EXHIBIT 4.5
Teekay Shipping Corporation
5,000,000 Units
[ ]% Premium Equity Participating
Security Units - PEPSSM Units
Underwriting Agreement
February [__], 2003
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Teekay Shipping Corporation, a Republic of The Marshall Islands
corporation, (the "Company"), proposes to issue and sell to the several
Underwriters listed in Schedule I hereto (the "Underwriters"), subject to the
terms and conditions stated herein, an aggregate of 5,000,000 [ ]% Premium
Equity Participating Security Units - PEPSSM Units (the "Firm Securities") of
the Company, the terms of which are set forth in Schedule II hereto. Each PEPS
Unit will consist of (a) a stock purchase contract (a "Purchase Contract") under
which the holder of the Securities (as defined below) will purchase from the
Company on February 16, 2006, for an amount in cash equal to the stated amount
per Security of $25.00 (the "Stated Amount"), a number of shares (each, a
"Common Share" and, collectively with all other Common Shares that may be issued
and sold by the Company upon settlement of the Purchase Contracts, the "Common
Shares") of the Company's common shares, par value $0.001 per share (the
"Common Stock"), as set forth in such Purchase Contract, and (b) $25.00
principal amount of the Company's [ ]% Notes due May 18, 2006 (a "Note" and
collectively with each other Note, including each Note that is part of the
Option Securities as defined below, the "Notes") with a principal amount of
$1,000. Additionally, the Company proposes to issue and sell to the several
Underwriters, for the sole purpose of covering over-allotments in connection
with the sale of the Firm Securities, at the option of the Underwriters, up to
an additional 750,000 [ ]% Premium Equity Participating Security Units - PEPSSM
Units (the "Option Securities"). The Firm Securities and any Option Securities
are herein referred to as the "Securities."
In accordance with the terms of a Purchase Contract Agreement (the
"Purchase Contract Agreement"), to be dated as of the Closing Date (as defined
below) and entered into between the Company and The Bank of New York, as
Purchase Contract Agent (the "Purchase Contract Agent"), the holders of the
Securities will pledge the Notes to The Bank of New York, as Collateral Agent
(the "Collateral Agent"), pursuant to a Pledge Agreement (the "Pledge
Agreement") to be dated as of the Closing Date and entered into among the
Company, the
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Collateral Agent, the Purchase Contract Agent and The Bank of New York, as
Securities Intermediary, to secure the holders' obligations to purchase Common
Shares under the Purchase Contracts. The Purchase Contracts, the Purchase
Contract Agreement and the Pledge Agreement are herein collectively referred to
as the "PEPS Agreements."
The Company will also enter into a Remarketing Agreement (the
"Remarketing Agreement"), to be dated as of the Closing Date, with Morgan
Stanley & Co. Incorporated, as Remarketing Agent, which will provide for the
remarketing of the Notes prior to the Settlement Date (as defined in the
Purchase Contract).
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder (the
"Securities Act"), a registration statement on Form F-3 (registration no.
333-102594), including a related prospectus, relating to the registration of
certain securities of the Company, including the Premium Equity Participating
Security Units - PEPSSM Units, the Purchase Contracts, the Notes and the Common
Shares (the "Shelf Securities"), to be sold from time to time by the Company.
The registration statement, as amended at the time it became effective,
including information, if any, deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act is
hereinafter referred to as the "Registration Statement," and the prospectus
included therein relating to the Shelf Securities at the time the Registration
Statement became effective, is hereinafter referred to as the "Base Prospectus."
The Base Prospectus, as supplemented by the prospectus supplement dated February
[__], 2003 (the "Prospectus Supplement"), relating to the Securities, in the
form first used to confirm sales of the Securities is hereinafter referred to as
the "Prospectus." If the Company has filed an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. Any reference
to the term Registration Statement, the Base Prospectus, any preliminary form of
prospectus previously filed with the Commission pursuant to Rule 424 of the
Securities Act or the Prospectus shall include the documents incorporated
therein by reference. The terms "supplement" and "amendment" or "amend" as used
in this Agreement shall include all documents subsequently filed by the Company
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), that are deemed to be incorporated by reference in the
Prospectus.
1. Representations and Warranties of the Company. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Company and the transactions contemplated by this Agreement meet
the requirements for using Form F-3 under the Securities Act. The Registration
Statement has become effective; no stop order suspending the effectiveness of
the Registration Statement is in effect, and no proceedings for such purpose are
pending before or, to the knowledge of the Company, contemplated by the
Commission.
(b) The Registration Statement, when it became effective, did not contain
and, as amended or supplemented, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not
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misleading, the Registration Statement and the Prospectus comply and, as amended
or supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act") and the Prospectus does not, as of its date, contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein. No order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission and no proceedings for
that purpose shall have been instituted or, to the knowledge of the Company,
threatened or contemplated by the Commission.
(c) The Company has been duly organized in the Republic of Liberia and is
validly existing as a corporation in good standing under the laws of the
Republic of The Marshall Islands, with power and authority (corporate and other)
to own its properties and to conduct its business as described in the
Registration Statement and the Prospectus and has been duly qualified to
transact business and is in good standing in each other jurisdiction in which
the conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the general
affairs, management, the current or future consolidated financial position,
business prospects, shareholders' equity or result of operations of the Company
and its subsidiaries, taken as a whole (a "Material Adverse Effect").
(d) Each subsidiary of the Company has been duly organized or incorporated,
is validly existing as a corporation or limited liability company in good
standing under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its business as
described in the Registration Statement and the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect; and all of the issued
shares of capital stock or membership interests of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned by the Company, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind, except as
set forth in Schedule III attached hereto. There are no outstanding rights,
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or membership interests of any subsidiary of
the Company.
(e) Schedule IV(a) hereto is a complete and accurate list of the Company's
operating subsidiaries incorporated under the laws of the Republic of Liberia
and Schedule IV(b) is a complete and accurate list of the Company's subsidiaries
organized or incorporated under the laws of the Republic of Liberia that have no
operations or assets; Schedule V(a) hereto is a complete and accurate list of
the Company's operating subsidiaries organized or incorporated under the laws of
The Bahamas; Schedule V(b) hereto is a complete and accurate list of the
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Company's subsidiaries organized or incorporated under the laws of The Bahamas
that have no operations or assets; Schedule VI(a) hereto is a complete and
accurate list of the Company's operating subsidiaries organized or incorporated
under the laws of the Republic of The Marshall Islands; Schedule VI(b) hereto is
a complete and accurate list of the Company's subsidiaries organized or
incorporated under the laws of the Republic of The Marshall Islands that have no
operations or assets; Schedule VII(a) hereto is a complete and accurate list of
the Company's operating subsidiaries organized or incorporated under the laws of
Norway; Schedule VII(b) hereto is a complete and accurate list of the Company's
subsidiaries organized or incorporated under the laws of Norway that have no
operations or assets; Schedule VIII(a) hereto is a complete and accurate list of
the Company's operating subsidiaries organized or incorporated under the laws of
Bermuda and Schedule VIII(b) hereto is a complete and accurate list of the
Company's subsidiaries organized or incorporated under the laws of Bermuda that
have no operations or assets.
(f) The authorized capital stock of the Company conforms as to legal
matters to the descriptions thereof contained in the Prospectus.
(g) All of the issued shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable, conform as
to legal matters to the descriptions thereof contained in the Prospectus and
none of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or similar rights of any shareholder of the Company.
(h) This Agreement has been duly authorized and, when executed and
delivered by the Company, this Agreement will constitute a valid and legally
binding instrument.
(i) The Securities have been duly authorized, and, when authenticated and
executed in accordance with the provisions of the Purchase Contract Agreement
and the first supplemental indenture (the "First Supplemental Indenture") to be
dated as of February [__], 2003 to the indenture dated as of February [ ], 2003
(the "Base Indenture," and as supplemented by the First Supplemental Indenture,
the "Indenture") between the Company and The Bank of New York as Trustee (the
"Trustee") and delivered to and paid for by the Underwriters pursuant to this
Agreement, will have been duly executed, authenticated, issued and delivered and
the Securities will be entitled to the benefits of the Purchase Contract
Agreement in the case of the Purchase Contracts and the Indenture in the case of
the Notes and will constitute valid and legally binding agreements of the
Company enforceable in accordance with their terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; provided, however, that upon the occurrence of a Termination Event
(as defined in the Purchase Contract), the Bankruptcy Code (11 U.S.C. ss.ss.
