parties hereto relating to the subject
matter of this Agreement, except those fully expressed herein.
Except as otherwise provided herein, no amendment, change or
modification of this Agreement or waiver of any provision hereof
shall be valid or binding on the parties hereto, unless such
amendment, change, modification or waiver shall be in writing and
signed by or on behalf of the parties hereto, and no waiver on
one occasion shall be deemed to be a waiver of the same or any
other provision hereof in the future.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first written above.
BELLSOUTH PERSONAL COMMUNICATIONS, INC.
By: /S/ THOMAS M. DOUGHERTY
Name: Thomas M. Dougherty
Title: Vice President
DUKENET COMMUNICATIONS, INC.
By: /S/ M. H. SMITH, JR.
Name: M. H. Smith, Jr.
Title: President
AMERICAN PCS L.P., by American
Personal Communications, Inc., its
general partner
By: /S/ W. SCOTT SCHELLE
Name: W. Scott Schelle
Title: Executive Vice President
CARONET, INC.
By: /S/ CHARLES D. BARHAM, JR.
Name: Charles D. Barham, Jr.
Title: Vice President
(Signatures contained on following page)
<PAGE>
(Signatures continued from preceding page)
ATLANTIC TELEPHONE MEMBERSHIP
CORPORATION
By: /S/ RUSSELL PRICE
Name: Russell Price
Title: General Manager
BLUFFTON TELEPHONE COMPANY, INC.
By: ___________________________________
Name: ______________________________
Title: _____________________________
CHESNEE TELEPHONE COMPANY
By: /S/ HANNAH A. LANCASTER
Name: Hannah A. Lancaster
Title: President
CHESTER TELEPHONE & COMPANY
By: /S/ J. M. MCELWEE
Name: J. M. McElwee
Title: President
CITIZENS TELEPHONE COMPANY
By: /S/ C. W. PICKELSIMER, JR.
Name: C. W. Pickelsimer, Jr.
Title: Vice President and
General Manager
THE CONCORD TELEPHONE COMPANY
By: /S/ BARRY R. RUBENS
Name: Barry R. Rubens
Title: Vice President
ELLERBE TELEPHONE COMPANY
By: /S/ DAN BENNETT
Name: Dan Bennett
Title: President
(Signatures continued on following page)
(Signatures continued from preceding page)
FARMERS TELEPHONE COOPERATIVE, INC.
By: /S/ JOHN L. MCDANIEL
Name: John L. McDaniel
Title: Executive Vice President
FORT MILL TELEPHONE COMPANY
By: /S/ JOHN M. BARNES
Name: John M. Barnes
Title: Executive Vice President
HARGRAY TELEPHONE COMPANY, INC.
By: ___________________________________
Name: ______________________________
Title: _____________________________
HART TELEPHONE COMPANY
By: /S/ J. LEE BARTON
Name: J. Lee Barton
Title: President/
Chief Executive Officer
HEATH SPRINGS TELEPHONE COMPANY
By: /S/ DWIGHT BRIDGES
Name: Dwight Bridges
Title: General Manager
HOME TELEPHONE COMPANY, INC.
By: /S/ ROBERT L. HELMLY
Name: Robert L. Helmly
Title: President
HORRY TELEPHONE COOPERATIVE, INC.
By: /S/ CURLEY P. HIGGINS
Name: Curley P. Higgins
Title: General Manager
(Signatures continued on following page)
<PAGE>
(Signatures contnued from preceding page)
LANCASTER TELEPHONE COMPANY
By: /S/ JOHN M. BARNES
Name: John M. Barnes
Title: Executive Vice President
LEXINGTON TELEPHONE COMPANY
By: /S/ B. EARL HESTER, JR.
Name: B. Earl Hester, Jr.
Title: Vice President
LOCKHART TELEPHONE COMPANY
By: /S/ J. M. MCELWEE
Name: J. M. McElwee
Title: President
MEBTEL, INC.
By: /S/ W. R. HUPMAN, JR.
Name: W. R. Hupman, Jr.
Title: President
NORTH STATE TELEPHONE COMPANY
By: /S/ WILLIAM H. DULA
Name: William H. Dula
Title: Vice President
PALMETTO RURAL TELEPHONE COOPERATIVE,
INC.
By: /S/ A. J. DANDRIDGE III
Name: A. J. Dandridge III
Title: General Manager
PIEDMONT RURAL TELEPHONE COOPERATIVE,
INC.
By: /S/ JAMES D. WASSON
Name: James D. Wasson
Title: President
(Signatures continued on following page)
<PAGE>
(Signatures continued from preceding page)
PIEDMONT TELEPHONE MEMBER CORPORATION
By: /S/ GRADY L. LEONARD
Name: Grady L. Leonard
Title: President
POND BRANCH TELEPHONE COMPANY, INC.
By: /S/ LUTHER E. KNEECE
Name: Luther E. Kneece
Title: Vice President/
General Manager
RIDGE TELEPHONE COMPANY, INC.
By: /S/ LUTHER E. KNEECE
Name: Luther E. Kneece
Title: Vice President/
General Manager
RIDGEWAY TELEPHONE COMPANY
By: /S/ J. M. MCELWEE
Name: J. M. McElwee
Title: Vice President
ROCK HILL TELEPHONE COMPANY
By: /S/ JOHN M. BARNES
Name: John M. Barnes
Title: Executive Vice President
<PAGE>
(Signatures continued from preceding page)
SANDHILL TELEPHONE COOPERATIVE, INC.
