Gross Revenue Sharing Pool Agreement



 






Exhibit 10.3




GROSS REVENUE SHARING POOL AGREEMENT



THIS
AGREEMENT is made this ______ day of December, 2007.



AMONG:




	 	 	 
	 

	 	TEEKAY CORPORATION, a Republic of The Marshall Islands corporation
having its registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH 96960 and having its
principal office at Bayside House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59212, Nassau, The Bahamas (“Teekay”
or “TK”).
	 
	 	 
	AND:

	 	TEEKAY TANKERS LTD., a Republic of The Marshall Islands corporation
having its registered office at Trust Company Complex, Ajeltake Road,
Ajeltake Island, Majuro, Marshall Islands MH 96960 and having its
principal office at Bayside House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59212, Nassau, The Bahamas (“TNK”,
and together with TK, the “Participants”).
	 
	 	 
	AND:

	 	TEEKAY CHARTERING LIMITED, a Republic of The Marshall Islands
corporation having its registered office at Trust Company Complex,
Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 and
having its principal office at Bayside House, Bayside Executive Park,
West Bay Street & Blake Road, P.O. Box AP-59212, Nassau, The Bahamas
(“TCL”).






WHEREAS:




	 	 	 
	A.

	 	The Participants and/or their respective affiliates are owners or in-charterers of
Aframax-class oil tankers who wish to achieve better trading efficiencies and to better meet
spot market demand by forming a gross revenue sharing pool of double hull Aframax tankers
initially comprised of the vessels specified in Schedule A attached hereto (as the same may
be updated from time to time); and
	 
	 	 
	B.

	 	The Parties wish that TCL shall commercially manage the Tankers (as defined below) in a
manner as hereinafter provided in order to maximize the earnings and minimize the related
expenses of the pooled vessels, through improved scheduling and a reduction of voyage
expenses.






THE PARTIES AGREE AS FOLLOWS:



1. Definitions




	 	 	 
	“COA”

	 	means a contract of affreightment.
	 
	 	 
	“Commercial Manager”

	 	means TCL.
	 
	 	 
	“Individual Tanker Expenses”

	 	has the meaning set forth in Schedule E.
	 
	 	 
	“Individual Tanker Gross Revenue”

	 	has the meaning set forth in Schedule C.
	 
	 	 
	“LMAA”

	 	means the London Maritime Arbitrators Association.
	 
	 	 
	“Long-term Contract”

	 	means any time charter that has a firm term of at least 90 days.
	 
	 	 
	“Monthly Statement”

	 	has the meaning set forth in Clause 25 hereof.






 









 






	 	 	 
	“NOR”

	 	means a notice of readiness.
	 
	 	 
	“Participants”

	 	means TK and TNK.
	 
	 	 
	“Participant Accounts”

	 	means for each Participant its account operated pursuant to Clause 22.
	 
	 	 
	“Party”

	 	means any of TK, TNK or TCL, and “Parties” means all of TK, TNK and TCL collectively.
	 
	 	 
	“Pool”

	 	means the revenue sharing mechanism contemplated herein.
	 
	 	 
	“Pool Expenses”

	 	has the meaning set forth in Schedule E.
	 
	 	 
	“Pool Key”

	 	means the agreed figure which expresses the relative theoretical earning capacity of each
Tanker on a time charter basis, such theoretical earning capacity to be based solely upon
the year of built, cargo carrying capacity, pumping capabilities, speed and bunker
consumption of the Tanker as warranted herein.
	 
	 	 
	“Short-term Contract”

	 	means any voyage, spot or time charter that has a firm term of less than 90 days.
	 
	 	 
	“Tanker Account”

	 	means the individual account of the revenues and expenses of each Tanker.
	 
	 	 
	“Tanker Contract”

	 	means any COA, Short-term Contract or, subject to approval under Clause 17, any Long-Term
Charter pursuant to which any Tanker operates.
	 
	 	 
	“Tanker Gross Revenue”

	 	has the meaning set forth in Schedule C.
	 
	 	 
	“Tankers”

	 	means double hull Aframax tankers committed to the Pool in accordance with this Agreement.
	 
	 	 
	“Working Capital”

	 	means the Two Hundred Fifty Thousand U.S. Dollars (US$250,000) that each Participant
shall commit to the Pool with respect to each of its Tanker not later than fifteen (15)
days before the date each such Tanker is expected to be delivered to the Pool and
thereafter in accordance with Clause 23.






2. Main objectives



Each of the Participants will maintain in the Pool all of its double hull conventional Aframax
tankers that are not on Long-term Contract, as further set forth in (and subject to the limitations
and provisions in the notes to) Schedule A in respect of which the Participants establish a revenue
sharing mechanism whereby the gross revenue of all Tankers is pooled and the Tanker Gross Revenue
is distributed to the Participants on the basis of Schedules B and C hereto. The Participants also
hereby establish a mechanism for deducting from each Participant’s allocation of Tanker Gross
Revenue their related Pool Expenses, on the basis of Schedules D and E hereto. “Conventional”
tankers exclude vessels that can carry drybulk and ore, tankers that are used for storage purposes
and shuttle tankers.




3. Pool Scope



The scope of the Pool shall include the carriage of all legal cargoes of crude oil and dirty
petroleum (as well as clean petroleum products with the prior consent of the applicable
Participant), on the spot market, including pursuant to Tanker Contracts. All cargo loaded must be
suitable for the individual Tanker.




