Second Amended
Limited Partnership Agreement
of the Partnership of
SAVANNAH CELLULAR LIMITED PARTNERSHIP
THIS AGREEMENT dated as of the 21st day of June, 1987, by and among
Savannah Cellular General Partnership (hereinafter the "Initial General
Partner"), a general partnership organized under the laws of the State of
California, as general partner, and each of those persons who have executed this
Agreement and whose names and addresses are set forth in Schedule A annexed
hereto, as limited partners (hereafter "Limited Partners").
WHEREAS, the FCC has issued to the Managing Partner of the Initial
General Partner a Construction Permit to build and operate a Cellular System in
Savannah, Georgia; and
WHEREAS, the Limited Partners have certain rights to receive
minority equity interests in the entity that will receive that Construction
Permit; and
WHEREAS, the parties hereto have concluded that it will be in their
best interests and the best interests of the public to form a limited
partnership for the purpose of constructing and operating the System; and
WHEREAS, the parties hereto desire to set forth in full the terms
and conditions of their undertaking in this Limited Partnership Agreement (the
"Agreement") and to form this limited partnership under the Delaware Revised
Uniform Limited Partnership Act;
-2-
NOW, THEREFORE, in consideration of the foregoing, the mutual
promises of the parties hereto, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, as hereinafter defined, the
following terms shall have the meanings respectively assigned to them in this
Article I unless the context requires otherwise.
"Affiliate" or "Affiliated Person" means, when used with reference
to a specific Person (or when not referring to a specific Person shall mean
Affiliate of a Partner), any Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with
such specific Person. This term shall also include any Person who, directly or
indirectly, through one or more intermediaries, has the contractual right or
option to acquire or vote more than 50% of the voting interest of a specific
Person.
"Agreed Value" means, with respect to property, the fair market
value of that property on the date it is contributed to the Partnership, as
determined by the Managing General Partner in good faith and by reasonable
methods
-3-
(including the employment of independent professional appraisers). For all
purposes, the Agreed Value of an interest in the Construction Permit (at the
time of its contribution in accordance with section 3.1) shall be based on the
proportion of ownership of the Construction Permit and on a total value for the
Construction Permit of $3,460,920, without increase or diminution for a majority
or minority position.
"Agreement" means this Partnership Agreement and the Schedules
hereto, as the same may be amended from time to time. Words such as "herein,"
"hereinafter," "hereof," "hereto," "hereby," and "hereunder," when used with
reference to this Agreement, refer to this Agreement as a whole, unless the
context otherwise requires.
"Area" means the Savannah, Georgia Metropolitan Statistical Area
("MSA").
"At-Risk Partner" shall mean any Partner that bears the economic
risk of loss with respect to a Partnership liability that is otherwise without
recourse to the Partnership, including Partners that have made non-recourse
loans to the Partnership or have guaranteed such loans made by others.
"Bankruptcy" (including the adjectival form "Bankrupt") means with
respect to any Partner, (i) such Partner making an assignment for the benefit of
creditors or admitting in writing its inability to pay its debts when due; (ii)
the commencement by or against such Partner of any
-4-
liquidation, dissolution, bankruptcy, reorganization, insolvency or other
proceeding for the relief of financially distressed debtors; or the appointment
for such Partner, or a substantial part of such Partner's assets, of a receiver,
liquidator, custodian or trustee; and, if any of the events referred to in this
clause (ii) occur involuntarily, the failure of same to be dismissed, stayed or
discharged within 90 days; or (iii) the entry of an order for relief against
such Partner under Title 11 of the United States Bankruptcy Code.
"Capital Account" means the capital account to be maintained by the
Partnership for each Partner. A Partner's Capital Account shall be credited with
(i) the amount of any Capital Contribution made by or on behalf of such Partner
in cash, (ii) the Agreed Value (net of liabilities that the Partnership is
considered to assume or take subject to under Code Section 752) of any Capital
Contribution made by or on behalf of such Partner in property other than cash,
and (iii) allocations to such Partner of Partnership Profits, income or gain
pursuant to section 4.1(a), and any other item required to be credited for
proper maintenance of capital accounts by the Treasury regulations under Section
704(b) of the Code. A Partner's Capital Account shall be debited with (i) the
amount of any cash and the fair market value of property distributed to such
Partner (net of liabilities that such Partner is considered to assume or take
subject to under Code
-5-
Section 752), all as may be determined in accordance with this Agreement, (ii)
allocations of Partnership Losses and deductions (or items thereof, including
Partner Nonrecourse Deductions) pursuant to section 4.1(b), and (iii)
allocations to such Partner of any expenditures of the Partnership described in
Code Section 705(a)(2)(B), including any nondeductible taxes paid by the
Partnership. If any property other than cash is distributed to a Partner, the
Capital Accounts of the Partners shall be adjusted in the manner provided in
section 8.6 as if the property had been sold by the Partnership for a price
equal to its fair market value and the proceeds of such sale distributed. In
addition, each Partner's Capital Account shall be adjusted as of the time of
either the acquisition of any LP or GP Units from the Partnership by any new or
existing Partner in exchange for more than a de minimus Capital Contribution or
the redemption of any LP or GP Units by the Partnership in exchange for more
than a de minimus amount to reflect the amount of unrealized income, gain, loss,
or deduction inherent in all Partnership property (to the extent such amount has
not been reflected in the Capital Accounts previously) that would be allocated
to such Partner under section 4.1 if all Partnership property were sold for its
fair market value at the time of the acquisition or redemption. Any question
concerning a Partner's Capital Account shall be resolved by applying principles
consistent with this Agreement and the regulations
-6-
promulgated under Section 704 of the Code in order to assure that all
allocations herein will have substantial economic effect or will otherwise be
respected for federal income tax purposes.
"Capital Contribution" means the sum of cash and the Agreed Value of
other property, if any, contributed to the Partnership by each Partner in
accordance with Article III and otherwise. Any reference in this Agreement to
the Capital Contribution of a Partner shall include the contributions to the
capital of the Partnership made by any predecessor in interest of such Partner.
"Cellular System" means the non-wireline Domestic Public Cellular
Radio Telecommunications Services system to be operated in the Area as described
in Part 22 of the FCC's Rules and Regulations as currently in effect or as from
time to time amended or modified.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.
"Construction Permit" means the permit granted by the FCC for the
construction of the Cellular System and any successor licenses or permits
allowing construction and operation of the Cellular System.
"Date of Issue" shall mean August 3, 1987, which shall be the record
date for the issue of LP Units (as defined below) and for determining the
respective Percentage
-7-
Interests (as defined below) of the Limited Partners and the Initial General
Partner.
"General Partner" means a Partner holding GP Units.
"GP Unit" means an ownership interest in the Partnership held by a
General Partner.
"FCC" means the Federal Communications Commission and any successor
federal agency having jurisdiction over the regulation of the Cellular System.
"Indebtedness" means any indebtedness of the Partnership for
borrowed money, or under guarantees (other than endorsements for collection or
deposit in the ordinary course of business) of the obligations of another
Person, or for obligations of the Partnership as an "account party" under a
letter of credit, or for the deferred purchase price of property or services. A
lease, the obligations with respect to which are required to be capitalized on
the Partnership's balance sheet in accordance with generally accepted accounting
principles consistently applied, shall be deemed indebtedness in the amount
required to be capitalized.
"Licenses" means all FCC, state or local licenses, approvals and
authorizations required to construct, own and operate the Cellular System.
"Limited Partner" means a Partner holding LP Units.
"LP Unit" means an ownership interest in the Partnership held by a
Limited Partner.
-8-
"Majority Vote" means the affirmative vote of a Partner or
combination of Partners holding in excess of 50% of the Percentage Interests
entitled to vote on the matter.
"Managing General Partner" means the Initial General Partner so long
as the Initial General Partner holds more than 50% of the GP Units. If the
Initial General Partner no longer holds more than 50% of the GP Units, the
Managing General Partner shall be that Partner holding more than 50% of the
outstanding GP Units, or, if no Partner holds more than 50% of the GP Units, the
Managing General Partner shall be the Partner holding GP Units that is chosen to
be Managing General Partner by a majority of all General Partners holding GP
Units in accordance with section 6.1(v).
"Option Agreement" means the Option Agreement by and among Sheila
Leibsohn, Georgia Metronet, Inc., a Georgia corporation, Savannah Cellular
Limited Partnership, and Savannah Cellular General Partnership dated as of June
24, 1987, and concerning interests in this Partnership.
"Partner" or "Partners" means the Persons who have executed this
Agreement on or before the Date of Issue (constituting the Initial General
Partner and the Limited Partners as identified in schedule A hereto) and any
Person who becomes a Substitute Partner in respect of any portion of the
Percentage Interest of a Partner as provided in Articles VI and VII.
-9-
"Partner Nonrecourse Debt" means any nonrecourse debt of the
Partnership for which any Partner bears the economic risk of loss. The
determination of whether a Partnership liability constitutes a Partner
Nonrecourse Debt shall be made in accordance with Temp. Treas. Reg. ss. ss.