101-1330, as amended) should not substantively limit the provisions of Sections
3.15 and 5.06(a) of the Purchase Contract Agreement or Section 5.04 of the
Pledge Agreement that require termination of the Purchase Contracts and release
of the Collateral Agent's security interest in (1) the Notes or (2) the Treasury
Securities (as defined in the Purchase Contract Agreement), as applicable, and
the transfer of such Notes and Treasury Securities to the Purchase Contract
Agent, for the benefit of the Holders of the Securities; provided further, that
the Company makes no representation as to whether a court exercising bankruptcy
jurisdiction might issue a temporary restraining order or provide other interim
relief
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that would delay the exercise of such termination right for a period of time
pending final adjudication of any challenge to the exercise of such right during
a bankruptcy case involving the Company.
(j) The Indenture has been duly authorized by the Company and duly
qualified under the Trust Indenture Act, and, when the Base Indenture and the
First Supplemental Indenture are executed and delivered by the Company and the
Trustee, will constitute a valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles (regardless of whether considered in a proceeding at law or in
equity) and the Securities and the Indenture will conform in all material
respects to the descriptions thereof in the Prospectus and will be in
substantially the form previously delivered to you.
(k) The Securities have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance; and the Securities have been
registered under the Exchange Act.
(l) The Notes included in the Securities have been duly authorized, and,
when authenticated and executed in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute valid and legally binding agreements of the Company
enforceable in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
will conform in all material respects to the description thereof contained in
the Prospectus and will be in substantially the form previously delivered to
you.
(m) The Common Shares issuable pursuant to the Purchase Contracts included
in the Securities have been duly authorized and reserved for issuance. Such
Common Shares, when issued and delivered in accordance with the provisions of
the PEPS Agreements, will be validly issued, fully paid and non-assessable; and
the issuance of such Common Shares will not be subject to any preemptive rights
other than those that have been waived.
(n) Each of the PEPS Agreements and the Remarketing Agreement has been duly
authorized and, when validly executed and delivered by the Company, will
constitute a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles, (regardless of
whether considered in a proceeding at law or in equity); provided, however, that
upon the occurrence of a Termination Event (as defined in the Purchase
Contract), the Bankruptcy Code (11 U.S.C. ss.ss. 101-1330, as amended) should
not substantively limit the provisions of Sections 3.15 and 5.06(a) of the
Purchase Contract Agreement or Section 5.04 of the Pledge Agreement that require
termination of the Purchase Contracts and release of the Collateral Agent's
security interest in (1) the Notes or (2) the Treasury Securities (as defined in
the Purchase Contract Agreement), as applicable, and the transfer of such Notes
and Treasury Securities to the Purchase Contract Agent, for the benefit of the
Holders of the Securities; provided further, the Company makes no representation
as to whether a court exercising bankruptcy jurisdiction might issue a temporary
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restraining order or provide other interim relief that would delay the exercise
of such termination right for a period of time pending final adjudication of any
challenge to the exercise of such right during a bankruptcy case involving the
Company; and each of the PEPS Agreements and the Remarketing Agreement will
conform in all material respects to the descriptions thereof in the Prospectus.
(o) None of the Company nor any of the subsidiaries is in violation of its
articles of incorporation or by-laws, or in default in the performance or
observance of any material obligation, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which any of the Company or the subsidiaries is a party or by
which any of them is bound.
(p) Neither the execution and delivery by the Company of, or the
performance by it of its obligations under, this Agreement, the PEPS Agreements,
the Remarketing Agreement, the Securities, the Notes and the Indenture, nor the
consummation of the transactions contemplated hereby will (A) conflict with or
result in a breach or violation of any provision of (i) the articles of
incorporation and by-laws of the Company, (ii) any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which any of
the Company or any of the subsidiaries is a party or by which any of them is or
may be bound or to which any of their respective properties or assets is or may
be subject, or (iii) any statute or any judgment, order, decree, rule or
regulation (collectively, any "Order") of any court, central bank, stock
exchange or governmental agency or body (collectively, a "Regulatory Authority")
having jurisdiction over the Company or any of its subsidiaries or any of their
properties, except, with respect to the foregoing clause (ii), to the extent
such conflict or contravention would not have a Material Adverse Effect, or (B)
result in the creation or imposition of any lien, charge or encumbrance upon or
with respect to any property or assets of any of the Company or the
subsidiaries.
(q) No consent, approval, authorization or order of, qualification with, or
registration or filing with any Regulatory Authority is required for the issue
and sale of the Securities or the performance by the Company of its obligations
under this Agreement, the PEPS Agreements, the Remarketing Agreement, the
Securities, the Notes or the Indenture, except such as may be required (1) for
registrations and filings under the Securities Act or the Exchange Act, (2) the
qualification of the Indenture under the Trust Indenture Act, and (3) under the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities.
(r) The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all properties and
assets owned by them, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Prospectus or are created pursuant
to credit agreements and related security agreements disclosed or referred to in
the Prospectus or Schedule III attached hereto or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries.
(s) The consolidated financial statements of the Company (together with
related schedules and notes) incorporated by reference in the Registration
Statement and Prospectus comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder and present fairly the
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consolidated financial position of the Company and its subsidiaries as of the
dates indicated and the consolidated results of its operations and changes in
financial position of the Company and its subsidiaries for the periods
specified; except with respect to Ugland Nordic Shipping ASA, a Norwegian
corporation ("UNS"), such financial statements and related schedules and notes
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis during the periods involved.
The selected financial data included in the Prospectus present fairly the
information shown therein. Such selected financial data as at and for the fiscal
years ended December 31, 2001, 2000, 1999, March 31, 1999 and 1998 have been
derived from the audited consolidated financial statements of the Company, and
such summary financial data as at and for the nine month periods ended September
30, 2002 and 2001 have been derived from the unaudited consolidated financial
statements of the Company.
(t) Neither the Company nor any of its subsidiaries has sustained since the
date of the latest audited financial statements incorporated by reference in the
Registration Statement and Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Registration
Statement and Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been any material change in the capital stock or long-term debt (other than an
immaterial change due to repayment or borrowing under existing credit
agreements) of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Registration Statement
and Prospectus.
(u) Other than as set forth in the Registration Statement and Prospectus,
there are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or to which any of their respective
properties is subject which, if determined adversely to the Company or any of
its subsidiaries, would individually or in the aggregate, have a Material
Adverse Effect; and to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by Regulatory Authorities or threatened by
others.
(v) Each of the Company and its subsidiaries has all necessary consents,
authorizations, approvals, orders, franchises, licenses, certificates (including
certificates of authority), concessions or permits (collectively, "Permits") of
and from, and has made all declarations and filings with, all federal,
provincial, state, local or other Regulatory Authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease license and use
its properties and assets and to conduct the business as described in the
Registration Statement and the Prospectus, except where the failure to possess
such Permits or to make such declarations or filings would not have a Material
Adverse Effect; neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to revocation, modification or any other material
impairment of any Permit.
(w) The Company is not, and after giving effect to the offering and sale of
the Securities will not be, an "investment company" within the meaning of the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act").
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(x) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
include any securities of the Company with the Securities registered pursuant to
the Registration Statement or, except as described in the Prospectus and
Registration Statement, to file a registration statement under the Securities
Act with respect to any securities of the Company, in each case, other than such
rights as have been waived.
(y) The statements set forth in the Prospectus Supplement under the caption
"Description of the PEPS Units," "Description of the Purchase Contracts,"
"Description of the Notes," "Certain Provisions of the Purchase Contracts, the
Purchase Contract Agreement and the Pledge Agreement," "Taxation of Teekay," and
"Tax Consequences" and the statements set forth in the Base Prospectus under the
captions "Securities We May Issue," "Description of Capital Stock," "Description
of Warrants," "Description of Stock Purchase Contracts and Stock Purchase
Units," and "Description of Debt Securities," insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate, complete and fair.
(z) No material labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in or contemplated by the
Registration Statement or Prospectus, or to the knowledge of the Company, is
imminent.
(aa) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility, participate in insurance clubs, self-insure
or have similar coverage against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are engaged.
(bb) Except as otherwise described in the Prospectus and Registration
Statement, the Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, provincial, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a Material Adverse Effect.
(cc) Except as otherwise described in the Registration Statement and
Prospectus, in the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a Material Adverse Effect.
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(dd) Except as otherwise described in the Prospectus, each of the Company
and its subsidiaries has filed all income or other tax returns that are required
to have been filed in its relevant jurisdictions, except insofar as the failure
to file such returns would not have a Material Adverse Effect, and has paid all
taxes due pursuant to such returns or pursuant to any assessment received by the
Company, except for such taxes, if any, as are being contested in good faith and
for which adequate reserves have been provided.