4. Obligation to Maintain





	 	a.	 	Each Participant shall exercise due diligence to maintain its Tankers at all
times in a sea- and cargo-worthy condition to the technical and operational standards
set forth in the Oil Companies International Marine Forum Guidelines and other national
and international standards and shall exercise due diligence to obtain and maintain all
certificates, documents




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	 	 	 	and equipment required from time to time by any applicable law to enable the Tanker to
perform any voyages under this Agreement. Furthermore, each Tanker shall be kept in class
with an International Association of Classification Societies classification society.
	 
	 	b.	 	Each Participant shall exercise due diligence to obtain and maintain throughout
the duration of this Agreement the vetting approvals for trading from Statoil, Shell,
BP/Amoco, Exxon/Mobil (including lighterage requirements), Chevron/Texaco,
Total/Fina/Elf and upon the Commercial Manager’s reasonable request from other major
oil companies (the “Other Oil Majors”), within three (3) months (six (6) months in the
case of a newbuilding) after the applicable Tanker has been delivered into the Pool.
Where a vetting approval of an Other Oil Major is to be obtained, the time limit shall
count from the Participant’s receipt of such request by the Commercial Manager or the
date of delivery of a Tanker into the Pool, whichever is the later. However, a
Participant shall not be in breach of this Clause 4 (b) during any period during which
a Tanker’s trading patterns prevent it from obtaining the required vetting approvals,
provided that they are obtained as soon as reasonably possible.
	 
	 	c.	 	Each Participant shall maintain and pay for any Certificates of Financial
Responsibility necessary in respect of its Tanker(s).
	 
	 	d.	 	The Participants’ insurances are to name TCL in its role as Commercial Manager
and subject to underwriters’ and the Participants’ agreement, any third party
designated by TCL, as joint or co-insured, with full cover.
	 
	 	e.	 	TCL shall under no circumstances be obliged to pay insurance premiums of any
kind, including P & I calls, notwithstanding the restrictions on insurance or P & I
cover which would thereby result.





5. Commercial Management



TCL shall use its best efforts to commercially manage the Tankers. The commercial management shall
include, but is not limited to, the following functions:




Fixing of Voyages





	 	a.	 	marketing and promoting the Tankers using TK branding; and
	 
	 	b.	 	providing chartering services which include, but are not limited to, seeking
employment for the Tankers and the conclusion (including the execution thereof) of
charter parties, or other contracts of employment of the Tankers;





Voyage organization and accounting





	 	c.	 	arranging and supervising of the proper payment of all hire and/or freight
revenues or other moneys of whatsoever nature arising out of the employment of the
Tankers or otherwise in connection with the Tankers;
	 
	 	d.	 	providing voyage estimates and accounts and calculating and invoicing of hire,
freights, demurrage, and/or despatch moneys due from or due to the charterers of the
Tankers;
	 
	 	e.	 	handling the commercial performance of all Tanker Contracts, including but not
limited to issuing of voyage instructions, scheduling of Tankers, allocation of cargo
space, appointing agents, brokers, arrangement of tugs, lighterage, bunkers, cargo and
freight insurance (when required);
	 
	 	f.	 	arranging surveys associated with the commercial operation of the Tankers;
	 
	 	g.	 	taking any other such actions TCL in its sole discretion deems necessary to
fulfill this Agreement; and




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	 	 	 	h. maintaining and operating the individual Tanker Accounts’;





General





	 	i.	 	liaising with the technical manager of each Participant to ensure that such
Participant’s obligations under this Agreement can be duly fulfilled; and
	 
	 	j.	 	handling and settling of all claims arising out of any Tanker Contracts in
accordance with Clauses 19 and 20 hereof.





6. Commercial Management Fee



In consideration of TCL performing the commercial management of the Tankers, each Participant shall
pay TCL a fixed fee of $350 per vessel per day for each of that Participant’s Tankers and 1.25% of
the Individual Tanker Gross Revenue attributable to that Participant’s Tankers. The amount of the
daily per vessel fee shall be adjusted every three years by agreement between TCL and the
Participants. If TCL and the Participants are unable to agree on any such adjusted fee within 30
days of the applicable three-year anniversary of the date of this Agreement, such adjusted fee
shall be determined by arbitration pursuant to Clause 33 hereof.




7. Trading Limits and Tax





	 	a.	 	TCL shall be entitled to fix the Tankers worldwide within Institute Warranty
Limits. TCL shall, with the consent of the Participants, have liberty to break the
Institute Warranty Limits, but in this case shall ensure that any additional insurance
is arranged for any applicable voyages and/or any additional insurance premiums are
paid. The cost of such insurance or premiums shall be a Pool Expense, if not borne by
the charterer, receiver or shipper under the respective Tanker Contract.
	 
	 	b.	 	TCL will not, without the prior consent of the applicable Participant,
knowingly cause any of such Participant’s Tanker to perform any voyage (i) to any
countries or areas that are sanctioned by the United States of America or the United
Nations or (ii) that begins and ends in the United States of America. Furthermore, TCL
will not without the prior written consent of a Participant use any of such
Participant’s Tankers in any manner which may adversely affect that Tanker’s present or
future trading capacity.
	 
	 	c.	 	TCL shall exercise due diligence to ensure that the Tankers are employed
between and at safe ports, places, berths, docks, anchorages and submarine lines, where
they can always lie safely afloat.
	 
	 	d.	 	TCL shall not be liable in any case to any Participant for any adverse tax
consequences it may face arising out of this Agreement except to the extent such tax
consequences arise as a result of TCL’s fraud, gross negligence, recklessness or wilful
misconduct.
	 
	 	e.	 	Without the prior consent of each Participant, TCL shall not enter into any
charter or other contract for the employment of any Tanker outside the scope of the
Pool as described in Clause 3.





8. Start Date



Each Tanker shall be delivered to the Pool as soon as practicable after the date of this Agreement
and as of the date and time such Tanker tenders NOR at its first loadport. The revenues and costs
of positioning the Tanker to the first loadport as aforesaid shall be for the respective
Participant’s account. Each Tanker may, if so required by the Participant delivering it to the
Pool, be subject to a mutual on-hire survey by TCL and such Participant, the cost of which shall be
borne by such Participant.




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9. Technical Management



Each Participant shall be responsible for the technical management of its Tankers at its sole cost
and expense.




10. Bunkers



Each Participant shall ensure that each of its Tankers has sufficient bunkers onboard at the time
such Tanker tenders NOR for its first voyage under the Pool to reach the next main bunkering port
after the discharge port of the first voyage under the Pool. TCL shall arrange for the provision
of bunker fuel of the quality required for each Tanker’s trade and engines which to the extent
possible should fall within the Participants’ environmental requirements on quality parameters. On
redelivery of each Tanker to a Participant, TCL shall ensure that such Tanker has sufficient
bunkers remaining onboard to reach the next main bunkering port.