By: /S/ JOHN S. MCLEOD, SR.
Name: John S. McLeod, Sr.
Title: President
SKYLINE TELEPHONE MEMBERSHIP CORPORATION
By: /S/ FRANK JAMES
Name: Frank James
Title: President
STAR TELEPHONE MEMBERSHIP CORPORATION
By: /S/ J. ELLIOT HENRY
Name: J. Elliot Henry
Title: President
SURRY TELEPHONE MEMBERSHIP CORPORATION
By: /S/ JOSEPH W. PRATT
Name: Joseph W. Pratt
Title: President
TRI-COUNTY TELEPHONE MEMBERSHIP
CORPORATION
By: /S/ DENNIS M. WALLACE, JR.
Name: Dennis M. Wallace, Jr.
Title: Executive Vice President and
General Manager
WEST CAROLINA RURAL TELEPHONE
COOPERATIVE, INC.
By: /S/ JOHN A. MCALLISTER
Name: John A. McAllister
Title: President
WILKES TELEPHONE MEMBERSHIP CORPORATION
By: ___________________________________
Name: ______________________________
Title: _____________________________
YADKIN VALLEY TELEPHONE MEMBERSHIP
CORPORATION
By: /S/ WADE GROCE
Name: Wade Groce
Title: President<PAGE>
SCHEDULE 1.13
CAPITAL CONTRIBUTION PROGRAM
(in millions of dollars)
[CONFIDENTIAL INFORMATION OMITTED PURSUANT TO RULE 24b-2]
<PAGE>
SCHEDULE 1.19
INITIAL EQUITY INTERESTS OF PARTNERS
PARTNER EQUITY INTEREST
BellSouth 66.984196%
DukeNet 14.93%
CaroNet 9.95%
APC 0.5%
(Rural Telcos continued on net page)
<PAGE>
SCHEDULE 1.19
INITIAL EQUITY INTERESTS OF PARTNERS
INITIAL
COMPANY EQUITY INTERESTS
Atlantic Telephone Membership Corporation 0.1735%
Bluffton Telephone Company, Inc. 0.0711%
Chesnee Telephone Company 0.0532%
Chester Telephone Company 0.1069%
Citizens Telephone Company 0.0870%
The Concord Telephone Company 1.4666%
Ellerbe Telephone Company 0.1012%
Farmers Telephone Cooperative, Inc. 0.7212%
Fort Mill Telephone Company 0.0937%
Hargray Telephone Company, Inc. 0.2132%
Hart Telephone Company 0.0448%
Heath Springs Telephone Company 0.0051%
Home Telephone Company, Inc. 0.4400%
Horry Telephone Cooperative, Inc. 0.6143%
Lancaster Telephone Company 0.1498%
Lexington Telephone Company 0.2630%
Lockhart Telephone Company 0.0027%
Mebtel, Inc. 0.2596%
North State Telephone Company 0.6985%
Palmetto Rural Telephone Cooperative, Inc. 0.0787%
Piedmont Rural Telephone Cooperative, Inc. 0.1413%
Piedmont Telephone Membership Corporation 0.0161%
Pond Branch Telephone Company, Inc. 0.0643%
Ridge Telephone Company, Inc. 0.0372%
Ridgeway Telephone Company 0.0461%
Rock Hill Telephone Company 0.4921%
Sandhill Telephone Cooperative, Inc. 0.0922%
Skyline Telephone Membership Corporation 0.2852%
Star Telephone Membership Corporation 0.2591%
Surry Telephone Membership Corporation 0.2250%
Tri-County Telephone Membership Corporation 0.0185%
West Carolina Rural Telephone Cooperative, Inc. 0.0854%
Yadkin Valley Telephone Membership Corporation 0.2342%
-------
TOTAL 7.6408%
<PAGE>
SCHEDULE 1.57
INITIAL VOTING INTERESTS OF PARTNERS
PARTNER VOTING INTEREST
BellSouth 67.3208%
DukeNet 15%
CaroNet 10%
(Rural Telcos continued on next page)
SCHEDULE 1.57
INITIAL VOTING INTERESTS OF PARTNERS
INITIAL
COMPANY VOTING INTEREST
Atlantic Telephone Membership Corporation 0.1735%
Bluffton Telephone Company, Inc. 0.0711%
Chesnee Telephone Company 0.0532%
Chester Telephone Company 0.1069%
Citizens Telephone Company 0.0870%
The Concord Telephone Company 1.4666%
Ellerbe Telephone Company 0.1012%
Farmers Telephone Cooperative, Inc. 0.7212%
Fort Mill Telephone Company 0.0937%
Hargray Telephone Company, Inc. 0.2132%
Hart Telephone Company 0.0448%
Heath Springs Telephone Company 0.0051%
Home Telephone Company, Inc. 0.4400%
Horry Telephone Cooperative, Inc. 0.6143%
Lancaster Telephone Company 0.1498%
Lexington Telephone Company 0.2630%
Lockhart Telephone Company 0.0027%
Mebtel, Inc. 0.2596%
North State Telephone Company 0.6985%
Palmetto Rural Telephone Cooperative, Inc. 0.0787%
Piedmont Rural Telephone Cooperative, Inc. 0.1413%
Piedmont Telephone Membership Corporation 0.0161%
Pond Branch Telephone Company, Inc. 0.0643%
Ridge Telephone Company, Inc. 0.0372%
Ridgeway Telephone Company 0.0461%
Rock Hill Telephone Company 0.4921%
Sandhill Telephone Cooperative, Inc. 0.0922%
Skyline Telephone Membership Corporation 0.2852%
Star Telephone Membership Corporation 0.2591%
Surry Telephone Membership Corporation 0.2250%
Tri-County Telephone Membership Corporation 0.0185%