1.704-1T (b)(4)(iv)(h), 1.704-1T(b)(4)(iv)(k), and 1.752-1T(d).
"Partner Nonrecourse Deduction" means any item of Partnership loss,
deduction, or Code Section 705(a)(2)(B) expenditure (as defined in Treas. Reg.
ss. 704-1(b)(2)(iv)(i)) entering into the computation of Profits and Losses that
is attributable to a Partner Nonrecourse Debt. The determination of whether an
item constitutes a Partner Nonrecourse Deduction shall be made in accordance
with Temp. Treas. Reg. ss. l.704-1T(b)(4)(iv)(h).
"Partnership" means the Partnership, formed under and governed by
this Agreement, as such Partnership may from time to time be reconstituted.
"Partnership Business" (including the "Business") shall have the
meaning provided in Section 2.3.
"Percentage Interest" means, with respect to any Partner, a
percentage determined by dividing the sum of that Partner's LP and GP Units by
the total number of LP and GP Units held by all Partners (including Substitute
Partners and Transferees).
-10-
"Person" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, governmental agency,
cooperative, association, individual or other entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such person as
the context may require.
"Profits" and "Losses" mean, for any fiscal year, the net income or
net loss, respectively, of the Partnership as reported by the Partnership for
federal income tax purposes, except that (i) items of income, gain, loss, and
deduction relating to property contributed to the Partnership shall be computed
as if the basis of the property to the Partnership at the time of contribution
were equal to its Agreed Value on that date (for purposes of this clause (i),
the amount of any depreciation, amortization, or other cost recovery deduction
allowable for any period with respect to Property contributed to the Partnership
shall be an amount that bears the same ratio to the Agreed Value of the Property
on the date of contribution as the federal income tax depreciation,
amortization, or other cost recovery deduction bears to the adjusted tax basis
of the Property on the date of contribution), (ii) any reduction in basis under
Section 48(q) of the Code shall be treated as an expense, (iii) any income of
the Partnership that is exempt from federal income tax and not otherwise taken
into account in compiling Profits or Losses shall be added to such taxable
income or loss, and
-11-
any related expenses not allowed as a deduction pursuant to Code Section 265
shall be subtracted from such taxable income or loss, and (iv) any expenditures
of the Partnership described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Treas. Reg. ss. 1.704-1(b) and not
otherwise taken into account under this section shall be subtracted from such
income or loss. If there has been an adjustment to the Partners' Capital
Accounts pursuant to the next to last sentence under the definition of
"Capital-Accounts" in Article I to reflect the unrealized income, gain, loss, or
deduction inherent in Partnership property at the time of the acquisition or
redemption of LP Units: (I) depreciation, amortization, or other cost recovery
deductions with respect to such property for each fiscal year or other period
shall equal an amount which bears the same ratio to the fair market value of
such property on the date of such adjustment as the federal income tax
depreciation, amortization, or other cost recovery deductions for such year or
other period bears to the adjusted tax basis of such property on such date; and
(II) gain or loss resulting from any disposition of such property with respect
to which gain or loss is recognized for federal income tax purposes shall be
computed under this sentence as if such property had an adjusted basis on the
date of such adjustment equal to its fair market value on such date. Profits and
Losses shall include, where the context requires,
-12-
related federal income tax items such as capital gain or loss, tax preferences,
investment interest, depreciation, cost recovery, depreciation recapture, and
cost recovery recapture. Except as otherwise provided in the regulations issued
under Code Section 704(b), such amounts shall be computed without regard to any
basis adjustment for federal income tax purposes under Section 743 of the Code
resulting from an election under Section 754 of the Code.
"Pro Rata" means the proportion which the respective Percentage
Interest of any Partner entitled or required to participate in any action bears
to the sum of the Percentage Interests of all Partners entitled or required to
participate in such action.
"Substitute Limited Partner" means any Person who becomes a Partner
by virtue of acquiring the Percentage Interest of a Limited Partner pursuant to
the provisions of Article VI or VII hereof.
"Transfer" (including the verb forms "Transfer" and "Transferred")
means an assignment, sale, exchange, pledge, transfer or other disposition.
"Transferor" means a Partner or Transferee who makes a Transfer and "Transferee"
means a Person who received a Transfer.
"Unanimous Vote" means the affirmative vote of all Partners entitled
to vote on a matter.
"Withdrawal" (including the verb form "Withdraw" and the adjectival
forms "Withdrawing" and "Withdrawn") means
-13-
as to any Partners, withdrawing from the Partnership either (i) voluntarily in
accordance with section 6.3, or (ii) involuntarily upon the occurrence of such
Partner's Bankruptcy, death or incompetency.
Each definition herein shall be deemed to refer to the singular,
plural, masculine, feminine, or neuter as the context requires.
ARTICLE II
ORGANIZATION
2.1 Formation. The parties hereto form the Savannah Cellular Limited
Partnership as a limited partnership under the laws of the State of Delaware.
2.2 Name. The business of the Partnership shall be conducted under
the name of Personal Telephone Company of Savannah or such other name or names
as may be chosen from time to time by the General Partner.
2.3 Purpose. The principal purpose of the Partnership is to design,
construct, develop, own, operate, and maintain the Cellular System in the Area
(the "Partnership Business" or "Business") and in connection therewith: to enter
into leases for, or purchase properties needed for, any sites necessary to the
operation and maintenance of the Cellular System and the provision of cellular
service and equipment; to construct improvements in, furnish, and equip the
sites; to acquire or lease all equipment, supplies, and
-14-
services necessary to the construction and operation of the Cellular System; to
engage in the wholesale and retail provision of cellular service and subscriber
equipment; to borrow or raise money necessary to the construction and operation
of the Cellular System; to sell or resell the services provided by the wireline
cellular system in the Area prior to commencement of operations of the
Partnership's Cellular System; to execute any documents required in connection
with the foregoing; and to do any and all acts and things which may be
necessary, incidental, or convenient to carry on the Partnership Business as
contemplated by this Agreement. The Partnership Business shall be conducted by
the Partnership as a partnership organized under the laws of Delaware and
qualified to do business in Georgia. Except as provided in this Agreement, the
Partnership Business may be conducted by the Partnership as a corporation,
business trust, or other business entity, only upon a Majority Vote of all
Partners.
2.4 Term. The term of the Partnership shall commence on the
Effective Date and shall continue until the earlier of (a) the ninety-ninth
anniversary of the Effective Date, unless by Majority Vote the Partners elect to
continue the Partnership or (b) the dissolution and termination of the
Partnership pursuant to Article VIII.
2.5 Principal Place of Business. The principal place of business of
the Partnership shall be the Savannah,
-15-
Georgia Area, except as otherwise determined by the General Partner.
2.6 Representations and Warranties. Each Partner represents and
warrants to each of the other Partners, which representations and warranties
shall survive the execution of this Agreement and the consummation of the
transactions herein contemplated, that:
(a) Consistent with its apparent identification in Schedule A, (i)
it is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation, or (ii) it is a partnership
or joint venture duly organized and validly existing under the laws of the
jurisdiction of its organization, or (iii) it is a natural person;
(b) It has full power and authority to execute and perform this
Agreement;
(c) The execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action on the part of such Partner, and
the Agreement is binding and enforceable against such Partner in accordance with
its terms;
(d) The execution, delivery, and performance of this Agreement will
not conflict with, result in a breach of, or cause a default under, with or
without the giving of notice or the passage of time or both, its articles of
incorporation, bylaws, partnership or joint venture
-16-
agreements, or any material agreement or instrument to which it is a party or by
which it or any of its property is bound, nor will it conflict with or violate
any statute, law, rule, regulation, order, decree, or judgment of any court or
governmental authority which is binding upon it or its property; and
(e) It has no knowledge of any fact or circumstance that would
disqualify it from holding an interest in the Construction Permit as a Partner.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Initial Contributions. The Initial General Partner shall
contribute to the Partnership all of its right, title and interest in the
Construction Permit issued by the FCC to construct for operation a Cellular
System in the Area, and each Limited Partner shall contribute to the Partnership
all of its right to receive a minority interest in the entity that will
construct and operate the Cellular System. In return, on the Date of Issue each
Limited Partner shall receive one LP Unit or that fraction of or number of LP
Units shown on Schedule A, and the Initial General Partner shall receive one LP
Unit and shall receive a number of GP Units and fractions thereof such that the
Percentage Interest attributable to such GP Units will be fifty and one
one-hundredth percent (50.01%) or such larger Percentage
-17-
Interest as may be necessary to ensure that the Percentage Interest represented
by one LP Unit does not exceed 0.99%.
3.2 Financing. Consistent with Sections 3.4 and 5.1(b), the
Partnership may, and it is the present intention of the partners to, finance all
or a portion of the cost of construction and operation of the Cellular System by
causing the Partnership to borrow the funds required therefor or otherwise to
finance such construction and operation (on a non-recourse basis, if
non-recourse financing is available on reasonable terms), in such amounts at
such times and on such terms as shall be consistent with sound business and
financial practice.
