Document:

ex10_3.htm

    Exhibit
10.3

      

      
        

         

        THIS
LEASE, made as of this 17th day of
July, 1995  by & between DMK Associates, L.P., a Virginia Limited
Partnership, whose address is P O Box 2500,    Norfolk, VA
23501-2500 (hereinafter referred to as "LANDLORD") and Dollar Tree Stores, Inc.
a Virginia corporation, whose address is 2555 Ellsmere Avenue, _Norfolk, Virginia
23513,  (hereinafter referred to as "TENANT").

      

      
        

         

        WITNESS ETH:

      

      
        That in
consideration of the mutual covenants and agreements herein contained, it
is

      

      
        agreed by
and between Landlord and Tenant as follows:

      

      
        .

      

      
        
          	
                   
      

                	
                  A.      BASIC
      LEASE PROVISIONS:    The following constitute the
      basic provisions of this Lease:

                

        

         

        

      

      
        1
..

      

      
        2.

      

      
        

         

        Premises

      

      
        a.      Address

      

      
        

         

        County
Square Footage

      

      
        b.

      

      
        c.

      

      
        

         

        Space
Number Trade Name

      

      
        

         

        Volvo
Parkway S/C

      

      
        Volvo
Parkway &
Battlefield Blvd

      

      
        Chesapeake,  VA    23320

      

      
        

         

        5,000.00

      

      
        50.00 Ft
X 100.00 Ft

      

      
        16                           ^

      

      
        DOLLAR
TREE         Me

      

      
        3.    Permitted
Use

      

      
        

         

        The
retail sale of general merchandise including, but not limited to, home decor and
accessories, costume jewelry, bathroom accessories, toys, stationery, auto
accessories,  apparel,   kitchen accessories, novelty
candy and snacks.    Tenant agrees that no one category will
become the principal product of the retail business, and Landlord covenants that
Tenant will be permitted to occupy the Premises for the entire Term for the uses
herein specified.

         

        

      

      
        
          	
                   
      

                	
                  4.    Delivery
      Date for Possession of
Premises

                

        

      

      
        

         

        5.    Lease
Commencement Date

      

      
        

         

        6.    Term

      

      
        

         

        
          	
                   
      

                	
                  7.    Option
      1 Option 2 Option 3

                

        

      

      
        

         

        
          	
                   
      

                	
                  8.    Address
      for notices: Landlord:

                

        

      

      
        

         

        Tenant

      

      
        

         

        9.    Minimum
Rent

      

      
        Original
Term 1-Four Years

      

      
        10.    Option  1                                1-Four
Years

      

      
        Option
2                          1-Four
Years

      

      
        Option
3                          1-Four
Years

      

      
        

         

        10/01/1995

      

      
        

         

        Sixty
days from dale of delivery of possession as stated in A.4 above or the date
Tenant opens for business,  whichever is earlier.

      

      
        

         

        Four
Years

      

      
        

         

        1
-                     Four
Years                      option

      

      
        1
-                     Four
Years                      option

      

      
        

         

        1
-                     Four
Years                      option

      

      
        

         

        DMK
Associates,  L.P.

      

      
        P O Box
2500

      

      
        Norfolk,   VA    23501-2500

      

      
        Per Sq
Ft

      

      
        8.00

      

      
        9.00

      

      
        10.00

      

      
        11,00

      

      
        

         

        Dollar
Tree Stores, Inc. Real Estate Department 2555 Ellsmere Avenue
Norfolk,  VA    23513

      

      
        
          	
                   
      

                	
                  Per Annum
      40,000,00

                

        

      

      
        45,000.00

      

      
        50,000,00

      

      
        55,000.00

      

      
        11.    Percentage
Rent:

      

      
        Page
1

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        .    Original
Term                                        1,333,333.00                                         3.00%

      

      
        Option
1                                   1,500,000.00                                         3.00%

      

      
        

         

        Option
2                                   1,666,667.00                                         3.00%

      

      
        Option
3                                   1,833,333.00                                         3.00%

      

      
        

         

        12.    Estimated
Operating Charges for the first year per square foot

      

      
        

         

        CAM                                                .30

      

      
        Taxes                                                .70

      

      
        

         

        Insurance                                                .07

      

      
        

         

        Landlord
represents the first year's charges will not vary more than 5% from the amount
above stated charges.

      

      
        

         

        
          	
                   
      

                	
                  13.    Annual
      increases for Charges for Common Area Maintenance will not exceed more
      than Fifteen percent (15.00%) of those charges for the previous
      year.

                

        

      

      
        

         

        14.    Radius
Restriction:                                                       None

      

      
        

         

        15.    Security
Deposit:                                                       None

      

      
        

         

        
          	
                   
      

                	
                  B.     DEMISED   PREMISES:        Landlord   hereby   Leases   to   Tenant   the   demised   premises
      ("Premises") described as
follows:

                

        

      

      
        

         

        
          	
                   
      

                	
                  1.    The
      space within a one-story unit (without basement, balcony, or mezzanine)
      having an approximate total square footage of 5,000.00 square feet as
      measured from the exterior face of any exterior walls and to the
      centerline of common walls, identified as Unit #16 and outlined in
      red on the site plan, attached hereto as Exhibit "A". The "Shopping
      Center" is more fully described in the legal description, attached hereto
      as Exhibit "B".

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    Landlord
      reserves the right to remeasure the Premises to determine the gross
      leasable area of the Premises. In the event the remeasurement discloses
      that the actual gross leasable area of the Premises as set forth in the
      preceding paragraph is incorrect, Landlord and Tenant shall execute an
      amendment to the Lease (i) reflecting the actual gross leasable area
      of the Premises, (ii) adjusting the Minimum Rent based on the new
      square footage, and (iii) adjusting Additional Rent (as defined in Section
      Y.12 of this Lease) and all other charges accruing under the Lease which
      are based on the actual gross leasable area of the Premises. In the event
      of an adjustment, Tenant will pay any excess rent owed to Landlord within
      fifteen (15) days after receipt of a statement, or Tenant shall take a
      credit for any overpayment against the next minimum rent and additional
      rent payments.

                

        

      

      
        

         

        C.      TERM                                           •
•'                                                                                                                .

      

      
        

         

        1.    The
term of this Lease shall commence upon the earlier of:

      

      
        

         

        
          	
                   
      

                	
                  (a)    The  date  which   is   sixty (60)   days  after  the   date  Landlord   delivers   the
      Premises to Tenant, or

                

        

      

      
        

         

        (b)    The
date on which Tenant opens the Premises for business to the
public,

      

      
        

         

        such date
being hereinafter called the Commencement Date and expiring on the Lease
Expiration Date in Section A.6 above, unless sooner terminated as provided
herein. Lease Year shall consist of twelve (12) full calendar months, and the
first Lease Year shall commence on the Commencement Date if the
Commencement Date shall occur on the first day of a calendar month. If the
Commencement Date does not occur on the first day of a calendar month, the first
Lease Year shall consist of the partial first month plus the following twelve
(12) full calendar months. Each succeeding Lease Year shall be twelve (12)
consecutive months following the expiration of the first Lease
Year.