West Carolina Rural Telephone Cooperative, Inc. 0.0854%
Yadkin Valley Telephone Membership Corporation 0.2342%
-------
TOTAL 7.6408%
<PAGE>
SCHEDULE 2.6
[CONFIDENTIAL INFORMATION OMITTED PURSUANT TO RULE 24b-2]
SCHEDULE 2.6
[CONFIDENTIAL INFORMATION OMITTED PURSUANT TO RULE 24b-2]
SCHEDULE 3.2
MINIMUM LICENSE CAPITAL CONTRIBUTIONS OF RURAL TELCOS
COMPANY EQUITY AMOUNT
Atlantic Telephone Membership Corporation $ 610,452
Bluffton Telephone Company, Inc. 250,000
Chesnee Telephone Company 187,168
Chester Telephone Company 376,152
Citizens Telephone Company 306,156
The Concord Telephone Company 5,158,740
Ellerbe Telephone Company 356,104
Farmers Telephone Cooperative, Inc. 2,536,752
Fort Mill Telephone Company 329,520
Hargray Telephone Company, Inc. 750,000
Hart Telephone Company 157,696
Heath Springs Telephone Company 18,024
Home Telephone Company, Inc. 1,547,712
Horry Telephone Cooperative, Inc. 2,160,795
Lancaster Telephone Company 526,788
Lexington Telephone Company 925,188
Lockhart Telephone Company 9,448
Mebtel, Inc. 913,336
North State Telephone Company 2,456,985
Palmetto Rural Telephone Cooperative, Inc. 276,928
Piedmont Rural Telephone Cooperative, Inc. 497,000
Piedmont Telephone Membership Corporation 56,568
Pond Branch Telephone Company, Inc. 226,240
Ridge Telephone Company, Inc. 130,856
Ridgeway Telephone Company 161,992
Rock Hill Telephone Company 1,731,120
Sandhill Telephone Cooperative, Inc. 324,176
Skyline Telephone Membership Corporation 1,003,296
Star Telephone Membership Corporation 911,448
Surry Telephone Membership Corporation 791,336
Tri-County Telephone Membership Corporation 64,936
West Carolina Rural Telephone Cooperative, Inc. 300,424
Yadkin Valley Telephone Membership Corporation 823,824
-----------
TOTAL $26,877,160
<PAGE>
SCHEDULE 10.2(C)
GUARANTY
(BellSouth)
In consideration of the sum of Five Dollars ($5.00) and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Guarantor,
BellSouth Enterprises, Inc., a Georgia corporation ("Guarantor"),
hereby irrevocably and unconditionally guarantees to BellSouth
Carolinas PCS, L.P., a Delaware limited partnership (the
"Partnership"), the prompt payment and performance according to
their terms of all of the obligations and liabilities ("the
Obligations") of BellSouth Personal Communications, Inc., a
Delaware corporation ("Obligor"), under or relating to that
certain BellSouth Carolinas PCS, L.P. Limited Partnership
Agreement, dated as of December 8, 1994 (the "Partnership
Agreement"; capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the
Partnership Agreement), among Obligor, American PCS L.P., a
Delaware limited partnership, DukeNet Communications, Inc., a
North Carolina corporation, CaroNet, Inc., a North Carolina
corporation, and the Rural Telcos named therein, and any
renewals, extensions or modifications, in whole or in part
thereof; provided that, notwithstanding anything to the contrary
herein, Guarantor shall not be liable for the payment or
performance of any obligation or liability of Obligor under
Section 13.2 of the Partnership Agreement, and the term
"Obligations" shall not include any obligation or liability of
Obligor under Section 13.2 of the Partnership Agreement.
This Guaranty shall be effective regardless of the solvency
or insolvency of Obligor, the dissolution of Obligor, the
institution by or against Obligor of any proceeding under the
Federal Bankruptcy Code, any reorganization, merger or
consolidation of Obligor, or any change in the ownership,
composition or nature of Obligor.
If any proceeding is instituted by or against Obligor under
the Federal Bankruptcy Code or any other bankruptcy, insolvency
or moratorium law, as between Guarantor and the Partnership, all
of the Obligations shall be immediately due and payable, without
notice or demand of any kind, and Guarantor agrees immediately to
pay the Obligations in full, irrespective of whether the
Obligations can be accelerated against Obligor and irrespective
of any right which Obligor may have under any bankruptcy,
insolvency or moratorium law to cure defaults and reinstate the
maturities of the Obligations.
