Exhibit 10.4
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OMNIBUS AGREEMENT
AMONG
TEEKAY SHIPPING CORPORATION
TEEKAY GP L.L.C.
TEEKAY LNG OPERATING L.L.C.
AND
TEEKAY LNG PARTNERS L.P.
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OMNIBUS AGREEMENT
THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the
Closing Date (as defined herein), among Teekay Shipping Corporation, a Xxxxxxxx
Islands corporation ("Teekay"), Teekay GP L.L.C., a Xxxxxxxx Islands limited
liability company (including any permitted successors and assigns under the MLP
Agreement (as defined herein), the "General Partner"), for itself and on behalf
of the MLP in its capacity as general partner, Teekay LNG Operating L.L.C., a
Xxxxxxxx Islands limited liability company (the "OLLC"), and Teekay LNG Partners
L.P., a Xxxxxxxx Islands limited partnership (the "MLP").
R E C I T A L S:
1. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Articles II and IV, with respect
to (a) those business opportunities that the Teekay Entities (as defined herein)
will not pursue during the term of this Agreement and (b) the procedures whereby
such business opportunities are to be offered to the Partnership Group (as
defined herein) and accepted or declined.
2. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Articles III and IV, with
respect to (a) those business opportunities that the Partnership Group will not
pursue during the term of this Agreement and (b) the procedures whereby such
business opportunities are to be offered to Teekay and accepted or declined.
3. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article V, with respect to (a)
Teekay's right of first offer relating to certain Crude Oil Assets (as defined
herein) and (b) the MLP's right of first offer relating to certain LNG Assets
(as defined herein).
4. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article VI, with respect to
certain indemnification obligations of Teekay.
In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with,
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the Person in question. As used herein, the term "control" means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agreement" means this Omnibus Agreement, as it may be amended, modified,
or supplemented from time to time in accordance with Section 7.6 hereof.
"Acquiring Party" has the meaning given such term in Section 4.1(a).
"Bid LNG Assets" has the meaning given such term in Section 2.2(b).
"Break-up Costs" means the aggregate amount of any and all additional
taxes and other similar costs to (a) the Teekay Entities that would be required
to transfer LNG Assets acquired by the Teekay Entities as part of a larger
transaction to a Partnership Group Member pursuant to Section 2.2(a) or (b) the
Partnership Group that would be required to transfer Crude Oil Assets acquired
by the Partnership Group as part of a larger transaction to a Teekay Entity
pursuant to Section 3.2(b).
"Change of Control" means, with respect to any Person (the "Applicable
Person"), any of the following events: (a) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the Applicable Person's assets to any other Person, unless
immediately following such sale, lease, exchange or other transfer such assets
are owned, directly or indirectly, by the Applicable Person; (b) the
consolidation or merger of the Applicable Person with or into another Person
pursuant to a transaction in which the outstanding Voting Securities of the
Applicable Person are changed into or exchanged for cash, securities or other
property, other than any such transaction where (i) the outstanding Voting
Securities of the Applicable Person are changed into or exchanged for Voting
Securities of the surviving Person or its parent and (ii) the holders of the
Voting Securities of the Applicable Person immediately prior to such transaction
own, directly or indirectly, not less than a majority of the outstanding Voting
Securities of the surviving Person or its parent immediately after such
transaction; and (c) a "person" or "group" (within the meaning of Sections 13(d)
or 14(d)(2) of the Exchange Act) other than Teekay or its Affiliates, with
respect to the General Partner, being or becoming the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all
of the then outstanding Voting Securities of the Applicable Person, except in a
merger or consolidation which would not constitute a Change of Control under
clause (b) above.
"Closing Date" means the date of the closing of the initial public
offering of common units representing limited partner interests in the MLP.
"Conflicts Committee" means the Conflicts Committee of the Board of
Directors of the General Partner.
"Contribution Agreement" means that certain Contribution, Conveyance and
Assumption Agreement, dated as of the Closing Date, among Teekay, the General
Partner, the MLP, the
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OLLC and Teekay Shipping Spain, S.L., together with the additional conveyance
documents and instruments contemplated or referenced thereunder.
"Contribution Assets" has the meaning given such term in Section 6.1.
