Exhibit 10.5


 


EXECUTION COPY


 


ADMINISTRATIVE SERVICES AGREEMENT


 


BETWEEN


 


OSG AMERICA L.P., AND


 


OSG SHIP MANAGEMENT, INC.


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  Definitions

  	
  1

  
	
  SECTION 2.

  	
  Administrative
  Services

  	
  2

  
	
  SECTION 3.

  	
  Covenants

  	
  2

  
	
  SECTION 4.

  	
  Non-exclusivity

  	
  3

  
	
  SECTION 5.

  	
  Confidential
  Information

  	
  3

  
	
  SECTION 6.

  	
  Reimbursement
  of Costs and Expenses

  	
  3

  
	
  SECTION 7.

  	
  General
  Relationship between the Parties

  	
  3

  
	
  SECTION 8.

  	
  Indemnity

  	
  3

  
	
  SECTION 9.

  	
  Consequential
  Damages

  	
  4

  
	
  SECTION 10.

  	
  Term and
  Termination

  	
  4

  
	
  SECTION 11.

  	
  Costs and
  Expenses Upon Termination

  	
  4

  
	
  SECTION 12.

  	
  Surrender of
  Books and Records

  	
  4

  
	
  SECTION 13.

  	
  Force Majeure

  	
  5

  
	
  SECTION 14.

  	
  Entire
  Agreement

  	
  5

  
	
  SECTION 15.

  	
  Severability

  	
  5

  
	
  SECTION 16.

  	
  Currency

  	
  5

  
	
  SECTION 17.

  	
  Choice of Law;
  Submission to Jurisdiction

  	
  5

  
	
  SECTION 18.

  	
  Notice

  	
  5

  
	
  SECTION 19.

  	
  Subcontracting
  and Assignment

  	
  6

  
	
  SECTION 20.

  	
  Amendments;
  Waivers

  	
  6

  
	
  SECTION 21.

  	
  Counterparts

  	
  6

  



 

















 


ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated as
of November 15, 2007, between OSG AMERICA L.P., a Delaware limited
partnership (“OSG MLP”) and OSG SHIP MANAGEMENT, INC., a Delaware
corporation (“OSGM”).


 


WHEREAS OSG
MLP, a limited partnership whose units are listed and will trade on the New
York Stock Exchange, requires certain non-strategic administrative services;
and


 


WHEREAS OSG
MLP wishes to engage OSGM to provide such non-strategic administrative services
to OSG MLP on the terms and subject to the conditions of this Agreement.


 


NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties (as
defined below) hereto agree as follows:


 


SECTION 1.
Definitions.  For the purposes of
this Agreement:


 


“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, 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.


 


“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 OSG or its Affiliates, with respect to OSG MLP
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.


 


“Costs and
Expenses” has the meaning set forth in Section 6.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


“Limited
Partnership Agreement” means the amended and restated agreement of limited
partnership of OSG MLP dated as of November 15, 2007, as amended,
supplemented or otherwise modified from time to time.


 


“OSG MLP
General Partner” means OSG America LLC, a Delaware limited liability
company, that is the general partner of OSG MLP and any successor general
partner of OSG MLP approved pursuant to Section 11.01 or Section 11.02
of the Limited Partnership Agreement or the transferee of or successor to all
of the general partner interest in OSG MLP pursuant to Section 4.06 of the
Limited Partnership Agreement; provided, however, that such
transferee or successor agrees to assume the rights and duties of OSG MLP
General Partner under this Agreement and to be bound by the provisions of this
Agreement;


 


“OSG MLP
Group” means OSG MLP and its subsidiaries.


 


“Parties”
means the parties to this Agreement and their successors and permitted assigns.


 


“Person”
means an individual, corporation, partnership, joint venture, trust, limited
liability company, unincorporated organization or any other entity.


 


“Services”
has the meaning set forth in Section 2.


 


“Unitholders”
means holders of units representing limited partnership interests in OSG MLP.


 


“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.


 


SECTION 2.
Administrative Services.  OSGM
shall provide to any member of the OSG MLP Group such of the non-strategic
administrative services set forth in Schedule A to this Agreement (the “Services”),
in a commercially reasonable manner, as OSG MLP, may from time to time
reasonably request or direct, all such Services to be provided under the
supervision of OSG MLP, as represented by OSG MLP General Partner in its
capacity as the general partner of OSG MLP.


 


SECTION 3.
Covenants.  During the term of
this Agreement OSGM shall:


 


(a) diligently provide or subcontract for the provision of (in
accordance with Section 19) the Services to the OSG MLP Group as an
independent 


 


2

















 


contractor,
and be responsible to OSG MLP 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 the Services in
accordance with established general commercial practices and in accordance with
United States generally accepted accounting principles, and allow OSG MLP and
its representatives to audit and examine such books, records and accounts at
any time during customary business hours.


