PARTNERSHIP AGREEMENT
Partnership Agreement made this 31 st day of January, 1998 by and between
Urban Transit Solutions, Inc. and ▇▇▇▇▇▇ Systems International, Inc.,
(individually the "Partner" and collectively the "Partners").
In consideration of the mutual terms, conditions and covenants hereinafter
set forth, the Partners agree as follows:
1.0 GENERAL
1.1 The purpose of the Partnership shall be the "Puerto Rico Parking
Meter Privatization Project".
1.2 The name of the Partnership shall be Urban Transit Solutions/▇▇▇▇▇▇
Systems International, (the "Partnership").
1.3 The initial address of the Partnership shall be CA-8 ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, which address may be changed
from time to time by the Partners.
1.4 The Partnership shall begin on January 31 st, 1998 and continue
until, and dissolve upon, the first happening of:
(a) The dissolution of one Partner; or
(b) The withdrawal, by written notice, of one Partner; or
(c) The affirmative vote of a majority in interest of the Partners.
2.0 CAPITALIZATION
2.1 The Capital of the Partnership shall consist of $500,000 contributed
in its entirety by ▇▇▇▇▇▇ Systems, Inc. The full amount shall be
deposited to the bank account held by Urban Transit Solutions, Inc.
at First Bank Puerto Rico, account number ▇▇-▇▇▇-▇▇▇▇. The initial
deposit, mutually agreed upon by both parties consisting of a partial
amount of $200,000 shall be available by method of a bank wire
transfer transaction not later than February 5th, 1998. The balance
of the amount shall be deposited 10 days after the awarding of the
contract.
2.2 No Partner shall receive interest on his capital contribution.
2.3 If in the opinion of the majority in interest of the Partnership
additional capital is needed for the proper conduct of the business
of the Partnership, ▇▇▇▇▇▇ Systems, Inc. shall contribute in
accordance to the mutual agreed amount of capital as it may be deemed
required for the proper development and operation of each additional
project.
2.4 Each Partner shall be indemnified by the other Partners as to excess
over the Partner's interest in the Partnership in the event a Partner
is compelled to pay and does pay any Creditor of the Partnership in
satisfaction of an obligation of the Partnership. It is the intent
and purpose of this provision that all of the Partners shall pay
their pro rata share of the Partnership debts, regardless of whether
a creditor of the Partnership recovers payment from some but not all
of the Partners.
3.0 SHARES OF STOCK
3.1 The respective Partners shall own shares of stock in the Partnership
according to the following schedule:
▇▇▇▇▇▇ Systems International, Inc.
shares 60%
Urban Transit Solutions, Inc.
shares 40%
3.2 Any plan for an increase in the number of shares of either Partner
shall require the unanimous consent of the Partnership who are the
parties to this Agreement, or their successors.
3.3 All shares now or hereafter owned by the Partners or prospective
Partners or transferors shall be subject to the provisions of this
Agreement.
3.4 A separate "Partnership Account" shall be maintained for each Partner
in this Agreement.
(a) A capital investment could be increased by (i) the contribution
to the capital of the Partnership, including the initial
contribution (Paragraph 2. 1. above) and (ii) the distributive
share of the Net Profits of the Partnership (Paragraph 3. 1); and
decreased by (i) distributions, (ii) the distributive share of
Net Losses of the Partnership and (iii) the distributive share of
expenditures of the Partnership not deductible in computing Net
Profits/Losses and not properly treated as capital expenditures.
(b) Distributions in kind shall be valued at fair market value less
any liability which the Partner assumes on the distribution or to
which the asset distributed is subject.
4.0 MANAGEMENT
4.1 All matters to be determined by the Partners shall be determined by
mutual consent of the Partners at a meeting when deemed appropriate.
All matters determined by the Partners shall be recorded in a Minute
Book reflecting the date, matter discussed and the action taken.
4.2 The Partners shall meet at least once each year. Additional meetings
may be held at the request of 51 % of the Partnership. All meetings
shall be by written notice thirty
(30) days in advance so that each Partner may be present either in
person or by
written proxy authorization.
4.3 The fiscal year of the Partnership shall be determined at the start-
up of the first parking meter project in Puerto Rico.
4.4 Each Partner shall have the right to inspect the books, records,
reports and accounts of the Partnership during normal business hours,
which books, records, reports and accounts shall be kept at the
Partnership's place of business.
4.5 Urban Transit Solutions, Inc. shall conduct the business of the
Partnership as the "Managing Partner".