      

      
        

         

        
          	
                   
      

                	
                  2.    At
      the time the Commencement Date is established, upon the request of
      Landlord, the parties will promptly execute a written instrument
      stipulating the Commencement Date and Expiration Date of the term of this
      Lease.

                

        

      

      
        

         

        D.     CONSTRUCTION

      

      
        

         

        
          	
                   
      

                	
                  1.    Landlord   shall deliver  the  Premises  to  Tenant  on   10/01/1995.     If  Landlord   is
      unable   to   deliver the   Premises   within   ten   (10)   days   after   the  turnover   date
      specified, the Lease shall be null and void with no further obligation on
      the part of the Landlord or the Tenant.    If the
      Landlord's failure to perform such
terms,

                

        

      

      
        

         

        .   ''                                                                         ..                      Page
2                                     ;

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        covenants
and conditions is due to any strike, lockout, labor dispute, civil commotion,
warlike operation, invasion, rebellion, hostilities, military or usurped power,
sabotage, governmental regulations or controls, Acts of God, fire or other
casualty which is beyond the reasonable control of Landlord, then the time
period for the turnover of the premises shall be extended for each day of delay.
TIME IS OF THE ESSENCE
OF THIS LEASE.

      

      
        

         

        
          	
                   
      

                	
                  2.    Landlord
      warrants that the heating, ventilating and air conditioning system (HVAC)
      for the Premises will be in good working order on the date the
      Premises are turned over to the
Tenant,

                

        

      

      
        

         

        3.    Landlord
and Tenant's work are detailed in Exhibit C of this Lease.

      

      
        

         

        E.      RENT                                                                f

      

      
        

         

        
          	
                   
      

                	
                  1.    Minimum
      Rent. Tenant agrees to pay to Landlord, at its office or other place as
      Landlord may from time to time designate, as Minimum Rent for the
      Premises during the term of this Lease, without any deduction or setoff,
      $8.00 per square foot, $3,333.33 in advance on the first day of each
      calendar month. The amounts to be paid by Tenant for rent and additional
      rent shall be prorated on a per diem basis for any partial month in the
      first Lease Year.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    Percentage
      Rent. As a further inducement for Landlord's entering into this Lease,
      Tenant shall pay to Landlord, in addition to the Minimum Rent, a
      percentage rate ("Percentage Rent") equal to the product obtained when the
      amount of Tenant's Gross Sales {as herein defined) for any Lease Year in
      excess of the Percentage Rent Breakpoint is multiplied by the Percentage
      Rent Rate. The Percentage Rent for each Lease Year shall be due and
      payable once Gross Sales exceed the Percentage Rent Breakpoint for such
      Lease Year, Tenant shall make estimated monthly payments, on or before the
      fifteenth (15th) day of each calendar month, in an amount equal to the
      product of the Percentage Rent Rate times the Gross Sales for the prior
      month (for the month in which the Gross Sales exceed the Percentage Rent
      Breakpoint, such payments shall be made only on the excess above the
      Percentage Rent Breakpoint). Tenant's obligation for the payment of
      Percentage Rent shall survive the expiration or earlier termination of
      this Lease.

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.    Gross
      Sales. The term "Gross Sales" shall mean the aggregate gross amount of all
      sales of merchandise made and all charges for services performed in the
      Premises (including orders taken in the: Premises for delivery from places
      other than the Premises), whether wholesale or retail, and whether cash or
      credit, and including the value of all consideration other than money
      received for any of the foregoing, and all amounts received by Tenant from
      conducting business on or from the Premises, including without
      limitation, all display fees, slotting allowances, promotional
      considerations, rebates or other payments received by Tenant to stock,
      promote or advertise any product, less (1) cash refunds or credit for
      merchandise returned if the price of such merchandise was originally
      included in Gross Sales, (2) the amount of sales and excise taxes to the
      extent included in sales, and (3) the amount of sales representing
      uncollectible bad checks. Merchandise transferred from the Premises to
      other stores of Tenant, or merchandise returned for credit to factories or
      jobbers shall not be included in determining Gross Sales. No deduction
      shall be allowed for uncollected or uncollectible credit or charge
      accounts.

                

        

      

      
        

         

        
          	
                   
      

                	
                  (a)    Reporting
      of Gross Sales. Tenant shall submit to Landlord on or before the fifteenth
      (15th) day of each calendar month a complete and accurate record of
      Tenant's gross sales for the preceding calendar month. On or before the
      thirtieth (30th) day of the month following the end of each Lease
      Year, Tenant shall furnish to Landlord a statement certified by Tenant's
      corporate financial officer of the Gross Sales for the preceding Lease
      Year.

                

        

      

      
        

         

        
          	
                   
      

                	
                  (b)    Books
      of Account. Tenant agrees to prepare and maintain at Tenant's principal
      office, accurate records of the Gross Sales, which records shall be kept
      in accordance with generally accepted accounting procedures, together with
      local sales tax returns of Tenant relating to Tenant's Gross Sales. The
      foregoing shall be open at all reasonable times to Landlord or its
      representatives to enable Landlord to determine the accuracy of the
      statements of Tenant's Gross Sales during and for three (3) years after
      the end of the Lease Year to which the same relate. In the event an
      examination or audit of records of Tenant discloses that Gross Sales as
      reported in the aforesaid statements were less, by two percent (2%) or
      more than the actual Gross Sales for any Lease Year, Tenant agrees to pay
      Landlord the reasonable cost of any such examination or audit. If such
      examination or audit discloses a discrepancy of three percent (3%) or
      more, and such under-reporting of Gross Sales by Tenant shall be
      deliberate in bad faith, Landlord shall also have the right to terminate
      this Lease.

                

        

      

      
        

         

        |                                                                                         Page
3                                     /

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        Landlord
shall have the right to inspect the records of Tenant in connection
with sales made by Tenant from other stores operated by it, but only in the
event such examination becomes necessary to ascertain the Gross Sales made by Tenant
from the Premises.

      

      
        

         

        F.      TAXES

      

      
        

         

        
          	
                   
      

                	
                  1.    Real
      Estate Taxes and Assessments. Tenant agrees to pay Tenant's
      proportionate share of all real estate taxes and assessments, together
      with any and all expenses incurred by Landlord in negotiating, appealing
      or contesting such taxes and assessments, both general and special, levied
      and assessed against the land, buildings, and all other
      improvements which may be added thereto, or constructed with the Shopping
      Center. Tenant's proportionate share shall be the total amount of such
      taxes and assessments multiplied by a fraction, the numerator of which
      shall be the number of square feet of floor area within the Premises, and
      the denominator of which shall be the gross leasable area of the existing
      buildings within the Shopping Center at the time such taxes were levied or
      assessed, but excluding the floor area of any
      buildings within the Shopping Center which are separately assessed for tax
      purposes and billed to an entity other than Landlord or paid directly by
      an entity other than Landlord, even though billed to
    Landlord.

