EXHIBIT 10.4
FORM OF ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT made effective the ____ day of December 2006;
BY AND BETWEEN:
TEEKAY OFFSHORE OPERATING PARTNERS L.P., a limited partnership duly
organized and existing under the laws of the Marshall Islands with its
registered office at Bayside House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59213, Nassau, The Bahamas.
("TKLP")
AND:
TEEKAY SHIPPING LIMITED, a Bahamas company with its registered office at
Bayside House, Bayside Executive Park, West Bay Street & Blake Road, P.O.
Box AP-59212, Nassau, The Bahamas
("TK Bahamas")
WHEREAS:
A. TKLP, a limited partnership whose units are listed and will trade on
the New York Stock Exchange, requires certain non-strategic
administrative and clerical services; and
B. TKLP wishes to engage TK Bahamas to provide such non-strategic
administrative and clerical services to TKLP on the terms set out
herein;
NOW THEREFORE, the parties agree that, in consideration of the fees set forth in
Schedule "B" to this Agreement (the "Fees") and subject to the Terms and
Conditions attached hereto, TK Bahamas shall provide the non-strategic
administrative and clerical services set forth in Schedule "A" to this Agreement
(the "Services").
IN WITNESS WHEREOF the Parties have executed this Agreement by their duly
authorized signatories with effect on the date first above written.
TEEKAY OFFSHORE OPERATING TEEKAY SHIPPING LIMITED
PARTNERS L.P. BY ITS GENERAL PARTNER
TEEKAY OFFSHORE OPERATING GP L.L.C.
By: __________________________ By: __________________________
Name: Name:
Title: Title:
TERMS AND CONDITIONS
1. DEFINITIONS
In this Agreement: the term:
"Change of Control" means with respect to any entity, an event in which
securities of any class entitling the holders thereof to elect a majority of the
members of the board of directors or other similar governing body of the entity
are acquired, directly or indirectly, by a person who did not immediately before
such acquisition own securities of the entity entitling such person to elect
such majority (and for the purpose of this definition, any such securities held
by another person who is related to such person shall be deemed to be owned by
such person);
"Limited Partnership Agreement" means the amended and restated agreement of
limited partnership of TKLP dated as of [DATE], as from time to time amended;
"TKGP" means Teekay GP L.L.C., a Marshall Islands limited liability company that
is the general partner of TKLP;
"TKLP Group" means TKLP, TKGP and subsidiaries of TKLP; and
"Unitholders" means holders of limited partnership units in TKLP.
2. GENERAL
TK Bahamas shall provide all or such portion of the Services, in a commercially
reasonable manner, as TKLP, may from time to time reasonably request or direct,
all under the supervision of TKLP, as represented by TKGP in its capacity as the
general partner of TKLP.
3. COVENANTS
During the term of this Agreement TK Bahamas shall:
(a) diligently provide or subcontract for the provision of (in accordance with
Section 18 hereof) the Services to TKLP (unless the provision of such
Services would materially interfere with Teekay Shipping Corporation's
operations) as an independent contractor, and be responsible to TKLP for
the due and proper performance of same;
(b) retain at all times a qualified staff so as to maintain a level of
expertise sufficient to provide the Services; and
(c) keep full and proper books, records and accounts showing clearly all
transactions relating to its provision of Services in accordance with
established general commercial practices and in accordance with United
States generally accepted accounting principles, and allow TKLP and its
representatives to audit and examine such books, records and accounts at
any time during customary business hours.
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4. NON-EXCLUSIVITY
TK Bahamas and its employees may provide services of a nature similar to the
Services to any other person. There is no obligation for TK Bahamas to provide
the Services to TKLP on an exclusive basis.
5. CONFIDENTIAL INFORMATION
TK Bahamas shall be obligated to keep confidential, both during and after the
term of this Agreement, all information it has acquired or developed in the
course of providing Services under this Agreement. TKLP shall be entitled to any
equitable remedy available at law or equity, including specific performance,
against a breach by TK Bahamas of this obligation. TK Bahamas shall not resist
such application for relief on the basis that TKLP has an adequate remedy at
law, and TK Bahamas shall waive any requirement for the securing or posting of
any bond in connection with such remedy.