4.6 Each Partner shall be bound by any action taken by the Managing
Partner in good faith under this Agreement. In no event shall any
Partner be called upon to pay any amount beyond the liability arising
against him on account of his capital contribution.
4.7 The Managing Partner shall not be liable for any error in judgment or
any mistake of law or fact or any act done in good faith in the
exercise of the power and authority as Managing Partner but shall be
liable for gross negligence or willful default.
5.0 PROHIBITIONS
5.1 No Partner shall sell, assign, mortgage, hypothecate or encumber his
interest in the Partnership without the express written permission of
all the remaining Partners, without regard to interest.
5.2 All Partners shall meet their personal obligations and debts as they
become due and each agrees to save and hold the remaining Partners
and the Partnership harmless from all costs, claims and demands with
respect to such obligations and debts.
5.3 No Partner shall, except upon the approval of the Partnership by
affirmative vote:
(a) lend any Partnership funds;
(b) incur any obligation in the name of or on the,credit of the
Partnership;
(c) lend any of the Partner's funds to the Partnership, with or
without interest;
(d) sell, assign, mortgage, hypothecate or encumber any asset of the
Partnership;
(e) make an assignment of the assets of the Partnership for the
benefit of creditors of the Partnership;
(f) execute any guarantee on behalf of the Partnership;
(g) release, assign or transfer a Partnership claim or any asset of
the Partnership;
(h) borrow in the name of the Partnership;
(i) submit any Partnership claim or liability to arbitration;
(j) initiate, conduct or settle litigation in the name of or
pertaining to the
Partnership; or;
(k) invest Partnership funds or other assets.
5.4 Any Partner who commits a prohibited act shall be individually liable
to the remaining Partners, pro rata to their Partnership interest,
for any loss caused by the prohibited act.
6.0 PROFITS/LOSSES AND DISTRIBUTIONS
6.1 Net Profits/Losses shall be determined in accordance with good
accounting principles and shall be as finally determined for
Commonwealth of Puerto Rico income tax purposes.
6.2 Net Profits/Losses shall be apportioned pro rata according to each
Partner's interest.
6.3 Distribution shall be made upon the affirmative vote of the Partners
as provided for in paragraph 4. 1. herein.
7.0 ADDITIONAL PARTNERS/DISSOLUTION
7.1 The Partnership may admit additional Partners upon the affirmative
vote of the Partners, as provided for herein. Additional Partners
shall then be admitted upon payment of a contribution to capital as
determined by the Partnership and each Partner's interest in the
Partnership as provided for in paragraph 3.1 shall be redetermined.
7.2 In the event of the dissolution of the Partnership for any reason,
the affairs of the Partnership shall be wound up and the proceeds of
the Partnership distributed in accordance with the terms of this
Agreement and the laws of the Commonwealth of Puerto Rico.
8.0 RIGHT OF FIRST REFUSAL-VOLUNTARY TRANSFER
8.1 Terms of the Offer, Offer Notice. It is understood and agreed that a
Partner shall be permitted to sell a portion not less than 10% of his
shares or the entire amount of shares as specifically provided
herein, at any given period after the execution of this agreement.
If any Partner shall desire to sell a portion or all the shares of
the Partnership's stock owned by him (such Partner being hereinafter
referred to as the "Offeror" and such shares being hereinafter
referred to as the "Offered Shares"), then the Offeror shall give
prior notice (the "Offer Notice") to the Partner hereinafter referred
to as the "Offerees". The Offer Notice shall:
(a) State the name and address of the person (the "Proposed
Purchaser") to whom the Offeror proposes to sell the Offered
Shares and the price at and the terms upon which he proposes to
sell the Offered Shares to the Proposed Purchaser (and shall have
attached thereto a commitment letter setting forth the
substantial terms of the sale to the Proposed Purchaser); and
(b) Constitute an offer to sell to the Offerees all, but not less
than 10% or all of the Offered Shares at the same price and upon
the same ten-ns as the Offeror proposes to sell the Offered
Shares to the Proposed Purchaser.
8.2 Acceptance of the Offer. The Offerees shall have a period of sixty
(60) days after the date of the giving of the Offer Notice in which
to accept the offer. Acceptance shall be made by giving concurrent
notice thereof, within the sixty (60) day time limit, to the Offeror.
In determining whether the Partner shall accept such Offer the
Offeror shall abstain from voting as a shareholder.