"control" means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Covered Environmental Losses" means all environmental and toxic tort
Losses suffered or incurred by the Partnership Group by reason of or arising out
of:
(i) any violation or correction of violation of Environmental Laws; or
(ii) any event or condition associated with ownership or operation by the
Teekay Entities of the Contribution Assets (including, without limitation, the
presence of Hazardous Substances on, under, about or migrating to or from the
Contribution Assets or the disposal or release of Hazardous Substances generated
by operation of the Contribution Assets), including, without limitation, (A) the
cost and expense of any investigation, assessment, evaluation, monitoring,
containment, cleanup, repair, restoration, remediation or other corrective
action required or necessary under Environmental Laws, (B) the cost or expense
of the preparation and implementation of any closure, remedial, corrective
action or other plans required or necessary under Environmental Laws and (C) the
cost and expense for any environmental or toxic tort pre-trial, trial or
appellate legal or litigation support work;
but only to the extent that such violation complained of under clause (i), or
such events or conditions included in clause (ii), occurred before the Closing
Date; and, provided that, in no event shall Losses to the extent arising from a
change in any Environmental Law after the Closing Date be deemed "Covered
Environmental Losses."
"Crude Oil Assets" means crude oil tankers and related charters.
"Crude Oil Restricted Business" has the meaning given such term in
Section 3.1.
"Environmental Laws" means all federal, state, foreign and local laws,
statutes, rules, regulations, orders, judgments and ordinances relating to
protection of health and safety and the environment, including, without
limitation, the United States federal Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic
Substances Control Act, the Oil Pollution Act of 1990, the Hazardous Materials
Transportation Act, the Marine Mammal Protection Act, the Endangered Species
Act, the National Environmental Policy Act, and other environmental conservation
and protection laws, each as amended through the Closing Date.
"Event of Loss" means any of the following events: (a) the actual or
constructive total loss of a Suezmax Asset or the agreed or compromised total
loss of a Suezmax Asset; (b) the
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destruction of a Suezmax Asset; (c) the damage to a Suezmax Asset to an extent,
determined in good faith by the Conflicts Committee within 90 days after the
occurrence of such damage, as shall make repair thereof uneconomical or shall
render such Suezmax Asset permanently unfit for normal use (other than
obsolescence); or (d) the condemnation, confiscation, requisition, seizure,
forfeiture or other taking of title to or use of a Suezmax Asset that shall not
be revoked within six months. An Event of Loss shall be deemed to have occurred:
(i) in the event of the destruction or other actual total loss of a Suezmax
Asset, on the date of such loss; (ii) in the event of a constructive, agreed or
compromised total loss of a Suezmax Asset, on the date of determination of such
total loss pursuant to the relevant insurance policy; (iii) in the case of any
event referred to in clause (c) above, upon such determination by the General
Partner; or (iv) in the case of any event referred in clause (d) above, on the
date six months after the occurrence of such event.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Offer Negotiation Period" has the meaning given such term in
Section 5.2.
"Fully-Built-Up Cost"" means, with respect to an LNG Asset to be acquired
or leased (pursuant to a capitalized lease obligation) by a Partnership Group
Member, the aggregate amount of all expenditures incurred (or to be incurred
prior to delivery to the Partnership Group Member) to acquire or construct and
bring such LNG Asset to the condition and location necessary for its intended
use by the Partnership Group Member.
"General Partner" is defined in the introduction to this Agreement.
"Hazardous Substances" means (a) substances which contain substances
defined in or regulated under applicable Environmental Laws; (b) petroleum and
petroleum products, including crude oil and any fractions thereof; (c) natural
gas, synthetic gas and any mixtures thereof; (d) any substances with respect to
which a federal, state, foreign or local agency requires environmental
investigation, monitoring, reporting or remediation; (e) any hazardous waste or
solid waste, within the meaning of any Environmental Law; (f) any solid,
hazardous, dangerous or toxic chemical, material, waste or substance, within the
meaning of and regulated by any Environmental Law; (g) any radioactive material;
and (h) any asbestos-containing materials that represent a health hazard.
"LNG" means liquefied natural gas.
"LNG Assets" means LNG carriers and related time charters.
"LNG Restricted Business" has the meaning given such term in Section 2.1.
"Losses" means losses, damages, liabilities, claims, demands, causes of
action, judgments, settlements, fines, penalties, costs and expenses (including,
without limitation, court costs and reasonable attorneys' and experts' fees) of
any and every kind or character; provided,
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however, that such term shall not include any special, indirect, incidental or
consequential damages.
"MLP" is defined in the introduction to this Agreement.
"MLP Agreement" means the First Amended and Restated Agreement of Limited
Partnership of the MLP, dated as of the Closing Date, as such agreement is in
effect on the Closing Date, to which reference is hereby made for all purposes
of this Agreement. No amendment or modification to the MLP Agreement subsequent
to the Closing Date shall be given effect for purposes of this Agreement unless
consented to by each of the Parties to this Agreement.
"Offer" has the meaning given such term in Section 4.1.
"Offered Assets" has the meaning given such term in Section 4.1.
"Offeree" has the meaning given such term in Section 4.1.