6. SERVICE FEE
In consideration for TK Bahamas providing the Services, TKLP shall pay TK
Bahamas the Fees as determined and by installments as set out in Schedule "B" to
this Agreement.
7. GENERAL RELATIONSHIP BETWEEN THE PARTIES
The relationship between the parties is that of independent contractor. The
parties to this Agreement do not intend, and nothing herein shall be interpreted
so as, to create a partnership, joint venture, employee or agency relationship
between TK Bahamas and any one or more of TKLP, TKGP in its capacity as general
partner on behalf of TKLP or any member of the TKLP Group.
8. INDEMNITY
TKLP shall indemnify and hold harmless TK Bahamas and its employees and agents
against all actions, proceedings, claims, demands or liabilities which may be
brought against them due to this Agreement including, without limitation, all
actions, proceedings, claims, demands or liabilities brought under the
environmental laws of any jurisdiction, and against and in respect of all costs
and expenses (including legal costs and expenses on a full indemnity basis) they
may suffer or incur due to defending or settling same, provided however that
such indemnity shall exclude any or all losses, actions, proceedings, claims,
demands, costs, damages, expenses and liabilities whatsoever which may be caused
by or due to the gross negligence or willful misconduct of TK Bahamas or its
employees or agents.
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9. TERM AND TERMINATION
This Agreement shall commence as of the date first above written and shall
continue for successive one year terms unless terminated by either party hereto
on not less than sixty (60) days notice. A party may at any time terminate this
Agreement forthwith if:
(a) in the case of TKLP, there is a Change of Control of TK Bahamas and in the
case of TK Bahamas, if there is a Change of Control of TKGP ;
(b) the other party breaches this Agreement;
(c) a receiver is appointed for all or substantially all of the property of
the other party;
(d) an order is made to wind-up the other party;
(e) a final judgment, order or decree which materially and adversely affects
the ability of the other party to perform this Agreement shall have been
obtained or entered against that party and such judgment, order or decree
shall not have been vacated, discharged or stayed; or
(f) the other party makes a general assignment for the benefit of its
creditors, files a petition in bankruptcy or for liquidation, is adjudged
insolvent or bankrupt, commences any proceeding for a reorganization or
arrangement of debts, dissolution or liquidation under any law or statute
or of any jurisdiction applicable thereto or if any such proceeding shall
be commenced.
10. FEES UPON TERMINATION
Upon termination of this Agreement, the Fee shall be adjusted as at the
effective date of termination. Any overpayment shall forthwith be refunded to
TKLP and any underpayment shall forthwith be paid to TK Bahamas.
11. SURRENDER OF BOOKS AND RECORDS
Upon termination of this Agreement, TK Bahamas shall forthwith surrender to TKLP
any and all books, records, documents and other property in the possession or
control of TK Bahamas relating to this Agreement and to the business, finance,
technology, trademarks or affairs of TKLP and any member of the TKLP Group and,
except as required by law, shall not retain any copies of same.
12. FORCE MAJEURE
Neither party shall be liable for any failure to perform this Agreement due to
any cause beyond its reasonable control.
13. ENTIRE AGREEMENT
This Agreement forms the entire agreement between the parties with respect to
the subject matter hereof and supersedes and replaces all previous agreements,
written or oral, with respect to the subject matter hereof.
14. SEVERABILITY
If any provision herein is held to be void or unenforceable, the validity and
enforceability of the remaining provisions herein shall remain unaffected and
enforceable.
15. CURRENCY
Unless stated otherwise, all currency references herein are to United States
Dollars.
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16. LAW AND ARBITRATION
This Agreement shall be governed by the laws of The Bahamas. Any dispute under
this Agreement shall be put to arbitration in The Bahamas, a jurisdiction to
which the parties hereby irrevocably submit.
17. NOTICE
Notice under this Agreement shall be given (via hand delivery or facsimile) as
follows:
If to TKLP:
Bayside House
Bayside Executive Park
West Bay Street & Blake Road
P.O. Box AP-59212
Nassau
The Bahamas
Attn: Teekay Offshore GP L.L.C., as represented by its Director
Fax: +1 242 502 8840
If to TK Bahamas:
Bayside House
Bayside Executive Park
West Bay Street & Blake Road
P.O. Box AP-59212
Nassau
The Bahamas
Attn: Director
Fax: +1 242 502 8840
18. SUBCONTRACTING AND ASSIGNMENT
TK Bahamas shall not assign, sub-contract or sub-license or assign this
Agreement to any party that is not a subsidiary or affiliate of Teekay Shipping
Corporation except upon written consent of TKLP.