Guarantor agrees that Obligor may deal with the Partnership
as it wishes. Without limiting the generality of the foregoing,
no modification of any of the Obligations, and no waiver,
extension, renewal, indulgence, settlement, compromise or failure
to exercise due diligence in collection, for any period or
periods, whether longer than the original period or not, or any
substitution or release of any other Person directly or
indirectly liable for any of the Obligations, shall affect or
impair, or release Guarantor from liability under, this Guaranty.
The liability of Guarantor hereunder is primary, and the
Partnership may proceed against Guarantor hereunder without first
proceeding against Obligor, any other person primarily or
secondarily liable on any of the Obligations, or any collateral
securing any of the Obligations. Guarantor hereby waives any
statutory or common law right to require the Partnership to take
action against Obligor.
This Guaranty is binding upon the successors and assigns of
Guarantor.
Words importing the singular number hereunder shall include
the plural number and vice versa, and any pronouns used herein
shall be deemed to cover all genders.
Guarantor waives presentment, protest, demand or notice.
Guarantor agrees that this Guaranty shall be governed by and
construed and enforced according to the laws of the State of
Delaware. Any and all disputes arising out of or in connection
with the execution, delivery or performance of this Guaranty
shall be solely and finally settled by arbitration as provided in
Section 15.13 of the Partnership Agreement. Wherever possible,
each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law, but if
any provision of this Guaranty shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
If it becomes necessary for the Partnership to engage
attorneys to enforce this Guaranty, whether there is a legal
action or suit or not, Guarantor shall, if it is determined to be
liable hereunder, reimburse the Partnership for all reasonable
attorneys' fees and expenses at trial, on appeal, upon petition
for review, or in bankruptcy, whether prescribed by statute or
not.
Guarantor represents that it is solvent as of the date of
this Guaranty and that it would not be rendered insolvent as of
this date if it were required to perform this Guaranty as of this
date. Any notice given under this Guaranty shall be given in
accordance with Section 15.13 of the Partnership Agreement.
<PAGE>
SIGNED, SEALED AND DELIVERED as of this 8th day of December,
1994.
BELLSOUTH ENTERPRISES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
Address:
1100 Peachtree Street
Atlanta, Georgia 30309-4599
ACCEPTANCE
The foregoing Guaranty is accepted as of this 8th day of
December, 1994.
BELLSOUTH CAROLINAS PCS, L.P.,
by its General Partner,
BELLSOUTH PERSONAL COMMUNICATIONS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
<PAGE>
SCHEDULE 10.2(C)
FORM OF GUARANTY
(Non-Rural Telco Limited Partners)
In consideration of the sum of Five Dollars ($5.00) and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the undersigned,
_______________, a _______________ corporation ("Guarantor"),
hereby irrevocably and unconditionally guarantees to BellSouth
Carolinas PCS, L.P., a Delaware limited partnership (the
"Partnership"), the prompt payment according to their terms of
all of the obligations and liabilities (the "Obligations") of
_______________, a _______________ corporation ("Obligor"), under
or relating to that certain BellSouth Carolinas PCS, L.P. Limited
Partnership Agreement, dated as of December 8, 1994 (the
"Partnership Agreement"; capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them in
the Partnership -Agreement), among Obligor, BellSouth Personal
Communications, Inc., a Delaware corporation, American PCS L.P.,
a Delaware limited partnership, DukeNet Communications, Inc., a
North Carolina corporation, CaroNet, Inc., a North Carolina
corporation, and the Rural Telcos named therein, and any
renewals, extensions or modifications, in whole or in part
thereof.
This Guaranty shall be effective regardless of the solvency
or insolvency of Obligor, the dissolution of Obligor, the
institution by or against Obligor of any proceeding under the
Federal Bankruptcy Code, any reorganization, merger or
consolidation of Obligor, or any change in the ownership,
composition or nature of Obligor.
If any proceeding is instituted by or against Obligor under
the Federal Bankruptcy Code or any other bankruptcy, insolvency
or moratorium law, as between Guarantor and the Partnership, all
of the Obligations shall be immediately due and payable, without
notice or demand of any kind, and Guarantor agrees immediately to
pay the Obligations in full, irrespective of whether the
Obligations can be accelerated against Obligor and irrespective
of any right which Obligor may have under any bankruptcy,
insolvency or moratorium law to cure defaults and reinstate the
maturities of the Obligations.
Guarantor agrees that Obligor may deal with the Partnership
as it wishes. Without limiting the generality of the foregoing,
no modification of any of the Obligations, and no waiver,
extension, renewal, indulgence, settlement, compromise or failure
to exercise due diligence in collection, for any period or
periods, whether longer than the original period or not, or any
substitution or release of any other Person directly or
indirectly liable for any of the Obligations, shall affect or
impair, or release Guarantor from liability under, this Guaranty.
The liability of Guarantor hereunder is primary, and the
Partnership may proceed against Guarantor hereunder without first
proceeding against Obligor, any other person primarily or
secondarily liable on any of the Obligations, or any collateral
securing any of the Obligations. Guarantor hereby waives any
statutory or common law right to require the Partnership to take
action against Obligor.
This Guaranty is binding upon the successors and assigns of
Guarantor.
Words importing the singular number hereunder shall include
the plural number and vice versa, and any pronouns used herein
shall be deemed to cover all genders.