"Offer Period" has the meaning given such term in Section 4.1.
"OLLC" is defined in the introduction to this Agreement.
"Parties" means the parties to this Agreement and their successors and
permitted assigns.
"Partnership Entities" means the General Partner, the MLP, the OLLC and
any Person controlled by any such entity.
"Partnership Group" means the MLP, the OLLC and any Person controlled by
any such entity.
"Partnership Group Member" means any Person in the Partnership Group.
"Person" means an individual, corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or any other
entity.
"Potential Transferee" has the meaning given such term in Section 5.2.
"Re-Charter" means the chartering of an LNG Asset or a Crude Oil Asset
pursuant to a time charter contract with a term of at least three (3) years in
the event that its existing charter expires or is terminated early (including,
without limitation, the chartering of any Replacement Suezmax Asset but only if
the charter party for the Replacement Suezmax Asset is not the same charter
party (or an Affiliate of such charter party) as for the replaced Suezmax
Asset).
"Replacement Suezmax Assets" means any Suezmax tankers that replace any
Suezmax Assets upon (a) an Event of Loss or (b) the replacement of a
time-charter arrangement existing as of the Closing Date where the original
Suezmax Asset which was subject to such time charter
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has been sold or transferred due to the exercise by the charter party of its
right under the time charter to cause such sale or transfer.
"Restricted Business" means, as applicable, the LNG Restricted Business or
the Crude Oil Restricted Business.
"Sale Assets" has the meaning given such term in Section 5.2.
"Suezmax Assets" means the Suezmax tankers included in the Contribution
Assets and any Replacement Suezmax Assets relating to such original Suezmax
tankers.
"Teekay Entities" means Teekay and any Person controlled, directly or
indirectly, by Teekay other than the Partnership Entities.
"Transfer" means any transfer, assignment, sale or other disposition of
any LNG Assets by a Teekay Entity or of any Crude Oil Assets by a Partnership
Group Member; provided, however, that such term shall not include: (a)
transfers, assignments, sales or other dispositions from a Teekay Entity to
another Teekay Entity or from a Partnership Group Member to another Partnership
Group Member; (b) transfers, assignments, sales or other dispositions pursuant
to the terms of any related charter or other agreement with a charter party; (c)
transfers, assignments, sales or other dispositions pursuant to Article II or
III of this Agreement; or (d) grants of security interests in or mortgages or
liens on such LNG Assets or Crude Oil Assets in favor of a bona fide third-party
lender (but not the foreclosing of any such security interest, mortgage or
lien).
"Transfer Notice" has the meaning given such term in Section 5.2.
"Transferring Party" has the meaning given such term in Section 5.2.
"Voting Securities" means securities of any class of Person entitling the
holders thereof to vote in the election of members of the board of directors or
other similar governing body of the Person.
ARTICLE II
LNG RESTRICTED BUSINESS OPPORTUNITIES
2.1 LNG RESTRICTED BUSINESSES. Subject to Section 7.4 and except as
permitted by Section 2.2, each of the Teekay Entities shall be prohibited from
engaging in or acquiring or investing in any business (each an "LNG Restricted
Business") that owns, operates or charters LNG Assets.
2.2 PERMITTED EXCEPTIONS. Notwithstanding any provision of Section 2.1
to the contrary, the Teekay Entities may engage in the following activities
under any of the following circumstances:
(a) the ownership and/or operation of any LNG Assets that they
acquire after the date of this Agreement if:
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(i) such LNG Assets are acquired as part of a business in a
transaction in which the fair market value of such LNG Assets represents
less than a majority of the fair market value (as determined in good faith
by the board of directors of Teekay) of the total assets or business
acquired; and
(ii) the Teekay Entity has offered the General Partner the
opportunity for any of the Partnership Group Members to purchase such LNG
Assets in accordance with the procedures set forth in Section 4.1 and the
General Partner, with the approval of the Conflicts Committee, has elected
not to cause any Partnership Group Member to purchase such LNG Assets;
(b) the ownership, operation and/or chartering of LNG Assets that
(i) are subject to an offer to purchase by a Teekay Entity as described in
Section 2.2(a)(ii) or (ii) subject to Section 4.1, relate to a tender, bid or
award for a proposed LNG project that a Teekay Entity has submitted or received
(or hereafter submits or receives) (such LNG Assets in clause (ii) being
referred to herein as "Bid LNG Assets"), in each case pending the applicable
offer of such LNG Assets to the General Partner and the General Partner's
determination pursuant to Section 4.1 whether to purchase the LNG Assets and, if
the General Partner's Conflicts Committee determines to cause a Partnership
Group Member to purchase such LNG Assets, pending the closing of such purchase;
(c) the provision by Teekay Entities of ship management services
relating to an LNG Restricted Business;
(d) the acquisition of up to a 9.9% equity ownership, voting or
profit participation interest in any publicly traded Person (other than the MLP)
that engages in an LNG Restricted Business;
(e) the ownership, operation and/or chartering of any LNG Assets
with respect to which the General Partner has advised Teekay that the General
Partner has elected, with the approval of the Conflicts Committee, not to cause
a Partnership Group Member to acquire (or seek to acquire); or
(f) the ownership and/or operation by Teekay Entities of the LNG
Assets subject to the Stock Purchase Agreement dated as of ___________, 2005,
between Teekay and the MLP if the MLP fails to perform its obligations to
purchase (or to cause other Partnership Group Members to purchase) such LNG
Assets under such agreement.
