CHANT INVESTMENTS
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS AGREEMENT made November 28, 2003,
AMONG:
Moon Capital Inc., a corporation formed pursuant to the
laws of the Province of Alberta ("Moon")
- and-
Dynamic Ventures Ltd., a corporation formed pursuant to
the laws of the Province of Alberta ("Dynamic")
- and -
Newfields Minerals Inc., a corporation formed pursuant to
the laws of the Province of British Columbia ("Newfields")
WHEREAS:
A. Moon, Dynamic and Newfields are all of the members of a general
partnership named Chant Investments;
X. Xxxx, Dynamic and Newfields wish to admit 679443 and 663654 as
members of the Partnership;
X. Xxxx, Dynamic, Newfields, 679443 and 663654 wish to amend and
restate the Partnership Agreement to reflect the admission of
679443 and 663654 to the Partnership;
NOW, THEREFORE the parties to this agreement covenant and agree as follows:
1. Definitions: When used in this agreement, including the foregoing
recitals:
(a) "663654" means 000000 Xxxxxxx Ltd., a corporation formed pursuant to
the laws of the Province of Alberta;
(b) "679443" means 000000 Xxxxxxx Ltd., a corporation formed pursuant
to the laws of the Province of Alberta;
(c) "Capital Account" shall have the meaning ascribed thereto in clause
8;
(d) "Dynamic" means Dynamic Ventures Ltd., a corporation formed pursuant
to the laws of the Province of Alberta;
(e) "Date of Withdrawal" shall have the meaning ascribed thereto in
clause 21;
(f) "Deferred Mandatory Draw" means, in respect of a particular
Partner, the amount by which:
(i) the aggregate of all deferred portions of a Partner's Mandatory
Draw;
exceeds:
(ii) the aggregate of all payments made by the Partnership
of deferred portions of a Partner's Mandatory Draw;
(g) "Discretionary Draw" shall have the meaning ascribed
thereto in clause 10;
(h) "First Tier Profits" means that amount of Taxable Income
that will result in the Taxable Income Allocated to the
Partners being equal to 85 of the Initial Capital Contributions;
(i) "Former Partner" shall have the meaning ascribed thereto
in clause 21;
(j) "Initial Capital Contribution" means, in respect of a
Partner, the amount contributed by the Partner to the Partnership
as capital pursuant to clause 7, and "Initial Capital
Contributions" means the aggregate of all amounts contributed
by the Partners to the Partnership as capital pursuant to clause
7;
(k) "Managing Partner" means Moon;
(l) "Mandatory Draw" shall have the meaning ascribed thereto
in clause 10;
(m) "Moon" means Moon Capital Inc., a corporation formed
pursuant to the laws of the Province of Alberta;
(n) "Newfields" means Newfields Minerals Inc., a corporation
formed pursuant to the laws of the Province of British Columbia;
(o) "Maximum Annual Draw" means, for any particular fiscal
period of the Partnership, the amount that is equal to the product
obtained when $1,800,000 is multiplied by a fraction, the
numerator of which is the number of days in the fiscal period
and the denominator of which is 365;
(p) "Oil and Gas Business" shall have the meaning ascribed
thereto in clause 4(a);
(q) "Other Partner" means any Partner other than the Managing
Partner, and "Other Partners" means all of the Partners other
than the Managing Partner;
(r) "Partner" means any one of 679443,663654, Moon, Dynamic and
Newfields and "Partners" means all of them;
(s) "Partnership" means the general partnership known as Chant
Investments to be continued by the Partners pursuant to this
agreement;
(t) "Related Parties" means, when used in reference to a Partner,
all individuals, firms, corporations and other entities that
are associates (as such term is defined in the Securities Act (Alberta))
of the Partner or that are related, affiliated or otherwise associated
with the Partner or that would be considered to be a non arm's length
party with respect to the Partner;
(u) "Second Tier Profits" means all Taxable Income in excess of
the First Tier Profits;
(v) "Separately Stated Amounts" means all amounts referred to in
s. 96(1) of the Income Tax Act (Canada) that are not taken into account
in computing the Partnership's income, gains and losses for income tax
purposes;
(w) "Taxable Income" means all income and gains of the
Partnership for income tax purposes;
(x) "Taxable Income Allocated to the Partners" means the amount
by which:
(i) the aggregate of all Taxable Income allocated to the
Partners since the commencement of the Partnership;
exceeds:
(ii) the aggregate of all Taxable Losses allocated to the
Partners since the commencement of the Partnership;
(y) "Taxable Losses" means all losses of the Partnership for
income tax purposes;
(z) "Withdrawal Fiscal Period" means the fiscal period of the
Partnership that includes the Date of Withdrawal; and
(aa) "Withdrawal Right Date" means the earlier of:
(i) December 1, 2015; and
(ii) the date on which the Taxable Income Allocated to the
Partners equals 73 of the Initial Capital Contributions.