(ee) There is no tax, levy, impost, deduction, charge or withholding
imposed by the Republic of The Marshall Islands, Republic of Liberia, Bermuda,
Norway or any political subdivision or taxing authority thereof either (i) on or
by virtue of the execution, delivery or performance of this Agreement, the
Indenture, the PEPS Agreements, the Remarketing Agreement or any other document
to be furnished hereunder, or (ii) on any payment to be made by the Company
pursuant to this Agreement, the Indenture, the PEPS Agreements, the Remarketing
Agreement or the Securities, except for any tax, levy, impost, deduction, charge
or withholding imposed on payments made to holders of Securities who reside in,
maintain an office in or engage in business in the Republic of The Marshall
Islands, Republic of Liberia, Bermuda or Norway.
(ff) Each of the Company, Teekay Chartering Limited ("Teekay Chartering"),
Bona Shipholding Ltd. ("Bona") and UNS, is, and immediately after the Closing
Date will be, Solvent. As used herein, the term "Solvent" means, with respect to
each of the Company, Teekay Chartering, Bona or UNS on a particular date (i) the
fair market value of the assets of the Company, Teekay Chartering, Bona or UNS,
as the case may be, is greater than the total amount of liabilities (including
contingent liabilities) of the Company, Teekay Chartering, Bona or UNS, as the
case may be, (ii) the present fair saleable value of the assets of the Company,
Teekay Chartering, Bona or UNS, as the case may be, is greater than the amount
that will be required to pay the probable liabilities of the Company, Teekay
Chartering, Bona or UNS, as the case may be, on its debts as they become
absolute and matured, (iii) the Company, Teekay Chartering, Bona or UNS, as the
case may be, is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature and (iv) the
Company, Teekay Chartering, Bona or UNS, as the case may be, does not have an
unreasonably small capital.
(gg) The Company maintains, and each of the subsidiaries maintain, a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States generally
accepted accounting principles and with statutory accounting principles, as the
case may be, and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(hh) None of the Company nor any of its subsidiaries or any employee or
agent thereof has made any payment of funds or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or retention of
funds is of a character required to be disclosed in the Prospectus.
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(ii) The statements made in the Prospectus under the caption "Service of
Process and Enforcement of Liabilities", insofar as they purport to constitute a
summary of the provisions of the laws therein, are accurate, complete and fair,
in all material respects.
(jj) The Company is subject to Section 13 or 15(d) of the Exchange Act.
(kk) The Company is not a Passive Foreign Investment Company ("PFIC")
within the meaning of Section 1296 of the United States Internal Revenue Code of
1986, as amended, and is not likely to become a PFIC.
(ll) Neither the sale of the Securities by the Company hereunder nor the
use of the proceeds thereof will cause any U.S. person participating in the
offering, either as underwriter and/or purchasers of the Securities, to violate
the Trading With the Enemy Act, as amended, the International Emergency
Economics Powers Act, as amended or any foreign asset control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(all such laws and regulations collectively referred to as the "Sanctions Laws
and Regulations") or any enabling legislation or executive order relating
thereto.
(mm) Neither the Company nor any of its affiliates does business with the
government of Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statutes.
(nn) The documents incorporated by reference in the Registration Statement
and Prospectus, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading when they were filed with the Commission; and any further documents
so incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(oo) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the Securities)
will violate or result in a violation of Section 7 of the Exchange Act, or any
regulation promulgated thereunder, including, without limitation, Regulations G,
T, U, and X of the Board of Governors of the Federal Reserve System.
2. Representations and Warranties of the Company. The Company represents and
warrants to and agrees with each of the Underwriters that, to its knowledge:
(a) Navion ASA, a wholly-owned subsidiary of Statoil ASA ("Navion"), has
been duly organized and is validly existing as a corporation under the laws of
the Kingdom of Norway, with corporate power and authority to own, its properties
and to conduct its business and has been duly qualified to transact business and
is in good standing in each other jurisdiction
10
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not, after giving effect to the
acquisition by the Company of such assets of Navion that is contemplated in the
Share Sale and Purchase Agreement by and among Statoil ASA and Statpet AS and
Norsk Teekay AS, dated December 15, 2002, on the general affairs, management,
the current or future consolidated financial position, business prospects,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect After Navion").
(b) Each subsidiary of Navion listed on Schedule IX(a) attached hereto
(that purports to identify each subsidiary of Navion that constitutes a
"significant subsidiary" as such term is defined in Rule 1-02 of Regulation S-X)
(collectively, the "Significant Navion Subsidiaries") has been duly
incorporated, is validly existing as a corporation under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect After Navion.
(c) None of Navion nor any of the Significant Navion Subsidiaries is in
violation of its articles of incorporation or by-laws, or in default in the
performance or observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which Navion or any of the Significant Navion
Subsidiaries is a party or by which it is bound.
(d) Navion and each of the Significant Navion Subsidiaries has good and
marketable title in fee simple to all real property and good and marketable
title to all properties and assets owned by them, in each case free and clear of
all liens, encumbrances and defects, except such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by Navion and the Significant Navion Subsidiaries.
(e) There are no legal or governmental proceedings pending to which Navion
or any Significant Navion Subsidiaries is a party or to which its properties is
subject which, if determined adversely to Navion or any Significant Navion
Subsidiaries, would individually or in the aggregate, have a Material Adverse
Effect After Navion; and no such proceedings are threatened or contemplated by
Regulatory Authorities or threatened by others.
(f) Each of Navion and the Significant Navion Subsidiaries has all
necessary Permits of and from, and has made all declarations and filings with,
all federal, provincial, state, local or other Regulatory Authorities, all
self-regulatory organizations and all courts and other tribunals, to own, lease
license and use its properties and assets and to conduct the business, except
where the failure to possess such Permits or to make such declarations or
filings would not have a Material Adverse Effect After Navion; and neither
Navion nor any Significant Navion Subsidiaries has received any notice of
proceedings relating to revocation, modification or any other material
impairment of any Permit.
11
(g) Navion and the Significant Navion Subsidiaries (i) are in compliance
with any and all Environmental Laws, (ii) have received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business and (iii) are in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a Material
Adverse Effect After Navion.
(h) The Company believes that, in the ordinary course of its business,
Navion conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of Navion and its subsidiaries, in the
course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties). The Company believes that, on the
basis of such review, Navion has reasonably concluded that such associated costs
and liabilities would not, singly or in the aggregate, have a Material Adverse
Effect After Navion.
(i) No material labor dispute with the employees of Navion or any of the
Significant Navion Subsidiaries exists or, to the best of the Company's
knowledge, is imminent.
(j) Navion and each of the Significant Navion Subsidiaries are insured by
insurers of recognized financial responsibility, participate in insurance clubs,
self-insure or have similar coverage against such losses and risks and in such
amounts as are prudent and customary in the business in which they are engaged.
3. Agreements to Sell and Purchase. The Company hereby agrees to sell to the
several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, hereby agrees, severally and not jointly, to purchase from
the Company at $25.00 per Firm Security (the "Purchase Price") the number of
Firm Securities set forth in Schedule I hereto opposite the name of such
Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Option Securities, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 750,000 Option
Securities at the Purchase Price, plus accrued dividends, if any, to the Option
Closing Date (as defined below). If you, on behalf of the Underwriters, elect to
exercise such option, you shall so notify the Company in writing not later than
30 days after the date of this Agreement, which notice shall specify the number
of Option Securities to be purchased by the Underwriters and the date on which
such Option Securities are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Option Securities may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Securities. If
any Option Securities are to be purchased, each Underwriter agrees, severally
and not jointly, to purchase the number of Option Securities (subject to such
adjustments to eliminate fractional units as you may determine) that bears the
same proportion to the total number of Option Securities to be
12
purchased as the number of Firm Securities set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of Firm
Securities.
The Company hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated and Salomon Smith Barney Inc. it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
Prospectus Supplement (1) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any Securities, Purchase Contracts or Common Shares or
any securities convertible into or exercisable or exchangeable for any
Securities, Purchase Contracts or Common Shares or (2) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Securities, Purchase Contracts or
Common Shares, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Securities to the Underwriters hereunder, (b) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, or (c) the sale or issuance by the
Company of shares of Common Stock pursuant to employee benefit, option or stock
repurchase plans in existence as of the date hereof.
4. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Securities are to be offered to the public initially at
$25.00 per PEPS Unit (the "Public Offering Price"), and to certain dealers
selected by you at a price that represents a concession not in excess of $[__]
per PEPS Unit under the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Securities to be sold by the
Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery to you for the respective accounts
of the several Underwriters of the certificates for the Firm Securities at the
offices of Shearman & Sterling, 1080 Marsh Road, Menlo Park, California,
94025-1022, at 9:00 a.m., New York City time, on February [__], 2003, or at such
other time on the same or such other date, not later than five business days
after the date of this Agreement as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "Closing Date."
Payment for the Option Securities shall be made to the Company in Federal
or other funds immediately available in New York City against delivery to
Underwriters of the certificates for the Option Securities purchased by the
Underwriters on the date specified in the notice described in Section 3 or at
such other time on the same or on such other date, in any event not later than
10 business days after the expiration of the Underwriters' option to purchase
Option Securities as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "Option Closing Date."
13
The certificates, if any, for the Securities purchased by the Underwriters
shall be registered in such names and in such denominations as you shall request
in writing not later than one full business day prior to the Closing Date or the
Option Closing Date, as the case may be. The certificates, if any, evidencing
the Firm Securities or Option Securities shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer taxes payable in
connection with the transfer of the Firm Securities or Option Securities to the
Underwriters duly paid, against payment of the Purchase Price with respect to
such Securities.
6. Conditions to the Underwriters' Obligations. The several obligations of the
Underwriters to purchase and pay for the Securities on the Closing Date are
subject, in the discretion of the Underwriters, to the condition that all
representations and warranties and other statements of the Company in this
Agreement are, at and as of the Closing Date, true and correct, the condition
that the Company shall have performed all of its obligations hereunder
theretofore to be performed, and to the following conditions:
(a) The Prospectus as amended or supplemented in relation to the Securities
shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period prescribed for such filing by the rules and regulations
under the Securities Act and in accordance with Section 6(a) hereof; no stop
order suspending the effectiveness of the Registration Statement shall have been
instituted or shall be pending or, to the knowledge of the Company, shall be
contemplated by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of the Underwriters.
(b) Subsequent to the execution and delivery of this Agreement and prior to
the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your judgment, is material and adverse and that
makes it, in your judgment, impracticable to market the Securities on the
terms and in the manner contemplated in the Prospectus.
(c) The Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the Company, to the
effect set forth in Section 6(b)(i) above and to the effect that (A) the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the
14
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date; and (B) there shall not have occurred any change, or any
development involving a prospective change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).
(d) The Underwriters shall have received on the Closing Date an opinion of
Watson, Farley & Williams, counsel for the Company, dated the Closing Date and
addressed to you in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company was duly incorporated in the Republic of Liberia.
(ii) The Company is validly existing as a corporation in good
standing under the law of the Republic of The Marshall Islands, has the
corporate power and authority to own its property and to conduct its
business as described in the Registration Statement and Prospectus.
(iii) The Underwriting Agreement has been duly authorized, executed
and delivered on behalf of the Company.
(iv) The Indenture has been duly authorized, executed and delivered
on behalf of the Company.
(v) Each of the PEPS Agreements has been duly authorized, executed
and delivered on behalf of the Company.
(vi) The Remarketing Agreement has been duly authorized, executed
and delivered on behalf of the Company.
(vii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable.
(viii) Each of the subsidiaries of the Company listed on Schedules
IV(a) and VI(a) hereto has been duly formed or incorporated, is validly
existing as a corporation or a limited liability company in good standing
under the laws of the Republic of The Marshall Islands or Republic of
Liberia, as the case may be, and has the limited liability company or
corporate power and authority to own its property and to conduct its
business as described in the Registration Statement and Prospectus.
(ix) All of the issued shares of capital stock or membership
interests, as the case may be, of each subsidiary listed on Schedule IV(a)
have been duly authorized and validly issued and, assuming issuance against
payment therefor, are fully paid and non-assessable. To such counsel's
knowledge, all of the shares of capital stock or membership interests, as
the case may be, of each subsidiary listed on Schedules IV(a) and VI(a) are
owned, directly or indirectly, by the Company free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind
except as set
15
forth in Schedule III. To such counsel's knowledge, there are no
outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock or
membership interests of any subsidiary listed on Schedules IV(a) and VI(a).
(x) The Securities have been duly authorized, executed and
delivered on behalf of the Company.
(xi) The Notes have been duly authorized, executed and delivered on
behalf of the Company.
(xii) The shares of Common Stock to be issued and sold by the Company
pursuant to the Purchase Contracts have been duly authorized and reserved
for issuance and, when issued and delivered in accordance with the
provisions of the Purchase Contract Agreement, will be validly issued,
fully paid and non-assessable.
(xiii) The statements in the Registration Statement and Prospectus
under the captions "Taxation of Teekay - Marshall Islands Taxation" and
"Regulation" and in the Company's Form 20-F for the year ended December 31,
2001 ("20-F") under the captions "Item 4 - Environmental Regulation -
International Maritime Organization," "Item 4 - Environmental Regulation -
The United States Oil Pollution Act of 1990," "Item 4 - Environmental
Regulation - Other Environmental Initiatives," and "Item 10 - Taxation,"
insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly summarize the matters
referred to therein.
(xiv) Although such counsel assumes no responsibility for the factual
accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus under the caption "Regulation," and
in the 20-F under the captions "Item 4 - Environmental Regulation -
International Maritime Organization," "Item 4 - Environmental Regulation -
The United States Oil Pollution Act of 1990," and "Item 4 - Environmental
Regulation - Other Environmental Initiatives," on the basis of the
procedures undertaken by counsel (and relying as to materiality to the
extent such counsel deems appropriate upon the opinions of officers and
other representatives of the Company), no facts have come to the attention
of counsel that cause it to believe that the statements contained in the
Registration Statement and Prospectus under the caption "Regulation" and in
the 20-F under the captions "Item 4 - Environmental Regulation -
International Maritime Organization," "Item 4 - Environmental Regulation -
The United States Oil Pollution Act of 1990," and "Item 4 - Environmental
Regulation - Other Environmental Initiatives," and any further amendments
or supplements thereto and made by the Company prior to the Closing Date
contained as of its date or contains as of the Closing Date an untrue
statement of a material fact or omitted or omits, as the case may be, to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(xv) The choice of New York law to govern the Underwriting Agreement
constitutes a valid choice of law insofar as the laws of The Republic of
the Marshall
16
Islands are concerned. The submission by the Company to the non-exclusive
jurisdiction of any federal or state court in the Borough of Manhattan, The
City of New York (a "New York Court") is a valid submission insofar as the
laws of The Republic of the Marshall Islands are concerned, provided that
Watson, Farley & Williams has accepted its appointment by the Company as
its agent to accept service of process in the United States of America
under this Agreement.
(xvi) A judgment granted by a foreign court against the Company may
be enforced in The Republic of the Marshall Islands without a retrial on
the merits of the matter provided that: (A) the judgment is for a specific,
ascertained sum of money and is final in the jurisdiction granting the
judgment; (B) the court granting the judgment had jurisdiction under the
laws of the place where the court is seated; (C) the judgment does not
offend the principles of the Republic of the Marshall Islands as to due
process, natural justice or public policy; (D) the judgment was not
obtained by fraud; (E) the judgment does not conflict with another final
and conclusive judgment; (F) the defendant was actually present in person
or by a duly appointed representative and (G) the judgment does not in
effect constitute a default judgment.
(e) The Underwriters shall have received on the Closing Date an opinion of
Graham, Thompson & Co., special Bahamian counsel for the Company, dated the
Closing Date and addressed to you in form and substance satisfactory to counsel
for the Underwriters, to the effect that:
(i) Each of the subsidiaries of the Company listed on Schedule V(a)
thereto, has been duly organized, is validly existing as a corporation in
good standing under the laws of Commonwealth of The Bahamas and has the
corporate power and authority to own its property and to conduct its
business as described in the Registration Statement and Prospectus and is
duly qualified to transact business.
(ii) All of the issued shares of capital stock of each subsidiary
listed on Schedule V(a) have been duly authorized and validly issued and,
assuming issuance against payment therefor, are fully paid and
non-assessable. To such counsel's knowledge, all of the shares of capital
stock of each subsidiary listed on Schedule V(a) are owned, directly or
indirectly, by the Company free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind. To such
counsel's knowledge, there are no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, any shares
of capital stock of any subsidiary listed on Schedule V(a).
(iii) The statements in the Prospectus under the caption "Taxation of
Teekay - Bahamian Taxation," insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the matters
referred to therein.