ARTICLE III
CRUDE OIL RESTRICTED BUSINESS OPPORTUNITIES
3.1 CRUDE OIL RESTRICTED BUSINESSES. Subject to Section 7.4 and except
as permitted by Section 3.2, each Partnership Group Member shall be prohibited
from engaging in or acquiring or investing in any business (each a "Crude Oil
Restricted Business") that owns, operates or charters Crude Oil Assets.
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3.2 PERMITTED EXCEPTIONS. Notwithstanding any provision of Section 3.1
to the contrary, the Partnership Group Members may
engage in the following activities under any of the following circumstances:
(a) the ownership, operation and/or chartering of any of the Suezmax
Assets, including any Replacement Suezmax Assets;
(b) the ownership and/or operation of any Crude Oil Assets that it
acquires after the date of this Agreement if:
(i) such Crude Oil Assets are acquired as part of a business
in a transaction in which the fair market value of such Crude Oil Assets
represents less than a majority of the fair market value (as determined in
good faith by the General Partner's Conflicts Committee) of the total
assets or business acquired; and
(ii) the Partnership Group Member has offered Teekay the
opportunity for Teekay or any other Teekay Entity to purchase such Crude
Oil Assets in accordance with the procedures set forth in Section 4.1 and
Teekay has elected not to purchase and not to cause another Teekay Entity
to purchase such Crude Oil Assets;
(c) the ownership, operation and/or chartering of Crude Oil Assets
that are subject to an offer by a Partnership Group Member as described in
Section 3.2(b) pending Teekay's determination whether to purchase the Crude Oil
Assets and, if Teekay determines to cause a Teekay Entity to purchase such Crude
Oil Assets, pending the closing of such purchase;
(d) the acquisition of up to a 9.9% equity ownership, voting or
profit participation interest in any publicly traded Person that engages in a
Crude Oil Restricted Business; or
(e) the ownership and/or operation by a Partnership Group Member of
any Crude Oil Assets with respect to which Teekay has previously advised the
General Partner that Teekay has elected not to cause a Teekay Entity to acquire
(or seek to acquire).
ARTICLE IV
BUSINESS OPPORTUNITIES PROCEDURES
4.1 PROCEDURES. In the event that (a) a Partnership Group Member
acquires Crude Oil Assets as part of a larger transaction in accordance with
Section 3.2(b), (b) a Teekay Entity acquires LNG Assets as part of a larger
transaction in accordance with Section 2.2(a), or (c) a Teekay Entity is awarded
a contract for the transportation requirements for all or any portion of any
proposed LNG project for which a Teekay Entity has tendered or submitted a bid,
then (i) not later than 30 days after the consummation of the acquisition (in
the case of clause (a) or (b) above) or (ii) not later than 180 days before the
scheduled delivery date of the relevant Bid LNG Asset (in the case of clause (c)
above), such acquiring Party (the "Acquiring Party") shall notify (A) Teekay, in
the case of an acquisition by a Partnership Group Member of Crude Oil Assets or
(B) the General Partner, in the case of an acquisition by a Teekay Entity of LNG
Assets or proposed acquisition of Bid LNG Assets of such acquisition (or
proposed acquisition) and offer
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such party to be notified (each an "Offeree") the opportunity for the Offeree
(or, in the case of Teekay or the General Partner, any other Teekay Entity or
Partnership Group Member, as applicable) to purchase such Crude Oil Assets, LNG
Assets or Bid LNG Assets, as applicable (the "Offered Assets"), for (I) their
fair market value (plus any Break-up Costs), in the case of clause (a) or (b)
above) or (II) their Fully-Built-Up Cost, in the case of clause (c) above, in
each case on commercially reasonable terms in accordance with this Section (the
"Offer"). The Offer shall set forth the Acquiring Party's proposed terms
relating to the purchase of the Offered Assets by the Offeree (or, in the case
of Teekay or the General Partner, any other Teekay Entity or Partnership Group
Member, as applicable), including any liabilities to be assumed by the Offeree
as part of the Offer. As soon as practicable after the Offer is made, The
Acquiring Party will deliver to the Offeree all information prepared by or on
behalf of or in the possession of such Acquiring Party relating to the Offered
Assets and reasonably requested by the Offeree. As soon as practicable, but in
any event, within 90 days after receipt of such notification, the Offeree shall
notify the Acquiring Party in writing that either:
(a) the Offeree (with the concurrence of the Conflicts Committee
if the Offeree is the General Partner) has elected not to purchase (or not to
cause any of its permitted Affiliates to purchase) such Offered Assets, in which
event the Acquiring Party and its Affiliates shall, subject to the other terms
of this Agreement, be forever free to continue to own, operate and charter such
Offered Assets; or
(b) the Offeree (with the concurrence of the Conflicts Committee
if the Offeree is the General Partner) has elected to purchase (or to cause any
of its permitted Affiliates to purchase) such Offered Assets, in which event the
following procedures shall be followed:
(i) After the receipt of the Offer by the Offeree, the
Acquiring Party and the Offeree shall negotiate in good faith, the fair
market value (and any Break-up Costs) or the Fully-Built-Up Cost, as
applicable, of the Offered Assets that are subject to the Offer and the
other terms of the Offer on which the Offered Assets will be sold to the
Offeree. If the Acquiring Party and the Offeree agree (with the
concurrence of the Conflicts Committee) on the fair market value (and any
Break-up Costs) or the Fully-Built-Up Cost, as applicable, of the Offered
Assets that are subject to the Offer and the other terms of the Offer
during the 30-day period (the "Offer Period") after receipt by the
Acquiring Party of the Offeree's election to purchase (or to cause any
permitted Affiliate of the Offeree to purchase) the Offered Assets, the
Offeree shall purchase (or cause any of its permitted Affiliates to
purchase) the Offered Assets on such terms as soon as commercially
practicable after such agreement has been reached.
(ii) If the Acquiring Party and the Offeree are unable to
agree on the fair market value (and any Break-up Costs) or the
Fully-Built-Up Cost, as applicable, of the Offered Assets that are subject
to the Offer or on any other terms of the Offer during the Offer Period,
the Acquiring Party and the Offeree will engage an independent ship broker
and/or an independent investment banking firm prior to the end of the
Offer Period to determine the fair market value (and any Break-up Costs)
or the Fully-Built-Up Cost, as applicable, of the Offered Assets and/or
the other terms on which the Acquiring
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Party and the Offeree are unable to agree. In determining the fair market
value or the Fully-Built-Up Cost of the Offered Assets and other terms on
which the Offered Assets are to be sold, the ship broker or investment
banking firm, as applicable, will have access to the proposed sale and
purchase values and terms for the Offer submitted by the Acquiring Party
and the Offeree, respectively, and to all information prepared by or on
behalf of the Acquiring Party relating to the Offered Assets and
reasonably requested by such ship broker or investment banking firm. Such
ship broker or investment banking firm will determine the fair market
value (and any Break-up Costs) or Fully-Built-Up Cost of the Offered
Assets and/or the other terms on which the Acquiring Party and the Offeree
are unable to agree within 60 days of its engagement and furnish the
Acquiring Party and the Offeree its determination. The fees and expenses
of the ship broker or investment banking firm, as applicable, will be
divided equally between the Acquiring Party and the Offeree. Upon receipt
of such determination, the Offeree will have the option, but not the
obligation, to (with the concurrence of the Conflicts Committee if the
Offeree is the General Partner):
(A) purchase the Offered Assets for the fair market
value (and any Break-up Costs) or Fully-Built-Up Cost, as
applicable, and on the other terms determined by the ship broker or
investment banking firm, as soon as commercially practicable after
determinations have been made; or
(B) elect not to purchase such Offered Assets, in
which event the Acquiring Party and its Affiliates shall, subject to
the other terms of this Agreement, be forever free to continue to
own and operate such Offered Assets.
4.2 SCOPE OF PROHIBITION. If any Party or its Affiliates engages in the
ownership or operation of a Restricted Business pursuant to any of the
exceptions described in Section 2.2 or 3.2, as applicable, the Party and its
Affiliates may not subsequently expand that portion of their business other than
pursuant to the exceptions contained in such Section 2.2 or 3.2. Except as
otherwise provided in this Agreement and the MLP Agreement, each Party and its
Affiliates shall be free to engage in any business activity whatsoever,
including those that may be in direct competition with the Teekay Entities or
the Partnership Group.
