EXHIBIT 10.5
ADVISORY, TECHNICAL AND ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT made effective the ____ day of December 2006;
BY AND BETWEEN:
[OPCO OPERATING SUBSIDIARY],
(together with its subsidiaries,"Operating Sub")
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. Operating Sub operates vessels, requires certain advisory, technical
and administrative services to supplement the existing capabilities
of its employees; and
B. Operating Sub wishes to engage TK Bahamas to provide such advisory,
technical and administrative services to Operating Sub 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 advisory, technical and
administrative 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.
[OPERATING SUB] TEEKAY SHIPPING LIMITED
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);
2. GENERAL
TK Bahamas shall provide all or such portion of the Services, in a commercially
reasonable manner, as OPERATING SUB, may from time to time reasonably request or
direct.
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 OPERATING SUB (unless the provision of
such Services would materially interfere with Teekay Shipping
Corporation's operations) as an independent contractor, and be responsible
to OPERATING SUB 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 OPERATING SUB
and its representatives to audit and examine such books, records and
accounts at any time during customary business hours.
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 OPERATING SUB 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. OPERATING SUB 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 OPERATING SUB 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.
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6. SERVICE FEE
In consideration for TK Bahamas providing the Services, OPERATING SUB 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 OPERATING SUB.
8. INDEMNITY
OPERATING SUB 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.
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 OPERATING SUB, there is a Change of Control of TK Bahamas
and in the case of TK Bahamas, if there is a Change of Control of
Operating Sub;
(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
OPERATING SUB 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
OPERATING SUB any and all books, records, documents and other property in the
possession or control of TK Bahamas relating to this Agreement and to the
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business, finance, technology, trademarks or affairs of OPERATING SUB and any
member of the OPERATING SUB 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.
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 OPERATING SUB:
[Address]
Attn:
If to TK Bahamas:
TK 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 OPERATING SUB.
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.
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20. AFFILIATES
This Agreement shall be binding upon and inure to the benefit of the affiliates
of OPERATING SUB 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 advisory, technical and
administrative services (the "Services") to OPERATING SUB, as OPERATING SUB may
from time to time reasonably request and direct TK Bahamas to provide pursuant
to Section 2:
1. negotiating loan and credit terms with lenders and monitoring and
maintaining compliance therewith;
2. negotiating and arranging for interest rate swap agreements, foreign
currency contracts and forward exchange contracts;
3. cash management, including arranging for the deposit of funds;
4. monitoring the performance of investment managers;
5. exercising of due diligence to:
(a) maintain and preserve each Vessel and her equipment in good
condition, running order and repair, so that each Vessel shall be,
insofar as due diligence can make her so, tight, staunch, strong and
well and sufficiently tackled, appareled, furnished, equipped and in
every respect seaworthy and in good operating condition; and
(b) keep each Vessel in such condition as will entitle her to the
highest classification and rating from the classification society
chosen by her owner or disponent owner for vessels of the class, age
and type;
6. handling of each Vessel while in ports or transiting canals either
directly or by use of vessel agents;
7. storing, victualing and supplying of each Vessel and the arranging for the
purchase of certain stores, supplies and parts;
8. procuring and arrangement for port entrance and clearance, pilots, vessel
agents, consular approvals, and other services necessary or desirable for
the management and safe operation of each Vessel;
9. preparing, issuing or causing to be issued to shippers the customary
freight contract, cargo receipts and/or bills of lading;
10. performance of all usual and customary duties concerned with the loading
and discharging of cargoes at all ports;
11. naming of vessel agents for the transaction of each Vessel's business;
12. adjustment and the negotiating of settlements, with or on behalf of
claimants or underwriters, of any claim, damages for which are recoverable
under policies of insurance;
13. arrangement or the prompt dispatch of each Vessel from loading and
discharging ports and for transit through canals;
14. arrangement for employment of counsel, and the investigation, follow-up
and negotiating of the settlement of all claims arising in connection with
the operation of each Vessel;
15. arrangement for the appointment of an adjuster and assistance in preparing
the average account, taking proper security for the cargo's and freight's
proportion of average, and in all ways reasonably possible protecting the
interest of each Vessel and her owner;
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16. negotiating of the settlement of insurance claims of Vessel owner's or
disponent owner's protection and indemnity insurance and the arranging for
the making of disbursements accordingly for owner's or disponent owner's
account;
17. attendance to all matters involving each Vessel's crew, including, but not
limited to, the following:
(a) arranging for the procurement and enlistment for each Vessel,
as required by applicable law, of competent, reliable and duly
licenced personnel (hereinafter referred to as 'crew
members'), and all replacements therefore as from time to time
may be required;
(b) arranging for all transportation, board and lodging for the
crew members as and when required at rates and types of
accommodations as customary in the industry;
(c) keeping and maintaining full and complete records of any
labour agreements which may be entered into between owner or
disponent owner and the crew members and the prompt reporting
to owner or disponent owner as soon as notice or knowledge
thereof is received of any change or proposed change in labour
agreements or other regulations relating to the master and the
crew members;
(d) negotiating the settlement of all wages with the crew members
during the course of and upon termination of their employment;
(e) the handling of all details and negotiating the settlement of
any and all claims of the crew members including, but not
limited to, those arising out of accidents, sickness, or
death, loss of personal effects, disputes under articles or
contracts of enlistment, policies of insurance and fines;
(f) keeping and maintaining all administrative and financial
records relating to the crew members as required by law,
labour agreements, owner or disponent owner, and rendering to
owner or disponent owner any and all reports when, as and in
such form as requested by owner or disponent owner; and
(g) the performance of any other function in connection with crew
members as may be requested by owner or disponent owner;
18. payment of all charges incurred in connection with the management of each
Vessel, including, but not limited to, the cost of the items listed in 5
to 17 above, canal tolls, repair charges and port charges, and any amounts
due to any governmental agency with respect to the Vessel crews;
19. in such form and on such terms as may be requested by Operating Sub, the
prompt reporting to Operating Sub or Shipco of each Vessel's movement,
position at sea, arrival and departure dates, casualties and damages
received or caused by each Vessel;
20. arrangement and retention in full force and affect of all customary
insurance pertaining to each Vessel as instructed by owner or disponent
owner and all such policies of insurance, including but not limited to
protection and indemnity, hull and machinery, war risk and oil pollution
covering each Vessel;
21. if requested by owner or disponent owner, making application for
certificates of financial responsibility on behalf of Vessels covered
hereunder;
For the purposes hereof, "Shipcos" means vessel owning corporations, each such
corporation being the owner or charterer of one vessel; and "Vessels" means
vessels which are primarily either liquefied natural gas tankers or crude oil
tankers owned or chartered by Shipcos.
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TK Bahamas shall provide quarterly reports to Operating Sub 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 OPERATING SUB,
OPERATING SUB 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 OPERATING SUB 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 OPERATING SUB 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 OPERATING
SUB 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,
OPERATING SUB 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 OPERATING SUB.
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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