(f) The Underwriters shall have received on the Closing Date an opinion of
Seward & Kissel LLP, special counsel for the Company, dated the Closing Date and
addressed to you in
17
form and substance satisfactory to counsel for the Underwriters, to the effect
that the statements in the Prospectus under the caption "Taxation of Teekay -
United States Taxation," "- Taxation of Our Shipping Income: In General," "-
Application of Code Section 883," and "- Taxation in Absence of Internal Revenue
Code Section 883 Exemption" insofar as such statements constitute summaries of
the legal matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein.
(g) The Underwriters shall have received on the Closing Date an opinion of
Thommessen Krefting Greve Lund AS Advokatfirma, special Norwegian counsel for
the Company, dated the Closing Date and addressed to you in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) Each of the corporations of the Company listed on Schedule
VII(a) thereto has been duly incorporated. Each of the partnerships of the
Company listed on Schedule VII(a) thereto has been duly established. Each
of the subsidiaries listed on Schedule VII(a) is validly existing under the
laws of the Kingdom of Norway and has the corporate power and authority to
own its property and to conduct its business as described in the
Registration Statement and Prospectus and is duly qualified to transact
business.
(ii) All of the issued shares of each corporation listed on Schedule
VII(a) or interest in each partnership listed on Schedule VII(a) have been
duly authorized and validly issued and the shares, assuming issuance
against payment therefor, are fully paid and non-assessable. To such
counsel's knowledge, all of the shares of capital stock of each subsidiary
listed on Schedule VII(a) are owned, directly or indirectly, by the Company
free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind. To such counsel's knowledge, there are
no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock of any
corporations listed on Schedule VII(a) nor any such corresponding rights to
any partnership interest in any of the partnerships listed on Schedule
VII(a).
(iii) The statements in the Registration Statement and Prospectus
under the captions "Taxation of Teekay - Norwegian Taxation" insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings and fairly
summarize the matters referred to therein.
(iv) Each of Navion and the Significant Navion Subsidiaries has been
duly incorporated under the laws of the Kingdom of Norway. Each of Navion
and the Significant Navion Subsidiaries is validly existing under the laws
of the Kingdom of Norway and has the corporate power and authority to own
its property and to conduct its business and is duly qualified to transact
business in Norway.
(v) All of the issued shares of capital stock of each Significant
Navion Subsidiary have been duly authorized and validly issued and,
assuming issuance against payment therefor, are fully paid and
non-assessable.
18
(h) The Underwriters shall have received on the Closing Date an opinion of
Perkins Coie LLP, counsel for the Company, dated the Closing Date and addressed
to you in form and substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) The Securities, the Indenture, the Underwriting Agreement, the
PEPS Agreements, the Remarketing Agreement and the Notes conform in all
material respects to the descriptions thereof in the Prospectus.
(ii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting
Agreement, the Indenture, the PEPS Agreements, the Remarketing Agreement,
the Securities and the Notes (i) will not contravene any provision of the
laws of the United States or New York or, to such counsel's knowledge, any
agreement listed as an exhibit to the Company's most recent Form 20-F filed
with the Commission and any additional documents filed under the Exchange
Act since the date of such filing or, to such counsel's knowledge, any
judgment or decree of any governmental body, agency or court of the United
States or any state thereof having jurisdiction over the Company or any
subsidiary that has been disclosed in the Company's most recent Form 20-F
filed with the Commission and any additional documents filed under the
Exchange Act since the date of such filing and (ii) to such counsel's
knowledge, will not result in any violation of the provisions of the
articles of incorporation and by-laws of the Company and will not result in
or require the creation or imposition of any lien, charge, or other
encumbrance upon or with respect to any of the properties of the Company or
any of its subsidiaries, except pursuant to the terms of the Indenture; and
no consent, approval, authorization or order of or qualification with any
Regulatory Authority of the United States or New York is required for the
issue and sale of the Securities or the performance by the Company of its
obligations under the Underwriting Agreement, the Indenture, the PEPS
Agreements, the Remarketing Agreement, the Securities or the Notes in
connection with the offer and sale of the Securities by the Underwriters
except as may be required by the federal securities or blue sky laws of the
various states in the United States.
(iii) The statements in the Prospectus Supplement under the captions
"Description of the PEPS Units," "Description of Certain Debt" and "Tax
Consequences - Material United States Federal Income Tax Consequences" and
the statements set forth in the Base Prospectus under the captions
"Securities We May Issue," "Description of Capital Stock," "Description of
Stock Purchase Contracts and Stock Purchase Units," and "Description of
Debt Securities," in each case insofar as such statements constitute
summaries of legal matters, documents or proceedings referred to therein,
fairly summarize the matters referred to therein in all material respects.
(iv) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act, nor a "Passive Foreign Investment Company" within
the meaning of Section 1297 of the United States Internal Revenue Code of
1986.
(v) Assuming the due authorization, execution, issuance and
delivery of the Securities by the Company and the due authentication of the
Securities pursuant to the
19
Purchase Contract Agreement and the Indenture, the Securities constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture on the part of the Notes and the
Purchase Contract Agreement on the part of the Purchase Contracts,
enforceable against the Company in accordance with their respective terms,
subject, as to enforcement, to bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium and other laws of general applicability from time to time in
effect relating to or affecting creditors' rights and to general equitable
principles (regardless of whether considered in a proceeding in equity or
at law); provided, however, that upon the occurrence of a Termination Event
(as defined in the Purchase Contract), the Bankruptcy Code (11
U.S.C.ss.ss.101-1330, as amended) should not substantively limit the
provisions of Sections 3.15 and 5.06(a) of the Purchase Contract Agreement
or Section 5.04 of the Pledge Agreement that require termination of the
Purchase Contracts and release of the Collateral Agent's security interest
in (1) the Notes or (2) the Treasury Securities (as defined in the Purchase
Contract Agreement), as applicable, and the transfer of such Notes and
Treasury Securities to the Purchase Contract Agent, for the benefit of the
Holders of the Securities; provided further, however, that no opinion is
expressed as to whether a court exercising bankruptcy jurisdiction might
issue a temporary restraining order or provide other interim relief that
would delay the exercise of such termination right for a period of time
pending final adjudication of any challenge to the exercise of such right
during a bankruptcy case involving the Company.
(vi) Assuming the due authorization, execution and delivery of the
Notes by the Company and the due authorization of the Notes by the Trustee,
the Notes constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture, enforceable against the
Company in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium and other laws of general
applicability from time to time in effect relating to or affecting
creditors' rights and to general equitable principles (regardless of
whether considered in a proceeding in equity or at law).
(vii) The Indenture has been duly qualified under the Trust Indenture
Act; assuming the due authorization, execution and delivery of the
Indenture by the Company and the due authentication, execution and delivery
of the Indenture by the Trustee, the Indenture constitutes a valid and
legally binding instrument of the Company, enforceable against the Company
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium and other laws of general
applicability from time to time in effect relating to or affecting
creditors' rights and to general equitable principles (regardless of
whether considered in a proceeding in equity or at law).
(viii) Assuming the due authorization, execution and delivery of each
of the PEPS Agreements and the Remarketing Agreement by the Company, each
of the PEPS Agreements and the Remarketing Agreement constitutes a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency (including, without limitation, all laws
20
relating to fraudulent transfers), reorganization, moratorium and other
laws of general applicability from time to time in effect relating to or
affecting creditors' rights and to general equitable principles (regardless
of whether considered in a proceeding in equity or at law), provided,
however, that upon the occurrence of a Termination Event (as defined in the
Purchase Contract), the Bankruptcy Code (11 U.S.C.ss.ss.101-1330, as
amended) should not substantively limit the provisions of Sections 3.15 and
5.06(a) of the Purchase Contract Agreement or Section 5.04 of the Pledge
Agreement that require termination of the Purchase Contracts and release of
the Collateral Agent's security interest in (1) the Notes or (2) the
Treasury Securities (as defined in the Purchase Contract Agreement), as
applicable, and the transfer of such Notes and Treasury Securities to the
Purchase Contract Agent, for the benefit of the Holders of the Securities;
provided further, however, that no opinion is expressed as to whether a
court exercising bankruptcy jurisdiction might issue a temporary
restraining order or provide other interim relief that would delay the
exercise of such termination right for a period of time pending final
adjudication of any challenge to the exercise of such right during a
bankruptcy case involving the Company.
(ix) To such counsel's knowledge and other than as set forth in the
Registration Statement and Prospectus, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would have a Material Adverse Effect.
(x) The Registration Statement and the Prospectus (other than the
financial statements and supporting schedules and other financial data
therein, as to which such counsel need express no belief) comply as to form
in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and the Trust Indenture Act.