11. Names and Markings





	 	a.	 	TCL may at its sole cost require each Tanker to be painted in “TK” colours, to
install and display the “TK” funnel insignia, to fly the “TK” house flag, and to have
“SPIRIT” added as a suffix to its name.
	 
	 	b.	 	Upon the withdrawal of a Tanker from the Pool or upon the termination of this
Agreement, upon TCL’s or TK’s request, the applicable Participant shall remove the
“TCL” insignia from the funnel and change the name to remove the suffix “SPIRIT” from
the name of such Tanker no longer participating in the Pool. Any costs of removing the
insignia and/or repainting the funnel shall be borne by:






	 	 i.	 	a Participant if this Agreement is terminated at the request of or by
the breach of such Participant or if such Tanker is withdrawn from the Pool at the
request of such Participant;
	 
	 	 ii.	 	TCL if this Agreement is terminated at the request of or by the breach
of TCL; or
	 
	 	 iii.	 	half by each Participant if this Agreement is terminated for any other
reason or by mutual consent.





12. Pool Key



The initial Pool Key for each Tanker shall be as set forth in Schedule A, which Pool Key shall
apply for the first six months of operation of the Pool. Thereafter, the Pool Key for each Tanker
may be varied from time to time (but at least once every six months) to reflect the actual
capability of the Tanker based on its performance during the previous six (6) months. Any
Participant may request a review of a Pool Key, in which case TCL shall produce the data in
reasonable detail regarding the performance of all the Tankers (the “Pool Key Data”) during the six
months and on this basis recommend a Pool Key for the Tanker or Tankers at issue. If the
Participants cannot agree on a Pool Key within sixty (60) days of the Pool Key Data having been
dispatched to the Participants, the matter shall be referred to an independent specialist
shipbroker or maritime consultant, whose recommendation regarding the Pool Key shall be binding on
the Participants. The Participants shall mutually agree upon the independent specialist shipbroker
or maritime consultant. In the event that an agreement has not been reached within another sixty
(60) days after the Pool Key Data has been dispatched, the independent specialist shipbroker or
maritime consultant shall be appointed by the President of the LMAA. The costs of such consultant
or specialist shall be borne by the Pool. Until such time as a new Pool Key is agreed or
determined, the revenues of the Pool shall continue to be distributed in accordance with the most
recent applicable Pool Key. Any such agreed to or determined change to any Pool Key shall have
retroactive effect.




13. Tanker Performance




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	 	a.	 	Unless ordered otherwise by a charterer, each Tanker shall perform all voyages
at the service speed set out in Schedule A. Each Participant warrants (for the
purposes of calculating the on-/off-hire time under this Agreement only) for its
Tankers that each such Tanker is and shall remain capable of maintaining throughout the
term of this Agreement the speeds and bunker consumptions for propulsion described in
Schedule A under normal working conditions and in moderate weather (which for the
purposes of this clause shall exclude any periods of winds exceeding Force 5 on the
Beaufort Scale and corresponding states of sea). The Tanker speed and bunker
consumption data are all “about”. For avoidance of doubt, the term “about” shall mean
a margin of one-half (1/2) knot with respect to speed and a margin of five percent (5%)
with respect to bunker consumption.
	 
	 	b.	 	Each Participant warrants (for the purposes of calculating the on-/off-hire
time under this Agreement only) for its Tankers that they will be capable of
discharging a full homogenous cargo within twenty-four (24) hours, including stripping
and minimum Crude Oil Washing as per MARPOL requirements, or maintain an average
back-pressure of one hundred (100) PSI at ship’s manifold, provided sufficient size and
number of hoses are supplied and shore facilities are capable of receiving same.
	 
	 	c.	 	In case of any delay resulting in an actual loss of time as a consequence of a
Tanker not meeting its warranted speed or pumping rate, such actual loss of time shall
count as “off-hire” for the purpose of calculating the distribution of gross revenues
and related expenses under this Agreement. Any additional costs of bunkers consumption
in excess of the warranted consumption shall be paid to the Pool by the Participant
that has committed the relevant Tanker and shall be added to the Gross Pool Revenue.
	 
	 	d.	 	For the purposes of calculating the distribution of gross revenues and related
expenses under this Agreement, a Tanker shall be deemed “off-hire” where in breach of
the obligation imposed in Clause 4(b) of this Agreement it does not have the required
vetting approvals. However, the Commercial Manager shall have the option, in its sole
discretion and while such Tanker is in breach of the obligation imposed in Clause 4(b),
to (i) keep the Tanker on-hire for the purposes of calculating the distribution of
gross revenues and related expenses under this Agreement, in which case the Tanker’s
revenues shall be included in Individual Tanker Gross Revenue or (ii) keep the Tanker
“off-hire” for purposes of calculating the distribution of gross revenues and related
expenses, in which case its revenues shall not be included in Individual Tanker Gross
Revenue and, together with its expenses, shall be for the account of the relevant
Participant only.





14. Off-Hire



For the purposes of calculating the distribution of gross revenues and related expenses under this
Agreement, a Tanker shall be deemed “off-hire” on each and every occasion there is a loss of time
arising out of or in connection with the Tanker being unavailable for service for periods in excess
of twenty-four (24) consecutive hours on account of:





	 	a.	 	any damage, defect, breakdown, deficiency of or accident to the Tanker’s hull,
machinery, equipment or cargo handling facilities, repair or maintenance thereto
(including dry docking);
	 
	 	b.	 	any default and/or deficiency of the Master, officers or crew, including the
failure or refusal or inability of the Master, officers and/or crew to perform the
services required; or
	 
	 	c.	 	any other cause preventing the full working of the Tanker, always provided that
in the instances described in Clauses 13 and 14(a) through (c) hereof any such loss of
time is not caused by a breach of the relevant Tanker Contract by the respective
charterer, receiver and/or shipper.




Each Participant may request a review of its Tankers’’ off-hire time by sending a written notice to
TCL, in which case TCL shall produce data in reasonable details regarding the performance of the
applicable Tanker for the period concerned (the “Off-Hire Assessment Data”). If the Participants
cannot agree on the


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off-hire time for that Tanker within sixty (60) days of the Off-Hire Assessment Data having been
dispatched to each Participant, TCL shall refer the matter to Richardson Lawrie Associates, London
SW 19 8PS whose decision shall be final and binding. The costs of Richardson Lawrie Associates
shall be borne by the Pool, unless the decision is within 10% of the Off-Hire Assessment Data in
which case the Participant disputing it shall pay the cost. If any Participant so requests in
writing, future disputes about off-hire may be referred to another expert than Richardson Lawrie
Associates and Richardson Lawrie ‘Associates’ commission hereunder is thereby terminated.