Guarantor waives presentment, protest, demand or notice.
Guarantor agrees that this Guaranty shall be governed by and
construed and enforced according to the laws of the State of
Delaware. Any and all disputes arising out of or in connection
with the execution, delivery or performance of this Guaranty
shall be solely and finally settled by arbitration as provided in
Section 15.13 of the Partnership Agreement. Wherever possible,
each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law, but if
any provision of this Guaranty shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
If it becomes necessary for the Partnership to engage
attorneys to enforce this Guaranty, whether there is a legal
action or suit or not, Guarantor shall, if it is determined to be
liable hereunder, reimburse the Partnership for all reasonable
attorneys' fees and expenses at trial, on appeal, upon petition
for review, or in bankruptcy, whether prescribed by statute or
not.
Guarantor represents that it is solvent as of the date of
this Guaranty and that it would not be rendered insolvent as of
this date if it were required to perform this Guaranty as of this
date. Any notice given under this Guaranty shall be given in
accordance with Section 15.13 of the Partnership Agreement.
<PAGE>
SIGNED, SEALED AND DELIVERED as of this 8th day of December,
1994.
________________________________________
By:_____________________________________
Name:________________________________
Title:_______________________________
Address:
ACCEPTANCE
The foregoing Guaranty is accepted as of this 8th day of
December, 1994.
BELLSOUTH CAROLINAS PCS, L.P.,
by its General Partner,
BELLSOUTH PERSONAL COMMUNICATIONS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
<PAGE>
SCHEDULE 10.2(C)
FORM OF GUARANTY
(Rural Telcos)
In consideration of the sum of Five Dollars ($5.00) and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the
undersigned,_______________, _______________, a _______________
corporation ("Guarantor"), hereby irrevocably and unconditionally
guarantees to BellSouth Carolinas PCS, L.P., a Delaware limited
partnership (the "Partnership"), the prompt payment and
performance according to their terms of all of the obligations
and liabilities (the "Obligations") of ____________________, a
_______________ corporation ("Obligor"), under or relating to any
of the Operative Agreements (as defined below).
The term "Operative Agreements" as used herein means all of
the following: (i) that certain BellSouth Carolinas PCS, L.P.
Limited Partnership Agreement, dated as of December 8, 1994 (the
"Partnership Agreement"; capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them in
the Partnership Agreement), among Obligor, BellSouth Personal
Communications, Inc., a Delaware corporation, American PCS L.P.,
a Delaware limited partnership, DukeNet Communications, Inc., a
North Carolina corporation, CaroNet, Inc., a North Carolina
corporation, and the Rural Telcos named therein; (ii) that
certain Service Provider Agreement of even date herewith, among
the Partnership and the Rural Telcos; (iii) that certain
Agreement to Partition License of even date herewith, among the
Partnership and the Rural Telcos; (iv) that certain Operating
Agreement to be entered into by the Partnership and those Rural
Telcos that acquire a Partitioned License pursuant to the
Partition Agreement; and (v) any renewals, extensions or
modifications, in whole or in part, of any of the foregoing.
This Guaranty shall be effective regardless of the solvency
or insolvency of Obligor, the dissolution of Obligor, the
institution by or against Obligor of any proceeding under the
Federal Bankruptcy Code, any reorganization, merger or
consolidation of Obligor, or any change in the ownership,
composition or nature of Obligor.
If any proceeding is instituted by or against Obligor under
the Federal Bankruptcy Code or any other bankruptcy, insolvency
or moratorium law, as between Guarantor and the Partnership, all
of the Obligations shall be immediately due and payable, without
notice or demand of any kind, and Guarantor agrees immediately to
pay the Obligations in full, irrespective of whether the
Obligations can be accelerated against Obligor and irrespective
of any right which Obligor may have under any bankruptcy,
insolvency or moratorium law to cure defaults and reinstate the
maturities of the Obligations.
Guarantor agrees that Obligor may deal with the Partnership
as it wishes. Without limiting the generality of the foregoing,
no modification of any of the Obligations, and no waiver,
extension, renewal, indulgence, settlement, compromise or failure
to exercise due diligence in collection, for any period or
periods, whether longer than the original period or not, or any
substitution or release of any other Person directly or
indirectly liable for any of the Obligations, shall affect or
impair, or release Guarantor from liability under, this Guaranty.
The liability of Guarantor hereunder is primary, and the
Partnership may proceed against Guarantor hereunder without first
proceeding against Obligor, any other person primarily or
secondarily liable on any of the Obligations, or any collateral
securing any of the Obligations. Guarantor hereby waives any
statutory or common law right to require the Partnership to take
action against Obligor.
This Guaranty is binding upon the successors and assigns of
Guarantor.
Words importing the singular number hereunder shall include
the plural number and vice versa, and any pronouns used herein
shall be deemed to cover all genders.
Guarantor waives presentment, protest, demand or notice.
Guarantor agrees that this Guaranty shall be governed by and
construed and enforced according to the laws of the State of
Delaware. Any and all disputes arising out of or in connection
with the execution, delivery or performance of this Guaranty
shall be solely and finally settled by arbitration as provided in
Section 15.13 of the Partnership Agreement. Wherever possible,
each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law, but if
any provision of this Guaranty shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Guaranty.