4.3 ENFORCEMENT. Each Party agrees and acknowledges that the other
Parties do not have an adequate remedy at law for the breach by any such Party
of its covenants and agreements set forth in this Article IV, and that any
breach by any such Party of its covenants and agreements set forth in this
Article IV would result in irreparable injury to such other Parties. Each Party
further agrees and acknowledges that any other Party may, in addition to the
other remedies which may be available to such other Party, file a suit in equity
to enjoin such Party from such breach, and consent to the issuance of injunctive
relief to enforce the provisions of Article IV of this Agreement.
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ARTICLE V
RIGHTS OF FIRST OFFER
5.1 RIGHTS OF FIRST OFFER.
(a) The Partnership Group hereby grants Teekay a right of first
offer on any proposed Transfer or Re-Charter by any Partnership Group Member of
any Crude Oil Assets owned or acquired by any Partnership Group Member. The
Teekay Entities hereby grant the MLP a right of first offer on any proposed
Transfer or Re-Charter of any LNG Assets owned or acquired by any Teekay Entity.
(b) The Parties acknowledge that all potential Transfers or
Re-Charters of Crude Oil Assets or LNG Assets pursuant to this Article V are
subject to obtaining any and all written consents of governmental authorities
and other non-affiliated third parties and to the terms of all existing
agreements in respect of such Crude Oil Assets or LNG Assets, as applicable.
5.2 PROCEDURES FOR RIGHTS OF FIRST OFFER. In the event that a
Partnership Group Member or a Teekay Entity (as applicable, the "Transferring
Party") proposes to Transfer or Re-Charter any Crude Oil Assets or LNG Assets,
as applicable (the "Sale Assets"), prior to engaging in any negotiation for such
Transfer or Re-Charter with any non-affiliated third party or otherwise offering
to Transfer or Re-Charter the Sale Assets to any non-affiliated third party,
such Transferring Party shall give Teekay or the MLP, as applicable (the
"Potential Transferee"), written notice setting forth all material terms and
conditions (including, without limitation, the purchase price (in the event of a
Transfer) or the terms of the charter agreement (in the event of a Re-Charter)
and a description of the Sale Asset(s) on which such Transferring Party desires
to Transfer or Re-Charter the Sale Assets (the "Transfer Notice"). The material
terms set forth in the Transfer Notice shall have been approved, in any case
where a Partnership Group Member is the Transferring Party, by the Conflicts
Committee of the General Partner. The Transferring Party then shall be obligated
to negotiate in good faith for a 30-day period following the delivery by the
Transferring Party of the Transfer Notice (the "First Offer Negotiation Period")
to reach an agreement for the Transfer or Re-Charter of such Sale Assets to the
Potential Transferee or any of its Affiliates on the terms and conditions set
forth in the Transfer Notice. If no such agreement with respect to the Sale
Assets is reached during the First Offer Negotiation Period, and the
Transferring Party has not Transferred or Re-Chartered, or agreed in writing to
Transfer or Re-Charter, such Sale Assets to a third party within 180 days after
the end of the First Offer Negotiation Period on terms generally no less
favorable to the Transferring Party than those include in the Transfer Notice,
then the Transferring Party shall not thereafter Transfer or Re-Charter any of
the Sale Assets without first offering such assets to the applicable Potential
Transferee in the manner provided above.
ARTICLE VI
INDEMNIFICATION
6.1 TEEKAY INDEMNIFICATION. Subject to the provisions of Section 6.2 and
Section 6.3, Teekay shall indemnify, defend and hold harmless the Partnership
Group from and against:
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(a) any Covered Environmental Losses relating to the assets contributed by the
Teekay Entities to the Partnership Group prior to or on the Closing Date (the
"Contribution Assets") to the extent that Teekay is notified by the General
Partner of any such Covered Environmental Losses within five (5) years after the
Closing Date; (b) Losses to the Partnership Group arising from (i) the failure
of the Partnership Group, immediately after the Closing Date, to be the owner of
such valid leasehold interests or fee ownership interests in and to the
Contribution Assets as are necessary to enable the Partnership Entities to own
and operate the Contribution Assets in substantially the same manner that the
Contribution Assets were owned and operated by the Teekay Entities immediately
prior to the Closing Date or (ii) the failure of the Partnership Entities to
have on the Closing Date any consent or governmental permit necessary to allow
the Partnership Entities to own or operate the Contribution Assets in
substantially the same manner that the Contribution Assets were owned and
operated by the Teekay Entities immediately prior to the Closing Date, in each
of clauses (i) and (ii) above, to the extent that Teekay is notified by the
General Partner of such Losses within two (2) years after the Closing Date; and
(d) all federal, state, foreign and local income tax liabilities attributable to
the operation of the Contribution Assets prior to the Closing Date, including
any such income tax liabilities of the Teekay Entities that may result from the
consummation of the formation transactions for the Partnership Group and the
General Partner, but excluding any federal, state, foreign and local income
taxes reserved on the books of the Partnership Group on the Closing Date.
