PARTNERSHIP AGREEMENT THIS AGREEMENT, MADE BETWEEN Partner 1 Name Partner 1 address Partner 1 City, Prov P.C. (hereinafter called "Partner ") OF THE FIRST PART AND Partner 2 Name Partner 2 Address Partner 2 City, Prov P.C. (hereinafter called "Partner ") OF THE SECOND PART ------------------------------------------------------ 1. PURPOSE A: The parties hereto do hereby form a partnership, which shall be conducted for the purpose of acquiring an Aircraft, and flying the same for business and pleasure. The principal base of operation shall be determined by a majority of the partners. B: The partnership shall commence on and shall continue until terminated by mutual consent of the parties or by the provisions of this Agreement. 2. ASSETS A: The principal asset of the partnership is the aircraft C- Other assets may include, but are not limited to, various joint bank accounts with all partners, miscellaneous supplies and equipment for partnership aircraft and other aircraft that the partners may unanimously agree to purchase. 3. LOANS AGAINST THE PARTNERSHIP ASSETS A: The partnership may borrow money against the aircraft only if unanimous consent of the partners is given and all partners agree on the specifics of the loan, such as financial institution, interest rate and repayment plan. B: When a loan has been obtained by the partnership, each partner shall pay such portion of any loan payment for which he is liable, when due and payable. If such payment is missed, the partner shall be deemed to be in default. The remaining partners may, if deemed expedient, cover the loan to protect their assets and the money so advanced, with interest, is a debt owed to the partners advancing the funds. C: No partner, without the consent of all other partners, shall: (a) Sell, assign, create a security interest in, or pledge his interest in the partnership or its assets or (b) Borrow or lend money on behalf of the partnership, purchase any security or bond except for cash in full. 4. INSURANCE A: Aircraft Coverage (i) The partnership shall maintain liability coverage for the use of the aircraft in the amount of $ . (ii) All aircraft owned by the partnership shall be insured for full hull value and for breach of warranty at all times. (iii) No partner shall fly any aircraft in such a way as to violate, jeopardize or void the insurance. (iv) Any increase in the insurance premium brought about in any manner by one of the partners shall be born by that partner. (v) In the event of a claim that is honoured by the insurance company, any deductible amount shall be paid by the partner giving rise to such claim. B. Life Insurance (i) The partnership shall procure policies of term life insurance naming the partnership as beneficiary for each partner in the amount of his respective capital share in the aircraft. Each partner shall be responsible for his premium. (ii) All such policies and the proceeds received thereunder shall be held by the partnership in trust for the purposes of this Agreement. 5. INDEMNIFICATION A: Each partner shall indemnify and hold harmless all other partners from and against all costs, charges and expenses that are incurred in or about any action, suit or proceeding that is brought, commenced or prosecuted against the partnership or the partner(s), for or in respect of any act or deed done by him in which the other partners had no part. B: While operating the aircraft, each partner shall be responsible to the partnership for damages occurring to the aircraft, other than damages covered by insurance. C: When any damage is discovered, the partnership shall be notified. If unreported, the partner who last operated the aircraft prior to the discovery shall be deemed responsible for such damage. D: Any disputes in the assessment or in the amount of damages shall be determined by the majority vote of the partners. 6 . OPERATING REGULATIONS A: The aircraft shall be flown only in strict accordance with the Rules and Regulations promulgated by the Ministry of Transport, the Federal Aviation Administration, and any other competent authority and the Pilot's Operating Manual or Flight Manual of the aircraft. B: A partner shall personally be present in every flight of the aircraft, unless the permission of a majority of the partnership is granted to allow a QUALIFIED non-partner to fly the aircraft. C: No partner shall fly a partnership aircraft unless he is current, fit, qualified, insured and fully licensed to do so. D: No partner shall fly any partnership aircraft into weather conditions for which he is not licensed. E: No partner shall fly a partnership aircraft while under the influence of alcohol, any controlled substance, stimulant, depressant, decongestant or narcotic. F: Each partner, prior to entering the United States with a partnership aircraft shall warn each and every passenger and crew member against transporting any narcotic or controlled substance, discovery of which may result in forfeiture of the aircraft to US Customs. G: Each partner shall make accurate logbook entries for all flights on which he functions as pilot-in-command. H: If a partner is charged with an infraction against the air regulations or drug enforcement regulations by a government agency, he may be requested, in writing, to withdraw from the partnership by unanimous agreement of the remaining partners. Such withdrawal shall proceed as if the partner were in default. 