2. Continuation of the Partnership: The Partnership shall continue under the
terms of this agreement and this agreement shall replace and supersede
all prior agreements related to the Partnership. Moon shall continue
as the managing partner, Dynamic and Newfields shall continue as partners
and 663654 and 679443 shall be admitted as additional general partners
of the Partnership effective as of the date of this agreement.
3. Name: The name of the Partnership shall be "Chant Investments"
or such other name as the Managing Partner may from time to time
determine.
4. Business of the Partnership: The business of the Partnership
shall consist of:
(a) participating in any one or more aspects of the petroleum
and natural gas industry, including, without limitation,
acquiring, operating and disposing of interests in petroleum
and natural gas lands, leases, xxxxx, gathering equipment,
plants, batteries and pipelines and conducting exploration
and development work (the "Oil and Gas Business"),
(b) becoming a partner of any partnership which participates in
all or any aspect of the Oil and Gas Business, including, without
limitation, acting as the managing partner of such partnership;
(c) purchasing or otherwise acquiring, holding, pledging,
hypothecating and exchanging shares, stocks, bonds, debentures
and other securities or obligations issued by any corporation,
governmental authority or other entity;
(d) investing in shares, bonds, debentures and other securities and
evidences of indebtedness and obligations issued or guaranteed
by any corporation, chartered bank, association, partnership, syndicate,
entity, person or governmental authority and evidences of any interest
in respect of any such shares, bonds, debentures and other securities
and evidences of indebtedness and obligations, and investing and lending
money on the security of real or personal property or without security;
and
(e) doing all things and carrying out all activities incidental to or
convenient for the carrying on and development of such businesses.
5. Place of Business: The principal place of business of the Partnership
shall be located at 00xx Xxxxx, 000 - 0xx Xxxxxx XX, Xxxxxxx,
Xxxxxxx X0X 0X0. The Managing Partner may establish other places
of business of the Partnership as required by the Partnership's
business.
6. Term: The Partnership shall continue until May 31,2026. The Partnership
shall not be dissolved by the dissolution, winding up or withdrawal from
the Partnership of a Partner, the assignment of a Partner's property
in trust for the benefit of such Partner's creditors or the bankruptcy
of a Partner.
7. Capital Contributions: Moon shall contribute $10,000 to the Partnership as
capital. Dynamic shall contribute $9 04 270 to the Partnership as
capital. Newfields shall contribute $8,335,870 to the Partnership as
capital. 679443 shall contribute $2,250,620 to the Partnership as capital.
663654 shall contribute $4,904,240 to the Partnership as capital.
Following their initial contributions, the Other Partners shall not
have any obligation to contribute additional funds or property to the
Partnership. Moon shall contribute any additional required capital.
8. Capital Accounts: The Partnership shall maintain a capital account
(the "Capital Account") for each of the Partners. There shall be added
to a Partner's capital account:
(a) the amount of all cash contributed by the Partner to the Partnership;
(b) the amount by which:
(i) the fair market value of all property, other than
cash, contributed by the Partner to the Partnership;
exceeds the aggregate of:
(ii) all liabilities of the Partner assumed by the
Partnership in connection with the contribution of
such property; and
(iii) the aggregate of all cash, promissory notes and the
fair market value of other Partnership assets paid
or transferred by the Partnership to the Partner in
connection with the contribution of such property;
(c) the amount of all cash advanced by the Partner to the
Partnership as a loan which is at any time, agreed by the Partner
advancing the cash and the Managing Partner to be included in
the calculation of the Partner's capital account;
(d) the amount of all liabilities of the Partnership assumed by
the Partner other than those assumed by the Partner pursuant to
sub clause (g)(iii) below; and
(e) all Taxable Income allocated to the Partner.