                

        

      

      
        

         

        During
the term of this Lease, or any renewals thereof, Tenant shall pay to Landlord,
monthly in advance, an amount equal to one-twelfth (l/12th) of Tenant's
proportionate share of real estate taxes and assessments for the current tax
year, as reasonably estimated by Landlord. If Tenant's proportionate share of
real estate taxes and assessments with respect to any tax year is less than the
total amount theretofore paid by Tenant for such period, the excess shall be
credited against the payments next becoming due. If Tenant's proportionate share
of real estate taxes and assessments for any tax year exceeds the total amount
theretofore paid by Tenant for such period, Tenant shall, upon receipt of
invoices from Landlord, pay the difference between the actual amount paid by
Tenant and Tenant's proportionate share of real estate taxes and
assessments.

      

      
        

         

        
          	
                   
      

                	
                  2.    Municipal,    County,    State    or    Federal    Taxes.        Tenant    shall    pay,    before
      delinquent,  all municipal,  county and state or
      federal taxes assessed against any
      Leasehold    interest    of    Tenant    or    any    fixtures,     furnishings,     equipment,
      stock-in-trade or other personal property of any  kind
      owned,   installed or used in or on the
      Premises.

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.
      Should any governmental taxing authority levy, assess, or impose any tax,
      excise or assessment (other than income, inheritance, gift or franchise
      tax) upon or against the rentals payable by Tenant to Landlord, by
      way of substitution for any existing tax on land and buildings,
      Tenant shall be responsible for and shall pay any such tax, excise or
      assessment, or shall reimburse Landlord for the amount hereof, as the case
      may be.

                

        

      

      
        !

      

      
        

         

        G.     COMMON
AREAS

      

      
        

         

        
          	
                   
      

                	
                  1.    Common
      Areas. Landlord grants to Tenant and Tenant's customers and invitees the
      right to use, in common with all others to whom Landlord has or may
      hereafter grant rights to use same, the Common Areas located within the
      Shopping Center. The term "Common Areas", as used in this Lease, shad mean
      the parking areas, roadways, pedestrian sidewalks, loading docks, delivery
      areas, landscaped areas, service courts, open and enclosed courts and
      malls, fire corridors, meeting areas and public restrooms, and all other
      areas or improvements which may be provided by Landlord for the common use
      of the tenants of the Shopping Center. Landlord hereby reserves the
      following rights with respect to the Common
  Areas:

                

        

      

      
        

         

        (a)    To
establish reasonable rules and regulations for the use
thereof;

      

      
        

         

        
          	
                   
      

                	
                  (b)   To
      use or permit the use by others to whom Landlord may have granted such
      rights for promotional
activities!;

                

        

      

      
        

         

        
          	
                   
      

                	
                  (c)    To
      close all or any portion thereof as may deemed necessary by Landlord's
      counsel to prevent a dedication thereof or the accrual of any rights to
      any person or
the public therein;

                

        

      

      
        

         

        
          	
                   
      

                	
                  (d)   To   change   the   layout   of   such   Common  Areas,   including   the   right   to
      reasonably add  to or  subtract from
      their  shape and  size,   whether
      by  the addition of building improvements or otherwise, and
      may make installations^ and/or construct or erect
      buildings,   structures,  booths therein or
      thereon and move or remove the same and shall have the right to retain
      revenue, ''

                

        

      

      
        

         

        !              Page
4

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        
          	
                   
      

                	
                  .    from  income  producing  events  whether
      or  not  conducted  for  promotional
      purposes or by or through the Merchant's Association, if any;
      and

                

        

      

      
        

         

        
          	
                   
      

                	
                  (e)    Landlord
      shall operate, manage, equip, light, repair and maintain said Common
      Areas for their intended purposes in an efficient and economical manner
      and may from time to time change the size, location, elevation, nature
      and/or use of any Common
Areas.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.
      Common Area Charge, Tenant shall pay to Landlord as a "Common Area Charge"
      a proportionate share of all costs and expenses of every kind and nature
      paid or incurred by Landlord in operating, maintaining, and repairing the
      Common Areas. Such costs and expenses shall include but not be limited to
      cleaning, lighting, repairing, maintaining, and replacing all common area
      improvements (provided, however, that any replacement of a common
      area improvement which is deemed a capital improvement by generally
      accepted accounting principles shall be amortized over its useful life);
      including without limitation, paving, roadways, sprinkler equipment
      (including standby charges), driveways, sidewalks, curbs, culverts and
      drainage facilities, barriers, retaining walls, fences, directional and
      Shopping Center signage (other than signs to be maintained by individual
      tenants), sewer and water supply lines and related facilities; snow
      removal, parking lot striping, painting, and painting of exterior
      walls, landscaping, providing security, providing public liability,
      property damage, fire and extended coverage and such other insurance as
      Landlord deems appropriate; including, but not limited to, the cost of
      Landlord's insurance provided for in Section L; total compensation and
      benefits (including premiums for Workmen's Compensation and other
      insurance) paid to or on behalf of employees; personal property taxes,
      supplies, fire protection and fire hydrant charges, water and sewer
      charges, utility charges, licenses and permit fees, reasonable
      depreciation of equipment used in operating and maintaining the Common
      Areas and rent paid for leasing such equipment, and administrative costs
      equal to fifteen (15%) per cent of the total cost of all the foregoing
      items (excluding insurance premiums paid by Landlord pursuant to Section L
      hereof). Tenant's Common Area Charge shall be determined by multiplying
      the total cost incurred by Landlord by the ratio of the square feet within
      the Premises to the gross leasable area within all of the existing
      buildings in the Shopping Center as of the date of the
      billing.

                

        

      

      
        

         

        Tenant's
Common Area Charge shall be paid in monthly installments on the first day of
each month in an amount to be estimated by Landlord. Within ninety (90) days
following the end of the period used by Landlord in estimating Landlord's cost,
Landlord shall furnish to Tenant a detailed statement of the actual amount of
Tenant's proportionate share of such Common Area Charge for such period. Within
fifteen (15) days thereafter, Tenant shall pay to Landlord or Landlord shall
remit to Tenant, as the case may be, the difference between the estimated
amounts paid by Tenant and the actual amount of Tenant's Common Area Charge for
such period as shown by such statement, subject to Section A. 12 and A.
13.

      

      
        

         

        The
Common Area Charges described in this Section G shall be subject to
audit

      

      
        

         

        by a
certified public accounting firm of Tenant's choice, at the address
Landlord

      

      
        

         

        set forth
in this Lease, at Tenant's expense during regular business hours
for

      

      
        

         

        one (1)
year following the end of the period used by Landlord in
estimating

      

      
        

         

        .               Landlord's
cost. Landlord shall use its best efforts to operate the
center

      

      
        

         

        economically
and efficiently.