 


SECTION 4.
Non-exclusivity.  OSGM and its
employees may provide services of a nature similar to the Services to any other
Person.  There is no obligation for OSGM
to provide the Services to the OSG MLP Group on an exclusive basis.


 


SECTION 5.
Confidential Information.  OSGM
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. 
OSGM MLP shall be entitled to any equitable remedy available at law or
equity, including specific performance, against a breach by OSGM of this
obligation.  OSGM shall not resist such
application for relief on the basis that OSG MLP has an adequate remedy at law,
and OSGM shall waive any requirement for the securing or posting of any bond in
connection with such remedy.


 


SECTION 6.
Reimbursement of Costs and Expenses. 
In consideration for OSGM providing the Services, OSG MLP shall
reimburse OSGM the costs and expenses set forth in Schedule B to
this Agreement (the “Costs and Expenses”) in the manner provided in Schedule B
to this Agreement.


 


SECTION 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
OSGM and any one or more of OSG MLP, OSG MLP General Partner in its capacity as
general partner on behalf of OSG MLP or any member of the OSG MLP Group.


 


SECTION 8.
Indemnity.  OSG MLP shall
indemnify and hold harmless OSGM and its directors, officers, 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,


 


3

















 


damages, expenses and
liabilities whatsoever which may be caused by or due to the gross negligence or
willful misconduct of OSGM or its employees or agents.


 


SECTION 9.
Consequential Damages.  NEITHER
OSGM NOR ANY OF ITS AFFILIATES SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES SUFFERED BY ANY MEMBER OF THE OSG MLP GROUP, OR FOR
PUNITIVE DAMAGES, WITH RESPECT TO ANY TERM OR THE SUBJECT MATTER OF THIS
AGREEMENT, EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE.  THIS LIMITATION APPLIES TO ALL CAUSES OF
ACTION, INCLUDING, WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY,
NEGLIGENCE, STRICT LIABILITY, FRAUD, MISREPRESENTATION AND OTHER TORTS.


 


SECTION 10.
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 60 days’ notice prior to the end of the then current term.  Notwithstanding the foregoing a Party may
terminate this Agreement at any time if:


 


(a) in the case of OSG MLP, there is a Change of Control of OSGM
and in the case of OSGM, if there is a Change of Control of OSG MLP;


 


(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.


 


SECTION 11.
Costs and Expenses Upon Termination. 
Upon termination of this Agreement in accordance with Section 10,
OSG MLP shall be obligated to pay OSGM any and all amounts payable pursuant to Section 6
for Services provided prior to the time of termination.


 


SECTION 12.
Surrender of Books and Records. 
Upon termination of this Agreement, OSGM shall forthwith surrender to
OSG MLP any and all books, records, documents and other property in the
possession or control of OSGM relating to this


 


4

















 


Agreement and to the business
or affairs of OSG MLP and any member of the OSG MLP Group and, except as
required by law, shall not retain any copies of same.


 


SECTION 13.
Force Majeure.  Neither party
shall be liable for any failure to perform this Agreement due to any cause
beyond its reasonable control.


 


SECTION 14.
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.


 


SECTION 15.
Severability.  If any provision of
this Agreement (or any portion thereof) or the application of any such
provision (or any portion thereof) to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof (or the remaining portion thereof) or the
application of such provision to any other Persons or circumstances.


 


SECTION 16.
Currency.  Unless stated otherwise,
all currency references herein are to United States Dollars.


 


SECTION 17.
Choice of Law; Submission to Jurisdiction.  This Agreement shall be subject to and
governed by the laws of the State of New York, without regard to 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.


 


SECTION 18.
Notice.  All notices or other
communications required or permitted to be given hereunder shall be in writing
and shall be delivered by hand or sent by facsimile or sent, postage prepaid,
by registered, certified or express mail or overnight courier service and shall
be deemed given when so delivered by hand or facsimile, or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service) to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice):


 


	
  (a)

  	
  if to OSGM:

  
	
   

  	
   

  
	
   

  	
  Overseas
  Shipping Group, Inc.

  
	
   

  	
  666 Third
  Avenue

  
	
   

  	
  New York, NY
  10017

  
	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
  Facsimile:
  (212) 578 1832

  
	
   

  	
   

  
	
  (b)

  	
  if to OSG
  MLP:

  
	
   

  	
   

  
	
   

  	
  OSG America
  L.P.