There shall be deducted from a Partner's capital account:
(f) the amount of all cash paid by the Partnership to the
Partner as a distribution;
(g) the amount by which:
(i) the fair market value of all Partnership property,
other than cash, distributed by the Partnership to the
Partner;
exceeds the aggregate of:
(ii) all liabilities of the Partnership assumed by the
Partner in connection with the distribution of the property;
and
(iii) the aggregate of all cash, promissory notes and the
fair market value of other property of the Partner
paid or transferred by the Partner to the Partnership in
connection with the distribution of the property.
(h) the amount of all cash paid by the Partnership to the
Partner to reduce the principal amount of the loan described in
sub clause (c) above;
(i) the amount of all liabilities of the Partner assumed by the
Partnership other than those assumed by the Partnership pursuant
to sub clause (b)(ii) above; and
(j) all Taxable Losses and Separately Stated Amounts allocated to the
Partner.
9. Allocation of Income and Losses: Except as otherwise specifically
provided in this agreement, the Partnership shall allocate to:
(a) the Other Partners 99 of the First Tier Profits and 1 of
the Second Tier Profits; and
(b) the Managing Partner all Taxable Income not allocated to the
Other Partners.
All Taxable Losses and Separately Stated Amounts for each fiscal
period of the Partnership shall be allocated among the Managing
Partner and the Other Partners in the same proportions that Taxable
Income is allocable among them for such fiscal period. All amounts
allocated to the Other Partners shall be allocated among them in
the same proportions as the Capital Account balance of each of the
Other Partners bears to the aggregate of the Capital Account
Balances of all the Other Partners as at the fiscal year end of
the Partnership in respect of which the allocations of Taxable
Income, Taxable Losses and Separately Stated Amounts are to be made
after accounting for all contributions and distributions made during
the fiscal year, but before accounting for the allocation of the Taxable
Income, Taxable Losses and Separately Stated Amounts for the fiscal
period.
10. Partnership Distributions: The Partnership shall, during each of its fiscal
periods other than its first fiscal period, pay to each Partner as a draw
an amount equal to 60 of the Taxable Income allocated to the Partner in
respect of the immediately preceding fiscal period of the Partnership
(the "Mandatory Draw"). The Partnership may pay the Mandatory Draw in
one or more installments at such time or times during each fiscal period
as the Managing Partner determines. Notwithstanding the foregoing and
notwithstanding the amount of Taxable Income allocated to each Partner
in respect of the immediately preceding fiscal period of the Partnership,
the aggregate of the Mandatory Draw paid to all Partners in a fiscal period
shall not exceed the Maximum Annual Draw for the fiscal period. If:
(a) the amount to be paid by the Partnership to the Partners in
a fiscal period is limited to the Maximum Annual Draw for the
fiscal period; and
(b) each Partner's Deferred Mandatory Draw was nil at the end of
the immediately preceding fiscal period of the Partnership;
then:
(c) the payment of the amount by which a Partner's Mandatory
Draw for the fiscal period exceeds the portion of the Maximum
Annual Draw to be paid to the Partner during the fiscal
period shall be deferred and shall form part of the Partner's
Deferred Mandatory Draw;
(d) the Maximum Annual Draw shall be paid to the Partners in the
same proportions as:
(i) each Partner's Deferred Mandatory Draw;
bears
(ii) to the aggregate of the Deferred Mandatory Draw of all
the Partners;
after accounting for the increase to the Deferred Mandatory
Draw of each Partner referred to
in sub clause (c) above; and
(e) each Partner's Deferred Mandatory Draw shall be paid by the
Partnership in its next fiscal period together with the Mandatory
Draw which the Partner is entitled to receive in the next
fiscal period, provided always that the aggregate of the
Deferred Mandatory Draw and the Mandatory Draw paid to all the
Partners in the next fiscal period shall not exceed the Maximum
Annual Draw for the next fiscal period.