(xi) The documents incorporated by reference in the Prospectus and
Registration Statement (other than the financial statements and supporting
schedules and other financial data therein, as to which such counsel need
express no belief), when they were filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
In addition to the matters set forth above, counsel rendering the foregoing
opinion shall also include a statement to the effect that although such counsel
is not passing upon such statements and assumes no responsibility for and has
made no independent check or investigation to verify the factual accuracy,
completeness or fairness of the statements contained in the Registration
Statement and Prospectus, on the basis of the procedures undertaken by counsel
(and relying as to materiality to the extent such counsel deems appropriate upon
the opinions of officers and other representatives of the Company), no facts
have come to the attention of counsel that cause it to believe that the
Registration Statement and Prospectus and any further amendments or supplements
thereto made by the Company prior to the Closing Date contained as of its date
or as of the Closing Date contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
the light of the
21
circumstances under which they were made, not misleading (other than the
financial statements and supporting schedules and other financial data
therein, as to which such counsel need express no belief).
(i) The Underwriters shall have received on the Closing Date, an opinion of
Appleby Spurling & Kempe, special Bermudian counsel for the Company, dated the
Closing Date and addressed to you, in form and substance satisfactory to counsel
for the Underwriters, to the effect that:
(i) Each of the subsidiaries of the Company listed on Schedule
VIII(a) thereto has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Bermuda and has the
corporate power and authority to own its property and to conduct its
business as described in the Registration Statement and Prospectus and is
duly qualified to transact business.
(ii) All of the issued shares of capital stock of each subsidiary
listed on Schedule VIII(a) have been duly authorized and validly issued
and, assuming issuance against payment therefor, are fully paid and
non-assessable. To such counsel's knowledge, all of the shares of capital
stock of each subsidiary listed on Schedule VIII(a) are owned, directly or
indirectly, by the Company free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind. To such
counsel's knowledge, there are no outstanding rights, warrants or options
to acquire, or instruments convertible into or exchangeable for, any shares
of capital stock of any subsidiary listed on Schedule VIII(a), including
Bona.
(iii) The statements in the Prospectus under the captions "Taxation
of Teekay - Bermudian Taxation" insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the matters
referred to therein.
(iv) Each of the subsidiaries listed on Schedule VIII(a) has been
designated as non-resident for the purposes of the Exchange Control Act,
1972 and regulations made thereunder.
(v) Each of the subsidiaries listed on Schedule VIII(a) has
received an assurance from the Ministry of Finance granting an exemption,
until 28 March 2016, from the imposition of tax under any applicable
Bermuda law computed on profits or income or computed on any capital asset,
gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, provided that such exemption shall not prevent the
application of any such tax or duty to such persons as are ordinarily
resident in Bermuda and shall not prevent the application of any tax
payable in accordance with the provisions of the Land Tax Act 1967 or
otherwise payable in relation to land in Bermuda leased to the Bermuda
Subsidiary. Each of the subsidiaries listed on Schedule VIII(a) is not
required by any Bermuda law or regulation to make any deductions or
withholdings in Bermuda from any payment it may make to a third party.
22
(vi) There are no Bermuda taxes on profits, income or dividends,
nor is there any capital gains tax, estate duty or death duty applicable to
the Company, each of the subsidiaries listed on Schedule VIII(a) or any
other subsidiary of the Company.
(vii) No litigation, arbitration or administrative or other
proceeding of or before any arbitrator or governmental authority of Bermuda
is pending against any of the subsidiaries listed on Schedule VIII(a), or
affecting any of its properties, rights, revenues or assets; and
(viii) No notice to the Registrar of Companies of the passing of a
resolution of members or creditors to wind up or the appointment of a
liquidator or receiver has been given and no petition to wind up any of the
subsidiaries listed on Schedule VIII(a) or application to reorganize its
affairs pursuant to a Scheme of Arrangement or application for the
appointment or a receiver has been filed with the Supreme Court.
The opinion of Watson, Farley & Williams described in subsection (d) of
this Section, the opinion of Graham, Thompson & Co. described in subsection (e)
of this Section, the opinion of Seward & Kissell, LLP described in subsection
(f) of this Section, the opinion of Thommessen Krefting Greve Lund AS
Advokatfirma described in subsection (g) of this Section, the opinion of Perkins
Coie LLP described in subsection (h) of this Section and the opinion of Appleby
Spurling & Kempe described in subsection (i) of this Section shall each be
rendered to you at the request of the Company and shall so state therein.
(j) The Underwriters shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Underwriters, dated the Closing Date in
form and substance satisfactory to the Underwriters.
(k) The Underwriters shall have received on the Closing Date an opinion of
Seward & Kissel LLP, counsel to The Bank of New York, as Purchase Contract
Agent, dated the Closing Date, and addressed to you in form and substance
reasonably satisfactory to counsel for the Underwriters, to the effect that:
(i) The Purchase Contract Agent is a banking corporation validly
existing under the laws of the State of New York.
(ii) The Purchase Contract Agent has the requisite power and
authority to execute, deliver and perform its obligations under the
Purchase Contract Agreement and the Pledge Agreement.
(iii) The execution, delivery and performance by the Purchase
Contract Agent of the Purchase Contract Agreement and the Pledge Agreement
have been duly authorized by all necessary corporate action on the part of
the Purchase Contract Agent, and the Purchase Contract Agreement and the
Pledge Agreement have been duly executed and delivered by the Purchase
Contract Agent, and constitute the valid and binding agreements of the
Purchase Contract Agent, enforceable against the Purchase Contract Agent in
accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether
23
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
(iv) The execution, delivery and performance of the Purchase
Contract Agreement and the Pledge Agreement by the Purchase Contract Agent
does not conflict with or constitute a breach of the charter or by-laws of
the Purchase Contract Agent.
(v) No consent, approval or authorization of, or registration with
or notice to, any state or federal governmental authority or agency
governing the corporate trust powers of the Purchase Contract Agent is
required for the execution, delivery or performance by the Purchase
Contract Agent of the Purchase Contract Agreement and the Pledge Agreement.
(l) The Underwriters shall have received, on each of the date hereof and on
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Deloitte & Touche, independent chartered accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statement and certain financial
information of Ugland Nordic Shipping ASA.
(m) The Underwriters shall have received, on each of the date hereof and on
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from Ernst
& Young, independent chartered accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statement and certain financial
information contained in the Registration Statement and the Prospectus.
(n) The Securities shall have been approved for listing, subject only to
official notice of issuance, on the New York Stock Exchange.
(o) The "lock-up" agreements, each substantially in the form of Exhibit A
hereto, between you and certain executive officers, directors of the Company and
Resolute Investments Inc. relating to sales and certain other dispositions of
shares of Securities, Purchase Contracts, Common Stock or certain other
securities, delivered to you on or before the date hereof, shall be in full
force and effect on the Closing Date.
(p) The Company shall have furnished or caused to be furnished to you such
further certificates and documents as you shall have reasonably requested.
The several obligations of the Underwriters to purchase Option Securities
hereunder are subject to the delivery to the Underwriters on the Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Option
Securities and other matters related to the issuance of the Option Securities.
24
7. Covenants of the Company. In further consideration of the agreements of the
Underwriters herein contained, the Company covenants with each Underwriter as
follows:
(a) To furnish to you, without charge, copies of the Registration Statement
as originally filed with the Commission and of each amendment thereto (including
financial statements, all exhibits thereto and documents incorporated therein by
reference and exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto but
including documents incorporated therein by reference) and to furnish to you in
New York City and to each Underwriter and dealer, without charge, prior to 10:00
A.M. New York City time on the business day next succeeding the date of this
Agreement and from time to time as expeditiously as possible during the period
mentioned in Section 7(c) below, as many copies of the Prospectus, any documents
incorporated therein by reference and exhibits thereto, and any supplements and
amendments thereto or to the Registration Statement as originally filed and of
each amendment thereto, as you may reasonably request. The Company consents to
the use of the Prospectus (and of any amendment or supplement thereto) in
accordance with the provisions of the Securities Act and with the securities or
Blue Sky laws of the jurisdictions in which the Securities are offered by the
several Underwriters and by all dealers to whom Securities may be sold, in
connection with the offering and sale of the Securities.
(b) (i) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus required
to be filed pursuant to such Rule, and (ii) during the period mentioned in
Section 6(c) below not to file any information, documents or reports pursuant to
the Exchange Act that upon filing becomes a document incorporated by reference
in the Registration Statement, without delivering a copy of such information,
documents or reports to you prior to or concurrently with such filing.