      

      
        

         

        H.     UTILITIES
AND RUBBISH DISPOSAL

      

      
        

         

        
          	
                   
      

                	
                  1.
      Gas and Electric Charges. Commencing with the date on which Landlord
      delivers the Premises to Tenant, Tenant shall pay for gas, if the same is
      available to the Premises, electric current and all other utilities
      required for the proper operation of Tenant's business, together with
      all taxes levied or other charges on such utilities, and governmental
      charges based on utility consumption. In the event Tenant's utilities
      shall be separately metered from all other tenants of the Shopping
      Center, Tenant shall, at its sole cost arid expense, pay for the cost of
      installation of such meters and any and all related costs and expenses,
      unless such costs and expenses are the express responsibility of Landlord
      pursuant to Exhibit "C" of this
Lease.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    Water
      and Sewer Charges. Commencing on the date on which Landlord delivers the
      Premises to Tenant, Tenant shall pay all water rents, all charges
      resulting from any sprinkler system and sewer charges charged against the
      Premises.

                

        

      

      
        

         

        If any
such utilities are not separately metered or assessed or are only partly
separately metered or assessed and are used in common with other tenants of the
Shopping Center, Tenant shall pay to Landlord an apportionment of such charges
for utilities used in common, computed by multiplying such charges
by

      

      
        

         

        I               Page
5

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        ;     •               '      the
ratio of square feet within the Premises to the square feet of
all  tenants

      

      
        

         

        !                           using
such common facilities,  in addition to Tenant's payments of the
separately

      

      
        

         

        j                        metered
charges.

      

      
        

         

        I

      

      
        |              3.
Rubbish Disposal. In the event Landlord shall acquire and install facilities
in

      

      
        ! the
Shopping Center for the consolidation of accumulated rubbish, Tenant
shall

      

      
        j be
permitted to use said facilities at the rates reasonably determined
by

      

      
        Landlord,
provided that the rates charged by Landlord are competitive
with

      

      
        ! other
rubbish removal companies in the area.

      

      
        >

      

      
        f                    In   no   event   shall   Landlord   be   liable   for   the   quality,   quantity,   failure,   or

      

      
        I                    interruption   of   the   foregoing   utility   and   rubbish   disposal   services   to   the

      

      
        '                    Premises
unless caused by Landlord's negligence or willful acts.

      

      
        i

      

      
        

         

        j       I.      USE
OF PREMISES BY TENANT

      

      
        

         

        1.    Tenant's
Use of Premises will be for the permitted use set forth
in Section A.3

      

      
        

         

        
          	
                   
      

                	
                  2.    Trade
      Name. Tenant agrees to conduct its business in the Premises under the name
      of DOLLAR TREE.

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.    Operation
      of Business. Tenant agrees to open its store for business, fully fixtured,
      stocked and staffed and to continuously operate in 100% of the Premises
      during the hours set by Landlord for all Tenants of the Shopping
      Center, on all business days the Shopping Center is open for business,
      except where Tenant is prevented from doing so by strikes, casualty or
      other causes beyond Tenant's control. In no event, however, will Tenant be
      open for business after 10:00 PM or before 9:00 AM on any day without
      Landlord's prior written consent. Tenant shall be permitted to close the
      Premises for a period not to exceed three (3) days per year to conduct
      inventory or due to the death of a store
  manager.

                

        

      

      
        

         

        J.       TENANT'S
COVENANTS WITH RESPECT TO OCCUPANCY

      

      
        

         

        

      

      
        

         

        Tenant
Agrees:.

      

      
        

         

        
          	
                   
      

                	
                  1.    To
      occupy the Premises in a safe and careful manner in compliance with all
      laws, ordinances, rules, regulations and orders of any governmental
      bodies having jurisdiction over the Premises, and without committing or
      permitting waste;

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    To
      neither do nor suffer anything to be done or kept in or about the
      Premises

                

        

      

      
        

         

        
          	
                   
      

                	
                  which
      contravenes Landlord's insurance policies or increases the
      premiums

                

        

      

      
        

         

        
          	
                  therefor;

                	
                  I

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.    To
      keep its show or display windows, canopy and electric signs lighted until
      at least 9:30 PM local time of each day or until a time which is thirty
      (30) minutes after the close of each business day, whichever is
      later;

                

        

      

      
        

         

        
          	
                   
      

                	
                  4.    To
      permit no reproduction of sound which is audible outside the Premises nor
      permit odors to be dispelled from the
Premises;

                

        

      

      
        

         

        
          	
                   
      

                	
                  5.    To
      place no sign on the exterior of the Premises or on the interior surface
      of any windows of the Premises (except for Tenant's standard window
      decal treatment which in no event shall occupy more than fifteen percent
      (15%) of said window) unless it meets the standards as set forth in Exhibit
      D attached hereto and made a part hereof and without also obtaining
      Landlord's prior written consent, and to maintain in good repair and
      promptly remove and repair any damage caused by such permitted sign;;.
      Tenant agrees not to display any pennants, search lights, window
      signs, balloons, or similar temporary advertising media. Tenant may
      display banners inside the premises within two (2) feet from the front of
      the store as long as they are professionally prepared. Tenant agrees to
      maintain its signs in good states of repair and save
      Landlord-­harmless from any loss, cost, or damage as a result of their
      condition and shall-'

                

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        repair
any damage which may have been caused by the erection, existence, maintenance or
removal of such signs, Upon vacating the storeroom. Tenant agrees to remove
all signs and repair all damages caused by such removal.

      

      
        

         

        
          	
                   
      

                	
                  6.    To
      place no merchandise, sign or other thing of any kind in the vestibule or
      entry outside of the Premises or on the sidewalks or other Common Areas
      adjacent thereto or elsewhere on the exterior of the
    Premises;

                

        

      

      
        

         

        
          	
                   
      

                	
                  7.    To
      park Tenant's vehicles and to require all employees to park only in such
      places as may be designated from time to time by Landlord for the use of
      Tenant and its employees, and specifically not to permit parking by any of
      them in any service court area (Landlord reserves the right to have towed,
      at the owner's cost and expense, any automobile parked in violation of
      this clause);

                

        

      

      
        

         

        
          	
                   
      

                	
                  8.    To
      keep any refuse in proper containers in the interior of the Premises until
      the same is removed from the Shopping Center and to permit no refuse to
      accumulate around the exterior of the
Premises;

                

        

      

      
        

         

        
          	
                   
      

                	
                  9.    To
      neither load nor unload or permit the loading or unloading of merchandise,
      equipment or other property from any doors of the Premises that open onto
      the front sidewalk areas, nor from any other doors except from the rear of
      the Premises and to use its best efforts to prevent the parking
      or standing of vehicles and equipment upon Shopping Center land except
      when actually engaged in loading or
unloading;

                

        

      

      
        

         

        
          	
                   
      

                	
                  10.
      To conduct no auction, fire or going-out-of-business sale without the
      prior written consent of
Landlord;

                

        

      

      
        