6.2 LIMITATION REGARDING INDEMNIFICATION.
The aggregate liability of Teekay under Section 6.1(a) above shall not exceed
$10 million. Furthermore, no claim may be made against Teekay for
indemnification pursuant to Section 6.1(a) unless the aggregate dollar amount of
all claims for indemnification pursuant to such section shall exceed $500,000,
in which case Teekay shall be liable for claims for indemnification only to the
extent such aggregate amount exceeds $500,000.
6.3 INDEMNIFICATION PROCEDURES.
(a) The Partnership Group Members agree that within a reasonable
period of time after they become aware of facts giving rise to a claim for
indemnification pursuant to Section 6.1, they will provide notice thereof in
writing to Teekay specifying the nature of and specific basis for such claim.
(b) Teekay shall have the right to control all aspects of the
defense of (and any counterclaims with respect to) any claims brought against
the Partnership Group that are covered by the indemnification set forth in
Section 6.1, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of
any such matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent (which consent shall not be
unreasonably withheld) of the Partnership Group (with the concurrence of the
Conflicts Committee) unless it includes a full release of the Partnership Group
from such matter or issues, as the case may be.
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(c) The Partnership Group Members agree to cooperate fully with
Teekay with respect to all aspects of the defense of any claims covered by the
indemnification set forth in Section 6.1, including, without limitation, the
prompt furnishing to Teekay of any correspondence or other notice relating
thereto that the Partnership Group may receive, permitting the names of the
members of the Partnership Group to be utilized in connection with such defense,
the making available to Teekay of any files, records or other information of the
Partnership Group that Teekay considers relevant to such defense and the making
available to Teekay of any employees of the Partnership Group; provided,
however, that in connection therewith Teekay agrees to use reasonable efforts to
minimize the impact thereof on the operations of the Partnership Group and
further agrees to maintain the confidentiality of all files, records and other
information furnished by a Partnership Group Member pursuant to this Section
6.3. In no event shall the obligation of the Partnership Group to cooperate with
Teekay as set forth in the immediately preceding sentence be construed as
imposing upon the Partnership Group an obligation to hire and pay for counsel in
connection with the defense of any claims covered by the indemnification set
forth in this Article VI; provided, however, that the Partnership Group Members
may, at their own option, cost and expense, hire and pay for counsel in
connection with any such defense. Teekay agrees to keep any such counsel hired
by the Partnership Group reasonably informed as to the status of any such
defense (including providing such counsel with such information related to any
such defense as such counsel may reasonably request) but Teekay shall have the
right to retain sole control over such defense.
In determining the amount of any Loss for which any of the members of the
Partnership Group is entitled to indemnification under this Agreement, the gross
amount of the indemnification will be reduced by (i) any insurance proceeds
realized by the Partnership Group, and such correlative insurance benefit shall
be net of any incremental insurance premium that becomes due and payable by the
Partnership Group as a result of such claim, and (ii) all amounts recovered by
the Partnership Group under contractual indemnities from third Persons. The
Partnership hereby agrees to use commercially reasonable efforts to realize any
applicable insurance proceeds or amounts recoverable under such contractual
indemnities; provided, however, that the costs and expenses (including, without
limitation, court costs and reasonable attorneys' fees) of the Partnership Group
in connection with such efforts shall be promptly reimbursed by Teekay in
advance of any determination of whether such insurance proceeds or other amounts
will be recoverable.
ARTICLE VII
MISCELLANEOUS
7.1 CHOICE OF LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
subject to and governed by the laws of the State of New York, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another jurisdiction. Each party
hereby submits to the jurisdiction of the state and federal courts located in
the State of New York and to venue in New York, New York.
7.2 NOTICE. All notices or requests or consents provided for or
permitted to be given pursuant to this Agreement must be in writing and must be
given by depositing same in the mail,
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addressed to the Person to be notified, postpaid, and registered or certified
with return receipt requested or by delivering such notice in person or by
private-courier, prepaid, or by telecopier to such party. Notice given by
personal delivery or mail shall be effective upon actual receipt. Couriered
notices shall be deemed delivered on the date the courier represents that
delivery will occur. Notice given by telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a party
pursuant to this Agreement shall be sent to or made at the address set forth
below such party's signature to this Agreement, or at such other address as such
party may stipulate to the other parties in the manner provided in this Section.