If it becomes necessary for the Partnership to engage
attorneys to enforce this Guaranty, whether there is a legal
action or suit or not, Guarantor shall, if it is determined to be
liable hereunder, reimburse the Partnership for all reasonable
attorneys' fees and expenses at trial, on appeal, upon petition
for review, or in bankruptcy, whether prescribed by statute or
not.
Guarantor represents that it is solvent as of the date of
this Guaranty and that it would not be rendered insolvent as of
this date if it were required to perform this Guaranty as of this
date. Any notice given under this Guaranty shall be given in
accordance with Section 15.13 of the Partnership Agreement.
SIGNED, SEALED AND DELIVERED as of this 8th day of December,
1994.
________________________________________
By:_____________________________________
Name:________________________________
Title:_______________________________
Address:
ACCEPTANCE
The foregoing Guaranty is accepted as of this 8th day of
December, 1994.
BELLSOUTH CAROLINAS PCS, L.P.,
by its General Partner,
BELLSOUTH PERSONAL COMMUNICATIONS, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
<PAGE>
SCHEDULE 15.3
ADDRESSES FOR NOTICES (INCLUDING FACSIMILE NUMBERS)
BellSouth Carolina PCS, L.P., by
BellSouth Personal Communications,
Inc., its General Partner
ATTENTION: Thomas M. Dougherty,
Vice President
3353 Peachtree Road, Suite 400
Atlanta, Georgia 30326
FAX 1 404 841-2025
BellSouth Personal Communications,
Inc.
ATTENTION: Thomas M. Dougherty,
Vice President
3353 Peachtree Road, Suite 400
Atlanta, Georgia 30326
FAX 1 404 841-2025
DukeNet Communications, Inc.
ATTENTION: M.H. Smith, Jr.,
President
422 South Church Street
PBO3R
Charlotte, NC 28242
FAX 1 704 382-8137
American Personal Communications
W. Scott Schelle
Executive Vice President
One Democracy Center, Suite 600
6901 Rockledge Drive
Bethesda, Maryland 20817
FAX 1 301 214-9490
CaroNet, Inc.
ATTENTION: Wayne C. Hamilton
411 Fayetteville Street Mall
Raleigh, NC 27602
FAX 1 919 546-4445
Atlantic Telephone Membership Corp.
ATTENTION: General Manager
Post Office Box 3198
Shallotte, N.C. 28459
FAX 1 910-754-5499
Bluffton Telephone Company
ATTENTION: President
Post Office Box 5519
Hilton Head Island, S.C. 29928
FAX 1 803-686-1139
CheSnee Telephone Company
ATTENTION: President
Post Office Box 430
Chesnee, S.C. 29323
FAX 1 803-461-3611
Chester Telephone Company
ATTENTION: President
Post Office Box 160
Chester, S.C. 29706
FAX 1-803-581-2225
Citizens Telephone Company
ATTENTION: V.P. and Gen. Mgr.
Post Office Box 1137
Brevard, N.C. 28712-1137
FAX 1-704-884-9595
Concord Telephone Company
ATTENTION: President
Post Office Box 227
Concord, N.C. 28026-0227
FAX 1-704-792-1122
Ellerbe Telephone Company
ATTENTION: President
Post Office Box 220
Ellerbe, N.C. 28338
FAX 1-910-652-7700
Farmers Telephone Cooperative, Inc.
ATTENTION: Executive Vice President
Post Office Box 588
Kingstree, S.C. 29556
FAX 1-803-382-3200
Fort Mill Telephone Company
ATTENTION: President
Post Office Box 470
Rock Hill, S.C. 29731
FAX 1-803-324-6222
Hargray Telephone Company
ATTENTION: President
Post Office Box 5519
Hilton Head Island, S.C. 29928
FAX 1-803-686-1139
Hart Telephone Company
ATTENTION: President
Post Office Box 388
Hartwell, Georgia 30643
FAX 1-706-376-1445
Heath Springs Telephone Company
ATTENTION: President
Post Office Box 308
Heath Springs, S.C. 29058
FAX 1-803-273-9783
Home Telephone Company
ATTENTION: Robert L. Helmly
Post Office Box 1194
Moncks Corner, S.C. 29461
FAX 1-803-899-4766
Horry Telephone Cooperative
ATTENTION: General Manager
Post Office Drawer 1820
Conway, S.C. 29526
FAX 1-803-365-1111
Lancaster Telephone Company
ATTENTION: President
Post Office Box 470
Rock Hill, S.C. 29731
FAX 1-803-324-6222
Lexington Telephone Company
ATTENTION: President
Post Office Box 808
Lexington, N.C. 27923-0808
FAX 1-704-249-5819
Lockhart Telephone Company
ATTENTION: President
Post Office Box 160
Chester, S.C. 29706
FAX 1-803-581-2225
Mebtel Communications
ATTENTION: President
Post Office Box 9
Mebane, N.C. 27302
FAX 1-919-563-6700
North State Telephone Company
ATTENTION: President
Post Office Box 2326
High Point, N.C. 27261
FAX 1-910-887-7418
Pond Branch Telephone Company
ATTENTION: General Manager
1660 Juniper Springs Road
Gilbert, S.C. 29054
FAX 1-803-892-2123
Ridge Telephone Company
ATTENTION: General Manager
1660 Juniper Springs Road
Gilbert, S.C. 29054
FAX 1-803-892-2123
Ridgeway Telephone Company
ATTENTION: President
Post Office Box 160
Chester, S.C. 29706
FAX 1-803-581-2225
Rock Hill Telephone Company
ATTENTION: President
Post Office Box 470
Rock Hill, S.C. 29731
FAX 1-803-324-6222
Palmetto Rural Tel. Coop., Inc.