7. BOOKINGS A: Each partner shall have first right of access to the aircraft in accordance with his share of the capital value of the partnership, based upon a rotating schedule as agreed to by the partners from time to time. B: Except as agreed upon by the partners, no partner shall fly the aircraft more than 50 hours per month; C: A calendar shall be maintained in which all reservations shall be booked. This book shall be kept onboard the aircraft to which it applies. D: All flights requiring use of partnership aircraft for more than 3 consecutive days shall be booked as soon as possible to enable partners to plan around each other's requirements. E: Flights of more than 2 weeks duration shall not be booked without the consent of a majority of partners. Each partner shall endeavour to facilitate longer flights but shall also be considerate of fair usage of partnership aircraft by all partners. F: Booking a flight at least 2 months before the flight reserves the aircraft for the period stated, regardless of the length of a flight subsequently proposed by another partner and regardless of rotational priority. 8. MAINTENANCE A: All maintenance required by law shall be carried out so as to cause the least disruption of the enjoyment of the aircraft by the partners. B: A partnership aircraft in need of maintenance necessary to the safety of flight shall not be flown until such maintenance is done. C: When any partnership aircraft is at it's home base, two partners shall agree before maintenance is done on the aircraft, unless a second partner is unavailable within a reasonable time. D: When any partnership aircraft is away from it's home base, any partner may, at his own discretion, order any maintenance to be done to the aircraft that he deems necessary to ensure the safety of the occupants or deems advisable for preventative maintenance purposes. E: All maintenance performed on partnership aircraft shall be recorded in and paid for from the appropriate partnership account. 9. MANAGEMENT A: Each partner shall have a voice in the operation of the partnership. No less than a majority of the partnership shall be present at each regular or special meeting to constitute a legal meeting and for the continuance of the affairs of the partnership. B: Except as provided in this Agreement, all decisions of the partnership's business and the sale of partnership assets shall be made by a majority vote of the partners of the partnership. Each partner shall have one (1) vote regardless of the size of his respective capital account. C: In the instance where the partnership consists of two partners or a quorum of partners is an even number and a tie exists on an issue requiring a majority vote, the partners may appoint an arbitrator who is acceptable to all parties to settle the vote. D: A Secretary shall be elected by a majority of the partners. The Secretary shall have physical possession of the books and records of the partnership and shall give such notices to the partners as may, from time to time, be required or deemed advisable, and shall perform the necessary ministerial functions of the partnership. Securities, bill of sales, or any other documents evidencing ownership of the aircraft held be the partnership and either registered or recorded in such name, shall be in the primary custody of the Secretary. E: Regular meetings of the partnership shall be held at least one time each year or more often as determined by the partnership. Notice of the time and place of each regular meeting shall be given by the Secretary to each partner at least one (1) week before such meeting. Special meetings may be called by the Secretary on such notice as he may determine. 10. PARTNERSHIP ACCOUNTS AND RECORDS A: Adequate accounting records of all partnership business shall be kept and these shall be open to inspection by any of the partners at all reasonable times. The partners shall appoint one person to be responsible for accounting. B: A chequing account may be opened in the names of all partners, any two (2) of which must sign for withdrawal or upon any cheque. The partnership, if it is needed, may open a savings account. In such event the savings account may be opened with the names of all partners, any two (2) of which must sign for any withdrawal. 11. CAPITAL ACCOUNT A: The contribution by each partner of either cash or equity to the capital of the partnership shall constitute that partner's share of the partnership. B: An individual capital account shall be maintained for each partner. The capital account shall consist of each partner's initial capital contribution, increased or decreased (as the case may be) on any valuation date for any increase or decrease in the net value of the partnership assets, and increased or decreased for his participation (or lack thereof) in any capital improvements. C: The net value of partnership assets shall be determined at least once each year, such date to be known as the valuation date. Adjustments to the capital account of each partner shall be made regularly at the end of each valuation date on the basis of the ratios of the respective capital accounts on that date. D: Any partner or combination of partners may make an improvement to the aircraft or its equipment with the majority CONSENT of the partnership. In the event that one or more of the partners do not agree to pay their share of the capital improvement consented to by the majority, then the aircraft shall be appraised, and the capital accounts adjusted accordingly. The cost of the improvement is then added to the capital account of the partners paying for the improvement, and the shares of the partnership are adjusted accordingly. E: An hourly sum, established from time to time by dividing the anticipated cost of airframe, engine, propeller, landing gear and other major component overhaul by the number of hours between overhauls will be charged against the capital account of the partner operating the aircraft. The partnership may elect to charge each flying partner this sum or any portion if the majority elects to accumulate an overhaul reserve. F: If overhaul is required for any major component before sufficient funds have accumulated in the overhaul reserves to cover the cost, the shortfall shall be divided among the partners in accordance with their capital share of the partnership. 