Partnership Agreement

PARTNERSHIP AGREEMENT

(Alberta)

This Partnership Agreement (the "Agreement") is entered into on ________ by the following parties:

________, located at the following address:

________

and

________, located at the following address:

________

(collectively the "Partners" and each of them a "Partner")

WHEREAS the parties intend to become partners and to form a business relationship;

AND WHEREAS the parties wish to associate themselves as partners in business and wish to set out the terms and conditions that govern the partnership;

NOW THEREFORE, in consideration of the promises and the mutual covenants contained herein, and for other valuable consideration (the receipt and adequacy of which is hereby acknowledged), the parties hereto agree as follows:

1. Partnership

The Partners hereby agree to enter into a partnership (the "Partnership") in accordance with the laws of the Province of Alberta (the "Act").

2. Name

The firm name of the Partnership will be the following: ________.

Or such other name as the Partners may agree to from time to time.

3. Purpose

The purpose of the Partnership will be the following:

________

4. Term

The Partnership will begin on ________ and will continue until terminated as provided in this Agreement.

5. Place of Business

The Partnership will operate from such location(s) as the Partners may designate from time to time.

6. Capital Contributions

6.1. Each of the Partners contributed to the capital of the Partnership, in cash, property, or services, represented in fair market value, as follows (the "Capital Contribution"):

6.1.1. ________: $________ (________)

6.1.2. ________: $________ (________)

6.2. All contributions will be submitted fully and on time, no later than ________.

6.3. All capital contributions are final unless all partners give written consent of withdrawal.

7. Additional Capital

7.1. Capital contributions may be amended from time to time, according to the requirements of the Partnership provided that the interests of the Partners are not affected, except with the unanimous consent of the Partners. No Partner will be required to make additional capital contributions. Whenever additional capital is determined to be required and an individual Partner is unwilling or unable to meet the additional contribution requirement within a reasonable period, as required by Partnership business obligations, remaining Partners may contribute in proportion to their existing capital contributions to resolve the amount in default. In such case, the allocation of profits or losses among all the Partners will be adjusted to reflect the aggregate change in capital contributions by the Partners.

7.2. Any advance of money to the Partnership by any Partner in excess of the amounts provided for in this Agreement or subsequently agreed to as additional capital contribution will be deemed a debt owed by the Partnership and not an increase in capital contribution of the Partner. This liability will be repaid with interest at rates and times to be determined by a majority of the Partners within the limits of what is required or permitted in the Act. This liability will not entitle the lending Partner to any increased share of the Partnership's profits nor to a greater voting power. Such debts may have preference or priority over any other payments to Partners as may be determined by a majority of the Partners.

8. Capital Accounts

An individual capital account (the "Capital Accounts") will be maintained for each Partner and their initial capital contribution will be credited to this account. Any additional capital contributions made by any Partner will be credited to that Partner's individual capital account.

9. Interest on Capital

No borrowing charge or loan interest will be due or payable to any Partner on their agreed capital contribution inclusive of any agreed upon additional capital contributions.

10. Financial Decisions

Decisions regarding the distribution of profits, allocation of losses, and the requirement for additional capital contributions as well as all other financial matters will be decided by a unanimous vote of the Partners.

11. Interest and Authority

The Partners' ownership interest in the Partnership will be as follows:

I. ________: ________% (________ percent)

II. ________: ________% (________ percent)

12. Profit and Loss

12.1. Subject to the other provisions of this Agreement, the net profits and losses of the Partnership, for both accounting and tax purposes, will accrue to and be borne by the Partners in equal shares (the "Profit and Loss Distribution").

12.2. The Partnership will account for its profits and losses by an accountant to be determined.

12.3. The profits and losses will be distributed to the partners annually, unless otherwise agreed to.

12.4. Each Partner will be responsible for their own taxes on any distribution made.

12.5. Partners will receive compensation from the partnership and such classification of compensation will be determined with the Partnership's accountant. The compensation arrangement will at all times comply with federal income tax laws.

13. Voting

In any vote required by the Partnership, the vote cast by each Partner will be assessed where each Partner receives one vote carrying equal weight.

14. Accounting

14.1. Accurate and complete books of account of the transactions of the Partnership will be kept in accordance with generally accepted accounting principles (GAAP) and at all reasonable times will be available and open to inspection and examination by any Partner. The books and records of the Partnership will reflect all the Partnership's transactions and will be appropriate and adequate for the business conducted by the Partnership.

15. Annual Report

As soon as practicable after the close of each fiscal year, the Partnership will furnish to each Partner an annual report showing a full and complete account of the condition of the Partnership. This report will consist of at least the following documents:

a) a statement of all information as will be necessary for the preparation of each Partner's income or other tax returns;

b) a copy of the Partnership's federal income tax returns for that fiscal year, including a copy of the Partnership Information Return;

c) supporting income statements;

d) a balance sheet;

e) a cash flow statement;

f) a breakdown of the profit and loss attributable to each Partner; and

g) any additional information that the Partners may require.