15. Laying Up



The Participants may by agreement lay up any Tanker, in which case the distributions of the Tanker
Gross Revenue shall be equitably adjusted, taking into account the savings realized by the
Participants as a result of such lay up, so as to ensure that the Participant whose Tanker is laid
up is not prejudiced by such agreement.




16. Fixing of Tankers



TCL will endeavour to work all fixtures as directly as reasonably possible with charterers so as to
minimize the brokerage commissions payable in connection with the fixing of the Tankers. TCL shall
provide each Participant with a monthly report regarding the fixtures or employment of the Tankers.




17. Long-term Contracts





	a.	 	TCL will not, without the prior written consent of each Participant, enter into any Long-term
Contract with respect to any Participant’s Tankers, or the performance of which requires any
Participant’s Tanker. If TCL does so with the consent of the Participants, the Participant
that owns the applicable Tanker shall not terminate this Agreement until the Long-term
Contract has been fully performed, always subject to Clause 29(b) hereof.
	 
	b.	 	If the requirements of any Long-term Contract cannot be met because a Tanker has been
withdrawn from the Pool, or has been off-hire as defined in Clause 14 hereof for a period of
at least forty (40) consecutive days, then the Participant that committed the Tanker shall
provide at its expense a suitable substitute tanker, to be approved by the other Participants,
such approval not to be unreasonably withheld, for the remaining period of the Long-term
Contract, unless TCL as Commercial Manager is able to substitute that Tanker with any other of
the Tankers which TCL as Commercial Manager will use reasonable endeavours to do. If the
Participant is not able to provide such a substitute Tanker, the Participant shall be liable
to TCL for the costs of chartering in such substitute Tanker (off-set by the earnings of such
substitute Tanker) until the requirements of the Long-term Contract are met. TCL shall not
require the consent of any Participant to enter into such Long-term Contracts with respect to
TCL tankers alone.





18. [Deleted]




19. Authority





	 	a.	 	TCL has the authority to act on behalf of the Participants in relation to all
actions and matters which in the reasonable opinion of TCL are necessary to perform the
function as commercial manager as provided for in Clause 5. Specifically, TCL shall be
entitled to, inter alia:






	 	 i.	 	charter the Tankers in the name of TCL on such terms which correspond
to the industry standards applicable for the type of vessels and trades comparable
to the employment envisaged under this Agreement; provided, however, that any
Tanker Contract shall identify TCL as the agent and the applicable Participant as
the principal and owner of such vessel. The chartering of any Tankers on other
terms as aforesaid requires the prior consent of the applicable Participant which
is not to be unreasonably withheld;




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	 	ii.	 	handle and settle any and all claims arising out of contracts
for the employment of the Tankers, and to bring or defend actions, suits or
proceedings in connection with such matters;
	 
	 	iii.	 	obtain legal or technical or other outside advice in relation
to the settling of claims and disputes and all other matters pertaining to the
Tankers; and
	 
	 	iv.	 	require a Participant to arrange for the provision of any
necessary guarantee bond or other security with respect to its Tankers and do
the same itself for the Tankers.






	 	b.	 	It is intended that the relationship between each Participant and TCL shall be
that of a principal and agent, respectively.





20. Liability and Indemnity





	 	a.	 	Each Participant shall ratify and confirm whatever TCL may lawfully and/or at
the request of the Participant do or cause to be done in the course of acting as agent
of that Participant in accordance with the terms of this Agreement.
	 
	 	b.	 	TCL will in respect of all actions, proceedings, claims and demands or
liabilities against it in performing the rights and duties of the commercial manager
and/or acting as agent of a Participant or due to using the Standard Carrier Alpha Code
on behalf of that Participant:






	  	i.	 	provide that Participant with reasonable and timely details of the
claim and reasonably provide that Participant with such related information and
documents as it may from time to time request;
	 
	  	ii.	 	reasonably procure that the handling of the claim, in so far as it
concerns that Participant, including without limitation any resistance or defence
to it, is performed with such reasonable written directions as may be given by that
Participant, assuming such directions are provided; and
	 
	 	iii.	 	where the claim concerns that Participant, neither make an admission of
liability nor settle or compromise the claim without the prior written consent of
that Participant, such consent not to be unreasonably withheld or delayed.






	 	c.	 	TCL’s liability to a Participant for each incident or series of related
incidents due to negligence, gross negligence or willful misconduct giving rise to a
claim or claims by that Participant against TCL in its role as commercial manager or
agent of that Participant or its’ Tankers shall never exceed a total of three (3)
times the annual commercial fee payable under Clause 6.
	 
	 	 	 	In its role as commercial manager or agent of a Participant or its Tankers, TCL shall be
under no liability whatsoever to such Participant for any loss, damage, delay or expense
of whatsoever nature, whether direct or indirect, including but not limited to loss of
profit arising out of or in connection with detention of or delay to any Tanker, and
howsoever arising in the course of performance of this Agreement, except for TCL’s total
liability as set out in this Clause 20 (c).
	 
	 	 	 	Except to the extent, and solely for the amount set out above, that TCL in its role as
commercial manager or agent of a Participant or its Tankers would be liable for, each
Participant hereby undertakes to defend and retain TCL in its role as commercial manager
or agent of such Participant or its Tankers and TCL’s employees, agents and
subcontractors indemnified and to hold them harmless against all actions, proceedings,
claims, demands or liabilities whatsoever or howsoever arising out of or in connection
with the performance of this Agreement and against and in respect of all costs, loss,
damages, and expenses (including legal costs and expenses) which TCL in its role as
commercial




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	 	 	 	manager or agent of such Participant or its Tankers may suffer or incur (either directly
or indirectly) in the course of the performance of this Agreement.
	 
	 	d.	 	If a claim (a “Relevant Claim”) is made against a Participant (the “Indemnified
Party”) or any of its affiliates or any seizure, distraint, arrest, detention or the
like (an “Arrest”) is effected in respect of property owned or controlled by the
Indemnified Party or any of its affiliates by reason of a claim against another
Participant (the “Indemnifying Party”) or any of its affiliates or TCL as the
commercial manager or agent of that Participant or its Tankers’, then the Indemnifying
Party shall indemnify and hold harmless the Indemnified Party and its affiliates
against the Relevant Claim and the Arrest and all costs, losses, liabilities and
expenses (including legal expenses) arising therefrom. In case of an Arrest, the
Indemnifying Party shall provide security to ensure the lifting of such Arrest as soon
as possible.