8.3 Priority Among Offerees. If all or any of the Offerees shall accept
the offer made by the Offer Notice, then:
(a) If the Partner shall have accepted such offer, the Offeror shall
sell and the Partner shall purchase all or such portion of the
Offered Shares as it desires of the Offeror's shares, at the
price, upon the terms and in the manner set forth in the Offer
Notice.
(b) If the Partner shall not have accepted such offer or it shall
have accepted only as to a portion of the Offeror's Shares, the
Offeror shall sell to the other Proposed Purchaser, and they
shall purchase all of the balance of the Offered Shares.
8.4 Failure of Offerees to Accot. If none of the Offerees, within the
required time, accepts the Offer made by the Offer Notice, the
Offeror shall thereafter within ninety (90) days of giving of the
Offer Notice have the right to sell all, but not less than 10%, of
the Offered Shares, but only to the Proposed Purchaser at the price,
upon the terms and in the manner set forth in the Offer Notice. If
the Offeror shall not so sell the Offered Shares within such period,
the Offer shall be deemed to have lapsed and the Offeror shall
continue to hold the Offered Shares subject to the provisions of the
Agreement. After such a lapse any offer or attempt to sell the
shares shall be treated as an original offer under this article.
9.0 INVOLUNTARY TRANSFER
9.1 If, other than by reason of a Corporate dissolution or merger, shares
are transferred by operation of law to any person other than the
Joint Venture (such as, but not limited to, a Shareholder's trustee
in bankruptcy, a purchaser at any creditor's or court), the Joint
Venture within sixty (60) days, or the remaining Joint Venturers
within seventy (70) days of the Joint Venture's receipt of actual
notice of the transfer, may notify such transferee of its desire to
purchase all, but not less than all, of the shares so transferred
("Notice of Intent to Purchase"). In such a case, the purchase price
shall be determined in accordance with the book value of the Joint
Venture's stock as reflected on the most recent balance sheet.
10. NON-COMPETE
10.1 During the life of this agreement and for five years after the
conclusion of this Joint Venture agreement, "Joint Venturer " shall
not engage in any other business activity, directly and/or
indirectly, to any person, fin-n, corporation and other entity,
regardless of whether it is for profit, gain or otherwise that is
similar to the business activity of Urban Transit Solutions in Puerto
Rico and the U.S. Virgin Islands. Urban Transit Solutions will be
bound to such agreement in the territory of the United States or any
other territory assigned to ▇▇▇▇▇▇ Systems International, Inc.
11.0 MISCELLANEOUS
11.1 Arbitration. If any controversy or claim arising out of this
Agreement cannot be settled by the Partners, the controversy or
claims shall be settled by arbitration in the City of San ▇▇▇▇,
Puerto Rico.
11.2 Governing Law. This Agreement shall be enforced and construed under
and shall be subject to the laws of the Commonwealth of Puerto Rico.
If any provision of this Agreement shall be unlawful, void or
unenforceable, that provision shall be deemed separate from and in no
way shall affect the validity or enforceability of the remaining
provisions of this Agreement.
11.3 Notices. All notices required to be given under this Agreement shall
be either (i) personally delivered to the party to whom addressed or
(ii) sent by U.S. Mail, postage prepaid, Certified Mail, Return
Receipt Requested, addressed to the Partner at the last address for
that Partner as maintained by the Partnership.
11.4 Entire Agreement. This Agreement contains the full and complete
understanding of all of the Partners with reference to the
Partnership and supersedes all prior agreements and understandings,
whether written or oral. This agreement may not be amended except in
writing and upon the consent of all of the Partners then existing of
the Partnership.
11.5 Successors. This Agreement shall be binding on and inure to the
benefit of the respective successors, permitted assigns, executors,
administrators, personal representatives and beneficiaries of the
Partners.
11.6 Subject Headings. The subject headings used in this Agreement
are for convenience only and shall not be deemed to affect the
meaning or construction of any of the provisions of this Agreement.
This Agreement constitutes the entire agreement between the Joint
Venturers pertaining to the subject matter contained in it, and supersedes
all prior and contemporaneous agreements, representations, warranties and
understandings of the parties.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by all the parties hereto. No waiver
of any of the provisions of this Agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether similar or not
similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless in writing signed by the party making the waiver.
Executed by the Partners as of the date first above written.
Karenen ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Urban Transit Solutions, Inc. ▇▇▇▇▇▇ Systems International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Urban Transit Solutions, Inc. ▇▇▇▇▇▇ Systems International, Inc.