16. Banking and Partnership Funds

The funds of the Partnership will be placed in such investments and banking accounts as will be designated by the Partners. All withdrawals from these bank accounts will be made by the duly authorized agent or agents of the Partners as agreed by unanimous vote of the Partners. Partnership funds will be held in the name of the Partnership and will not be commingled with those of any other person or entity.

17. Management

17.1. All the Partners will be consulted and the advice and opinions of the Partners will be obtained as much as is practicable. However, the Managing Partner will have management and control of the day-to-day business of the Partnership for the purposes stated in this Agreement. All matters outside the day-to-day business of the Partnership will be decided by a unanimous vote of the Partners.

17.2. The following Partner will serve as the Managing Partner: ________. The term "Managing Partner" will also include any Party subsequently appointed to that role.

17.3. In addition to day-to-day management tasks, the Managing Partner's duties will include keeping, or causing to be kept, full and accurate business records for the Partnership according to generally accepted accounting principles (GAAP) and overseeing the preparation of any reports considered reasonably necessary to keep the Partners informed of the business performance of the Partnership.

17.4. A Managing Partner may voluntarily withdraw from the position of Managing Partner or may be replaced by a unanimous vote of remaining Partners. In the event of a withdrawal or removal of the Managing Partner from the position of Managing Partner or from the Partnership, the remaining Partners will have equal rights in the management of the Partnership until and unless they appoint a successor Managing Partner.

17.5. The Managing Partner will not be liable to the remaining Partners for any action or failure to act resulting in loss or harm to the Partnership except in the case of gross negligence or willful misconduct.

17.6. The Managing Partner is authorized and may retain, or otherwise secure or enter into contracts with persons or firms as from time to time may be required in the management of the Partnership's business including, but not limited to, arrangements with sales companies, attorneys, accountants, brokers, advertising, and insurance companies.

18. Contract Binding Authority

Each Partner will have authority to bind the Partnership in contract.

19. Compensation for Services Rendered

Partners may be compensated for services actually rendered as may be agreed from time to time by majority vote of the Partners.

20. Tax Matters Partner

20.1. The following Partner will serve as the tax matters Partner: ________. The tax matters Partner will prepare, or cause to be prepared, all tax returns and reports for the Partnership and will make any related elections that the Partners deem advisable.

20.2. A tax matters Partner may voluntarily withdraw from the position of tax matters Partner or may be appointed or replaced by a majority vote of the other Partners. In the event of a withdrawal of the tax matters Partner from the Partnership, the remaining Partners will appoint a successor as soon as practicable.

21. Meetings

21.1. Regular meetings of the Partners will be held annually, unless otherwise agreed to.

21.2. Any Partner can call a special meeting to resolve issues that require a vote, as indicated by this Agreement, by providing all Partners with reasonable notice. In the case of a special vote, the meeting will be restricted to the specific purpose for which the meeting was held.

21.3. All meetings will be held at a time and in a location that is reasonable, convenient, and practical considering the situation of all Partners.

22. Admitting a New Partner

22.1. A new Partner may be admitted to the Partnership with a majority vote of the existing Partners.

22.2. Any new Partner agrees to be bound by all the covenants, terms, and conditions of this Agreement, inclusive of all current and future amendments. Further, a new Partner will execute such documents as are needed to effect the admission of the new Partner. Any new Partner will receive such business interest in the Partnership as determined by a unanimous decision of the other Partners.

23. Voluntary Withdrawal of a Partner

23.1. Any Partner will have the right to voluntarily withdraw from the Partnership at any time.

23.2. Except as otherwise provided elsewhere in this Agreement, the voluntary withdrawal of a Partner will have no effect upon the continuance of the Partnership business.

23.3. In the event that a Partner's interest in the Partnership is to be sold, the remaining Partners have a right of first purchase on that interest. If any of the remaining Partners elect to purchase the interest of the Dissociated Partner, those Partners will serve written notice of such election upon the Dissociated Partner within thirty (30) days after receipt of the Dissociated Partner's notice of intention to withdraw, including the purchase price and method and schedule of payment for the Dissociated Partner's interest. The purchase amount of any buyout of the Dissociated Partner's interest will be determined as outlined in the Valuation of Interest section of this Agreement.

23.4. A Dissociated Partner will only exercise the right to withdraw in good faith and will act to minimize any present or future harm done to the remaining Partners as a result of the withdrawal.