ATTENTION: General Manager
Post Office Drawer 1577
Walterboro, S.C. 29488
FAX 1-803-538-7904
Piedmont Rural Tel. Coop., Inc.
ATTENTION: General Manager
Post Office Box 249
Laurens, S.C. 29360
FAX 1-803-682-8888
Piedmont Telephone Membership Corp.
ATTENTION: General Manager
Post Office Box 2066
Lexington, N.C. 27293-2066
FAX 1-704-787-5246
Sandhill Telephone Coop., Inc.
ATTENTION: General Manager
Post Office Box 519
Jefferson, S.C. 29718
FAX 1-803-658-7700
Star Telephone Membership Corp.
ATTENTION: Exec. V.P. & Gen. Mgr.
Post Office Box 348
Clinton, N.C. 28328
FAX 1-910-564-4199
Skyline TMC
ATTENTION: General Manager
Post Office Box 759
West Jefferson, N.C. 28649
FAX 1-910-877-2020
Surry Telephone Membership Corp.
ATTENTION: General Manager
Post Office Box 385
Dobson, N.C. 27017
FAX 1-910-374-5031
Tri-County Telephone Membership Corp.
ATTENTION: General Manager
Post Office Box 520
Belhaven, N.C. 27810
FAX 1-919-964-2211
West Carolina Rural Tel. Coop., Inc.
ATTENTION: General Manager
Post Office Box 610
Abbeville, S.C. 29620
FAX 1-803-446-2144
Yadkin Valley Telephone Membership
Corp.
ATTENTION: General Manager
Post Office Box 368
Yadkinville, N.C. 27055
FAX 1-910-463-5005
<PAGE>
SCHEDULE 15.16
NON-DISCLOSURE PROVISIONS
By executing the Agreement to which this SCHEDULE 15.16 is
attached, each Partner agrees as follows:
1. ACKNOWLEDGEMENT. Each Partner acknowledges that it has
received and may in the future receive from one or more other
Partners or the Partnership information of a non-public nature
for use by such Partner and its officers, directors, agents,
employees and representatives, including financial and legal
advisers (collectively, "representatives") in connection with the
evaluation of the formation of the Partnership and its investment
and participation therein.
2. CONFIDENTIAL INFORMATION DEFINED. Each Partner
acknowledges that, in the course of its consideration of and any
concurrent or subsequent discussions between such Partner and
other Partners or the Partnership or their respective
representatives relating to the formation of the Partnership or
its investment and participation therein, such Partner may
receive certain non-public and confidential information from or
about the Partnership, the other Partners or their Affiliates,
including but not limited to technical, financial and business
plans and models, names of customers or suppliers, proposed
business transactions, reports, market projections, software
programs, data or any other confidential and proprietary
information relating to the Partnership. All such technical,
financial or other business information thus supplied by the
Partnership or a Partner to other Partners or their
representatives is hereinafter called the "Information". The
term "Information" as used herein also includes the terms and
conditions of the Agreement and the other Transaction Documents.
Any Information supplied by the Partnership or any Partner prior
to the execution of the Agreement shall be considered in the same
manner and be subject to the same treatment as the Information
made available after the execution of the Agreement.
3. EXCLUSIONS FROM DEFINITION. The term "Information" as
used herein does not include any data or information (a) which is
already known to the receiving Partner at the time it is
disclosed to the receiving Partner, or (b) which before being
divulged by the receiving Partner (i) has become generally known
to the public through no wrongful act of the receiving Partner;
(ii) has been rightfully received by the receiving Partner from a
third party without restriction on disclosure and without, to the
knowledge of the receiving Partner, a breach of an obligation of
confidentiality running directly or indirectly to the Partnership
or any Partner; (iii) has, prior to release, been approved for
release by a written authorization by the Partnership or the
disclosing Partner; (iv) has been disclosed pursuant to a
requirement of a governmental agency or of law without similar
restrictions or other protections against public disclosure, or
is required to be disclosed by operation of law; (v) is
independently developed by the receiving Partner without use,
directly or indirectly, of the Information received from the
Partnership or any other Partner; or (vi) is furnished to a third
party by the disclosing Partner without restrictions on the third
party's right to disclose the information.
4. NON-DISCLOSURE OBLIGATION. Each partner receiving any
Information shall keep such Information confidential and shall
not disclose such Information, in whole or in part, to any Person
other than its representatives who need to know such Information
in connection with the receiving Partner's evaluation thereof and
determination of business strategies, or other actions in
connection with the Partnership (it being agreed and understood
that such representatives shall be informed by the receiving
Partner of the confidential nature of the Information and shall
be directed by the receiving Partner to treat the Information
confidentially), except (i) with the prior written consent of the
Partnership or the disclosing Partner (ii) as provided in
Paragraph 10 of this SCHEDULE 15.16 or (iii) as otherwise
permitted hereunder. The Information shall be used by the
receiving Partner solely in connection with its investment and
participation in the Partnership, and shall not be otherwise used
for any purpose detrimental to the interests of the Partnership
or the disclosing Partner.