The defense of any Relevant Claim or Arrest shall be handled by TCL as commercial manager at the
cost of the Indemnifying Party but pursuant to the instructions of the Indemnified Party. However,
where no such instructions are given, then TCL may follow the instructions of the Indemnifying
Party. The Relevant Claim or Arrest shall not be settled without the prior written consent of the
Indemnified and the Indemnifying Party, which consent shall not be unreasonably withheld.



For the avoidance of doubt it is acknowledged and agreed that where TCL is the Indemnifying Party
pursuant to this Clause 20(d), clause 20(c) does not apply.




21. Expenses



Each Party shall individually bear its own costs that are not otherwise allocated under this
Agreement, including but not limited to costs for travel, document preparation and professional
advisors.




22. Bank Accounts



The Working Capital and all revenues arising from the operation of a Participant’s Tankers shall be
paid into its Participant Account. “Each Participant shall expeditiously sign all resolutions and
other documents required from time to time in connection with the operation of its Participant
Account, including with respect to authorized signatories. A suitable number of persons designated
by TCL shall be authorized signatories to the Participant Account, and Participant shall not
interfere with the operation of its Participant Account, add to or remove from its Participant
Account funds and/or authorized signatories, or otherwise operate the account in any way unless TCL
does not comply with its duties under Clause 25 hereof or declares or files for bankruptcy,
in which case such Participant shall be entitled to remove all funds.



Any interest earned on the Participant Accounts shall be disbursed to the respective Participants
in quarterly intervals and shall not constitute Tanker Gross Revenue.




23. Working Capital



TCL shall, by cash calls and disbursements, as the case may be, endeavour to maintain the Working
Capital for each Tanker at its initial amount, but each Participant will provide with respect to
its Tankers, upon fifteen (15) days prior written notice, any additional Working Capital reasonably
required by TCL. Upon termination of this Agreement or the withdrawal of a Tanker from the Pool,
TCL shall, within thirty (30) days of such event, pay to the applicable Participant the excess
Working Capital relating to any Tanker no longer in the Pool, less any set-offs which, in the fair
estimation of TCL, are necessary to cover outstanding liabilities and contingencies. TCL shall
endeavour to complete a final accounting with respect to any Participant Tanker withdrawn from the
Pool whether by termination or otherwise within one hundred twenty (120) days of the date of such
termination or withdrawal. Any interest earned on the Working Capital shall accrue to the benefit
of the applicable Participant. For the avoidance of doubt it is agreed that the Working Capital may
only be used for the operation of the Tanker in respect of which it was provided by a Participant.




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24. Individual Tanker Accounts



TCL will, on behalf of each Participant, pay or collect, as the case may be, any Tanker Gross
Revenue and any Pool Expense each Tanker may earn or incur, and TCL shall for each Tanker keep a
Tanker Account following U.S. Generally Accepted Accounting Principles (“US GAAP”). All workings
and entries shall be in U.S. Dollars unless otherwise required for the efficient operation of the
Pool. TCL shall use prudent financial practices to avoid exposing the Tanker Accounts to currency
fluctuations. Any credit risk and/or risk of non-payment by charterers shall be borne by the Pool.




25. Monthly Payments



To show the revenues and expenses of each Tanker on a cash basis, TCL shall on or before the
twentieth (20th) day of each month provide each Participant with a statement of cash flows for the
previous month together with payment of the amount due to such Participant based on net cash flow
in respect of such Participant’s Tankers less the initial and any additional Working Capital
advances made pursuant to this Agreement. On or before the twentieth (20th) day of each month, TCL
shall also provide each Participant with a monthly statement prepared on an accrual basis in
accordance with US GAAP (the “Monthly Statements”) showing such Participant’s share in the gross
revenues and the Participant’s related expenses arising from the operation of the Pool. The
allocation of gross revenues arising from the operation of the Pool shall be calculated using the
formulas set out in Schedule B and Schedule C hereto. The related expenses arising from the
operation of the Pool shall be calculated and allocated using the formulas set out in Schedule D
and Schedule E hereto.




26. [RESERVED]




27. Set-off



Notwithstanding any other provision of this Agreement, TCL shall be entitled to set-off any amounts
owed to it either at law or in equity by a Participant under this Agreement, against any amount
owed to such Participant under this Agreement.




28. Audits





	 	a.	 	TCL will maintain and keep true and correct accounts of the Tanker Accounts and
the Pool (including supporting documents) and will make the same available at the
offices of Teekay Shipping (Canada) Ltd. for inspection and auditing by each
Participant (the auditing only to be at the expense of the applicable Participant) in
semi-annual intervals. This accounting system shall be in accordance with that used by
TCL for vessels which are under disponent ownership of TCL but which are not part of
this Pool.
	 
	 	b.	 	TCL will at the end of each calendar year provide to a Participant upon such
Participant’s request, a statement certified by TCL’s auditor verifying the accuracy of
the financial statements, the individual Tanker Accounts and the Pool.





29. Term and Termination





	 	a.	 	Initial Term. The initial term of this Agreement shall commence on
December ___, 2007 and end on December 31, 2022, unless terminated earlier pursuant to
this Agreement (the “Initial Term”).
	 
	 	b.	 	Renewal Term. This Agreement will, without any further act or
formality on the part of any Party, on the expiration of the Initial Term or any
Renewal Term, be automatically renewed for a further term of five (5) years (each a
“Renewal Term”) unless notice of termination is given by any Party to the other Parties
in accordance with Clause 29(c)(v), in the case of the Initial Term, or Clause
29(c)(vi), in the case of any Renewal Term.
	 
	 	c.	 	Termination by TNK. This Agreement may be terminated by TNK:






 10












 






	 	i.	 	if, at any time, TCL or Teekay materially breaches this
Agreement and the matter is unresolved after ninety (90) days pursuant to the
dispute resolution provisions of Clause 33 (“TCL/Teekay Breach”);
	 
	 	ii.	 	if, at any time, (A) TCL or Teekay has been convicted of, has
entered a plea of guilty or nolo contendre with respect to, or has entered into
a plea bargain or settlement admitting guilt for, a crime, which conviction,
plea bargain or settlement is demonstrably and material injurious to TNK and
(B) the holders of a majority of TNK’s outstanding Class A Common Stock elect
to terminate this Agreement;
	 
	 	iii.	 	if, at any time, TCL or Teekay becomes insolvent, admits in
writing its inability to pay its debts as they become due, is adjudged bankrupt
or declares bankruptcy or makes an assignment for the benefit of creditors, a
proposal or similar action under the bankruptcy, insolvency or other similar
laws of any applicable jurisdiction, or commences or consents to proceedings
relating to it under any reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction;
	 
	 	iv.	 	if any person or entity or group of persons or entities (other
than Teekay or any of its affiliates) acquires control of a majority of the
voting or economic control of TCL and TNK does not consent to such change of
control, which consent shall not be unreasonably withheld or delayed;
	 
	 	v.	 	if, in the fourth quarter of 2021, TNK elects to terminate this
Agreement by notice to TCL and Teekay no later than December 31, 2021, which
termination shall be effective on December 31, 2022;
	 
	 	vi.	 	if, in the fourth quarter of any year immediately preceding the
year that includes the end of any Renewal Term, TNK elects to terminate this
Agreement by notice to TCL and Teekay no later than December 31 of such
preceding year, which termination shall be effective at the end of the final
year of such Renewal Term; or
	 
	 	vii.	 	if the Management Agreement dated as of December ___, 2007
between TNK and Teekay Tankers Management Services Ltd. (as the same may be
amended and modified from time to time, the “Management Agreement”) terminates
for any reason.






	 	d.	 	Termination by TCL or Teekay. This Agreement may be terminated by TCL
or Teekay:






	 	i.	 	after the fifth anniversary of the date of this Agreement with
twelve (12) months’ prior notice by TCL or Teekay, as applicable, to all other
Parties;
	 
	 	ii.	 	if, at any time, TNK materially breaches this Agreement and the
matter is unresolved after ninety (90) days pursuant to the dispute resolution
provisions of Clause 33 (“TNK Breach”);
	 
	 	iii.	 	if, at any time, TNK becomes insolvent, admits in writing its
inability to pay its debts as they become due, is adjudged bankrupt or declares
bankruptcy or makes an assignment for the benefit of creditors, a proposal or
similar action under the bankruptcy, insolvency or other similar laws of any
applicable jurisdiction, or commences or consents to proceedings relating to it
under any reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction; or




11









 












	 	iv.	 	if the Management Agreement terminates for any reason.






	 	e.	 	Termination For a Particular Tanker. Unless otherwise agreed to in
writing by the Parties, this Agreement shall terminate immediately with respect to a
particular Tanker, but only with respect to such Tanker:






	 	i.	 	if it becomes an actual or constructive total loss or if the
Tanker is sold or transferred to, or becomes controlled by, a person or entity
other than a Participant or an affiliate thereof, and if a Tanker is sold or
transferred to another Participant (A) this Agreement shall be deemed novated
to the other Participant in respect of such Tanker as of the time and date such
other Participant takes delivery of such Tanker and (B) as of the time and date
of novation such other Participant shall become responsible for the fulfillment
of this Agreement in respect of such Tanker and the Participant selling or
transferring such Tanker shall cease to be liable under this Agreement with
respect to such Tanker except for obligations and liabilities accrued until the
time and date of such novation;
	 
	 	ii.	 	if such Tanker becomes subject to a Long-term Contract (and TCL
agrees not to subject any Tanker to a Long-term Contract without the prior
consent of the Participants); or
	 
	 	iii.	 	(A) a distress or execution is levied or issued against such
Tanker and is not discharged within twenty days (20) days, (B) an encumbrancer
takes possession or a receiver or similar officer is appointed in respect of
such Tanker and the taking of possession is not lifted or the appointment is
not withdrawn within twenty (20) days or (C) the security constituted by any
mortgage or charge in such Tanker created by the owner of disponent owner
thereof becomes enforceable and the relevant mortgagee or chargee takes any
step to enforce the same.






	 	f.	 	Delayed Termination for Tanker Subject to Long-term Contract.
Notwithstanding anything to the contrary and subject to Clause 29(e)(i) with respect to
any actual or constructive total loss of the Tanker, if at the time this Agreement
terminates pursuant to this Clause 29 any Tanker is obligated to perform a Long-term
Contract or is required for the performance thereof and otherwise remains subject to
this Agreement, such termination of this Agreement shall not become effective with
respect to such Tanker until the earlier of (i) the date such Long-term Contract has
been performed or cancelled and (ii) the date TCL as commercial manager is able to
substitute another oil tanker for such Tanker under such Long-term Contract, which
substitution TCL as commercial manager will use reasonable efforts to effect. Without
the prior written consent of the Participants, TCL shall not fix, execute or otherwise
enter into or agree to any new charter party, COA or other like Tanker employment
contract which cannot reasonably be completed before the then scheduled termination
date of this Agreement.
	 
	 	g.	 	Effect of Termination of this Agreement. Subject to Clause 29(f), upon
termination or expiry of this Agreement, this Agreement will be void and there shall be
no liability on the part of any Party (or their respective officers, directors,
employees or affiliates), except that (A) (1) the obligation of the Participants to pay
to TCL the commercial management fees pursuant to Clause 6 (Commercial Management Fee)
for services rendered through the termination date, (2) the obligation of TCL to pay to
the Participants their respective share of Tanker Gross Revenue less Pool Expenses
under this Agreement for all periods ending prior to or on the termination date, and
(3) Clauses 20 (Liability and Indemnity), 21 (Expenses), 23 (Working Capital), 28
(Audits), 30 (Redelivery of Tankers on Termination of Pool), 33 (Law and Arbitration)
and 34 (Confidentiality and Equitable Rights) shall survive such




12









 






	 	 	 	termination and (B) such termination shall not relieve TCL or Teekay from liability
for any TCL/Teekay Breach or TNK for any TNK Breach.