7.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.
7.4 TERMINATION. The provisions of Articles II, III, IV and V of this
Agreement (but not less than all of such Articles) may be terminated by (a)
Teekay upon notice to the other Parties upon a Change of Control of Teekay and
(b) the General Partner upon notice to the other Parties upon a Change of
Control of the General Partner.
7.5 WAIVER; EFFECT OF WAIVER OR CONSENT. Any party hereto may (a) extend
the time for the performance of any obligation or other act of any other party
hereto or (b) waive compliance with any agreement or condition contained herein.
Except as otherwise specifically provided herein, any such extension or waiver
shall be valid only if set forth in a written instrument duly executed by the
party or parties to be bound thereby; provided, however, that the MLP and the
OLLC may not, without the prior approval of the Conflicts Committee, agree to
any extension or waiver of this Agreement that, in the reasonable discretion of
the General Partner, will adversely affect the holders of common units of the
MLP. No waiver or consent, express or implied, by any party of or to any breach
or default by any Person in the performance by such Person of its obligations
hereunder shall be deemed or construed to be a waiver or consent of or to any
other breach or default in the performance by such Person of the same or any
other obligations of such Person hereunder. Failure on the part of a party to
complain of any act of any Person or to declare any Person in default,
irrespective of how long such failure continues, shall not constitute a waiver
by such party of its rights hereunder until the applicable statute of
limitations period has run.
7.6 AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
from time to time only by the written agreement of all the parties hereto;
provided, however, that the MLP and the OLLC may not, without the prior approval
of the Conflicts Committee, agree to any amendment or modification of this
Agreement that, in the reasonable discretion of the General Partner, will
adversely affect the holders of common units of the MLP.
7.7 ASSIGNMENT. No party shall have the right to assign its rights or
obligations under this Agreement without the consent of the other parties
hereto.
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7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.
7.9 SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.
7.10 GENDER, PARTS, ARTICLES AND SECTIONS. Whenever the context requires,
the gender of all words used in this Agreement shall include the masculine,
feminine and neuter, and the number of all words shall include the singular and
plural. All references to Article numbers and Section numbers refer to Articles
and Sections of this Agreement.
7.11 FURTHER ASSURANCES. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.
7.12 WITHHOLDING OR GRANTING OF CONSENT. Each party may, with respect to
any consent or approval that it is entitled to grant pursuant to this Agreement,
grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.
7.13 LAWS AND REGULATIONS. Notwithstanding any provision of this
Agreement to the contrary, no party to this Agreement shall be required to take
any act, or fail to take any act, under this Agreement if the effect thereof
would be to cause such party to be in violation of any applicable law, statute,
rule or regulation.
7.14 INCENTIVE FEES. Nothing in this Agreement shall prohibit the MLP
from paying to Teekay or any other Teekay Entity certain incentive fees that are
approved by the Conflicts Committee, in its sole discretion, and which relate to
LNG projects provided to the MLP by Teekay or other Teekay Entities.
7.15 NEGOTIATION OF RIGHTS OF TEEKAY, LIMITED PARTNERS, ASSIGNEES, AND
THIRD PARTIES. The provisions of this Agreement are enforceable solely by the
parties to this Agreement, and no shareholder of Teekay and no limited partner,
member, assignee or other Person of the MLP or the OLLC shall have the right,
separate and apart from Teekay, the MLP or the OLLC, to enforce any provision of
this Agreement or to compel any party to this Agreement to comply with the terms
of this Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on, and
effective as of, the Closing Date.
TEEKAY SHIPPING CORPORATION
By:
-------------------------------------
Name:
Title:
Address for Notice:
[ ]
Phone: [ ]
Fax: [ ]
Attention: [ ]
TEEKAY GP L.L.C.
By:
-------------------------------------
Name:
Title:
Address for Notice:
[ ]
Phone: [ ]
Fax: [ ]
Attention: [ ]
TEEKAY LNG PARTNERS, L.P.
OMNIBUS AGREEMENT
SIGNATURE PAGE
TEEKAY LNG OPERATING L.L.C.
By: Teekay LNG Partners L.P.,
its sole member
By: Teekay GP L.L.C.,
its general partner
By:
--------------------------------
Name:
Title:
Address for Notice:
[ ]
Phone: [ ]
Fax: [ ]
Attention: [ ]
TEEKAY LNG PARTNERS L.P.
By: Teekay GP L.L.C., its general partner
By:
---------------------------------
Name:
Title:
Address for Notice:
[ ]
Phone: [ ]
Fax: [ ]
Attention: [ ]
TEEKAY LNG PARTNERS, L.P.
OMNIBUS AGREEMENT
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