19. WAIVER
The failure of either party to enforce any term of this Agreement shall not act
as a waiver. Any waiver must be specifically stated as such in writing.
20. AFFILIATES
This Agreement shall be binding upon and inure to the benefit of the affiliates
of TKLP and/or TK Bahamas.
21. COUNTERPARTS
This Agreement may be executed in one or more signed counterparts, facsimile or
otherwise, which shall together form one instrument.
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SCHEDULE A
SERVICES
TK Bahamas shall provide such of the following non-strategic administrative and
clerical services (the "Services") to TKLP, as TKGP may from time to time
request and direct TK Bahamas to provide pursuant to Section 2:
(a) Keep and maintain at all times books, records and accounts which
shall contain particulars of receipts and disbursements relating to
the assets and liabilities of TKLP and such books, records and
accounts shall be kept pursuant to normal commercial practices that
will permit TKLP to prepare or cause to be prepared financial
statements in accordance with US generally accepted accounting
principles and in each case shall also be in accordance with those
required to be kept by TKLP under applicable securities legislation
in the US and as TKLP is required under the US Internal Revenue Code
of 1986 and the regulations applicable with respect thereto, all as
amended from time to time;
(b) Prepare all such returns, filings and documents, for review and
approval by TKLP as may be required under the Limited Partnership
Agreement together with such other returns, filings, documents and
instruments as may from time to time be requested or instructed by
TKLP;
(c) Provide, or arrange for the provision of, advisory services to TKLP
with respect to TKLP's obligations under applicable securities
legislation in the US and assist TKLP in arranging for compliance
with continuous disclosure obligations under applicable securities
legislation including the preparation for review, approval and
filing by TKLP of reports and other documents with all applicable
regulatory authorities, providing that nothing herein shall permit
or authorize TK Bahamas to act for or on behalf of TKLP in its
relationship with regulatory authorities except to the extent that
specific authorization may from time to time be given by TKLP;
(d) Provide advisory and clerical services to assist and support TKLP in
its communications with its Unitholders, as TKLP may from time to
time request or direct, provided that nothing herein shall permit or
authorize TK Bahamas to determine the content of any such
communications by TKLP to its Unitholders;
(e) At the request and under the direction of TKLP, handle all
administrative and clerical matters in respect of (i) the call and
arrangement of all annual and/or special meetings of the Unitholders
pursuant to the Limited Partnership Agreement, (ii) the preparation
of all materials (including notices of meetings and information
circulars) in respect thereof and (iii) the submission of all such
materials to TKLP in sufficient time prior to the dates upon which
they must be mailed, filed or otherwise relied upon so that TKLP has
full opportunity to review them, approve them, execute them and
return them to TK Bahamas for filing or mailing or other disposition
as TKLP may require or direct;
(f) Provide or secure sufficient and necessary office space, equipment
and personnel including all accounting, clerical, secretarial,
corporate and administrative services as may be reasonably necessary
for the performance of the Services;
(f) Arrange for the provision of such audit, accounting, engineering,
legal, insurance and other professional services as are reasonably
required by TKLP from time to time in connection with the discharge
of its responsibilities under the Limited Partnership Agreement, to
the extent such advice and analysis can be reasonably provided or
arranged by TK Bahamas, provided that nothing herein shall permit TK
Bahamas to select the auditor of TKLP, which shall be selected in
accordance with the provisions for the appointment of the auditor
pursuant to the Limited Partnership Agreement or as otherwise be
required by law governing TKLP, or to communicate with the auditor
other than in the ordinary course of making such books and records
available for review as the auditors may require and to respond to
queries from the auditors with respect to the accounts and
statements prepared by, or arranged by, TK Bahamas, and in
particular TK Bahamas will not have any of the authorities, rights
or responsibilities of the audit committee of TKGP, but shall
provide information to such committee as may from time to time be
required or requested; and provided further that nothing herein
shall entitled TK Bahamas to retain legal counsel for TKLP unless
such selection is specifically approved by TKGP;
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(g) Provide such assistance and support as TKLP may from time to time