(c) If, during such period after execution and delivery of this Agreement
as in the opinion of counsel for the Underwriters a prospectus is required by
law to be delivered in connection with sales by an Underwriter or dealer, any
event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Prospectus (or to file under the Exchange
Act any document which, upon filing, becomes a document incorporated therein by
reference) to comply with applicable law, forthwith to prepare and, subject to
the provisions of Section 6(b) above, file with the Commission and furnish, at
its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Securities may have been
sold by you on behalf of the Underwriters and to any other dealers upon request,
either amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
25
(d) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction.
(e) Not to be or become, at any time prior to the expiration of three years
after the Closing Date, an open-end investment company, unit investment trust,
closed-end investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act.
(f) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds".
(g) The Company will not take, and will cause each subsidiary not to take,
directly or indirectly, any action that will result in a violation by any U.S.
person participating in the offering of the Sanctions Laws and Regulations with
respect to the sale of the Securities hereunder. Further, the Company will not
use, and will cause each subsidiary not to use, the proceeds from the sale of
the Securities, directly or indirectly, for any purpose or activity that would
cause the Underwriters or any purchaser of the Securities to be in violation of
the Sanctions Laws and Regulations or any agent or "Specially Designated
National" of any country the subject of the Sanctions Laws and Regulations, or
any person or entity of any country the subject of the Sanctions Laws and
Regulations.
(h) To make generally available to its securityholders as soon as
practicable, but in any event not later than fifteen months after the effective
date of the Registration Statement (as defined in Rule 158(c)), an earnings
statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder (including at the option of the Company Rule 158).
(i) To endeavor to list any Common Shares underlying the Securities on the
New York Stock Exchange.
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company (including
local and special counsel) and accountants in connection with the registration
and delivery of the Securities under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing or reproduction
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, (ii) the costs of producing this Agreement, the
Indenture, the PEPS Agreements, the Remarketing Agreement and any Blue Sky
memorandum and legal investment surveys, closing documents and any other
documents in connection with the offer, purchase, sale and delivery of the
Securities, (iii) all expenses in connection with the qualification of the
Securities for the offering and sale under state securities
26
laws and all as provided in Section 7(d) hereof, including filing fees and the
fees and disbursements of counsel for the Underwriters in connection with the
Blue Sky memoranda and legal investment surveys and such qualification, (iv) any
filing fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Securities
by the National Association of Securities Dealers, Inc., (v) any fees charged by
rating agencies for the rating of the Securities, (vi) all costs and expenses
incident to the listing of the Securities and the Common Shares underlying the
Securities on any national securities exchange, (vii) all fees and expenses in
connection with the preparation and filing of the registration statement on Form
8-A relating to the Securities and all costs and expenses incident to the
listing the Securities on the New York Stock Exchange, (viii) the cost of
producing certificates representing the Securities, (ix) the fees and expenses
of the Trustee, Purchase Contract Agent, Collateral Agent and any transfer
agent, registrar or depositary and the fees and disbursements of counsel for the
Trustee, Purchase Contract Agent and Collateral Agent in connection with the
Securities, (x) all taxes arising as a result of the issuance, sale and delivery
of the Securities by the Underwriters in the manner contemplated by this
Agreement, including in any case, any Marshall Islands income, capital gains,
withholding, transfer or other tax asserted against the Underwriters by reason
of the purchase and sale of the Securities pursuant to this Agreement, (xi) the
costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, and (xii) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section, Section 8 and
the last paragraph of Section 10, the Underwriters will pay all of their costs
and expenses, including fees and disbursements of their counsel, stock transfer
taxes payable on resale of any of the Securities by them and any advertising
expenses connected with any offers they may make.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each affiliate of any Underwriter within the meaning of
Rule 405 under the Securities Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein; provided, however that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from
27
whom the person asserting any such losses, claims damages or liabilities
purchased Securities, or any person controlling such Underwriter, if a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendment or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Securities
to such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of noncompliance by the Company with Section
7(a) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such
28
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into, and (iii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to any indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Securities shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the Prospectus, bear to the aggregate Public Offering Price
of the Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Underwriters'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the respective number of Securities they have purchased hereunder,
and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid or payable
by an indemnified party as the result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged
29
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
any affiliate of any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
9. Termination. The Underwriters may terminate this Agreement by notice given
by you to the Company if after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on, or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a material
disruption in securities settlement, payment or clearance services in the United
States or Canada shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal, New York State or Canadian
authorities or (v) there shall have occurred any outbreak or escalation of
hostilities or declaration of war or any change in financial markets or any
calamity or crisis that, in your judgment, is material and adverse and which,
singly or together with any other such event specified in clause (v), makes it,
in your judgment, impracticable or inadvisable to proceed with the offer, sale
or delivery of the Securities on the terms and in the manner contemplated in the
Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Securities that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
number of the Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Firm
Securities set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the number of Securities that any Underwriter has agreed to purchase pursuant to
this Agreement be increased pursuant to this Section 10 by an amount in excess
of one-ninth of such number of Securities without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Firm Securities and the
30
aggregate number of Firm Securities with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Securities to be purchased,
and arrangements satisfactory to you and the Company for the purchase of such
Firm Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Option Securities and the aggregate number of Option Securities with
respect to which such default occurs is more than one-tenth of the aggregate
number of Option Securities to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Option Securities or (ii) purchase not less than the number of Option Securities
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform their obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Judicial Proceedings. (a) The Company irrevocably (i) agrees that any legal
suit, action or proceeding against the Company brought by the Underwriters or by
any person who controls the Underwriters arising out of or based upon this
Agreement or the transactions contemplated hereby may be instituted in any New
York court, (ii) waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
proceeding in any New York court and (iii) submits to the exclusive jurisdiction
of such courts in any such suit, action or proceeding. The Company has appointed
Watson, Farley & Williams, New York, New York, as its authorized agent (the
"Authorized Agent") upon whom process may be served in any such action arising
out of or based on this Agreement or the transactions contemplated hereby which
may be instituted in any New York Court by the Underwriters or by any person who
controls the Underwriters, expressly consents to the jurisdiction of any such
court in respect of any such action, and waives any other requirements of or
objections to personal jurisdiction with respect thereto. Such appointment shall
be irrevocable. The Company represents and warrants that the Authorized Agent
has agreed to act
31
as such agent for service of process and agrees to take any and all action,
including the filing of any and all documents and instruments, that may be
necessary to continue such appointment in full force and effect as aforesaid.
Service of process upon the Authorized Agent and written notice of such service
to the Company shall be deemed, in every respect, effective service of process
upon the Company.
(b) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder into any currency other than United States
dollars, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Underwriters could purchase United
States dollars with such other currency in the City of New York on the business
day proceeding that on which final judgment is given. The obligations of the
Company in respect of any sum due from it to the Underwriters shall,
notwithstanding any judgment in a currency other than United States dollars, not
be discharged until the first business day, following receipt by the
Underwriters of any sum adjudged to be so due in such other currency, on which
(and only to the extent that) the Underwriters may in accordance with normal
banking procedures purchase United States dollars with such other currency; if
the United States dollars so purchased are less than the sum originally due to
the Underwriters hereunder, the Company agrees, as a separate obligation and
notwithstanding any such judgment, that the party responsible for such judgment
shall indemnify the Underwriters against such loss. If the United States dollars
so purchased are greater than the sum originally due to the Underwriters
hereunder, the Underwriters agree to pay to the Company an amount equal to the
excess of the dollars so purchased over the sum originally due to the
Underwriters hereunder.
14. Notice. Except as otherwise provided herein, notice given pursuant to any
provision of this Agreement shall be delivered or sent by mail, telex or
facsimile (i) if to the Company, at the address of the Company set forth in the
Prospectus; or (ii) if to you, care of Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036, Attention: Manager, Corporate Finance
Division.
15. Headings. The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
32
Very truly yours,
TEEKAY SHIPPING CORPORATION
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof.
MORGAN STANLEY & CO. INCORPORATED
By:
----------------------------------------
Name:
Title:
SALOMON SMITH BARNEY INC.
By:
----------------------------------------
Name:
Title:
SCHEDULE I
Number of
Firm Securities
Underwriter To Be Purchased
---------- ---------------
Morgan Stanley & Co. Incorporated......................
Salomon Smith Barney Inc...............................