3.3 Capital Accounts. No interest shall be paid on any Capital
Contribution or Capital Account. No Partner shall have the right to demand a
return of a Capital Contribution. No Partner shall be liable for the return of
the Capital Contribution of any other Partner, or any portion thereof; any such
return shall be made solely from the assets of the Partnership. No Partner shall
be required to pay the Partnership or any Partner any deficit in any other
Partner's Capital Account upon dissolution or otherwise; provided, however, that
if any Partner is required to pay a liability of the Partnership, it shall be
entitled to reimbursement from Partnership assets. Upon the transfer of all or a
part of an interest in the Partnership, the Capital Account of the
-18-
transferor that is attributable to the transferred interest shall carry over to
the transferee.
3.4 Limited Liability of Limited Partners. No Limited Partner shall
be liable under this Agreement for any of the losses, debts, or obligations of
the Partnership or be required to contribute any capital beyond its initial
contribution and any other capital contributions made in accordance with this
Article.
3.5 No Right to Withdraw Capital. Prior to the dissolution and
liquidation of the Partnership, no Partner shall have the right to withdraw from
the Partnership any part of its capital contributed to the Partnership or have
any right to receive any funds or property of the Partnership except as
specifically provided in this Agreement.
3.6 Priority Among Limited Partners. Except as otherwise provided in
this Agreement, no Limited Partner has any priority over any other Limited
Partner as to the return of its Capital Contribution or as to its allocation of
profits and losses or distribution of cash.
-19-
ARTICLE IV
PROFITS, LOSSES, TAX ALLOCATIONS, AND DISTRIBUTIONS
4.1 Profits, Losses, and Tax Allocations.
(a) Allocation of Profits. Except as otherwise provided in the
Agreement, items of income and of gain and Profits of the Partnership for each
fiscal year shall be determined as of the end of such fiscal year and allocated
to the Partners as follows:
(i) First, if there is a net decrease in Partnership "minimum
gain" (as defined in Treas. Reg. ss. 1.704-1(b)(4)(iv)(c)) during a
fiscal year, all Partners with a deficit Capital Account balance at the
end of such fiscal year (excluding from each Partner's deficit Capital
Account balance any amount that such Partner is obligated to restore under
section 8.4 of this Agreement and under Treas. Reg. ss.
1.704-1(b)(2)(ii)(c) as well as any addition thereto pursuant to the next
to last sentences of Treas. Reg. ss. l.704-l(b)(4)(iv)(f) and Temp.
Treas. Reg. ss. l.704-1T(b)(4)(iv)(h)(5) after taking into account
thereunder any changes during such fiscal year in partnership minimum gain
and minimum gain attributable to Partnership Nonrecourse Debt, and after
reducing such balance by any adjustments, allocations, and distributions
specified in Treas. Reg. ss. 1.704-1(b)(2)(ii)(d)(4), (5), and (6) as
are
-20-
reasonably expected to be made to such Partner) shall be allocated items
of Partnership income and gain entering into the computation of Profits
and Losses for such fiscal year (and, if necessary subsequent fiscal
years) in the amount and in the proportions needed to eliminate such
deficits as quickly as possible. The allocation under this section
4.l(a)(i) is intended to comply with the minimum gain chargeback
requirements of Treas. Reg. ss. 1.704-1(b)(4)(iv)(e) and shall be
interpreted consistently therewith. However, if it is determined that the
Partnership is subject to the minimum gain chargeback provisions of
paragraph (b)(4)(iv)(e) of Temp. Treas. Reg. ss. 1.704-1T, then the
allocations required under such paragraph shall apply in lieu of the
allocations described in the first sentence of this section 4.l(a)(i).
(ii) Second, if there is a net decrease during a Partnership
fiscal year in the minimum gain attributable to a Partner Nonrecourse Debt
then any Partner with a share of the minimum gain attributable to such
debt at the beginning of such fiscal year shall be allocated items of
Partnership income and gain entering into the computation of Profits and
Losses for such fiscal year (and, if necessary, for subsequent years) (a
"Partner Nonrecourse Debt Minimum Gain Chargeback") in
-21-
proportion to, and to the extent of, an amount equal to the greater of --
(A) The portion of such Partner's share of the net
decrease in the minimum gain attributable to such Partner Nonrecourse Debt
that is allocable to the disposition of Property subject to such debt; or
(B) The deficit balance in such Partner's Capital
Account at the end of such year (determined before any allocation of
Partnership income, gain, loss, deduction, or section 705(a)(2)(B)
expenditure for such year and excluding from such deficit capital account
balance any amount that such Partner is obligated to restore under Treas.
Reg. ss. 1.704-1(b)(2)(ii)(c), as well as any addition thereto pursuant
to the next to last sentences of Treas. Reg. ss. 1.704-1(b)(4)(iv)(f) and
Temp. Treas. Reg. ss. 1.704-1T(b)(4)(iv)(h)(5) after taking into account
thereunder any changes during such year in Partnership minimum gain and in
the minimum gain attributable to any Partner Nonrecourse Debt).
(iii) Third, if any Limited Partner unexpectedly receives an
adjustment, allocation, or distribution of the type contemplated by Treas.
Reg. ss. l.704-l(b)(2)(ii)(d)(4), (5), or (6) that causes or increases a
deficit in such Limited Partner's Capital Account balance (in excess of
any amount that such Partner is obligated to restore under Section 8.4 of
this Agreement
-22-
and under Treas. Reg. ss. l.704-l(b)(2)(ii)(c) as well as any addition
thereto pursuant to the next to last sentences of Treas. Reg. ss.
1.704-l(b)(4)(iv)(f) and Temp. Treas. Reg. ss. l.704-l(b)(4)(iv)(h)(5),
and after reducing such balance by any adjustments, allocations, and
distributions specified in Treas. Reg. ss. l.704-l(b)(2)(ii)(d)(4), (5),
and (6) as are reasonably expected to be made to such Partner), items of
Partnership income and gain entering into the computation of Profits and
Losses shall be allocated to all such Limited Partners in proportion to
such deficits being offset to eliminate such deficits as quickly as
possible. It is the intent of the Partners that this section 4.l(b)(iii)
be construed as a qualified income offset provision under Treas. Reg. ss.
l.704-l(b)(2)(ii)(d).
(iv) Fourth, Profits less any amounts allocated pursuant to
section 4.l(a)(i) through (iii) shall be allocated to the General Partners
to the extent necessary to offset any allocations of Loss to such General
Partners pursuant to the last sentence of section 4.l(b)(ii). This
allocation shall be made in reverse order of the allocations to be offset.
-23-
(v) Fifth, the remaining Profits less any amounts allocated
pursuant to section 4.l(a)(i) through (iv), if any, shall be allocated to
the Partners in proportion to their respective Percentage Interests.
(b) Allocation of Losses. Except as otherwise provided in this
Agreement, items of expense, deduction and loss and the Losses of the
Partnership for each fiscal year shall be determined as of the end of such
fiscal year, and shall be allocated to the Partners as follows:
(i) First, Partner Nonrecourse Deductions attributable to a
Partner Nonrecourse Debt shall be allocated to the Partner that bears the
economic risk of loss for such Partner Nonrecourse Debt in accordance with
Temp. Treas. Reg. ss. l.704-1T(b)(4)(iv)(h).
(ii) Second, Losses less any amounts allocated pursuant to
section 4.l(b)(i) shall be allocated to each Partner in proportion to such
Partner's Percentage Interest, provided, however, Losses shall not be
allocated to any Limited Partner to the extent such Losses would cause or
increase a deficit in such Limited Partner's Capital Account balance (in
excess of any amount that such Partner is obligated to restore under
section 8.4 of this Agreement and under Treas. Reg. ss.
1.7O4-1(b)(2)(ii)(c) as well as any addition thereto pursuant to the next
to last sentences of Treas. Reg. ss. l.704-1(b)(4)(iv)(f) and Temp. Treas.
Reg.
-24-
ss. 1.704-1(b)(4)(iv)(h)(5)) and after reducing such balance by any
adjustments, allocations, and distributions specified in Treas. Reg. ss.
1.704-1(b)(2)(ii)(d)(4), (5), and (6) as are reasonably expected to be
made to such Partner). Any Losses (less any amounts allocated pursuant to
section 4.l(b)(i)) that cannot be allocated to a Limited Partner under the
preceding sentence (due to the deficit Capital Account balance
restrictions) shall be allocated to the General Partners in proportion to
their respective Percentage Interests.
(c) Tax Allocations. All items of income, gain, loss, and deduction,
and all tax preferences, depreciation, accelerated cost recovery system
deductions and investment interest and other tax items of the Partnership for
each fiscal year (collectively referred to as "Partnership Tax Items") shall be
allocated for tax purposes to the Partners in accordance with this section
4.1(c).