30. Redelivery of Tankers on Termination of Pool



TCL may redeliver the Participants’ Tankers worldwide (at the time of dropping the last outbound
pilot at the last discharge port), but shall endeavour to redeliver them at
UKC/USAC/USG/MED/CARIBS. The Tankers’ condition shall, if the applicable Participant so requires,
be verified by a mutual survey by TCL and such Participant, the cost of which shall be borne by
such Participant.




31. No Partnership



Nothing in this Agreement shall create a partnership among any of the Parties. The Pool shall not
be an entity with rights or obligations in itself.




32. Affiliates



Each Party may use affiliated or wholly owned subsidiary companies to perform or assist them in its
obligations under this Agreement, in which case such Party shall remain responsible for the
performance of such affiliates or subsidiaries.




33. Law and Arbitration





	 	a.	 	This Agreement shall be governed by and construed in accordance with English
law and any dispute arising out of or in connection with it shall be referred to
arbitration in London in accordance with the Arbitration Act 1996 or any statutory
modification or re-enactment thereof for the time being in force and under the terms of
the LMAA before a tribunal of three arbitrators.
	 
	 	b.	 	In cases where neither the claim nor any counterclaim exceeds the sum of Fifty
Thousand U.S. Dollars (US$50,000), the arbitration shall be conducted in accordance
with the LMAA Small Claims Procedure current at the time when the arbitration
proceedings are commenced.





34. Confidentiality and Equitable Rights





	 	a.	 	No Party will disclose or announce the terms of this Agreement, or any related
negotiations, agreements, charter parties or arbitrations to any third-party (other
than the disclosing Party’s professional advisors, banks, financial institutions or
investors) without the prior written consent of the other Parties or as required by
law, or securities regulations listing agreements with any applicable stock exchange,
the LMAA or as part of TNK’s filings with the U.S. Securities and Exchange Commission.
	 
	 	b.	 	Each Party shall be entitled to any equitable remedy available at law or
equity, including specific performance, against a breach by any other Party of the
terms of this Clause. No Party shall resist such application for relief on the basis
that the applicant has an adequate remedy at law, and each Party shall waive any
requirement for the securing or posting of any bond in connection with same.





35. Termination of technical management agreement



Should the Participant terminate the technical management agreement for any of its Tankers, its
appointment of new managers shall be subject to the consent of TCL, such consent not to be
unreasonably withheld.




36. Third Party Membership of the Gross Revenue Sharing Pool Agreement.



It is agreed by the Parties that additional members may be added to the Pool subject to (a) the new
members becoming parties to this Agreement and (b) the mutual agreement of the Parties, which is
not to


13









 






be unreasonably withheld. Such mutual agreement must in particular involve the fixing of an
appropriate Pool Key for the new vessels committed to the Pool.




37. Participant Meetings



The Participants shall meet at least twice per year to analyse the performance of the Pool and to
decide on its participating strategy, etc. Such meetings shall take place at the time and place
agreed at the previous meeting or such other time and place agreed by all Participants.




38. Notices



Any notice to be given by any Party shall be in writing and shall be sent to the other Parties by
fax, by registered or recorded mail or by personal service to the other, as follows:







If to TCL, Teekay or TNK:



c/o Teekay Shipping (Canada) Ltd.

Suite 2000, Bentall 5

550 Burrard Street

Vancouver, B.C., V6C 2K2

Canada



Attn: General Counsel

Fax: +1 604 609 4775




39. Force Majeure



No Party shall be under any liability for any failure to perform any of their obligations hereunder
by reason of any cause whatsoever of any nature or kind beyond their reasonable control.




37. Amendments



No amendment, supplement, modification or restatement of any provision of this Agreement shall be
binding unless it is in writing and signed by each Party.




[Remainder of This Page Left Blank]




14









 







IN WITNESS WHEREOF, this Agreement has been executed by the duly authorised signatories of the
respective Parties on the day and year first above written.




	 	 	 	 	 
	TEEKAY CORPORATION

	 	TEEKAY TANKERS LTD.	 	 
	 
	 	 	 	 
	 

Title:

	 	 

Title:
	 	 
	Name:

	 	Name:	 	 
	 
	 	 	 	 
	TEEKAY CHARTERING LIMITED
	 	 	 	 
	 
	 	 	 	 
	 

Title:

	 	 	 	 
	Name:
	 	 	 	 







15












 





SCHEDULE A

STANDARD CLASS DOUBLE HULL AFRAMAX TANKERS

(to be updated as necessary)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Initial
	 	 	Fully laden	 	Ballast	 	Pool
	Teekay Tankers	 	Speed	 	HO	 	DO	 	Speed	 	HO	 	DO	 	Key
	SEE ATTACHED
	 	 	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Initial
	 	 	Fully laden	 	Ballast	 	Pool
	Teekay Corporation	 	Speed	 	HO	 	DO	 	Speed	 	HO	 	DO	 	Key
	SEE ATTACHED
	 	 	 	 	 	 	 	 	 	 	 	 	 	 






1. Commitment of Tankers





	a.	 	The Participants shall each commit to include in the Pool all of their respective
conventional Aframax-class crude oil tankers that are employed in the spot market or operate
pursuant to time charters with a firm term of less than 90 days, unless otherwise agreed by
the parties with respect to specific vessels.





2. Adding and Withdrawing Tankers





	a.	 	It is acknowledged that the Participants may submit other vessels (each a “New Vessel”) than
those stated above for employment pursuant to the Agreement. In such instance, each
Participant warrants that such New Vessel will, in all relevant respects, be comparable to the
Tankers and justify allocation of a Pool Key of one (1).






	b.	 	Each Participant submitting a New Vessel to the Pool shall notify (the “New Vessel Notice”)
each other Party with a minimum time limit of 15 working days before the New Vessel is
submitted to this Pool, of its main characteristics relevant for evaluating the New Vessel’s
Pool Key and shall include a description with the warranted speed and bunker consumption.






	c.	 	Where a Party objects to the New Vessel within five (5) working days of receipt of the New
Vessel Notice, the submitting Participant shall make available further information
demonstrating the accuracy of its description and that it merits the allocation of a Pool Key
of one (1). If the Parties do not agree on the accuracy of the description or the allocation
of the Pool Key (one or any other figure) within five (5) working days of receipt of such
additional information, the matter shall be referred to Richardson Lawrie Associates, London
SW19 8PS or such other independent specialist shipbroker or maritime consultant as may be
agreed from time to time by the Parties (the “Evaluator”). The decision of the Evaluator in
respect of the applicable description and the proper Pool Key shall be binding on the Parties
but subject to later review as per Clause 12 of the Agreement. Until the decision by the
Evaluator is available, the New Vessel may be submitted to the Pool, applying a temporary Pool
Key of one (1), which Pool Key to be retrospectively adjusted from such New Vessel’s entry
into the Pool, to date of allocation of the appropriate Pool Key by the Evaluator.