request in connection with any new or existing financing for TKLP,
such assistance and support to be provided in accordance with the
direction, and under the supervision of TKLP, as represented by TKGP
in its capacity as the general partner of TKLP;
(h) Provide such administrative and clerical services as may be required
by TKLP to support and assist TKLP in considering any future
acquisitions or divestments of assets of TKLP, all under the
direction and under the supervision of TKLP, as represented by TKGP
in its capacity as the general partner of TKLP ;
(i) Provide such support and assistance to TKLP as TKLP may from time to
time request in connection with any future offerings of Units that
TKLP may at any time determine is desirable for TKLP, all under the
direction and supervision of TKLP, as represented by TKGP, in its
capacity as the general partner of TKLP;
(j) Provide, at the request and under the direction of TKLP, such
communications to the transfer agent for TKLP as may be necessary or
desirable;
(k) Prepare and provide regular cash reports and other accounting
information for review by TKLP, so as to permit and enable TKLP to
make all determinations of financial matters required to be made
pursuant to the Limited Partnership Agreement, including the
determination of amounts available for distribution by TKLP to its
Unitholders, and to assist TKLP in making arrangements with the
transfer agent for TKLP for the payment of distributions to the
Unitholders in accordance with the Limited Partnership Agreement;
(l) Provide such assistance to TKLP as TKLP may request or direct with
respect to the performance of the obligations to the Unitholders
under the Limited Partnership Agreement and to provide monitoring of
various obligations and rights under agreements entered into by TKLP
and provide advance reports on a timely basis to TKLP advising of
steps, procedures and compliance issues under such agreements, so as
to enable TKLP, through its general partner to make all such
decisions as would be necessary or desirable thereunder; and
(m) Provide such additional administrative and clerical services
pertaining to TKLP, the assets and liabilities of TKLP and the
Unitholders and matters incidental thereto as may be reasonably
requested by TKLP from time to time.
TK Bahamas shall provide quarterly reports to TKLP outlining the nature
and details of the foregoing services that have been provided.
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SCHEDULE B
FEES
In consideration for the provision of services by TK Bahamas to TKLP, TKLP shall
pay TK Bahamas an annual Fee for each calendar year during the term of this
Agreement divided into twelve (12) equal monthly installments payable in advance
and which is equal to the annual aggregate amount of such costs and expenses
(the "Costs and Expenses") as TK Bahamas may reasonably incur in connection with
the provision of the Services plus a reasonable profit mark-up to be agreed upon
and reviewed annually by the parties and which shall be consistent with the
Organization for Economic Development's guidelines for transfer pricing levels
as well as local rules and regulations.
In respect of each calendar year during the term of this Agreement, TK Bahamas
shall prepare an estimate of the Costs and Expenses it reasonably expects to
incur during such year and shall submit such estimate to TKLP within ten (10)
Bahamian banking days of the last day of the immediately preceding year.
The calculation of TK Bahamas' aforesaid estimated Costs and Expenses may be
adjusted from time to time by agreement between the parties, and the Fee payable
by TKLP shall be re-calculated accordingly.
Within sixty (60) Bahamian banking days (or such longer period as the parties
shall agree) after the end of each year, TK Bahamas shall submit to TKLP an
accounting of the Costs and Expenses it has incurred in that year (the "actual
Costs and Expenses").
Ten (10) Bahamian banking days (or such longer period as the parties shall
agree) after the date on which TK Bahamas delivers such accounting of its actual
Costs and Expenses:
(a) where the aggregate of all Fees paid in the relevant year is
less than the agreed mark-up of the actual Costs and Expenses,
TKLP shall pay an Adjustment to TK Bahamas; and
(b) where the aggregate of all Fees paid in the relevant year is
greater than the agreed mark-up of the actual Costs and
Expenses, TK Bahamas shall pay an Adjustment to TKLP.
Where the aggregate of all Fees paid in a year is equal to the agreed mark-up of
the actual Costs and Expenses, no Adjustment is payable.
For the purposes hereof "ADJUSTMENT" means a payment (made in accordance with
the foregoing) in the amount of the difference between the aggregate of all Fees
paid in a year and the agreed mark-up of the actual Costs and Expenses incurred
in that year.
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