(i) Except as provided in sections 4.l(c)(ii) and 4.l(c)(iii),
Partnership Tax Items shall be allocated for tax purposes in accordance
with the allocations of items of income, gain, and Partner Nonrecourse
Deductions under sections 4.1(a)(i), 4.l(a)(ii), 4.l(a)(iii), and
4.l(b)(i) and the allocation of Profits and Losses under sections
4.l(a)(iv), 4.l(a)(v), and 4.l(b)(ii). For purposes of
-25-
the preceding sentence, an allocation to a Partner of a share of Profits
or Losses shall be treated as an allocation to such Partner of the same
share of each Partnership Tax Item that is taken into account in computing
such Profits or Losses.
(ii) Except as provided in section 4.l(c)(iii), if there has
been an adjustment to the Partners' Capital Accounts pursuant to the next
to last sentence under the definition of "Capital Accounts" in Article I
to reflect the unrealized income, gain, loss, or deduction inherent in
Partnership property at the time of the acquisition or redemption of LP
Units Partnership Tax Items with respect to such property shall be
allocated to the Partners for tax purposes so as to take into account the
difference between the adjusted tax basis of such property and the value
at which it is reflected in the Partners' Capital Accounts in the same
manner as variations between the adjusted tax basis and fair market value
of property contributed to the Partnership are taken into account in
determining the Partners' allocations of Partnership Tax Items under
section 4.l(c)(iii). For purposes of the preceding sentence, the value at
which property is reflected in the Capital Accounts shall equal the fair
market value of such property on the date it was contributed to or
acquired by the Partnership as adjusted by the aggregate
-26-
adjustments made to all Partners' Capital Accounts with respect to such
property under the next to last sentence under the definition of "Capital
Accounts" and clauses (I) and (II) under the definition of "Profits" and
"Losses" in Article I. The allocations under this section 4.l(c)(ii) are
intended to comply with paragraphs (b)(2)(iv)(f)(4) and (b)(4)(i) of
Treas. Reg. ss. 1.704-1 and shall be interpreted consistently therewith.
(iii) Gain or loss upon sale or other disposition of any
property contributed to the Partnership or any depreciation, amortization,
or other cost recovery deduction allowable with respect to the basis of
property contributed to the Partnership shall be allocated for tax
purposes among the contributing and non-contributing Partners so as to
take into account the difference between the adjusted tax basis and the
Agreed Value of the property on the date of its contribution to the extent
permitted by Treas. Reg. ss. 1.704.1(c)(2) or such superseding regulations
as may be promulgated in accordance with Section 704(c) of the Code. In
making allocations pursuant to the preceding sentence, the Managing
General Partner is authorized to apply any method or convention required
or permitted by Section 704(c) of the Code; provided, however, that the
Managing General Partner shall select such method or convention
-27-
as, in its opinion, will take such variation fully into account.
(d) To the extent consistent with the economic arrangement between
the partners as set forth in this Agreement, accounting matters relating to
allocations of Profits and Losses, Capital Accounts, and allocations of items
for federal income tax purposes shall be handled in such a way that the
allocations of such items will have substantial economic effect or will
otherwise be respected for federal income tax purposes.
(e) Special allocations in the case of a termination. If the
Partnership terminates for tax purposes under Code Section 708(b)(l)(B) either
as a result of the sale by Sheila Harris of her interest in the Savannah
Cellular General Partnership or as a result of the sale by the Providence
Journal Company of the stock of Georgia Metronet and a related election under
Code section 338 ("Technical Termination"), then, to the extent permissible
under applicable regulations, any Partnership nonrecourse deductions (as defined
in Temp. Treas. Reg. ss. l.704-1T(b)(4)(iv)(b)) attributable to property owned
by the Partnership both before and after the Technical Termination and
attributable to any Partnership Nonrecourse debt outstanding at the time of the
Technical Termination will be allocated in such a way that a Limited Partner
(other than Georgia Metronet) holding his interest before the Technical
Termination will not have the
-28-
amount of such deductions allocated to him reduced for any year as a result of
decreased depreciation or other cost recovery deductions entering into the
computation of Profits and Losses with respect to property placed in service on
or before the date of the Technical Termination where such reduction arises
solely because of such Technical Termination. This provision will be
accomplished by reallocating such deductions from the General Partner to such
Limited Partner. Offsetting allocations from such Limited Partner to the General
Partner will be made in subsequent years to the extent that the amount of
Partnership nonrecourse deductions allocated to the Limited Partner are
increased for any year as a result of increased depreciation or other cost
recovery deductions for such year entering into the computation of Profits and
Losses with respect to property placed in service on or before the date of the
Technical Termination where such increase arises solely because of such
Technical Termination; provided that the aggregate amount of offsetting
allocations made to the General Partner from a Limited Partner under this
sentence does not exceed the aggregate amount of allocations made to that
Limited Partner from the General Partner pursuant to the previous two sentences.
No Limited Partner shall be entitled to the benefits of this subsection 4.1(e)
if the depreciation or other cost recovery deductions allowable to such Limited
Partner are greater for such year and preceding
-29-
years, in the aggregate, than would have been the case had the Technical
Termination not occurred.
4.2 Other Items. All other items that must be allocated to the
Partners shall be allocated to the Partners in accordance with the allocation of
Profits and Losses as provided in section 4.1 of this Agreement.
4.3 Distributions. Distributions in cash or in kind may be made in
the discretion of the Managing General Partner. All such distributions shall be
made in proportion to Partners' positive Capital Account balances or, if no
Partner has a positive Capital Account balance, in proportion to Percentage
Interests. Distributions in kind shall be treated as provided in section 8.6.
ARTICLE V
RIGHTS, POWERS AND DUTIES OF THE PARTNERS
5.1 Management of Partnership Business. Subject only to the
limitations contained in this Agreement, the Managing General Partner shall have
exclusive and complete authority in the management and control of the business
of the Partnership for the purposes herein stated, shall make all decisions
affecting the business of the Partnership, and shall have all of the rights and
powers of a general partner as provided in the Delaware Revised Uniform Limited
Partnership Act and as otherwise provided by law. Any action taken by the
Managing General Partner shall constitute the act of and serve
-30-
to bind the Partnership. The Managing General Partner shall manage and control
the affairs of the Partnership to the best of its ability and shall use its best
efforts to carry out the business of the Partnership set forth in Article II,
and in connection therewith, the powers of the Managing General Partner to act
on behalf of the Partnership, which it may exercise at the cost, expense and
risk of the Partnership but subject to the provisions of Section 5.2 hereof,
include (but are not limited to) the following powers:
(a) To construct and operate the Cellular System and to enter into
agreements with others with respect to these activities, which agreements may
contain such terms, provisions and conditions as the General Partner, in its
sole and absolute discretion, shall approve;
(b) To borrow money from any source, for any Partnership purpose,
and in connection therewith to issue notes, debentures and other debt securities
and to hypothecate the assets of the Partnership to secure repayment of the
borrowed sums; so long as this financing is without recourse to any Partner
(other than to any At-Risk Partner). If such financing is not reasonably
available, the Managing General Partner may cause the Partnership to borrow
money with recourse to the Managing General Partner or with recourse to one or
more other General Partners, but only if such General Partners agree in writing
thereto. In any case, however, no borrowing may be undertaken that is with
recourse to the
-31-
Limited Partners (other than At-Risk Partners). No lender to which application
is made for a loan by the General Partner shall be required to inquire as to the
purposes for which such loan is sought. As between this Partnership and such
lender, it shall be conclusively presumed that the proceeds of such loan are to
be and will be used for the purposes authorized under this Agreement;
(c) To invest Partnership assets in bank savings accounts, savings
and loan associations, commercial paper, government securities, certificates of
deposit, bankers' acceptances and other short-term interest-bearing
obligations;
(d) To obtain replacements of any loans or mortgages related in any
way to the Cellular System and prepay in whole or in part, refinance, recast,
modify, consolidate or extend any loans or mortgages affecting any property of
the Partnership;
(e) to investigate, select and determine the relations with
attorneys, accountants, consultants, borrowers, lenders and persons acting in
any other capacity, in connection with the business of the Partnership;
(f) To expend the capital and revenues of the Partnership in
furtherance of the Partnership's business;
(g) To enter into agreements and contracts with Persons to sell,
lease, dispose of, trade, exchange, convey, quitclaim, surrender, release or
abandon all or any part of the real, personal or mixed property of the
Partnership, or
-32-
any interest therein, upon such terms and conditions as the General Partner may
deem advisable, appropriate or convenient;
(h) To perform any and all other acts or activities customary or
incident to the acquisition, ownership, operation, management, and improvement
of the Cellular System and to the conduct of other related activities;
(i) To enter into agreements and contracts with parties and give
receipts, releases and discharges regarding all of the foregoing and any matters
incident thereto as the General Partner may deem advisable or appropriate;
(j) To make such elections under the tax laws of the United States,
the States of Delaware and Georgia and other relevant jurisdictions as to the
treatment of items of Partnership income, gain, loss, deduction and credit, and
as to all other relevant matters (including without limitation elections under
sections 751 through 755 of the Code), as it believes necessary or desirable;
provided, however, that the Managing General Partner shall be required to make
an election under Section 754 of the Code only if the Partners receiving the
benefits of such election shall agree to pay all of the costs to the Partnership
associated with making such election (including recurrent costs) in proportion
to their Percentage Interests affected by the election;
(k) To delegate all or any of its duties hereunder and in
furtherance of any such delegation to appoint, employ, or make a contract with
any Person (including without
-33-
limitation Affiliates of the Managing General Partner) as the Managing General
Partner may in its sole discretion deem necessary or desirable for the
transaction of the business of the Partnership. Such a Person may, under the
supervision of the Managing General Partner, perform any of the following or
other acts or services for the Partnership as the Managing General Partner may
approve, provided, however, that the Managing General Partner shall continue to
be primarily responsible to the Partnership for the performance of all such
obligations: administer the day-to-day operations of the Partnership; serve as
the Partnership's advisor and consultant in connection with policy decisions
made by the Managing General Partner; act as consultants, accountants,
correspondents, attorneys, brokers, escrow agents, or in any other capacity
deemed by the Managing General Partner necessary or desirable; investigate,
select and, on behalf of the Partnership, conduct relations with persons acting
in such capacities with, or employ, or retain services performed or to be
performed by, any of them in connection with the Cellular System; and perform or
assist in the performance of administrative or managerial functions necessary in
the management of the Partnership and the Cellular System; and
(l) Perform or engage in any other acts or activities, and execute
or deliver all other instruments or other writings of any kind or character, as
the Managing General Partner, in its sole discretion, may determine to be
necessary
-34-
or appropriate to carry out the purposes, powers, and business of the
Partnership in Article II, subject only to the limitations set forth in this
Agreement.