         

        
          	
                   
      

                	
                  11.    To
      permit Landlord free access to the Premises at all reasonable times after
      notice to Tenant (except
      in the event of an emergency when no prior notice shall be
      required) for the purpose of examining the same or making alterations or
      repairs to the Premises that Landlord may deem necessary for the safety or
      preservation thereof;

                

        

      

      
        

         

        12.    To
adequately heat and cool the Premises;

      

      
        

         

        
          	
                   
      

                	
                  13.    To
      permit no Hen, notice of intention to file lien or other charges (whether
      arising out of work of any contractor, mechanic, laborer or material man
      or any mortgage, condition sale, security agreement or chattel
      mortgage otherwise) which might be or become a lien or encumbrance or
      charge upon the Premises or any part thereof or the income therefrom, and
      to suffer no other matter or thing whereby the estate, right and interest
      of Landlord in the Premises or any part thereof might be
      impaired;

                

        

      

      
        

         

        
          	
                   
      

                	
                  14.    To
      solicit no business in the Common Areas, nor distribute handbills or other
      advertising matter to customers, nor place the same in or on automobiles
      in the Common Areas;

                

        

      

      
        

         

        
          	
                   
      

                	
                  15.    To
      comply with all reasonable rules and regulations which Landlord may from
      time to time establish and uniformly enforce for all tenants of the
      Shopping Center for the use and care of the Premises, the Common Areas,
      and other facilities and buildings on the Shopping
  Center;

                

        

      

      
        

         

        
          	
                   
      

                	
                  16.    To
      cooperate fully with Landlord and other tenants of the Shopping
      Center in promoting the use of trade names and slogans as may be
      adopted for the Shopping Center and in all promotional and advertising
      campaigns;

                

        

      

      
        

         

        
          	
                   
      

                	
                  17.    To
      shut off all exhaust fans, if any servicing the Premises, at all times
      when Premises are closed; if Tenant's Premises front on an enclosed mall
      Tenant shall maintain positive air pressure so as to prevent the drawing
      of heated or cooled air from the enclosed mall and shall keep the Premises
      heated or air conditioned, as the case may be, to at least the same
      minimum temperature (in the case of heat) or at the same maximum
      temperature (in the case of air conditioning) as Landlord shall attempt to
      maintain in such mall;

                

        

      

      
        

         

        
          	
                   
      

                	
                  18.    To
      handle and dispose of all rubbish, garbage, and waste in accordance with
      regulations established by Landlord and not permit the accumulation
      (unless in sealed metal containers) or burning of any trash, rubbish,
      refuse, garbage or waste materials in, on, or about any part of the
      Shopping Center;

                

        

      

      
        

         

        
          	
                   
      

                	
                  19.    To
      prohibit the Premises to be used in any way which will injure the
      reputation of the Shopping Center or which may be a nuisance, annoyance,
      inconvenience or damage to the tenants or the Shopping Center or to
      the neighborhood including, without limiting the generality of the
      foregoing, noise by the playing of any musical instrument or radio or
      television, or the use of a microphoneT—
      loud speaker, electrical equipment, or utilizing flashing lights or
      search lights

                

        

      

      
        r

      

      
        

         

        e
7                                                                                                                x'\

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        or* any other equipment which in
the judgment of Landlord might cause disturbance, impairment or interference
with the use or enjoyment by any other tenant in the Shopping
Center;

      

      
        

         

        
          	
                   
      

                	
                  20.    To
      prohibit the operation in the Premises or any part of the Shopping Center
      of any coin or token-operated vending machines or similar devices
      (including without limitation, pay telephones, pay lockers, pay toilets,
      scales, amusement devices and machines for the sale of merchandise and/or
      commodities);

                

        

      

      
        

         

        
          	
                   
      

                	
                  21.    To
      permit Landlord or its agents, on or after ninety (90) days next preceding
      the expiration of the term of this Lease, to have the right to show the
      Premises to potential tenants, and to place notices offering the Premises
      "To Lease" or "For Sale" on the front of the Premises or any part thereof;
      and

                

        

      

      
        

         

        
          	
                   
      

                	
                  22.    That
      it shall not make any penetrations through the roof of the Premises
      without the prior written consent of
Landlord;

                

        

      

      
        

         

        
          	
                   
      

                	
                  23.    To
      defend, protect, indemnify and hold Landlord harmless from and against any
      and all claims, causes of action, liabilities, damages, costs and
      expenses, including, without limitation, attorney fees, arising from or in
      any way connected with Hazardous Waste (as hereinafter defined)
      within the Shopping Center which are the result of Tenant's use, occupancy
      or operation of the Premises. As used herein the term "Hazardous Waste"
      shall be defined as any hazardous substance, containment, pollutant or
      hazardous release (as such terms are defined in any federal, state or
      local law, rule, regulation or ordinance,
      including without, limitation, the Comprehensive Environmental
      Response, Compensation and Liability Act of 1980, as amended) and other
      said wastes.

                

        

      

      
        

         

        In the
event Tenant shall cause or permit the presence of Hazardous Waste in, on or
under the Premises or any other portion of the Shopping Center, Tenant shall
promptly, at Tenant's sole cost and expense, take any and all action necessary
(as required by appropriate government authority or otherwise) to return the
areas affected thereby to the condition existing prior to the presence of any
such Hazardous Waste thereon, subject to Landlord's prior written consent. The
foregoing covenants shall survive the termination of this
Lease.

      

      
        

         

        K.     REPAIRS
AND ALTERATIONS

      

      
        

         

        
          	
                   
      

                	
                  1.    Repairs
      by Landlord. Landlord shall keep the foundations, roof, and structural
      portions of the outer walls of the Premises in good repair, except for
      repairs required thereto by reason of the acts of Tenant, Tenant's
      employees, agents, licensees, or contractors. Tenant shall give Landlord
      written notice of the necessity for repairs coming to the attention
      of Tenant following which Landlord shall have a reasonable time to
      undertake and complete such repairs. Notice from Tenant of the need for
      Landlord to perform a repair to the Premises shall not be a condition to
      Landlord commencing such repair if Landlord has actual knowledge of the
      need for repairs from any other independent source. The provisions of this
      Subsection K.I shall not apply in the case of damage or destruction by
      fire or other casualty or by Eminent Domain, in which events the
      obligations of Landlord shall be controlled by either Section M or Section
      O hereof.

                

        

      

      
        

         

        It is
expressly understood that Landlord shall not be responsible for any portions of
the Premises constructed by Tenant.