  
	
   

  	
  Two Harbour
  Place

  
	
   

  	
  302 Knights
  Run Avenue

  



 


5

















 


	
   

  	
  Suite 1200

  
	
   

  	
  Tampa, FL
  33602

  
	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
  Facsimile:
  (813) 221-2769

  



 


SECTION 19.
Subcontracting and Assignment. 
OSGM shall not assign this Agreement to any Person that is not a
subsidiary or Affiliate of OSGM except upon written consent of OSG MLP.  OSGM may freely subcontract or sublicense its
obligations to provide any Service under this Agreement, so long as OSGM
remains liable for performance of the Services and its obligations under this
Agreement.


 


SECTION 20.
Amendments; Waivers.  (a) No
provision of this Agreement may be amended or waived unless such amendment or
waiver is in writing and signed, in the case of an amendment, by the Parties
hereto, or in the case of a waiver, by the Party against whom the waiver is to
be effective; provided, however, that after the completion of OSG
MLP’s initial public offering of common units representing limited partner interests,
OSG MLP may not, without the prior approval of the conflicts committee of the
board of directors of the OSG MLP General Partner or, if there is no such
committee, the independent members of such board of directors, agree to any
amendment or modification of this Agreement that the OSG MLP General Partner
determines will adversely affect the holders of such common units.  The Parties hereto agree that, for purposes
of this Section 20, any material change in the nature, quantity or
duration of the Services to be provided under this Agreement shall constitute a
modification of this Agreement.


 


(b) The
failure of any Party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights nor shall
any single or partial exercise by any Party to this Agreement of any of its
rights under this Agreement preclude any other or further exercise of such
rights or remedies under this Agreement. 
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law or otherwise.


 


SECTION 21.
Counterparts.  This Agreement may
be executed in one or more counterparts, all of which shall be considered one
and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the Parties and delivered to the other
Party.


 


[Signature Page follows]


 


6

















 


IN WITNESS
WHEREOF, the Parties have executed this Agreement on, and effective as of, the
date first written above.


 


 


	
   

  	
  OSG AMERICA L.P.,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by OSG AMERICA LLC, its general partner,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by

  	
    /s/ Myles R. Itkin

  
	
   

  	
   

  	
   

  	
    Name: Myles R. Itkin

  
	
   

  	
   

  	
   

  	
    Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  OSG SHIP MANAGEMENT, INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by

  	
    /s/ Lois Zabrocky

  
	
   

  	
   

  	
   

  	
    Name: Lois Zabrocky

  
	
   

  	
   

  	
   

  	
    Title: Vice President

  



 
















 


SCHEDULE A


 


Services


 


OSGM shall
provide such of the following Services to any member of the OSG MLP Group, as
OSG MLP General Partner may from time to time request and direct OSGM 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 the OSG
MLP Group, which books, records and accounts shall be kept and maintained in
accordance with normal commercial practices that will permit any member of the
OSG MLP Group to prepare or cause to be prepared financial statements in
accordance with U.S. generally accepted accounting principles, and keep and
maintain at all times such additional books, records and accounts as the OSG
MLP Group is required to keep and maintain under applicable U.S. federal
securities laws and regulations and the Internal Revenue Code of 1986 and
related regulations, all as amended from time to time;


 


(b)                                prepare all returns,
filings and documents that OSG MLP is required to prepare pursuant to the
Limited Partnership Agreement or that are otherwise necessary or desirable in
connection with the conduct of OSG MLP Group’s business, in each case, for the
review and approval of OSG MLP; and after such returns, filings and documents
have been reviewed and approved by OSG MLP, file such returns, filings and
documents, as applicable, with the relevant authority;


 


(c)                                 advise, or arrange for
the provision of advice, as to OSG MLP’s obligations under applicable U.S.
securities laws and regulations, including its continuous disclosure
obligations under applicable U.S. securities laws and regulations and the rules and
regulations of the New York Stock Exchange and any other securities exchange
upon which OSG MLP’s securities are listed or otherwise admitted for trading;
prepare all reports and documents that OSG MLP is required to prepare pursuant
to such laws, rules and regulations or that are otherwise necessary or
desirable, in each case, for the review and approval of OSG MLP; and after such
reports and documents have been reviewed and approved by OSG MLP, file,
disseminate, post on the Internet, mail or otherwise distribute such reports
and documents, as OSG MLP may request or direct; provided, however,
that nothing herein shall permit or authorize OSGM to act for or on behalf of
OSG MLP in dealing with any regulatory authority, except to the extent
specifically authorized by OSG MLP;


 


(d)                                provide, or arrange for
the provision of, investor relations services to Unitholders and financial
markets; provided, however, that nothing herein 