If:
(f) the amount to be paid by the Partnership to the Partners
in a fiscal period is limited to the Maximum Annual Draw for
the fiscal period; and
(g) any Partner's Deferred Mandatory Draw was other than nil at
the end of the immediately preceding fiscal period of the
Partnership;
then:
(h) the payment of the amount by which the:
(i) aggregate of a Partner's Deferred Mandatory Draw and
Mandatory Draw for the fiscal period;
exceeds:
(ii) the portion of the Maximum Annual Draw to be paid to
the Partner during the fiscal period;
shall be deferred and, to the extent not already part of a
Partner's Deferred Mandatory Draw, shall form part of the
Partner's Deferred Mandatory Draw;
(i) if the Deferred Mandatory Draw of any Partner includes a deferred and
unpaid portion of the Partner's Mandatory Draw that was calculated
based on the First Tier Profits allocated it, then the Maximum Annual
Draw shall be paid to the Partners in the same proportions as:
(i) the deferred and unpaid portion of the Mandatory Draw
of each Partner that was calculated based on the
First Tier Profits allocated to it and that forms
part of its Deferred Mandatory Draw;
bears:
(ii) to the aggregate of the deferred and unpaid portions
of the Mandatory Draw of all Partners that were
calculated based on the First Tier Profits allocated
to them and that form part of their Deferred Mandatory Draw;
after accounting for the increase to the Deferred Mandatory
Draw of each Partner referred to in sub clause (h) above;
payments of the Maximum Annual Draw shall be made as set out
above to a maximum of the deferred and unpaid portions of the
Mandatory Draw of the Partners that were calculated based on
the First Tier Profits allocated to them and that form
part of their Deferred Mandatory Draw; any balance of the
Maximum Annual Draw shall be paid to the Partners in accordance
with the provisions of sub clause (j) below after accounting
for all payments of the Maximum Annual Draw made pursuant to this sub clause
(j) if no Partner's Deferred Mandatory Draw includes any deferred and
unpaid portion of the Partner's Mandatory Draw that was calculated
based on the First Tier Profits allocated it, then the Maximum Annual
Draw shall be paid to the Partners in the same proportions as:
(i) each Partner's Deferred Mandatory Draw;
bears:
(ii) to the aggregate of the Deferred Mandatory Draw of
all the Partners;
after accounting for the increase to the Deferred Mandatory
Draw of each Partner referred to in sub clause (h) above;
(k) all amounts paid by the Partnership shall be credited:
(i) first, to the payment of the deferred and unpaid
portion of the Mandatory Draw of a Partner that was
calculated based on the First Tier Profits allocated
to it and that forms part of its Deferred Mandatory Draw;
(ii) secondly, to the payment of the balance of the Deferred
Mandatory Draw payable to a Partner; and
(iii) finally, to the payment of the Mandatory Draw
payable to each Partner; and
(l) each Partner's Deferred Mandatory Draw shall be paid by the
Partnership in its next fiscal period together with the Mandatory Draw
which the Partner is entitled to receive in the next fiscal period,
provided always that the aggregate of the Deferred Mandatory Draw and
the Mandatory Draw paid to all the Partners in the next fiscal
period shall not exceed the Maximum Annual Draw.
Notwithstanding any of the foregoing provisions which limit to the
Maximum Annual Draw the aggregate amount of draws payable by the
Partnership in any fiscal period, the Managing Partner may, at any
time and from time to time, but shall have no obligation to,
cause the Partnership to pay as a draw to one or more of the
Partners without paying to the other Partners or Partner amounts in
excess of the Partner's Deferred Mandatory Draw and Mandatory Draw
(the "Discretionary Draw"). If the Partnership pays a Discretionary
Draw to a Partner, the amount of the Discretionary Draw may,
at the election of the Managing Partner, be applied to reduce the
amount of any Deferred Mandatory Draw and Mandatory Draw required
to be paid by the Partnership after the date of payment of the
Discretionary Draw.
11. Fiscal Year End: The fiscal year of the Partnership shall end on
November 30 of each year. The fiscal year end of the Partnership may
be changed from time to time by the Managing Partner, subject
always to any restriction in respect thereof contained in the
Income Tax Act (Canada).