5.2 Restrictions on the Managing General Partner's Authority.
(a) Notwithstanding anything in this Agreement to the contrary, the
Managing General Partner may not (except with the written consent or
ratification of the specific act given in accordance with this Agreement by all
the Limited Partners or by other written instrument executed and delivered by
all the Limited Partners subsequent to the date of this Agreement) do any of the
following:
(i) perform any act in contravention of this Agreement;
(ii) perform any act which would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise provided
in this Agreement;
(iii) possess or assign any rights in specific Partnership
property, other than for a Partnership purpose;
(iv) admit a person as a Partner, except as otherwise provided
in this Agreement; or
(v) amend this Agreement in a manner which affects the rights
of the Limited Partners, except as otherwise provided in Articles IX and
XII.
-35-
5.3 Sale of Additional LP Units.
(a) If, in the judgment of the Managing General Partner, the
Partnership is unable to obtain adequate funds on reasonable terms for the
construction and operation of the Cellular System through the borrowing of funds
in accordance with section 5.1(b), the Managing General Partner may cause the
Partnership to sell additional LP Units in the Partnership, of the same class as
the LP Units initially issued or of a separate class that may be subject to
additional capital calls, on such terms and conditions as it may deem to be
appropriate in order to raise capital; provided, however, that any Partner
(including all General Partners) holding LP Units or GP Units at the time of any
such sale shall be offered the opportunity to purchase such portion of the
additional LP Units being offered for sale as is equal to such Partner's
Percentage Interest in the Partnership.
(b) Any sale of additional LP Units pursuant to this Section
shall be conducted in a manner consistent with the federal securities laws and
the blue sky or other securities laws of any state in which an offer to sell
such additional LP Units may be deemed to be made and shall be conducted in such
a manner that it does not result in the termination of the Partnership for tax
purposes under Section 708(b) of the Code. The transfer of any additional LP
Units sold pursuant to this Section shall be restated in accordance with Article
VII of this Agreement.
-36-
5.4 Tax Matters Partner. The Managing General Partner is hereby
designated as the "Tax Matters Partner" in accordance with Section 6231(a)(7) of
the Code and, in connection therewith and in addition to all other powers given
thereunder, shall have all other powers needed to perform fully hereunder,
including, without limitation, the power to retain all attorneys and accountants
of its choice and the right to settle any audits without the consent of the
Limited Partners. The Managing General Partner shall be entitled to
reimbursement from the Partnership for all necessary and reasonable
out-of-pocket expenses incurred in performing its duties as Tax Matters Partner.
5.5 Management Fees; Reimbursement of Expenses. The Partnership
shall reimburse the Managing General Partner for reasonable and necessary
out-of-pocket expenses incurred by the Managing General Partner (or any
partner therein) in performing the Managing General Partner's duties hereunder,
and shall pay to the Managing General Partner the sum of $25,000 per annum as
compensation for its performance of such duties. General partners in the Initial
General Partner, including the Managing Partner, may enter into consulting or
other agreements with the Partnership and may be paid reasonable compensation
for services actually rendered to the Partnership pursuant to any such
agreements. Except for the reimbursement and compensation expressly provided for
in this Section 5.5, neither the Managing General Partner nor any
-37-
partners therein shall receive any compensation or reimbursement of expenses for
services performed for or on behalf of the Partnership.
5.6 Limitations on Limited Partners. The Limited Partners shall not
participate in the management or control of the Partnership's business, nor
shall they transact any business for the Partnership, nor shall they have the
power to sign for or bind the Partnership, said powers being vested solely and
exclusively in the Managing General Partner. Each Limited Partner hereby
consents to the exercise by the Managing General Partner of the power conferred
on the Managing General Partner by this Agreement.
5.7 Other Interests of Partners. Any of the Partners may engage or
invest in any other business venture or activity of any nature and description,
or possess any interest therein, independently or with others, including, but
not limited to, the operation of cellular systems in other areas. Neither the
Partnership nor the Managing General Partner nor any Limited Partner nor any
Affiliate of the Managing General Partner or of a Limited Partner shall have any
duty or obligation to disclose or offer to the Partnership or the Partners, or
to obtain for the benefit of the Partnership or the Partners, any other venture
or activity or interest therein; and the Partnership, the Partners, the
creditors of the Partnership and any other person having an interest in the
Partnership shall not merely by virtue of the
-38-
Partnership, have any rights in and to such other ventures of a Partner or the
income or profits derived therefrom.
ARTICLE VI
TRANSFER OF GENERAL PARTNERSHIP INTEREST
6.1 Transfer of GP Units. A Partner may not make a Transfer of all
or any portion of its GP Units unless the Transfer satisfies the following
conditions:
(i) the Transfer is in accordance with and does not violate
the Option Agreement;
(ii) in the opinion of reputable legal counsel chosen by the
Managing General Partner, the Transfer of such Units does not violate
federal securities laws, does not result in the termination of the
Partnership within the meaning of Section 708(b) of the Code (a "Tax
Termination") (provided, however, that Transfers of GP Units to GMI made
on or within 180 days after the fifth anniversary of the date on which an
FCC Form 489 in respect of the Cellular System is filed pursuant to the
Option Agreement, may be made regardless of whether or not they will
result in a Tax Termination), and does not jeopardize the status of the
Partnership for income tax purposes;
(iii) the Transfer of such GP Units is not to a minor or
incompetent, except that this limitation shall
-39-
not apply to a transfer in trust for the benefit of a minor or an
individual in custodianship under the Uniform Gifts to Minors Act or
similar legislation;
(iv) any and all FCC and/or state or local regulatory consents
or approvals necessary to permit consummation of the transfer have been
obtained, and any and all necessary filings with the FCC and/or any other
regulatory or governmental agency in respect of such transfer have been
made; and
(v) if (following the Transfer) the Initial General Partner
no longer holds more than 50% of the outstanding GP Units and no General
Partner holds more than 50% of the outstanding GP Units, the holders of
50% or more of the outstanding GP Units (determined after the Transfer)
agree in writing on a General Partner who accepts responsibility for the
management and control of the Partnership as a substitute Managing General
Partner.
6.2 Conversion of GP Units into LP Units. After a transfer of GP
Units in accordance with section 6.1 and receipt by the Managing General Partner
of the Transferee's agreement in writing to be bound by the terms of the Option
Agreement and upon the approval of the Managing General Partner, any Transferee
other than the Managing General Partner may convert the GP Units transferred
into LP Units by giving written notice to the Managing General Partner, provided
that, in the opinion of reputable legal counsel
-40-
chosen by the Managing General Partner, the conversion will not (i) jeopardize
the limited liability of the Limited Partners, (ii) result in the termination of
the Partnership under Code section 708(b), nor (iii) constitute a violation of
any applicable federal or state securities laws. Upon the conversion of GP Units
into LP Units, the holder of those units shall henceforth have, with respect to
the units, only the rights and responsibilities of a holder of LP Units, but the
LP Units shall carry with them the right to receive the distributions and
allocations to which the former GP Unit holder was entitled under Articles IV
and VIII.