The costs of the Evaluator shall be borne by the Party requesting the Evaluator’s decision if
the Pool Key is deemed to be one (1), otherwise by the Participant submitting the New Vessel.



	 
	d.	 	The delivery of the New Vessel shall be made pursuant to Clause 8 of the Agreement.
	 
	e.	 	[RESERVED]



16









 












	f.	 	Any Tanker that becomes subject to a time charter with a term of at least 90 days shall no
longer participate in the Pool, unless otherwise agreed by the Parties.






	g.	 	Tankers will no longer participate in the Pool if they suffer an actual or constructive loss
or if they are sold to or become controlled by a third party who is not a Party or an
affiliate thereof.






	h.	 	Subject to Clause 12 of the Agreement, this Schedule A shall be updated as necessary should
the performance characteristics of any of the Tankers or any of the Tankers’’ Pool Keys change
or in the event of the addition or withdrawal of any Tanker.




17









 











SCHEDULE B

GROSS REVENUE DISTRIBUTION FORMULA



Tanker Gross Revenue distribution amount for a Tanker = Distribution Factor x Tanker Gross Revenue
for the period



where:




	 	 	 	 	 
	Distribution Factor =

	 	(Pool Key for such Tanker x TIS)
 

	 	  
	 

	 	TTT	 	 





and where:



TIS = Time in service (calendar days reduced by off-hire) for such Tanker for the period





TTT = Aggregate of Total Time in service of all Tankers in the Pool for the period



and where:



Tanker Gross Revenue shall be determined according to the formula set out in Schedule C.




18









 








SCHEDULE C

TANKER GROSS REVENUE





While individual Tanker Accounts are maintained, for purposes of calculating the
distributions of cash from the Pool, “Tanker Gross Revenue” shall be the aggregate
of all Individual Tanker Gross Revenue determined on a calendar quarter basis.




“Individual Tanker Gross Revenue” is comprised of all amounts earned from the
following during the relevant period:




	 	(A)	 	each Tanker’s total voyage revenue (including but not limited
to demurrage and dead freight). Where a third party has made a claim under a
Tanker Contract by way of set off against hire/freight or other amounts payable
by it and the applicable Participant would be liable to indemnify TCL were such
a claim made against TCL by way of a payment demand, then such Participant
shall pay such amounts to TCL necessary to make up such set off. Equally,
where a claim is made by a third party against one Participant in respect of
another Participant’s Tanker by way of set off and for which the first
Participant is liable under the Tanker Contract, the second Participant shall
make good such deduction. Any amount later recovered from such third party
shall not count as Tanker Gross Revenue;
	 
	 	(B)	 	each Tanker’s charter hire for fixed-rate time charters;
	 
	 	(C)	 	each Tanker’s share of salvage monies due to each of the
applicable Participant or with respect to the applicable Tanker;
	 
	 	(D)	 	any currency exchange gains arising from the commercial
operations of the applicable Tanker; and
	 
	 	(E)	 	all revenue of any nature received or accrued by TCL arising
out of or in connection with the operation of the applicable Tanker and its
commercial operations under the Agreement.






Individual Tanker Gross Revenue shall be adjusted taking into account the following:




	 	(A)	 	results of any voyage not yet completed at the end of the
relevant calendar months;
	 
	 	(B)	 	without prejudice to Clause 24 of the Agreement, amounts of
Individual Tanker Gross Revenue earned but not yet received; and
	 
	 	(C)	 	retentions for any outstanding or contingent obligations and
liabilities falling under the definition of Individual Tanker Expense.




19









 











SCHEDULE D

PARTICIPANT RELATED EXPENSE CALCULATION



Pool Expense amount for a Tanker = Expense Factor x Pool Expenses for the period



where:




	 	 	 	 	 
	Expense Factor =

	 	(Pool Key for such Tanker x TIS)
 

	 	  
	 

	 	TTT	 	 





and where:



TIS = Time in service (calendar days reduced by off-hire) for such Tanker for the period





TTT = Aggregate of Total Time in service of all Tankers in the Pool for the period



and where:



Pool Expenses shall be determined according to the formula set out in Schedule E.




20









 








SCHEDULE E

POOL EXPENSES





While individual Tanker Accounts are maintained, for purposes of calculating
distributions relating to the Pool, “Pool Expenses” shall be the aggregate of all
Individual Tanker Expenses determined on a calendar quarter basis.




“Individual Tanker Expenses” are comprised of the following during the relevant
period:




	 	(A)	 	each Tanker’s total voyage expenses, including but not limited
to agents, tugs, port expenses, wharfage, brokerage commission, bunkers, canal
fees, additional war risk premiums and, furthermore, any other expenses
becoming due on a per call basis, including but not limited to additional
insurance premiums;
	 
	 	(B)	 	all costs connected to the vessel operating at higher Security
Levels (or the equivalent in any national legislation) than Security Level 1 as
that term is defined in the International Security Code for Ports and Ships
Code or any national enactment thereof (unless due to the Tanker’s flag) or
connected to security measures required under the ISPS Code or any national
enactment thereof in respect of TCL’s or any charterer’s supplies or the cargo
loaded or due to the Tanker’s previous trading itinerary;
	 
	 	(C)	 	any currency exchange losses arising from the commercial
operations of the Tanker;
	 
	 	(D)	 	apportionment of prepaid expenses not included in voyage
expenses referred to above and of expenses paid after the relevant accounting
period and attributable in whole or part to such accounting period; and
	 
	 	(E)	 	the pro-rated share (based on the total number of Tankers) of
all other reasonable expenses or amounts payable by TCL in connection with the
business of the Pool (for the avoidance of doubt, this amount does not include
TCL’s overhead, including but not limited to, costs for personnel,
telecommunication, travel, etc.).






21