12. Authority of Managing Partner: The Managing Partner shall have
the sole and exclusive right to manage the business of the Partnership
and the Managing Partner shall have all of the rights and powers
that may be possessed by the Partners in that regard under the Partnership
Act (Alberta) and/at law. All decisions and actions taken by the Managing
Partner pursuant to the rights and powers granted it by this agreement
and at law shall be final and binding upon all the Partners. Without
limiting the generality of the foregoing, the Managing Partner's
rights and powers to manage the business of the Partnership shall
include, without limitation, the right and power to:
(a) purchase or otherwise acquire petroleum and natural gas
lands,interests and tangible property, including all petroleum
and natural gas substances and equipment, facilities, plants,
pipelines and other tangible property within, upon or under
such lands or associated with such interests;
(b) make all decisions relating to all partnerships of which
the Partnership is a partner, including having the Partnership
withdraw as a partner of any one or more of such partnerships;
(c) make all decisions relating to all Partnership assets;
(d) open, operate and close all bank accounts which the Managing Partner
determines to be necessary or desirable in connection with the
administration of Partnership assets, and to name signing officers
for such accounts;
(e) manage, control, operate and develop all Partnership assets, and to
take all action which the Managing Partner determines to be
necessary or desirable in connection therewith;
(f) invest the Partnership's assets in such investments as the Managing
Partner may, from time to time determine, purchase or otherwise
acquire, hold, pledge, hypothecate, exchange and contract with
reference to shares, bonds, debentures and other securities and
evidences of indebtedness and obligations issued or guaranteed by
any corporation, company, chartered bank, association, partnership,
syndicate, entity, person or governmental authority and evidences
of any interest in respect of any such shares, bonds, debentures and
other securities and evidences of indebtedness and obligations, and
while the holder or owner thereof to exercise all rights, powers
and privileges of ownership, including all voting rights, if
any, with respect thereto;
(g) lend money to any parties, including Related Parties, with or without
security, provided that interest at reasonable commercial rates is
charged to such borrower;
(h) grant security, guarantee or otherwise secure indebtedness or
obligations of any entity, including without limitation, any Related
Party;
(i) negotiate and agree to the terms of, execute and carry out on behalf of
the Partnership all agreements which the Managing Partner determines
to be necessary or desirable connection with the acquisition, ownership,
operation, maintenance, development, abandonment and disposition of
Partnership assets;
(j) execute on behalf of the Partnership all instruments and documents,
including, without limitation, cheques, drafts, notes and other negotiable
instruments; mortgages or deeds of trust; security agreements; financing
statements; documents providing for the acquisition, mortgage or d
disposition of property; assignments; bills of sale; leases; partnership
10
agreements; operation agreements of other limited liability
companies; and any other instruments or documents necessary, in
the opinion of the Managing Partner, to the conduct of the business
of the Partnership;
(k) make all calculations, valuations and determinations and take all
other actions required to give effect to the provisions of this
agreement, including, without limitation: (i) the determination of
all amounts required to calculate the balance of a Partner's
Capital Account, including the fair market value of property contributed
by or distributed to a Partner, (ii) the determination of the balance
of a Partner's Capital Account for the purpose of allocating Taxable
Income, Taxable Losses and Separately Stated Amounts, (iii) the
apportionment between the period prior to and including the Date of
Withdrawal and the period after the Date of Withdrawal of the
Taxable Income, Taxable Losses and Separately Stated Amountsfor the
Withdrawal Fiscal Period, (iv) the determination of the balance of a
Former Partner's Capital Account at the Date of Withdrawal, (v) the
determination of the fair market value of the Former Partner's
Capital Account balance at the Date of Withdrawal; such fair market value
shall be calculated using the following formula: the Former Partner's
Capital Account balance at the Date of Withdrawal (after accounting for
all contributions and distributions made by and to the Former Partner
on or prior to the Date of Withdrawal and the Taxable Income, Taxable
Losses and Separately Stated Amounts to be allocated to the Former
Partner for the Withdrawal Fiscal Period, and assuming that no Taxable
Income, Taxable Losses and Separately Stated Amounts will be allocated to
the Former Partner for any fiscal period of the Partnership after the
Withdrawal Fiscal Period and that no distribution of assets will be
made to the Former Partner after the Date of Withdrawal pursuant to
clause 10 discounted from the date for termination of the Partnership
set out in clause 6 back to the Date of Withdrawal at the rate of
5 per annum, compounded annually, (vi) the determination of the balance
of a Partner's Capital Account for the purpose of distributing the
proceeds of liquidation of Partnership assets on the dissolution of the
Partnership and (vii) the determination of the value of Partnership
property transferred to a Partner in connection with the dissolution
of the Partnership;
(l) sell, lease or otherwise dispose of any or all of the assets of the
Partnership for such consideration and on such terms as the Managing
Partner may determine, and to execute any xxxx of sale, contract or
other document in connection therewith;
(m) contract on behalf of the Partnership for the employment of employees
and the services of independent contractors;
(n) engage in any kind of activity and perform and carry out
contracts of any kind necessary or incidental to the business of
the Partnership;
(o) pay all expenses and obligations of the Partnership from Partnership
funds;
(p) on behalf of the Partners and the Partnership, make any
income tax or other elections available to the Partners or the
Partnership; and
11
(q) execute and file such other instruments, documents and
certificates that may from time to time be required by the laws
of any province or any other jurisdiction in which the Partnership
may do business.