24. Involuntary Withdrawal of a Partner

24.1. Events resulting in the involuntary withdrawal of a Partner from the Partnership will include but not be limited to: death of a Partner; Partner mental incapacity; Partner disability preventing reasonable participation in the Partnership; Partner incompetence; breach of fiduciary duties by a Partner; criminal conviction of a Partner; Expulsion of a Partner; Operation of Law against a Partner; or any act or omission of a Partner that can be reasonably expected to bring the business or societal reputation of the Partnership into disrepute.

24.2. Except as otherwise provided elsewhere in this Agreement, the involuntary withdrawal of a Partner will have no effect upon the continuance of the Partnership business.

24.3. In the event that a Partner's interest in the Partnership is to be sold, the remaining Partners have a right of first purchase on that interest. If any of the remaining Partners elect to purchase the interest of the Dissociated Partner, those Partners will serve written notice of such election, including the purchase price and method and schedule of payment upon the Dissociated Partner, their executor, administrator, trustee, committee or analogous fiduciary within a reasonable period after acquiring knowledge of the change in circumstances to the Dissociated Partner. The purchase amount of any buyout of a Partner's interest will be determined as outlined in the Valuation of Interest section of this Agreement.

24.4. A trustee in bankruptcy or similar third party who may acquire that Dissociated Partner's interest in the Partnership will only acquire that Partner's economic rights and interests and will not acquire any other rights of that Partner or be admitted as a Partner of the Partnership or have the right to exercise any management or voting interests.

25. Dissociation of a Partner

25.1. Where the remaining Partners have purchased the interest of a Dissociated Partner, the purchase amount will be paid in full, but without interest, within 90 days of the date of withdrawal.

25.2. The Partnership will retain exclusive rights to use the trade name and firm name and all related brand and model names of the Partnership.

25.3. Where the voluntary or involuntary withdrawal of a Partner results in only one Partner remaining or where no buyer is found to purchase the interest of the Dissociated Partner then the Partnership will proceed in a reasonable and timely manner to dissolve the Partnership, with all debts being paid first, prior to any distribution of the remaining funds. Valuation and distribution will be determined as described in the Valuation of Interest section of this Agreement.

25.4. On any purchase and sale of a Partnership interest, a Dissociated Partner will only have liability for Partnership obligations that were incurred during their time as a Partner. Immediately upon the sale of a withdrawing Partner's interest, the Partnership will prepare, file, serve, and publish all notices required by law to protect the withdrawing Partner from liability for further Partnership obligations.

25.5. The remaining Partners retain the right to seek damages from a Dissociated Partner where the dissociation resulted from a malicious or criminal act by the Dissociated Partner or where the Dissociated Partner had breached their fiduciary duty to the Partnership or was in breach of this Agreement or had acted in a way that could reasonably be foreseen bringing harm or damage to the Partnership or the reputation of the Partnership.

26. Dissolution

26.1. Except as otherwise provided in this Agreement, the Partnership may be dissolved only with a majority vote of all the Partners.

26.2. In the event of the dissolution of the Partnership, each Partner will share in any remaining assets or liabilities of the Partnership equally (the "Dissolution Distribution").

26.3. Upon the dissolution of the Partnership and liquidation of Partnership property, and after payment of all selling costs and expenses, the liquidator will distribute the Partnership assets in the following order of priority:

I. in satisfaction of liabilities to creditors (except Partnership obligations to current Partners);

II. in satisfaction of Partnership debt obligations to current Partners; and

III. to the Partners according to the Dissolution Distribution described above.

26.4. The claims of each priority group will be satisfied in full before satisfying any claims of a lower priority group. Any excess of Partnership assets after liabilities or any insufficiency in Partnership assets in resolving liabilities under this section will be shared by the Partners according to the Dissolution Distribution described above.

27. Valuation of Interest

27.1. In the absence of a written agreement setting a value, the value of the Partnership will be based on the fair market value appraisal of all Partnership assets (less liabilities) determined in accordance with generally accepted accounting principles (GAAP). This appraisal will be conducted by an independent accounting firm agreed to by all Partners. An appraiser will be appointed within a reasonable period of the date of withdrawal or dissolution. The results of the appraisal will be binding on all Partners. A withdrawing Partner's interest will be based on that Partner's proportion of the Dissolution Distribution described above, less any outstanding liabilities the withdrawing Partner may have to the Partnership. The intent of this section is to ensure the survival of the Partnership despite the withdrawal of any individual Partner.

27.2. No allowance will be made for goodwill, trade name, patents or other intangible assets, except where those assets have been reflected on the Partnership books immediately prior to the valuation.

28. Goodwill

The goodwill of the Partnership will be assessed at an amount to be determined by appraisal using generally accepted accounting principles (GAAP).

29. Title to Partnership Property

Title to all Partnership property will remain in the name of the Partnership. No Partner or group of Partners will have any ownership interest in such Partnership property in whole or in part.