6.3 Withdrawal of General Partners. The Managing General Partner may
not transfer all of its GP Units or otherwise voluntarily Withdraw from the
Partnership (other than by operation of law) unless (i) a new Managing General
Partner has been selected in accordance with section 6.l(v) and (ii) that new
Managing General Partner has agreed in writing to serve as such. No General
Partner may withdraw from the Partnership other than (i) by transfer of its GP
Units, in accordance with this Article, (ii) upon dissolution of the Partnership
in accordance with Article VIII, or (iii) by operation of law. Each of the
Limited Partners hereby specifically consents to Georgia Metronet, Inc.,
becoming the Managing General Partner of the Partnership upon its purchase of
more than 50% of the Initial General Partner's GP Units pursuant to the terms of
the Option Agreement.
-41-
6.4 Liability of a Retired General Partner. If the business of the
Partnership is continued after the Initial General Partner (or other former
Managing General Partner) is no longer a holder of GP Units, the Initial General
Partner (or such other former Managing General Partner) shall not incur any
obligation or liability on account of the business of the Partnership or the
activities of the Managing General Partner occurring after the Initial General
Partner (or such other former Managing General Partner) is no longer a Partner.
ARTICLE VII
TRANSFER OF LIMITED PARTNERSHIP INTERESTS
7.1 Transfer of LP Units.
(a) Right to Transfer. Except as provided in Section 8.4, a Limited
Partner shall not have the right to make a Transfer of all or any part of its LP
Units unless the Transfer satisfies the following conditions:
(i) the Transfer is in writing;
(ii) there is filed with the Partnership a duly executed and
acknowledged counterpart of the instrument making the Transfer, and such
instrument evidences the written acceptance of the Transferee to all the
terms and provisions of this Agreement, and the representation that the LP
Unit(s) are being taken for the purposes of investment and not with a view
to resale or distribution;
-42-
(iii) the Transfer of such LP Units is not to a minor or
incompetent, except that this limitation shall not apply to a transfer in
trust for the benefit of a minor or an individual in custodianship under
the Uniform Gifts to Minors Act or similar legislation;
(iv) the Limited Partner desiring to Transfer his Partnership
Interest secures, at his own expense, an opinion of counsel to the
Partnership acceptable to the General Partner, or a "no-action letter"
from the staff of the Securities and Exchange Commission acceptable to the
General Partner, to the effect that the proposed transaction will not
violate the federal securities laws; and
(v) the Limited Partner desiring to Transfer his Partnership
Interest secures, at his own expense, an opinion of counsel to the
Partnership acceptable to the General Partner to the effect that the
proposed transaction would not result in the close of the Partnership's
taxable year with respect to all Partners, would not result in the
termination of the Partnership within the meaning of Section 708(b) of the
Code (provided, however, that transfers to GMI pursuant to Option
Agreements that take place on or within 180 days after the fifth
anniversary of the date on which an FCC Form 489 in respect of the
Cellular System is filed shall be permitted whether or not such transfers
would result in
-43-
a Tax Termination), and would not jeopardize the status of the Partnership
and Partners for federal income tax purposes.
(b) Rights of Transferee. The Transferee of an LP Unit Transferred
in accordance with the provisions of this Article VII shall become a Substitute
Limited Partner only upon the consent of the Managing General Partner, which
consent may be given or withheld in the Managing General Partner's sole
discretion. Failure or refusal of the Managing General Partner to admit a
Transferee of any LP Units Transferred in accordance with the provisions of this
Article VIII as a Substitute Limited Partner shall in no way affect the right of
such Transferee to receive the share of the capital and Profits and Losses to
which his predecessor in interest was entitled. A transferee of any LP Units who
does not become a Substitute Limited Partner in accordance with this Section 7.2
and who desires to make a further assignment of its LP Units shall be subject to
all the provisions of this Section 7.2 to the same extent and in the same manner
as any Limited Partner desiring to make a Transfer of his LP Units.
(c) Rights of Transfer. Any Limited Partner who shall Transfer his
LP Units shall cease to be a Limited Partner of the Partnership and shall no
longer have any of the rights or privileges of a Limited Partner.
-44-
7.2 Death of a Limited Partner. The death, bankruptcy or insolvency
of a Limited Partner will not terminate the Partnership. In the event of the
death of a Limited Partner, except as hereinafter provided in this Section 7.2,
his executor or administrator shall succeed to his interests and shall be
responsible for all the liabilities and obligations of the deceased Limited
Partner under this Agreement, but shall have the right to become a Substitute
Limited Partner only in accordance with the provisions of Section 7.1. For the
purpose of settling the estate of the deceased Limited Partner, the executor or
administrator shall have only such rights of a Limited Partner as are necessary.
7.3 Effectiveness of Transfer. (a) The Transfer by a Limited Partner
(or by a Transferor of a Limited Partner) pursuant to Section 7.1 hereof of all
or part of its LP Units shall become effective on the first day of the month
following receipt by the General Partner of evidence of such assignment in form
and substance reasonably satisfactory to the General Partner and a fee
sufficient to cover all reasonable expenses of the Partnership connected with
such Transfer, provided that the General Partner may, in its sole discretion,
establish an earlier effective date for the assignment if requested to do so.
(b) No Transfer of an LP Unit or any part thereof an violation of
this Article shall be valid or effective, and
-45-
the Partnership shall not recognize the same for the purposes of making payment
or distributions of Profits, Income, return of Capital Contributions or other
distribution with respect to such Partnership Interests, or part thereof. The
Partnership may enforce the provisions of this Article either directly or
indirectly or through its agents by entering an appropriate stop-transfer order
on its books or otherwise refusing to register or transfer or permit the
registration or transfer on its books of any proposed Transfers not in
accordance with this Article VII.
(c) The Partnership shall, from such time as Partnership Interests
are registered in the name of the Transferee on the Partnership's books in
accordance with the above provisions, pay to the Transferee all further
distributions or Profits or other compensation by way of income or return of
capital, on account of the Partnership Interest Transferred. Until the
registration of Transfer on the Partnership's books, the Managing General
Partner may proceed as if no Transfer has occurred.
7.4 Determination of Order of Transfer by Partners.
(a) If, at any time in the opinion of reputable legal counsel chosen
by the Managing General Partner, Partners desire to Transfer a number of LP
Units and GP Units that, were all such Units to be Transferred, would cause the
Partnership to terminate for tax purposes pursuant to Section
-46-
708(b) of the Code, the Managing General Partner shall allow such Transfers to
be consummated only at such times as will not result in the termination of the
Partnership for tax purposes. The Managing General Partner shall have the right
to require the consummation of some or all proposed Transfers of GP or LP Units
to be deferred until such time or times as such consummation will not result in
termination of the Partnership for tax purposes.
(b) The General Partnership shall choose the Partners that will be
required to defer their proposed Transfers of GP or LP Units pursuant to section
(a) hereof in the following manner:
(i) As between requests to Transfer that were received by the
Managing General Partner at different times, the later received requested
Transfer shall be deferred. For this purpose, receipt shall occur upon
actual written notification, received by any agent of the Managing General
Partner acting in such capacity, setting forth the Transferor, the
Transferee, and the number of LP Units or GP Units to be transferred. A
request to Transfer by the Managing General Partner shall be considered to
be received on the date it is actually committed to writing and executed.
(ii) Among requests to Transfer that were received
simultaneously, the Managing General Partner may, in its sole discretion,
either (a) allow each
-47-
Partner requesting approval to transfer immediately that Pro Rata portion
of the LP or GP Units it wishes to Transfer that, taken together with all
other such immediate Transfers, will not result in the termination of the
Partnership for tax purposes, and require each Partner to defer
consummation of the Transfer of the remainder of its LP or GP Units, or
(b) designate by lot an order in which Partners will be permitted to
Transfer their LP or GP Units. Each Partner whose name is chosen shall be
permitted in turn to consummate its proposed Transfer in full on the first
date on which such a Transfer would not, in the judgment of the Managing
General Partner, result in the termination of the Partnership for tax
purposes.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION
8.1 Events Causing Termination. The Partnership shall be dissolved
and its affairs wound up upon:
(a) the Withdrawal of the Managing General Partner if no Managing
General Partner remains and the Limited Partners do not elect pursuant to
Section 8.2 to reconstitute the Partnership;
(b) the sale or other disposition of all or substantially all of the
Partnership's real, personal and
-48-
intangible property or of the interests in the Cellular System owned by the
Partnership;
(c) the expiration of the term of the Partnership;
(d) the Unanimous Vote of all the Partners to terminate the
Partnership; or
(e) otherwise by operation of law.
