Exhibit 10.5
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT made effective the ____ day of _________ 2005;
BY AND BETWEEN:
TEEKAY LNG PARTNERS L.P., a limited partnership duly organized and existing
under the laws of the Xxxxxxxx Islands with its registered office at TK
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 TK
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 LNG PARTNERS L.P. TEEKAY SHIPPING LIMITED
BY ITS GENERAL PARTNER
TEEKAY 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 Xxxxxxxx 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.
2
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.
3
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.
4
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:
----------
TK House
Bayside Executive Park
Xxxx Xxx Xxxxxx & Xxxxx Xxxx
X.X. Xxx XX-00000
Nassau
The Bahamas
Attn: Teekay GP L.L.C., as represented by its Director
----
Fax: x0 000 000 0000
If to TK Bahamas:
----------------
TK House
Bayside Executive Park
Xxxx Xxx Xxxxxx & Xxxxx Xxxx
X.X. Xxx XX-00000
Nassau
The Bahamas
Attn: Director
----
Fax: x0 000 000 0000
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.
5
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;
(g) 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;
6
(h) 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;
(i) 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;
(j) 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;
(k) Provide, at the request and under the direction of TKLP, such
communications to the transfer agent for TKLP as may be necessary or
desirable;
(l) 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;
(m) 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
(n) 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.
7
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 xxxx-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 xxxx-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 xxxx-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 xxxx-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 xxxx-up of the actual Costs and Expenses incurred
in that year.
8