30. Force Majeure

A Partner will be free of liability to the Partnership where the Partner is prevented from executing their obligations under this Agreement in whole or in part due to force majeure, such as earthquake, typhoon, flood, fire, and war or any other unforeseen and uncontrollable event where the Partner has communicated the circumstance of said events to any and all other Partners and taken any and all appropriate actions to mitigate said event.

31. Duty of Loyalty

No Partner will engage in any business, venture, or transaction, whether directly or indirectly, that might be competitive with the business of the Partnership or that would be in direct conflict of interest to the Partnership without the unanimous written consent of the remaining Partners. Any and all business, ventures, or transactions with any appearance of conflict of interest must be fully disclosed to all other Partners. Failure to comply with any of the terms of this clause will be deemed an Involuntary Withdrawal of the offending Partner and may be treated accordingly by the remaining Partners.

32. Duty of Accountability for Private Profits

Each Partner must account to the Partnership for any benefit derived from that Partner without the consent of the other Partners from any transaction concerning the Partnership or any use by that Partner of the Partnership property, name, or business connection. This duty continues to apply to any transactions undertaken after the Partnership has been dissolved but before the affairs of the Partnership have been completely wound up by the surviving Partner or Partners or their Agent or Agents.

33. Duty to Devote Time

Each Partner will devote such time, and attention to the business of the Partnership as the majority of the Partners will from time to time reasonably determine for the conduct of the Partnership business.

34. Forbidden Acts

34.1. No Partner may do any act in contravention of this Agreement.

34.2. No Partner may permit, intentionally or unintentionally, the assignment of express, implied, or apparent authority to a third party that is not a Partner in the Partnership.

34.3. No Partner may do any act that would make it impossible to carry on the ordinary business of the Partnership.

34.4. No Partner may confess a judgment against the Partnership.

34.5. No Partner will have the right or authority to bind or obligate the Partnership to any extent with regard to any matter outside of the intended purpose of the Partnership.

34.6. Any violation of the above Forbidden Acts will be deemed an involuntary withdrawal of the offending Partner and may be treated accordingly by the remaining Partners.

35. Indemnification

All Partners will be indemnified and held harmless by the Partnership from and against any and all claims of any nature, whatsoever, arising out of a Partner's participation in Partnership affairs. A Partner will not be entitled to indemnification of liability under this section arising out of gross negligence, willful misconduct or from the breach of any provision of this Agreement.

36. Liability

A Partner will not be liable to the Partnership, or to any other Partner, for any mistake or error in judgment or for any act or omission done in good faith and believed to be within the scope of authority conferred or implied by this Agreement or the Partnership.

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39. Notice

Any notice to be given under this Agreement must be in writing and must be sent by registered mail to the address of the relevant Party set out at the head of this Agreement. Notices sent as above will be deemed to have been received 3 working days after the day of posting (in the case of inland first class mail), or 7 working days after the date of posting (in the case of air mail). In proving the giving of a notice it shall be sufficient to prove that the notice was left, or that the envelope containing the notice was properly addressed and posted, as the case may be.

40. Amendments

This Agreement may only be amended in whole or in part with the unanimous written consent of all Partners.

41. Modifications

This Agreement may only be amended by agreement in writing signed by all of the Partners.

42. Severability

The Parties acknowledge that if a dispute between the Parties arises out of this Agreement or the subject matter of this Agreement, they would want the court to interpret the Agreement as follows:

a) with respect to any provision that it holds unenforceable, by modifying that provision to the minimum extent necessary to make it enforceable, or if that modification is not permitted by law, by disregarding that provision;

b) if an unenforceable provision is modified or disregarded in accordance with the present section, by holding that the rest of the Agreement will remain in effect as written;

c) by holding that any unenforceable provision will remain as written in any circumstances other than those in which the provision is held to be unenforceable;

d) if modifying or disregarding the unenforceable provision would result in a failure of an essential purpose of this Agreement, by holding the entire Agreement unenforceable.

43. Counterparts

If the Parties sign this Agreement in several counterparts, each will be deemed an original but all counterparts together will constitute one instrument. Delivery by facsimile or by electronic transmission in portable document format (PDF) of an executed counterpart of this Agreement is as effective as delivery of an originally executed counterpart of this Agreement.

44. Governing Law

44.1. This Agreement will be governed exclusively in accordance with the laws of the province of Alberta, and the laws of Canada in effect in the province of Alberta.

44.2. The parties attorn to the exclusive jurisdiction of the courts of the province of Alberta and all courts competent to hear appeals therefrom.

45. Entire Agreement

This Agreement constitutes the entire understanding between the Parties with respect to the subject matter of this Agreement and supersedes all other agreements, whether written or oral, between the Parties.

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