      

      
        

         

        
          	
                   
      

                	
                  2.     Repairs
      by  Tenant.     Except as
      provided  in Subsection
      K.I,   Tenant  shall  keep
      the  Premises  and  every
      part  thereof
      and  any  fixtures,   facilities  or  equipment
      contained  therein,   in  good
      condition
      and  repair,   including,   but
      not limited to, exterior and interior portions of all
      doors,  door checks and operations, windows,
      plate    glass,    and    showcases    surrounding    the Premises,     the    heating,    air
      conditioning, electrical, plumbing and sewer systems,  the
      exterior doors, window
      frames,    and    all    portions    of    the store    front    area,    and    shall    make    any
      replacements thereof of all broken and/or cracked plate and window glass
      which may become necessary during the term of this Lease,  and
      any renewal thereof, excepting any repairs to items of Landlord's original
      construction made necessary by reason of damage due to fire or other
      casualty covered by standard fire and extended coverage
      insurance.    In connection with Tenant's obligation
      to maintain the HVAC system servicing the Premises,  Tenant
      shall,  during the term of this
      Lease,   and   any   renewals   thereof,   at   its   sole   cost   and   expense,   maintain   a
      service    contract    for    the    routine    performance    of    standard     HVAC     system
      maintenance,   including but not
      limited to,  periodic replacement of
      filters,  oiling of mechanical components and inspection for
      wear and tear.    Within fifteen (15) days of
      Landlord's written request,   Tenant  shall
      provide Landlord with a copy
      of   the   foregoing   HVAC   service   contract.      If  Tenant   refuses   or   neglects   to"'
      commence or  complete  repairs  promptly
      and  adequately,   Landlord  may
      make  or'

                

        

      

      
        

         

        Page
8                             /    X

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        complete
said repairs and Tenant shall pay the cost thereof to Landlord upon demand,
together with the sum of fifteen percent (15%) of said costs for
overhead.

      

      
        

         

        
          	
                   
      

                	
                  3.    Alterations
      or Improvements by Tenant. Tenant shall not, without Landlord's prior
      written consent, make, nor permit to be made, any alterations, additions
      or improvements to the Premises. Any alterations which may be permitted by
      Landlord shall be based upon plans and specifications submitted by Tenant
      and approved by Landlord and upon the condition that Tenant shall promptly
      pay all costs, expenses, and charges thereof, shall make such alterations
      and improvements in accordance with applicable laws and building
      codes and ordinances and in a good workmanlike manner, and shall fully and
      completely indemnify Landlord, which indemnification shall be in a form
      acceptable to Landlord against any mechanic's lien or other liens or
      claims in connection with the making of such alterations,
      additions, or improvements. Tenant shall promptly repair any damages
      to the Premises, or to the buildings of which the Premises are a part,
      caused by any alterations, additions or improvements to the Premises by
      Tenant. Landlord's approval of Tenant's plans shall not be unreasonably
      withheld.

                

        

      

      
        

         

        
          	
                   
      

                	
                  4.    Removal
      of Improvements. All Items of Landlord's construction, all heating and air
      conditioning equipment, and all alterations, additions and other
      improvements by Tenant shall become the property of Landlord at the
      termination of the Lease and shall not be removed from
      the Premises. All trade fixtures, furniture, furnishings, and signs
      installed in the Premises by Tenant and paid for by Tenant shall remain
      the property of Tenant and may be removed upon the expiration of the
      term of this Least:; provided (a) that any of such items as are affixed to
      the Premises and require severance may be removed only if Tenant repairs
      any damage caused by such removal and (b) that Tenant shall have fully
      performed all of the covenants and agreements to be performed by Tenant
      under the provisions of this Lease. If Tenant fails to remove
      such items from the Premises prior to the expiration or earlier
      termination of this Lease, all such trade fixtures,
      furniture, furnishings, and signs shall become the property of
      Landlord unless Landlord elects to require their removal, in which
      case Tenant shall promptly remove same and restore the Premises to its
      prior condition. In the event Tenant fails to remove all such
      trade fixtures, furniture, furnishings, and signs within ten (10) days
      after Landlord elects to require their removal, Landlord shall have the
      right to remove same and sell such trade fixtures, furniture, furnishings,
      and signs to pay for the cost of
removal.

                

        

      

      
        

         

        Tenant  further
agrees   that all personal property  of
every  kind  or  description which may at any time
be in the Premises shall be at the Tenant's sole risk. Landlord shall not be
responsible or liable to Tenant for any loss or damage that
may   be  occasioned   by   the  acts   or  omissions   of  persons  occupying   any   space
adjacent to or adjoining Tenant's Premises.    Landlord
shall not be responsible or liable to Tenant for any loss or damage resulting to
Tenant or its property from roof
leaks,   water,   gas,   steam,   fire, or  the
bursting,   stoppage,   or leakage  of
sewer pipes,  or from the heating or plumbing fixtures,  or
from electric wires, or from gas odors unless caused by its own negligent or
willful acts.

      

      
        

         

        Nothing
contained in this Lease shall be construed to release Landlord from
liability for damages proximately caused by its own negligent or willful
acts.

      

      
        

         

        INDEMNITY
AND INSURANCE

      

      
        

         

        
          	
                   
      

                	
                  1.    Indemnification
      by Tenant. Tenant will indemnify and hold Landlord harmless from and
      against all loss, cost, expense, and liability whatsoever (including
      Landlord's cost of defending against the foregoing, such cost to include
      attorney's fees) resulting or occurring by reason of Tenant's
      construction, use or occupancy of the
Premises.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    Public
      Liability Insurance, Tenant agrees to carry public liability insurance
      covering the Premises and Tenant's use thereof, together with contractual
      liability endorsements covering Tenant's obligations set forth in
      Subsection L(l), with a minimum limit of One Million and
      00/100 Dollars ($1,000,000.00) on account of bodily injuries to or death
      or property damage for each occurrence and a minimum limit of Two
      Million Dollars and 00/100 ($2,000,000.00) general aggregate. Such
      insurance shall also provide that the general aggregate limits apply
      separately to each insured location, if applicable. Tenant shall
      deposit said policy or policies (or certificates thereof) with Landlord
      prior to the date of any use or occupancy of the Premises by Tenant; said
      policy or policies shall name Landlord, Tenant and such other parties as
      Landlord may from time to time notify Tenant in writing to be named as
      additional insureds under such insurance policy and shall bear
      endorsements to the effect that the insurer-__ agrees to notify Landlord
      and such other parties designated by Landlord
as

                

        

      

      
        

         

        i                                                                                 Page
9                                  / ^

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        additional
insureds not less than thirty (30) days in advance of any modification or
cancellation thereof. Landlord agrees to maintain at least the same public
liability coverage with respect to the Shopping Center.

      

      
        

         

        
          	
                   
      

                	
                  3.    Landlord's
      Insurance. Landlord agrees to carry policies insuring the improvements on
      the Shopping Center against fire and such other perils as are normally
      covered by extended coverage endorsements in the county where the Premises
      are located, in an amount equal to at least eighty percent (80%) of the
      insurable value of such improvements, together with insurance against such
      other risks (including loss of rent) and in such amounts as
      Landlord deems appropriate. Tenant agrees that the total cost of the
      foregoing insurance shall be included in the Common Area charge as
      provided for in Subsection G(2) of this Lease and that Tenant shall pay
      its proportionate share of the foregoing insurance per said
      Subsection; provided, however, that Tenant shall have no rights in said
      policy or policies maintained by Landlord and shall not, by reason of
      such reimbursement, be entitled to be a named additional insured
      thereunder, In the event any of Landlord's policies insures Premises or
      risks other than the Shopping Center or the rents therefrom, the statement
      of the insurer shall be conclusive as to the portion of the
      total premium attributable to the Shopping
  Center.