Except as otherwise specifically provided in this agreement, no
Partner other than the Managing Partner may take part in the management
or control of the business of the Partnership, transact any business
for the Partnership or have the right or authority to sign for or bind
the Partnership. Without limiting the foregoing, and subject always to
any other provision of this agreement which may limit the authority of
the Managing Partner, only execution by the Managing Partner is necessary,
and its execution alone is sufficient, for any promissory notes or other
evidences of indebtedness of the Partnership and all security that may
be granted in connection therewith to be validly executed by the
Partnership. A copy of this agreement may be shown to any person
to confirm such authority. The signature of the Managing Partner is
sufficient to execute any statement of partnership or other documents
necessary to effect this or any other provision of this agreement.
13. Title to Partnership Assets: For administrative convenience and without
altering or affecting the rights and interests of the Partners set out
in this agreement, any Partnership property may be held in the name of
the Managing Partner or the name of any other person, on behalf of
and in trust for the Partnership, and for the use and benefit of the
Partners in accordance with the terms of this agreement.
14. Obligations of Managing Partner: In managing the business of the
Partnership, the Managing Partner shall:
(a) devote to the Partnership such time as may be necessary for
the proper conduct of the business of the Partnership, but the
Managing Partner is not required to devote its full time and
effort to the business of the Partnership; and
(b) indemnify each of the Other Partners from any loss, claim or
damage that any of the Other Partners may suffer as a result of
a claim made against any of the Other Partners by the Royal Bank
of Canada respecting any bank account that the Partnership may
have from time to time with the Royal Bank of Canada, unless such
claim arose as a result of any actions or non actions of the Other
Partner made in violation of this agreement.
15. Decisions of Partners: Unless otherwise specifically provided in this
agreement, all approvals, consents and decisions required of the Partners,
including all decisions required in connection with the operation of the
Partnership if there is no Managing Partner, shall be given or made by a
resolution passed by the majority vote of the Partners or a resolution
signed, in one or more counterparts, or approved in writing by a majority
of the Partners.
16. Other Activities of a Partner Not Restricted: Notwithstanding the existence
of the Partnership, each Partner and each Partner's Related Parties may
engage in whatever activities they choose, whether such activities are
the same as those carried on by the Partnership or are competitive with
the Partnership or otherwise, without having or incurring any obligation
to offer any interest in such activities to the Partnership or any
Partner or to otherwise account therefore. Neither this agreement, nor any
activity undertaken pursuant hereto, shall prevent a Partner and the
Partner's Related Parties from engaging in such activities, or require a
Partner or any of the Partner's Related Parties to permits the Partnership
12
or any Partner to participate in any such activities. As a material part of
the consideration for each Partner's execution of this agreement, the
Partners agree that any such activities of a Partner and the Partner's
Related Parties shall be deemed not to be a conflict of interest or
breach of duty by the Partner with respect to the operations of the
Partnership, and the Partners consent to such activities and waive,
relinquish and renounce any right, claim and participation in or to
such activities.
17. Liability of Managing Partner: The Managing Partner shall not be liable to
the Partnership or the Other Partners for:
(a) any mistakes or errors in judgment, except those resulting from
its gross negligence or willful misconduct;
(b) any act or omission believed in good faith to be within the scope
of its authority conferred by this agreement; or
(c) any loss or damage to any Partnership property attributable
to an accidental event.
18. Partner Indemnification: The Partnership and its receiver, trustee or
other legal representative on behalf of the Partnership shall indemnify,
save harmless and pay all judgments and claims against a Partner relating
to any liability or damage incurred by reason of any act performed or
omitted to be performed by the Managing Partner in connection with the business
of the Partnership, including legal fees and disbursements on a solicitor
and his own client basis incurred by the Partner in connection with the
defense of any action based on any such act or omission; provided always
that the Managing Partner shall not be so indemnified from any liability
or damage resulting from its fraud, willful misconduct or gross negligence.