 


A-1

















 


shall permit
or authorize OSGM to determine the content of any communication by OSG MLP with
its Unitholders or the financial markets;


 


(e)                                 provide, or arrange
for the provision of, all administrative matters in respect of (i) the
calling and arranging all meetings of Unitholders pursuant to the Limited
Partnership Agreement, (ii) the preparation of any materials (including notices
of meetings and information circulars) in respect thereof for the review and
approval of OSG MLP and (iii) after such materials have been reviewed and
approved by OSG MLP, the filing, posting on the Internet, mailing or other
distribution of such materials as OSG MLP may request or direct;


 


(f)                                   provide, or arrange
for the provision of, such audit, internal audit, accounting, engineering,
legal, insurance and other professional services as may be necessary or
desirable for the conduct of the OSG MLP Group’s business; provided, however,
that nothing herein shall authorize or permit OSGM to select and appoint the
auditor of OSG MLP, which shall be selected and appointed in accordance with
the provisions of the Limited Partnership Agreement for the appointment of the
auditor of OSG MLP or as otherwise required by applicable law, or to
communicate with the auditor other than in the ordinary course of making such
books and records of OSG MLP available for review as the auditor may require
and to respond to queries from the auditor with respect to the accounts and
statements prepared by, or the preparation of which were arranged by, OSGM, and
in particular OSGM will not have any of the authorities, rights or
responsibilities of the audit committee of OSG MLP General Partner, but shall
provide, or arrange for the provision of, information to such committee as may
from time to time be required or requested; provided, further, however,
that nothing herein shall entitle OSGM to retain legal counsel for the OSG MLP Group
unless such selection is specifically approved by OSG MLP;


 


(g)                                provide, or arrange for
the provision of, administrative, advisory, arrangement, negotiation,
documentation, compliance or monitoring services in connection with any new or
existing financing for OSG MLP, including any interest rate swap agreements,
foreign currency contracts, forward exchange contracts and any other hedging
arrangements;


 


(h)                                provide, or arrange for
the provision of, administrative, advisory, negotiation or documentation
services in connection any acquisition or divestment of any asset of the OSG
MLP;


 


(i)                                    provide, or arrange
for the provision of, administrative, advisory, negotiation or documentation
services in connection with any offering of securities by OSG MLP;


 


A-2

















 


(j)                                    prepare and
provide, or arrange for the preparation and provision of, regular cash reports
and other accounting information for review by OSG MLP, so as to permit and
enable OSG MLP 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 OSG MLP to its Unitholders, and to
assist OSG MLP in making arrangements with the transfer agent for OSG MLP for
the payment of distributions to the Unitholders in accordance with the Limited
Partnership Agreement;


 


(k)                                 provide such
assistance to OSG MLP as OSG MLP 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 OSG MLP and provide advance reports on a timely
basis to OSG MLP advising of steps, procedures and compliance issues under such
agreements, so as to enable OSG MLP, through OSG MLP General Partner, to make
all such decisions as would be necessary or desirable thereunder; and


 


(l)                                    provide, or arrange
for the provision of,  such additional
administrative services pertaining to the OSG MLP Group, the assets and
liabilities of the OSG MLP Group or the Unitholders and matters incidental
thereto as may be reasonably requested by OSG MLP from time to time.


 


A-3
















 


SCHEDULE B


 


Costs and Expenses


 


Within 30 days
after the end of each month, OSGM shall submit to OSG MLP for payment an
invoice for reimbursement of all costs and expenses reasonably incurred by OSGM
(the “Costs and Expenses”) in connection with the provision of the
Services listed in Schedule A by OSGM to the OSG MLP Group for such month. Each
statement will contain such supporting detail as may be reasonably required to
validate such amounts due.


 


OSG MLP shall
make payment within 15 days of the date of each invoice (any such day on which
a payment is due, the “Due Date”). All invoices for Services are payable
in U.S. dollars. All amounts not paid within 10 days after the Due Date shall
bear interest at the rate of 1.00% per annum over US$ LIBOR from such Due Date
until the date payment is received in full by OSGM.


 


Without
limiting the foregoing, Costs and Expenses shall include all fees from third
parties for providing Services and OSGM’s internal costs for providing general
administrative Services, such as the costs of OSGM’s internal lawyers,
accountants, and finance, information technology and human resource personnel. OSGM
may, in its sole discretion, decide not to be reimbursed for the full amount of
the internal costs for providing such Services, but the exercise of such
discretion shall not affect or modify OSGM’s right to be reimbursed the full
amount of the costs of Services provided after the exercise of such discretion.


 


B-1