                

        

      

      
        

         

        
          	
                   
      

                	
                  4.    Tenant
      agrees to carry insurance against fire and such other risks as are, from
      time to time, included in standard extended coverage endorsements,
      insuring Tenant's stock-in-trade, trade fixtures, furniture, furnishings,
      special equipment, floor and wall coverings, and all other items of
      personal property to Tenant located on or within the Premises, such
      coverage to be in an amount equal to at least eighty percent (80%)
      of the replacement
      cost thereof.

                

        

      

      
        

         

        
          	
                   
      

                	
                  5.    Tenant
      may self-insure its Leasehold improvements, inventory, fixtures,
      equipment and plate glass in the Premises during the term of this Lease
      and any renewals or extensions thereof so long as Tenant shall have a net
      worth of at least Three Million and 00/100 Dollars ($3,000,000.00).
      Prior to the Commencement Date of the Lease, Tenant shall furnish Landlord
      with a certificate evidencing such coverage or net worth, as the case may
      be,

                

        

      

      
        

         

        
          	
                   
      

                	
                  6.    Mutual
      Waiver of Subrogation. All property insurance policies carried by either
      party covering the Premises, including but not limited to contents, fire,
      and casualty insurance, shall to the extent permitted by law expressly
      waive any right on the part of the insurer against the other party. The
      parties hereto agree that their policies will include such waiver clause
      or endorsement so long as the same shall be obtainable without extra cost,
      or if extra shall be charged therefor, so long as the other party pays
      such extra cost. If cost shall be chargeable therefor, each party shall
      advise the other of the amount of extra cost, and the other party, at its
      election, may pay the same, but shall not be obligated to do so. The
      failure of any insurance policy to include such waiver clause or
      endorsement shall not affect the validity of
      this Lease.

                

        

      

      
        

         

        M.     DAMAGE
AND DESTRUCTION

      

      
        

         

        In the
event the Premises are damaged by a peril covered by standard policies of fire and extended coverage
insurance to an extent which is fess than fifty percent (50%) of the cost of
replacement of the Premises, the damage shall, except as hereinafter provided,
promptly be repaired by Landlord, at Landlord's expense but, that in no event
shall Landlord be required to repair or replace Tenant's stock-in-trade, trade
fixtures, furniture, furnishings, equipment or personal property. In the
event (a) the Premises arc damaged to the extent of fifty percent (50%) or more
of the cost of replacement of the Premises, (b) the buildings on the Shopping
Center are damaged to the extent of fifty percent (50%) or more of the cost
of replacement, notwithstanding the extent of damage to the Premises, or (c) any
damage to the Premises occurs during the last one (1) year of the
term of this Lease, Landlord may elect either to repair or rebuild the Premises
and the buildings that are a part of the Shopping Center, as the case may be, or
to terminate this Lease upon giving notice of such election in writing to Tenant
within ninety (90) days after the event causing the damage. If the casualty,
repairing, or rebuilding shall render the Premises untenantable, in whole or in
part, a proportionate abatement of the Minimum Rent shall be allowed
until the date Landlord completes the repairs or rebuilding. If Landlord is
required or elects to repair the Premises, Tenant shall repair or replace its
stock-in-trade, trade fixtures, furniture, furnishings, equipment, and personal
property in a manner and to at least a condition equal to that prior to its
damage or destruction and the proceeds of all insurance carried by Tenant shall
be held in trust by Tenant for the purpose of such repair and
replacement.

      

      
        

         

        N.      ASSIGNING
AND SUBLETTING

      

      
        

         

        Page
10

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        Tenant
shall have the right to assign the lease or to sublet the whole or any part of
the Demised Premises at any time provided:

      

      
        

         

        1.    Tenant
will remain liable hereunder;

      

      
        

         

        2.    Tenant's
assignee or sub-tenant will assume all obligations under the
Lease;

      

      
        

         

        
          	
                   
      

                	
                  3.    The
      Demised Premises will continue to be used only for the retail sale of
      items enumerated in the Use clause;
and

                

        

      

      
        

         

        4.    Tenant's
successor shall have retail experience comparable to that of
Tenant.

      

      
        

         

        Tenant  is  a  publicly  owned   corporation,   and   any  change  in
ownership  of  its shares shall not constitute an Assignment
for the purposes of this Lease.

      

      
        

         

        O.     EMINENT
DOMAIN

      

      
        

         

        
          	
                   
      

                	
                  1.    In
      the event the Shopping Center or any part thereof shall be taken or
      condemned either permanently or temporarily for any public or quasi-public
      use or purpose by any authority in appropriate proceedings or by any right
      of eminent domain, the entire compensation award thereof, including, but
      not limited to, all damages as compensation, for diminution in value of
      the Leasehold, reversion and fee, shall belong to Landlord, without any
      deduction therefrom for any present or future estate of Tenant, and Tenant
      hereby assigns to Landlord all its right, title, and
      interest to any such award. However, Tenant shall have the right to
      recover from the condemning authority, but not from Landlord, such
      compensation as may be separately awarded to Tenant on account of the
      values of Landlord improvements made by Tenant and for moving and
      relocating expenses.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    In
      the event of taking under the power of eminent domain of (a) more than
      twenty-five percent (25%) of the Premises or (b) a sufficient portion of
      the Shopping Center so that after such taking less than fifty percent
      (50%) of the leasable floor area within all buildings located on the
      Shopping Center (as constituted prior to such taking) are occupied by
      tenants, either Landlord or Tenant shall have the right to terminate this
      Lease by notice in
      writing given within ninety (90) days after the condemning
      authority takes possession, in which event all rents and other charges
      shall be prorated as of the date of such
  termination.

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.    In
      the event of a taking of any portion of the Premises not resulting in a
      termination of this Lease, Landlord shall use so much of the proceeds
      of Landlord's award for the Premises as is required therefore to
      restore the Premises to a complete architectural unit and this Lease shall
      continue in effect with respect to the balance of the Premises, with a
      reduction of Minimum Rent in proportion to that portion of the Premises
      taken.