19. Restrictions on Transfer: No Partner may sell, transfer, assign, mortgage,
pledge or otherwise dispose of or encumber all or a portion of the Partner's
interest in the Partnership, including, without limitation, the Partner's
interest in this agreement or in any of the business or property of the
Partnership, without the consent of the Managing Partner, which consent
may be arbitrarily or unreasonably withheld.
20. Admission of Additional Partners: The Managing Partner may, from time to
time, admit such additional members of the Partnership as it, in its sole
discretion, determines. The additional members may be Related Parties.
The Managing Partner will determine the amount of capital to be initially
contributed by any new member of the Partnership.
21. Partner Withdrawals: Any Partner (the "Former Partner") may withdraw as a
member of the Partnership at any time on or after the Withdrawal Right Date
by giving written notice thereof to the Partnership. The notice shall
specify the date (the "Date of Withdrawal") on which the withdrawal of
the Former Partner from the Partnership shall be effective. The
Former Partner shall cease to be a member of the Partnership on the Date
of Withdrawal and shall thereafter have no rights under this agreement,
except to receive from the Partnership the amount referred to below. Except
for such amount and except as otherwise specifically provided below, the
Former Partner shall not, after the Date of Withdrawal, be entitled to
receive any amounts from the Partnership nor to share in any Taxable Income,
Taxable Losses and Separately Stated Amounts. Within 180 days following the end
of the Withdrawal Fiscal Period, the Partnership shall pay to the Former
Partner, without interest, the fair market value of the Former Partner's
13
Capital Account balance at the Date of Withdrawal. All Taxable Income,
Taxable Losses and Separately Stated Amounts for the Withdrawal Fiscal
Period shall be allocated among the Partners, including the Former
Partner, as follows:
(a) the Taxable Income, Taxable Losses and Separately Stated
Amounts for the entire Withdrawal Fiscal Period shall be
apportioned between the period prior to and including the
Date of Withdrawal and the period after the Date of Withdrawal
based on the number of days in the Withdrawal Fiscal Period prior
to and including the Date of Withdrawal and the number of days
in the Withdrawal Fiscal Period after the Date of Withdrawal;
(b) the portion of the Taxable Income, Taxable Losses and Separately
Stated Amounts for the period prior to and including the Date
of Withdrawal shall be allocated among the Partners,
including the Former Partner, as set out in clause 9; and
(c) the portion of the Taxable Income, Taxable Losses and Separately
Stated Amounts for the period after the Date of Withdrawal shall
be allocated among the Partners, excluding the Former Partner,
as set out in clause 9.
Notwithstanding the foregoing, the Managing Partner may, but has no
obligation whatsoever to agree to permit a Partner to withdraw as a member
of the partnership prior to the Withdrawal Right Date. If the Managing
Partner agrees to permit such a withdrawal, all of the foregoing provisions
of this clause shall apply to the withdrawal, with the withdrawing Partner
being the Former Partner and the Withdrawal Date being the date agreed upon
by the withdrawing Partner and the Managing Partner.
22. Dissolution of the Partnership: The Partnership shall be dissolved upon the
expiration of the term of the Partnership set out in clause 6. Dissolution
of the Partnership shall be effective on the date specified in clause 6, but
the Partnership shall not terminate until the property of the Partnership has
been distributed in liquidation of the Partnership. Notwithstanding the
dissolution of the Partnership, prior to the liquidation and termination of
the Partnership, the business and affairs of the Partnership shall continue
to be governed by this agreement. The Partners agree that no Partner may make
an application under s. 39 of the Partnership Act (Alberta) for the
dissolution of the Partnership.