8.2 Successor Partnership. If the Partnership is dissolved or to be
dissolved by reason of the Withdrawal of the Managing General Partner without
replacement pursuant to Section 8.1(a), Limited Partners whose aggregate
Partnership Percentage exceeds twenty-five percent (25%) may call a meeting of
the Limited Partners by delivering to each of the other Limited Partners, within
thirty (30) days of such Withdrawal, a written notice demanding that a meeting
of Limited Partners be held at the principal place of business of the
Partnership or at another location at the time set forth in such notice (which
shall be not less than fifteen nor more than thirty days after the date of such
notice). Limited Partners having all (100%) of the Limited Partnership Interests
may, by affirmative vote at such meeting, continue the business of the
Partnership and reconstitute the Partnership as a successor limited partnership
with a new General Partner if, in the opinion of reputable legal counsel
approved by the holders of over 50% of the outstanding LP Units, the proposed
reconstitution of the Partnership does not result in the termination of the
Partnership within the
-49-
meaning of Section 708(b) of the Code and does not jeopardize the status of the
Partnership for federal income tax purposes. If the Limited Partners exercise
this right to continue the business of the Partnership, the Person appointed by
them as the new Managing General Partner, the former Managing General Partner,
and each of the Limited Partners shall execute, acknowledge and file with the
Secretary of State of the State of Delaware a Certificate and Agreement of
Limited Partnership that shall contain substantially the same provisions as
those contained herein and in the Certificate of Limited Partnership of the
Partnership, except that the new Managing General Partner shall be allocated
such share of the profits, losses and distributions of the Partnership, or shall
be paid such fees, as is determined by Partners whose aggregate Percentage
exceeds seventy-five percent (75%). Under this new Certificate and Agreement of
Limited Partnership, the former Managing General Partner shall not be then
entitled to payment of the unreturned balance in its Capital Account, but
instead shall thereafter have the status of an assignee of the GP Units of the
former Managing General Partner and shall receive distributions and allocations
to which it is entitled under Article IV and this Article VIII. The new General
Partner shall indicate its acceptance of the appointment by the execution of
such Certificate and Agreement of Limited Partnership.
-50-
8.3 Final Accounting. Upon the dissolution of the Partnership a
proper accounting shall be made from the date of the most recent prior
accounting to the date of dissolution.
8.4 Negative Capital Account. Upon the dissolution of the
Partnership, any General Partner who has a negative balance in his Capital
Account, as determined after taking into account all Capital Account adjustments
for the fiscal year during which such dissolution occurs, shall be obligated to
contribute to the Partnership by the end of such fiscal year (or, if later,
within 90 days after the date of such dissolution) an amount such that the
balance in his Capital Account is zero, such amount to be applied and
distributed as provided in Section 8.5. No Limited Partner shall have any
obligation to pay any amount to the Partnership on account of a negative Capital
Account Balance.
8.5 Procedure on Liquidation. Unless the business of the Partnership
is continued pursuant to Section 8.2, upon the dissolution of the Partnership,
the Managing General Partner or the Persons required by law to wind up the
Partnership's affairs shall liquidate the assets of the Partnership and apply
and distribute the proceeds of such liquidation as follows:
(a) First, to payment of debts and liabilities of the Partnership;
-51-
(b) Second, to the setting up of reasonable reserves for any
contingent liabilities or obligations of the Partnership, provided that any such
reserves shall be held for such period as the General Partner or other Persons
so distributing shall deem advisable for the purpose of disbursing such reserves
in payment of such liabilities or obligations and, at the expiration of such
period, the balance of such reserves, if any, shall be distributed as
hereinafter provided;
(c) Third, to the Partners in accordance with their Capital Accounts
as adjusted pursuant to Article IV for all Partnership operations up to and
including such liquidation.
8.6 Distribution in Kind. If the Managing General Partner or the
Persons required by law to wind up the Partnership's affairs shall determine
that a portion of the Partnership's assets should be distributed to the
Partners, the Managing General Partner or such Persons, as the case may be,
shall obtain an Appraisal as of a date reasonably close to the date of
liquidation. Any unrealized appreciation (or loss) with respect to such assets
shall be allocated among the Partners (in accordance with Section 4.1, assuming
that the property were sold for the appraised value) and distribution of any
such assets (or portions thereof as tenants in common) in kind to a Partner
shall be considered a
-52-
distribution of an amount equal to the assets' appraised fair market value (or
portions thereof) for purposes of Section 8.5.
8.7 Certificate of Cancellation. Upon the completion of the
distribution of Partnership assets as provided in Sections 8.5 and 8.6, the
Partnership shall be terminated and the Managing General Partner or Persons
required by law to wind up the Partnership's affairs shall cause a certificate
of cancellation to be filed in the office of the Secretary of State of the State
of Delaware and shall take such other actions as may be necessary or appropriate
to terminate the Partnership.
8.8 No Recourse Against the General Partners. A Limited Partner
shall look solely to the assets of the Partnership for the return to its
investment, and if the property of the Partnership remaining after the payment
or discharge of the debts and liabilities of the Partnership is insufficient to
return such investment, it shall have no recourse against the Managing General
Partner, any General Partner or other holders of GP Units or any of their
Affiliates or against any other Limited Partner. Distributions in accordance
with the provisions of this Article VIII upon termination and dissolution of the
Partnership will constitute a complete return to the Partners of their interests
in the profits of the Partnership and their Capital Contributions, a final and
complete distribution to the Partners of
-53-
all their interests in the Partnership properties and its other assets, and a
final termination and settlement of any and all of the Partners' other interests
in the Partnership.
ARTICLE IX
POWER OF ATTORNEY
Section 9.1. Appointment.
(a) Each Limited Partner hereby irrevocably constitutes and appoints
the Managing General Partner his true and lawful attorney-in-fact, and
empowers and authorizes such attorney, in his name, place and stead to make,
execute, deliver, acknowledge, swear to, file and record in all necessary or
appropriate places such documents as may be necessary or appropriate to carry
out this Agreement, including but not limited to:
(1) any application, certificate, certification, report or
similar instrument or document required to be submitted by or on behalf of
the Partnership to any governmental or administrative agency, officer or
body, or to any self-regulatory organization or trade association in
furtherance of the Partnership business;
(2) all certificates and other instruments (including
counterparts of this Agreement), and any amendment thereof, which the
Managing General Partner deems appropriate to form, qualify or continue
the Partnership as a limited partnership in the
-54-
jurisdictions in which the Partnership may conduct business or in which
such formation, qualification or continuation is, in the opinion of the
Managing General Partner, necessary or desirable to protect the limited
liability of the Limited Partners;
(3) all amendments to this Agreement adopted in accordance
with the terms hereof and all amendments to this Agreement as may be
necessary or appropriate to reflect or effect:
(i) a change of the name or the location of the
principal place of business of the Partnership,
(ii) the Transfer or acquisition of any Partnership
Interests by a Limited Partner or a General Partner in any manner
permitted by this Agreement,
(iii) a Person becoming a Substitute Limited Partner in
the Partnership or a substitute Partner in the Partnership as
permitted by this Agreement,
(iv) a change in any provision of this Agreement
effected by the exercise by any Person of any right or rights
hereunder, and
(v) the dissolution of the Partnership pursuant to this
Agreement;
-55-
(4) such certificates, instruments and documents as may be
required by, or may be appropriate under, the laws of Delaware in
connection with the use of the name of the Partnership by the Partnership;
(5) such certificates, instruments and documents as such
Limited Partner may be required, or as may be appropriate for such Limited
Partner to make, under the laws of Delaware or Georgia, to reflect
(i) a change of name or address of such Limited Partner,
(ii) any changes in or amendments of this Agreement, or
pertaining to the Partnership, of any kind referred to in this
Section 9.1, and
(iii) any other changes in or amendments of this
Agreement but only if and when the consent thereto has been obtained
from the Managing General Partner and Limited Partners having all
(100%) of the Limited Partnership Interests; and
(6) all conveyances and other instruments which the Managing
General Partner deems appropriate to reflect the dissolution and
termination of the Partnership.
(b) Each of the agreements, certificates, instruments and documents
made pursuant to Section 9.1(a) shall be in such form as the Managing General
Partner and counsel for the Partnership shall deem appropriate. The powers
conferred
-56-
by Section 9.1(a) to make agreements, certificates, instruments and documents
shall be deemed to include, without limitation, the powers to sign, execute,
acknowledge, swear to, verify, deliver, file, record or publish the same.
(c) Each Limited Partner authorizes the Managing General Partner as
such attorney-in-fact to take any further action which such Managing General
Partner shall consider necessary or advisable in connection with any action
taken pursuant to this Section 9.1, hereby giving such Managing General Partner
as such attorney-in-fact full power and authority to do and perform each and
every act or thing whatsoever requisite or advisable to be done in and about any
action taken pursuant to this Section 9.1 as fully as such Limited Partner might
or could do if personally present and hereby ratifying and confirming all that
such Managing General Partner as such attorney-in-fact shall lawfully do or
cause to be done by virtue of this Section 9.1.
9.2. Irrevocability; Manner of Exercise. The power of attorney
granted hereunder:
(a) is a special power of attorney coupled with an interest and is
irrevocable;
(b) may be exercised by the Managing General Partner as such
attorney-in-fact, by listing all of the Limited Partners executing any
agreement, certificate, instrument or document with the single signature of such
General Partner; and
-57-
(c) shall survive the Transfer by a Limited Partner of the whole or
a portion of its interest, except that where the purchaser, Transferee or
assignee thereof with the consent of the Managing General Partner is admitted as
a Substitute Limited Partner, the power of attorney shall survive the Transfer
for the sole purpose of enabling such attorney-in-fact to execute, acknowledge
and file any agreement, certificate, instrument or document necessary to effect
such substitution.