12. FIXED EXPENSE ACCOUNT A: The partnership shall establish and maintain an accounting of all fixed expenses including, but not limited to, tie-down fees, installment payments on the aircraft, taxes and insurance. B: Each partner shall make payments to the fixed cost account of the following amounts, regardless of the amount of time he flies: 1. An equal share of the theoretical insurance premium for the partner who is the least costly to insure, plus his share, if any, of the remaining insurance premium. 2. Any portion of the insurance premium attributable to a previous claim shall be paid by the partner responsible and the above formula then applied to the balance of the premium. 3. A share of the installment payment on the aircraft in accordance with his original capital share. 4. An equal share of the home base storage and tie-down fees. 5. A share in proportion to his capital account of any tax or levy set against the aircraft or partnership. 13. MAINTENANCE ACCOUNT A: Each partner agrees to pay a share of the maintenance expense in proportion to his use of the Aircraft. B: Once each year, the total maintenance expenses of the partnership will be divided by the total hours flown since the partnership was formed to arrive at a maintenance cost per hour. Each partner's maintenance account will adjusted to reflect the overall proportion of time flown and maintenance costs. 14. DIRECT EXPENSES A: Any partner while operating the aircraft shall be responsible for the cost of fuel and oil of the aircraft, and, unless otherwise agreed to by a majority of partners, shall leave the aircraft full of fuel. B: Each partner while operating the aircraft agrees to pay all landing, parking and hangarage fees that may be assessed against the aircraft while in his control. 15. CONTRIBUTIONS AND ASSESSMENTS A: Upon the vote of no less than a majority of the partnership, periodic assessments may be made against each partner for payment of capital expenses, fixed expenses, maintenance expenses or for such purpose as the partnership shall determine. No assessment shall exceed the capital account value of the partner being assessed. B: Each assessment shall be payable on the date of assessment made. C: No partner shall be permitted to contribute personal services or property other than cash or equity in an aircraft for the purposes of paying the initial capital contribution. No partner shall contribute other than cash for payment of fixed expense assessments. 16. ARREARS AND DEFAULT A: Any partner who is assessed and whose payment has not been received within 15 days is deemed to be in arrears, and shall not fly the aircraft until the assessment is paid. B: Any arrears in the payment of assessments which exceed 30 days shall be repaid to the partnership by the partner in arrears at an interest rate of ten percent (10%) per month. C: In the event a partner is more than sixty (60) days in arrears, he is deemed to be in default, and the buy-out provision herein shall apply. 17. SALE OF PARTNERSHIP SHARES AND ASSETS A: TO THE PARTNERSHIP OR A PARTNER (i) The partnership shall have first option to purchase the withdrawing partner's capital account. If the partnership does not choose to purchase the capital account of the withdrawing partner, then in such event, any one (1) or more other partners on their own behalf may purchase the withdrawing partner's capital account. The amount for the buy-out shall be paid in cash and shall be equal to the value of the withdrawing partner's capital account, calculated as his share of the partnership after valuation. (ii) The partnership, or any other purchasing partner, as the case may be, shall have the right to pay the buy-out price within thirty (30) days unless otherwise agreed, without interest thereon. If neither the partnership not any partner or partners exercise the option to purchase herein created, the withdrawing partner shall have the right to offer his share to a third party as provided for herein. B: BY SUBSTITUTION (i) Provided that he owes no money to the partnership, any partner may withdraw from the partnership by substitution, that is by selling his interest in the partnership to a new partner acceptable to the remaining partners. (ii) The withdrawing partner may ask any price he wishes for his share of the partnership; however, the new partner receives only the balance of the withdrawing partner's capital account. (iii) The partner leaving the partnership divests himself of all interest in the partnership. After the sale of his capital account, the partner leaving the partnership remains liable for any debt due the partnership arising from this agreement except for those liabilities assumed by the new partner. (iv) The new partner pays the costs of changing the registration of the aircraft and is liable for any sales taxes that may arise from the transaction. C: BY LIQUIDATION (i) The partnership may be dissolved and terminated upon the vote or agreement of a majority of the partners. (ii) Upon any such dissolution and termination, the partners shall promptly liquidate the affairs of the partnership by discharging all debts and liabilities of the partnership and by distributing all remaining assets to the partners or their representatives in