5. COMPLIANCE WITH LEGAL PROCESS. In the event that the
Partner receiving any Information is legally requested or
required (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process or, in the opinion of outside counsel for such
Partner, by federal or state securities or other statutes,
regulations or laws) to disclose any Information, such Partner
shall promptly notify the Partnership or the disclosing Partner
of such request or requirement prior to disclosure so that the
Partnership or the disclosing Partner, as the case may be, may
seek an appropriate protective order and/or waive compliance with
the terms of this Agreement. If, however, in the opinion of
outside counsel for the receiving Partner such Partner is
nonetheless, in the absence of such order or waiver, compelled to
disclose such Information or otherwise stand liable for contempt
or suffer possible censure or other penalty or liability, then
the receiving Partner may disclose such information without
liability to the other Partner hereunder.
6. OWNERSHIP; RETURN OF INFORMATION. No license to a
Partner, under any trademark, patent, copyright, mask work
protection right or any other intellectual property right, is
either granted or implied by the conveying of Information to such
Partner. All Information (including tangible copies and
computerized or electronic versions thereof), shall remain the
property of the Partnership or the Partner furnishing such
information. Within ten (10) days following the receipt of a
written request referencing this Agreement and this paragraph
from the Partnership or any Partner furnishing Information
hereunder, the receiving Partner shall deliver to the Partnership
or the furnishing Partner, as the case may be, all tangible
materials containing or embodying the Information received from
the Partnership or the furnishing Partner, as the case may be.
That portion of the Information which has been incorporated into
analyses, compilations, comparisons, studies or other documents
prepared by the receiving Partner or its representatives shall be
held by the receiving Partner and kept confidential as provided
above or shall be destroyed.
7. REMEDIES FOR BREACH. Each Partner understands and
agrees that money damages would not be a sufficient remedy for
any breach of this Agreement and that the Partnership or the
disclosing Partner, as the case may be, shall be entitled to seek
injunctive or other equitable relief to remedy or forestall any
such breach or threatened breach. Such remedy shall not be
deemed to be the exclusive remedy for any breach of these
agreements but shall be in addition to all other rights and
remedies available at law or in equity.
8. TERM. The obligation of each Partner to maintain the
confidentiality of the Information it has received under the
Agreement shall continue for a period of two (2) years after the
earlier to occur of the dissolution of the Partnership or the
date on which such Partner ceases to be a Partner.
9. APPLICABILITY TO ASSOCIATED PARTNERS. Any information
disclosed by an Affiliate of a Partner which would otherwise
constitute Information hereunder if disclosed by the such
Partner, shall be deemed to constitute Information under the
Agreement, and the rights of such Partner under the Agreement may
be enforced by any such Affiliate as if such Affiliate were also
a Partner to the Agreement. Each Partner may disclose any
Information received hereunder to employees or representatives of
any of its Affiliates, provided such Partner complies with the
provisions of this SCHEDULE 15.16, including Paragraph 4 hereof.
10. RIGHT TO DISCLOSE INFORMATION IN CONNECTION WITH
OUTSIDE OFFER. (a) If, pursuant to Section 10.4, any Partner is
seeking an Outside Offer from any Third Party, such Seller shall
be permitted to disclose to such Third Party the Partnership's
annual financial information contemplated by Section 8.3,
provided that such Third Party executes for the benefit of the
Partnership a non-disclosure agremeent containing provisions
substantially the same as Paragraphs 1 through 9 inclusive of
this SCHEDULE 15.16 (a "Non-disclosure Agreement"), and such
Partner delivers an executed original of such non-disclosure
agreement to the Partnership prior to the delivery of such annual
financial information to the Third Party.
(b) If, pursuant to Section 10.4, any Seller has
obtained from a Third Party an Outside Offer that is conditioned
on such Third Party's being satisfied with the results of its due
diligence investigation relating to the Offered Interest and
Offered Assets, if any, and the Partnership (pursuant to Section
10.4(a)), other Partners (pursuant to Section 10.4(b)) and, if
the Seller is a Rural Telco, the other Rural Telcos (pursuant to
Section 10.4(f)) have declined to purchase the Offered Interest
and Offered Assets, if any, such Seller shall be permitted to
disclose any Information reasonably requested by such Third
Party, provided that such Third Party executes a Non-disclosure
Agreement and such Seller delivers an executed original of such
Non-disclosure Agreement to the Partnership prior to the delivery
of any Information to such Third Party.
(c) Notwithstanding anything herein to the contrary,
if as a result of the conduct of any due diligence investigation
contemplated by Paragraph 10(b) of this SCHEDULE 15.16 the price
set forth in the Outside Offer is reduced or any other material
term of the Outside Offer is changed, such Outside Offer shall be
deemed revised, and the Seller shall re-offer the Offered
Interest and Offered Assets, if any, to the Partnership, the
Partners and, if the Seller is a Rural Telco, the other Rural
Telcos, as contemplated in Section 10.4, on the terms set forth
in the Outside Offer as so revised.