23. Liquidation: In connection with the winding up and dissolution of the
Partnership, the Managing Partner shall liquidate the assets of the
Partnership and apply and distribute the proceeds thereof:
(a) first to the payment of all obligations of the Partnership and the
expenses of liquidation;
(b) secondly to the setting up of any reserves for contingencies
which the Managing Partner considers necessary;
(c) thirdly to the Partners in an amount equal to each Partner's
Capital Account after accounting for:
i) all contributions from the Partners and all distributions
to the Partners made prior to the distribution of
assets to the Partners pursuant to this sub clause (c)- and
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ii) Taxable Income, Taxable Losses and Separately Stated
Amounts to be allocated to the Partners up to and
including the fiscal year end of the Partnership immediately
following the disposition of the last of the Partnership
property, including all Taxable Income, Taxable Losses
and Separately Stated Amounts resulting from the distribution
of Partnership property to the Partners pursuant to this sub
clause (c) and sub clause (d) below; and
(d) finally to the Partners in the same proportions as Taxable Income
was allocable among the Partners for the Partnership's fiscal period
immediately preceding the Partnership's fiscal period during which the
Partnership is required to be dissolved.
Notwithstanding the foregoing, the Managing Partner may satisfy its
obligation to distribute proceeds of the liquidation to a Partner by
transferring specific Partnership property to the Partner, instead of
disposing of the property and distributing the disposition
proceeds to the Partner. If a Partner has a negative Capital Account
balance after completion of the accounting provided for in sub clause (c)
above, then the Partner shall contribute to the Partnership the
amount required to bring the Partner's Capital Account balance
to zero. The amount contributed by the Partner shall be added to the
proceeds of liquidation for the purposes of this clause.
24. No Interest on Capital: No Partner shall be paid interest on any capital,
which the Partner may from time to time contribute to the Partnership.
25. Return of Capital Contributions: Except as specifically provided in this
agreement, no Partner has the right to withdraw or receive any return of
its capital prior to the dissolution of the Partnership, nor to require its
capital be returned in the form of property other than cash.
26. Power of Attorney: Each of the Other Partners hereby irrevocably
constitutes and appoints the Managing Partner as its attorney to take such
action on behalf of each of the Other Partners as may be necessary to implement
the terms and conditions of this agreement. Specifically, without limiting
the generality of the foregoing, each of the Other Partners hereby
irrevocably constitutes and appoints the Managing Partner as its
attorney to take the following actions:
(a) amend, alter or restate this agreement, provided that such
amendment, alteration or restatement does not adversely affect
the substantive rights of any of the Other Partners;
(b) admit any person or entity as a member of the Partnership and
allowing the withdrawal from the Partnership of any Partner prior
to the Withdrawal Right Date, provided that such admission or
withdrawal is in accordance with the provisions of this agreement as
it may be amended from time to time;
(c) reorganize, amalgamate or combine the Partnership with any
other entity; and
(d) take any actions deemed necessary by the Managing Partner to
exercise the authority granted to the Managing Partner by clause
12.
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27. Disposal of Interest: Upon a Partner having withdrawn as a member of the
Partnership in accordance with the provisions of this agreement or having
disposed of its entire interest in the Partnership, such Partner shall
cease to be a party to this agreement.
28. Further Acts: Each Partner shall, from time to time and without additional
consideration, perform all acts and execute and deliver all documents
required to carry out and give full effect to the terms of this agreement.
29. Governing Law: This agreement shall be governed by and construed in
accordance with the laws in force in the Province of Alberta.
30. Binding Effect: The covenants and agreements contained in this agreement
are binding upon and shall enure to the benefit of all Partners and their
respective successors and permitted assigns, including, without limitation,
any receiver, receiver-manager, trustee in bankruptcy or other person
having control over the business and affairs of any of the Partners,
notwithstanding the insolvency or bankruptcy of such Partner.
31. Counterparts: This agreement may be executed in separate counterparts,
including by way of facsimile, each of which when so executed and delivered
shall be an original, and all such counterparts shall together constitute one
and the same instrument.
IN WITNESS WHEREOF the Partners have executed this agreement.
/s/ Rutra Xxxx /s/ Xxxxxx Xxxxx
---------------- --------------------
Per: Rutra Xxxx Per: Xxxxxx Xxxxx
Moon Capital Inc. Dynamic Ventures Ltd.
/s/ R Xxxxx /s/ Xxxxxx Xxxxx
----------------------- ------------------
Per: X. Xxxxx Per: Xxxxxx Xxxxx
Newfields Minerals Inc. 663654 Alberta Ltd.
/s/ Xxxxxx Xxxxx
-------------------
Per Xxxxxx Xxxxx
679443 Alberta Ltd.