the ratios of their respective capital accounts on the date of dissolution and termination. D: BY DEFAULT OF A PARTNER (i) A partner who is in default as defined above may be removed from the partnership. (ii) If a majority of the partners not in default vote to remove the defaulting partner, written notice will be given to the defaulting partner before further action is taken. (iii) In the event the defaulting partner settles his account with the partnership within 3 business days of receipt of the notice, he will no longer be considered in default and his rights and obligations as a partner will be fully restored. The partner who was in default shall pay all expenses to the other partners and the partnership as a result of his being in default, together with a deposit equal to his share of the estimated fixed and maintenance expense account assessments for the next year. (iv) If after 3 business days from the receipt of notice by the defaulting partner full payment has not been made, the remaining partners may buy or sell the defaulting partner's interest in the partnership at the current value of his capital account after valuation. (v) All outstanding debts, including interest to the partners and partnership, all reasonable expenses incurred to sell the capital account and all penalties against the partnership brought about because of the defaulting of the partner shall be deducted from the proceeds of the sale and the balance given to the defaulting partner or held in trust for his account. E: BY DEATH OF A PARTNER OR PARTNERS (i) Upon the death of any partner, the partnership shall collect the proceeds of the policies insuring the life of the deceased partner and shall pay the value of the decedent's capital account after valuation and less any outstanding charges and less any expenses arising from the purchase to the legal representative of the decedent's estate within thirty (30) days after appointment of such legal representative and receipt of the insurance proceeds. (ii) On the receipt of the purchase price, the legal representative shall transfer to the partnership the deceased partner's interest therein. (iii) Should the value of the interest of the deceased partner exceed the proceeds of the insurance, the surviving partners will pay such excess to the estate of the decedent by a promissory note payable within six months. (iv) Should the insurance proceeds exceed the value of the deceased partner's interest in the partnership, such excess proceeds shall likewise be distributed to the legal representative of the estate of the deceased partner. F: CONTINUATION If the capital account of a withdrawing or deceased partner is purchased in accordance with this Agreement, the partnership business shall not terminate but shall continue, as of the effective date of withdrawal, after an appropriate adjustment is made in the capital accounts of the remaining or surviving partners, as the case may be, in accordance with the provisions of this Agreement. 18. NOTICES a: Sole Contract This Agreement constitutes the entire and only Contract between the parties hereto in respect of the Aircraft and as of the first day of the term hereof, all other Leases, contracts, understandings and agreements which may have existed between the parties hereto in respect thereof are hereby cancelled and annulled, saving and accepting any obligations previously accrued thereunder and outstanding. This Agreement takes precedence over any other Agreement prepared for filing ,tax or registration purposes. This Agreement shall not be amended, revised or altered except by writing validly signed on behalf of all parties hereto. b: Time Time is of the essence to this Agreement. c: Assignment This Agreement shall not be assigned, nor shall any sublease be entered into by a Partner without the prior written consent of the Partnership, which may be arbitrarily withheld. d: Succession This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. e: Waiver Any waiver by either party, or any failure on its part to exercise its rights in respect of any breach of this Agreement shall be limited to the particular instance and shall not extend to any other instance or matter under this Agreement or in any way affect the validity hereof or otherwise affect any right or remedy of such party. f: (PROVINCE) Contract This Agreement shall be interpreted and the rights and the liabilities of the parties determined in accordance with the laws of the Province of (PROVINCE). g: Validity If any provisions of this Agreement are contrary to, prohibited by, or held invalid under applicable laws or regulations of any jurisdiction in which it is sought to be enforced, then that provision shall be considered inapplicable and omitted but shall not invalidate the remaining provisions. 18. NOTICES (continued) h: Notices Any notice which the parties hereto may give one to another under this Agreement shall be well and sufficiently given if delivered personally, if sent by Telex, by Courier or if sent by registered mail, postage prepaid to the Partner at the address shown on the first page. Any notice personally delivered shall be received at the time of delivery, at the time of answerback if sent by Telex, or if sent by courier or by registered mail, shall be deemed to have been served on the party or parties to whom it was addressed on the third day after posting of the notice. IN WITNESS WHEREOF the parties hereto have set their hands and seals. SIGNED, SEALED AND DELIVERED in the presence of ) ) ) ___________________________(ls) ) Partner ) ) ) ) ) ) ___________________________(ls) ) Partner ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) |