Total 5,000,000
Sch. I
SCHEDULE II
Title of Securities:
Registration Statement: Registration Statement No. 333-102594
Number of Firm Securities: 5,000,000 PEPS(SM) Units
Number of Option Securities: 750,000 PEPS(SM) Units
Price to Public: $25.00 per Security
Purchase Price by Underwriters: $[ ] per Security
Interest Rate on Notes: [ ]%
Specified funds for payment of purchase price: Federal (same day) funds
Reference Price: $[ ]
Threshold Appreciation Price: $[ ]
Closing Price of Teekay Shipping Corporation Common Stock on
February 10, 2003: $38.52
Payment Dates: February 16, May 16, August 16, and November 16, commencing
May 16, 2003
Purchase Contract Settlement Date: February 16, 2006
Maturity of Note: May 18, 2006
Stock Exchange Listing: New York Stock Exchange
Closing Date: February 18, 2003
Closing Location: Menlo Park, California
Names and addresses of Underwriters:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Salomon Smith Barney Inc.
388 Greenwich Street
24th Floor
New York, New York 10013
Sch. II
SCHEDULE III
Encumbrances on shares of the Company's Subsidiaries
1. Shares of the following of the Company's subsidiaries are
encumbered pursuant to the Pledge Agreement and Irrevocable Proxy dated January
29, 1996, relating to Teekay Shipping Corporation's $225 Million 8.32% First
Preferred Ship Mortgage Notes Due 2008.
Poul Spirit LLC
Torben Spirit LLC
Senang Spirit LLC
Mayon Spirit LLC
Leyte Spirit LLC
Luzon Spirit LLC
Samar Spirit LLC
2. Shares of the following of the Company's subsidiaries are
encumbered pursuant to the Amended and Restated Reimbursement Agreement, dated
April 16, 1998, between Barrington (Australia) Pty Limited, Palmerston
(Australia) Pty Limited, VSSI Australia Limited, VSSI Transport Inc., Alliance
Chartering Pty Limited and Nedship Bank (America) N. V.
Dampier Spirit LLC
Avalon Spirit LLC
3. Shares of the following of the Company's subsidiaries are
encumbered pursuant to the Agreement for a U.S. $200,000,000 Reducing Revolving
Credit Facility, dated January 26, 1998, to be made available to certain
wholly-owned subsidiaries of Teekay Shipping Corporation, by Den Norske Bank
ASA, Nordea Bank, and The Bank of Nova Scotia.
Musashi Spirit LLC
Onozo Spirit LLC
Palmstar Cherry LLC
Palmstar Lotus LLC
Palmstar Poppy LLC
Teekay Spirit LLC
Vancouver Spirit LLC
Victoria Spirit LLC
Sch. III
SCHEDULE IV(a)
Company Subsidiaries Incorporated in the Republic of Liberia With Operations
Teekay Norge Limited
SCHEDULE IV(b)
Company Subsidiaries Incorporated in the Republic of Liberia Without Operations
Willow Ltd.
Cranberry Corporation
Jasmin Holdings Ltd.
Sch. IV
SCHEDULE V(a)
Company Subsidiaries Incorporated in The Bahamas With Operations
Teekay Shipping Limited
SCHEDULE V(b)
Company Subsidiaries Incorporated in The Bahamas Without Operations
Seagull International Ltd.
Sch. V
SCHEDULE VI(a)
Company Subsidiaries Incorporated in The Republic of The Marshall Islands With
Operations
Alliance Spirit LLC Palmstar Orchid LLC
Avalon Spirit LLC Palmstar Poppy LLC
Bahamas Spirit LLC Palmstar Rose LLC
Cook Spirit LLC Palmstar Thistle LLC
Cork Spirit LLC PetroAtlantic LLC
Dampier Spirit LLC PetroNordic LLC
Donegal Spirit LLC Poul Spirit LLC
DSME Hull No. 5248 LLC Samar Spirit LLC
DSME Hull No. 5249 LLC Sebarok Spirit LLC
Galway Spirit LLC Seletar Spirit LLC
Great West Hull No. 1465 LLC Semakau Spirit LLC
Great West Hull No. 1466 LLC Senang Spirit LLC
Hamane Spirit LLC Sentosa Spirit LLC
Kanata Spirit LLC Seraya Spirit LLC
Kareela Spirit LLC Shannon Spirit LLC
Koyagi Spirit LLC Shilla Spirit LLC
Kyushu Spirit LLC Singapore Spirit LLC
Leyte Spirit LLC Sudong Spirit LLC
Limerick Spirit LLC Teekay Spirit LLC
Luzon Spirit LLC Teekay Chartering Limited
Magellan Spirit LLC Teekay Lightering Services LLC
Mayon Spirit LLC Teekay Nordic Holdings Inc.
Mushashi Spirit LLC Torben Spirit LLC
Namsan Spirit LLC Torres Spirit LLC
Nordic NB LLC Ulsan Spirit LLC
Norsk Teekay Holdings Ltd. Vancouver Spirit LLC
Onozo Spirit LLC Victoria Spirit LLC
Pacific Spirit LLC
Palmstar Cherry LLC
Palmstar Lotus LLC
SCHEDULE VI(b)
Company Subsidiaries Incorporated in The Republic of The Marshall Islands
Without Operations
Sch. VI
SCHEDULE VII(a)
Company Subsidiaries Incorporated in Norway With Operations
Ugland Nordic Shipping AS KS Nordic Laurita
Ugland Nordic Investment AS KS Bona Fortuna
Teekay Shipping (Norway) AS KS Bona Freighter
Norsk Teekay AS KS Nordic Akarita
Nordic Akarita AS KS Nordic Apollo
Nordic Apollo AS
Nordic Laurita AS
Nordic Sarita Investment AS
SCHEDULE VII(b)
Company Subsidiaries Incorporated in Norway Without Operations
Sch. VII
SCHEDULE VIII(a)
Company Subsidiaries Incorporated in Bermuda With Operations
Bona Shipholding Ltd.
Teekay Shipping Limited
Bona Shipping India Ltd.
Bona Freighter & Fortuna Ltd.
SCHEDULE VIII(b)
Company Subsidiaries Incorporated in Bermuda Without Operations
Sch. VIII
SCHEDULE IX(a)
Significant Navion Subsidiaries
Navion Offshore Loading AS
Navion Shipping Holding AS
Navion Shipping Operations AS
Sch. IX
Exhibit A
[Form of PEPS Lock-Up Agreement]
February __, 2003
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Salomon Smith Barney Inc.
388 Greenwich Street
24th Floor
New York, New York 10013
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley") and Salomon Smith Barney Inc. (collectively with Morgan
Stanley, the "Underwriters") propose to enter into an Underwriting Agreement
(the "Underwriting Agreement") with Teekay Shipping Corporation, a Republic of
The Marshall Islands corporation (the "Company"), providing for the public
offering (the "Public Offering") by the Underwriters Premium Equity
Participating Security Units - PEPS (each a "Security" and collectively, the
"Securities") which require any holder of a Security to, among other things,
purchase from the Company, on a future date, shares of the Company's Common
Stock, par value $0.0001 per share (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of the
Underwriters, it will not, during the period commencing on the date hereof and
ending 90 days after the date of the final prospectus supplement relating to the
Public Offering (the "Prospectus Supplement"), (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any Securities,
Purchase Contracts or shares of Common Stock or any securities convertible into
or exercisable or exchangeable for any Securities, Purchase Contracts or shares
of Common Stock or (2) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Securities, Purchase Contracts or shares of Common Stock, whether any
such transaction described in clause (1) or (2) above is to be settled by
delivery of Securities, Purchase Contracts or Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (a)
the sale of any Securities to the Underwriters pursuant to the Underwriting
Agreement, (b) transactions relating to shares of Securities, Purchase Contracts
or Common Stock or other securities acquired in open market transactions after
the completion of the Public Offering, or (c) dispositions of shares of Common
Stock by gift to the undersigned's immediate family members, to trusts
established for the benefit of the undersigned's immediate family members or to
charitable organizations; provided that any such person, trust or charitable
organization agrees as a condition to receiving such gifts to be bound
by the terms of the foregoing sentence. In addition, the undersigned agrees
that, without the prior written consent of the Underwriters, it will not, during
the period commencing on the date hereof and ending 90 days after the date of
the Prospectus Supplement, make any demand for or exercise any right with
respect to, the registration of any Securities, Purchase Contracts or shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Securities, Purchase Contracts or Common Stock. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the undersigned's share of
Securities, Purchase Contracts or Common Stock except in compliance with the
foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
This Lock-up Agreement will terminate and shall be of no further effect
in the event that either the Underwriting Agreement is terminated or the sale of
the Securities in the Public Offering has not occurred on or before February 28,
2003.
Very truly yours,
----------------------------------------
(Name)
----------------------------------------
(Address)