9.3 Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all other acts and things, as
may be required by law or as, in the opinion of the Managing General Partner,
may be necessary or advisable to carry out the intent and purposes of this
Agreement.
ARTICLE K
LIABILITY AND INDEMNIFICATION OF THE MANAGING GENERAL PARTNER
10.1 Return of Capital Contribution. Anything in this Agreement to
the contrary notwithstanding, the Managing General Partner shall not be liable
for the return of the Capital Contributions of the Limited Partners, or any
portion thereof, it being expressly understood that any such return shall be
made solely from the Partnership assets.
-58-
10.2 Liability for Actions or Omissions. The performance of any act
or the omission of any act by the Managing General Partner, in the good faith
belief that he was acting within the scope of his authority under this Agreement
on behalf of the Partnership or in furtherance of the Partnership's interests,
shall not subject the Managing General Partner to any liability to the
Partnership or to the Partners; provided, however, that the foregoing shall not
relieve the Managing General Partner of liability for: (i) fraud, gross
negligence, or willful misfeasance of the General Partner, (ii) violations of
his fiduciary duties, or (iii) acts or omissions of the Managing General Partner
which are in breach of his obligations hereunder.
10.3 Indemnification by Partnership. The Partnership shall indemnify
and save harmless the Managing General Partner from and against any claim, loss,
expense, liability, action or demand incurred by the Managing General Partner in
respect of any omission to act or of any act performed by the Managing General
Partner in the good faith belief that he was acting or refraining from acting
within the scope of his authority under this Agreement on behalf of the
Partnership or in furtherance of the Partnership's interests, provided, however,
that the Managing General Partner shall not be entitled to any indemnity for any
loss sustained or fees or expenses incurred by the Managing General Partner by
reason of: (i) fraud, gross negligence or willful misfeasance of
-59-
the Managing General Partner, (ii) violations of his fiduciary duties, (iii)
acts or omissions of the Managing General Partner which are in breach of his
obligations hereunder, and (iv) his Pro Rata share of any loss sustained or fees
or expenses incurred by the Partnership. This indemnification shall be binding
upon and inure to the benefit of the Managing General Partner, its heirs,
successors and assigns.
ARTICLE XI
FISCAL MATTERS
11.1 Title to Property and Bank Accounts. The property of the
Partnership shall be held in the name of the Partnership. The Managing General
Partner may not commingle property of the Partnership with any other property of
the Managing General Partner or property of an Affiliate of the General Partner.
All deposits (including security deposits) and other funds not needed in the
operation of the business may, to the extent permitted by applicable
governmental requirements, be deposited in any bank or trust company, or
invested in (i) commercial paper having the highest rating by either Standard
and Poor's Corporation or Moody's Investors Services, Inc., (ii) United States
Government securities, (iii) securities of governmental agencies, (iv) insured
money market funds, and (v) bankers' acceptances and certificates of deposit of
banks having individual capital and surplus of not less than one hundred million
dollars ($l00,000,000).
-60-
The Managing General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in its possession or control, and shall not employ, or permit another to employ,
such funds or assets in any manner except for the exclusive benefit of the
Partnership. The Managing General Partner may not contract away its fiduciary
duties.
11.2 Books and Reports.
(a) Maintenance of Books. The Managing General Partner shall keep or
cause to be kept complete and accurate books with respect to the Partnership's
business. Each of the Partners and their duly authorized representatives shall
have the right to examine the books of the Partnership and all other records and
information concerning the Partnership at reasonable times.
(b) Annual Reports. On or before April 1 of each year, the Managing
General Partner shall cause to be prepared and sent to the Limited Partners a
statement setting forth the Limited Partner's share of Profits and Losses,
including those for income tax purposes for the preceding calendar year,
together with an annual financial statement of the Partnership in accordance
with generally accepted accounting principles.
(c) Fiscal Year. The fiscal year of the Partnership shall be the
calendar year.
-61-
11.3 Tax Elections. Notwithstanding the provisions of Section 5.1
herein, if a Partner transfers all or part of its interest in the Partnership at
a profit, any basis adjustment allocable to such profit, whether made under
Section 754 of the Code or otherwise, shall be allocated solely to the
transferee.
ARTICLE XII
GENERAL PROVISIONS
12.1 Obligations and Rights of Transferees.
(a) Assumption of Obligations. Any Person who acquires in any manner
whatsoever any interest in the Partnership, regardless of whether such Person
has accepted and adopted in writing the terms and provisions of this Agreement,
shall be deemed by the acceptance of the benefit of the acquisition thereof to
have agreed to be subject to and bound by the same obligations under this
Agreement that the predecessor in interest of such Person was subject to or
bound by.
(b) Limitation on Rights of Transferees. A person acquiring an
interest in the Partnership, including the personal representative and heirs of
a deceased Partner, shall have only such rights, and shall be subject to all the
obligations, as are set forth in this Agreement; and, without limiting the
generality of the foregoing, such Persons shall not have any right to have the
value of its interest ascertained or to receive the value of such interest or,
in lieu
-62-
thereof, to receive profits attributable to any right in the Partnership, except
as herein set forth.
12.2 Notice. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been given when the same are (i)
deposited in the United States mail and sent by certified or registered mail,
postage prepaid, or (ii) delivered, in each case, to the parties at the
addresses set forth in Schedule A annexed hereto or at such other addresses as
such parties may designate by notice to the Managing General Partner.
12.3 Waiver of Action for Partition. Each of the Partners
irrevocably waives during the term of the Partnership and during the period of
its liquidation following any dissolution any right that such Partner may have
to maintain any action for Partition with respect to any of the assets of the
Partnership.
12.4 No Warranties or Representations Other Than As Expressed.
Except as set forth in this Agreement, neither the Managing General Partner nor
the Partnership makes any warranty or representation of any kind to any Partner,
and no Partner makes such warranty to the Partnership or any other Partner
relating directly or indirectly to the Partnership or the Partnership Interests,
or the operations, income, losses or profitability thereof, or the tax
consequences of investing in the Partnership. Each Partner understands that no
one is authorized to make any such warranty or representation on
-63-
behalf of the Partnership or any Partner except as herein stated.
12.5 Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements herein shall survive until the
dissolution and final liquidation of the Partnership, except to the extent that
a representation, warranty or agreement expressly provides otherwise.
12.6 Agreement in Counterparts. This Agreement may be executed in
counterparts and all counterparts so executed shall constitute one agreement
binding on all the parties hereto as long as each counterpart is signed by the
General Partner and as long as each Limited Partner shall sign at least one
counterpart.
12.7 Variance of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the Person or Entity may require.
12.8 Captions. Captions contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit, extend, or describe
the scope of this Agreement or the intent of any provisions hereof.
12.9 Construction. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any third party, including, without
limitation, any creditor of the Partnership. Except as otherwise expressly
provided
-64-
herein, all provisions of this Agreement shall be binding on, inure to the
benefit of, and be enforceable by or against, the heirs, successors, legal
representatives and assigns of the parties hereto.
12.10 Severability. In case one or more of the provisions contained
in this Agreement or any application thereof shall be invalid, illegal, or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained here and any other application thereof shall not
in any way be affected or impaired thereby, unless a manifest injustice or
inequity would result from the applicability and enforcement of such remaining
provisions.
12.11 Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware applicable to contracts
made and to be performed wholly within such jurisdiction.
12.12 Consent of the Partners. Wherever the consent of Partners is
permitted or required under this Agreement, such consent may be given in writing
or at a meeting of the Partnership held at the principal place of business of
the Partnership pursuant to notice stating the nature of the business to be
transacted and delivered to all Partners in the manner described in Section 12.2
not less than 15 nor more than 50 days prior to such meeting.
12.13 Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the
-65-
parties hereto with respect to the subject matter hereof, expressly superseding
and replacing any and all Alliance Agreements with respect to the Cellular
System pursuant to which the Partners have rights to receive interests in the
Cellular System, and there are no agreements, restrictions, representations, or
warranties concerning the parties other than those set forth herein.
12.14 Effective Date. This Agreement shall become effective
immediately upon its execution by the General Partner and Limited Partners.
12.15 Amendment. This Agreement may be amended upon the prior
written consent of the General Partner and Limited Partners whose aggregate
Partnership Percentage exceeds fifty percent of the outstanding Partnership
Percentage held by Limited Partners; provided, however, that no amendment shall,
without the prior written consent of all Partners: (i) modify the purposes of
the Partnership or the character of its business; (ii) impose or create any new
or additional liability on any Partner or enlarge the obligations of any Partner
to make contributions to the capital of the Partnership as provided in this
Agreement; or (iii) alter the Partnership Percentages or allocations of
distributions and profits and losses set forth in this Agreement.
* * *