                

        

      

      
        

         

        P.      DEFAULT
BY TENANT

      

      
        

         

        
          	
                   
      

                	
                  1.    If
      Tenant defaults in the payment of Minimum Rent, Percentage Rent, or other
      charges, or in the performance of any other of Tenant's obligations
      hereunder, and Tenant fails to remedy such default within ten (10) days
      after written notice from Landlord (unless default relates to matters
      other than the payment of money and cannot be remedied within ten (10)
      days; and Tenant commences to remedy such default within said ten (10) day
      period after written notice from Landlord and thereafter diligently
      pursues correction thereof, in which event the time to remedy such default
      shall be extended to the time reasonably required therefore), or if a
      receiver of any property of Tenant on the Premises is appointed, or
      Tenant's interest in the Premises is levied upon by legal process, or
      Tenant be adjudged bankrupt and Tenant fails within thirty (30) days to
      cause the vacation of such appointment, levy or adjudication, or if Tenant
      files a voluntary petition in bankruptcy, disposes of all or substantially
      all of its assets in bulk, or makes an assignment for the benefit of its
      creditors, then and in any such instance, without further notice to
      Tenant, Landlord may enter upon the Premises and terminate this Lease. In
      the event of such termination, the obligations of Landlord hereunder shall
      cease, without prejudice, however, to the right of Landlord to
      recover from Tenant any sums due Landlord for Minimum Rent and other
      charges payable by Tenant hereunder, including reasonable attorney's fees
      to the date of such entry, and also liquidated damages equal to any
      deficiency between the then rental value of the Premises for the unexpired
      portion of the term and the Minimum Rent provided for that portion of the
      term, discounted at six percent (6%) per annum to present net worth. In
      addition, Landlord may enter upon the Premises without terminating this
      Lease and may relent the Premises in its own name for the account of
      Tenant for the remainder of the term at the highest rent then obtainable
      and immediately recover from Tenant any deficiency for the balance of the
      term between the

                

        

      

      
        

         

        I                Page
11

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        amount
for which the Premises were relet, less expense of reletting, and the rent
provided hereunder. If Landlord submeters electric current, gas, or water to the
Premises, then if at any time Tenant fails to pay rent or other charges for same
within ten (10) days after they are due, Landlord may, at its option, in
addition to the foregoing remedies and without further notice to Tenant, cease
furnishing such electric current, gas or water. No failure of Landlord to
enforce its right or remedies upon default of Tenant shall prejudice or affect
the rights of Landlord upon any subsequent or similar
default.

      

      
        

         

        
          	
                   
      

                	
                  2.    If
      Tenant at any time shall fail to pay any taxes, assessments, or liens, to
      make any payment or perform any act required by this Lease to be made or
      performed by it, Landlord, without waiving or releasing Tenant from
      any obligation or default under this Lease, may (but shall be under no
      obligation to) at any time thereafter make such payments or perform such
      act for the account and at the expense of Tenant. All sums so paid by
      Landlord and all costs and expenses so incurred including reasonable
      attorney's fees, shall accrue interest at the rate of two (2%) above the
      prime lending rate of NationsBank N.A. from the date of payment or
      incurring thereof by Landlord and shall constitute additional rent payable
      by Tenant under this Lease and shall be paid by Tenant to Landlord upon
      demand. All other sums payable by Tenant to Landlord under this Lease, if
      not paid when due,
      shall accrue interest at the rate of two percent (2%) above the prime
      lending rate of NationsBank N.A. from their due date until paid, said
      interest to be considered additional rent under this Lease and shall be paid to Landlord by
      Tenant upon demand. If Tenant shall issue a check to Landlord which is
      dishonored by Tenant's depository bank and returned unpaid for any reason,
      including without limitation, due to insufficient funds in Tenant's
      checking account, Tenant shall pay to Landlord in addition to any other
      rights or remedies available to Landlord at law, the sum of Seventy five
      and 00/100 Dollars ($75.00) for Landlord's administrative expense in
      connection therewith.

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.     In
      the event either Landlord or Tenant shall be required to commence
      legal proceeding to enforce any of the terms of this Lease, the prevailing
      party in such proceeding shall be entitled to reimbursement from the
      non-prevailing party of all reasonable attorney fees and court costs
      incurred in connection
therewith.

                

        

      

      
        

         

        All
rights and remedies of Landlord herein enumerated shall be cumulative, and none
shall exclude any other remedies allowed under law or in
equity.

      

      
        

         

        Q.      SECURITY
DEPOSIT.     None
R.     NOTICES

      

      
        

         

        
          	
                   
      

                	
                  1.    Any
      notice or consent required to be given by or on behalf of either party to
      the other shall be deemed given when mailed by registered or
      certified mail, postage prepaid, return receipt requested, or by any other
      method providing for reasonable verification of receipt thereof, addressed
      as follows:

                

        

      

      
        

         

        Landlord:                     -             ,                        DMK
Associates,  L.P.

      

      
        DMK
Associates PC Box 2500
Norfolk,  VA    23501-2500

      

      
        

         

        Tenant;                                                Dollar
Tree Stores, Inc.

      

      
        Real
Estate Department 2555 Ellsmere Avenue Norfolk,
VA    23513

      

      
        

         

        Notwithstanding
any provision to the contrary contained herein, Landlord shall not mail or
deliver any notice or consent required to be given by or on behalf of Landlord
to the Premises.

      

      
        

         

        S.      MORTGAGE
SUBORDINATION

      

      
        

         

        
          	
                   
      

                	
                  1.    Landlord
      is the fee simple
      owner of the Shopping Center. This Lease is and shall at all times,
      unless Landlord shall otherwise elect, be subject and subordinate to
      all covenants, restrictions, easements and encumbrances now or hereafter
      affecting the fee title of the Shopping Center and to all mortgages, deeds
      of trust, financing or refinancing in any amounts which may now or
      hereafter be placed against or affect any or all of the land or any or all
      of the building and improvements now or at any time hereafter constituting
      part of or adjoining the Shopping Center. The aforesaid provision shall be
      self-operative and no further instrument or document shall be required to
      effectuate said subordination unless otherwise requested. Tenant also
      agrees that'-an-yTM mortgagee or trustee may elect to have this Lease prior
      to the lien of its

                

        

      

      
        

         

        Page
12                                                                                                                        f

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        mortgage
or deed of trust, and upon notification by such mortgagee or trustee to Tenant
to that effect, this Lease shall be deemed prior in lien to the said mortgage or
deed of trust, whether this Lease is dated prior to or subsequent to the date of
said mortgage or deed of trust. Tenant agrees that if Landlord's mortgagee or
trustee requests confirmation of such subordination, within ten (10) days
after receipt of written request therefor. Tenant shall execute and deliver
whatever instruments (including but not limited to a Memorandum of
Lease and/or a Non-Disturbance and Attornment Agreement in recordable form)
which may be required for such purposes and to carry out the intent of this
section.

      

      
        

         

        T.     ESTOPPEL
CERTIFICATES

      

      
        

         

        At any
time and from time to time, Tenant agrees, upon request in writing from
Landlord, to execute and deliver to Landlord, for the benefit of such persons as
Landlord names in such request, a statement in writing and in form and substance
satisfactory to Landlord certifying to such of the following information as
Landlord shall request: (a) that this Lease constitutes the entire agreement
between Landlord and Tenant and is unmodified and in full force and effect
(or if there have been modifications, that the same is in full force and
effect as modified and stating the modifications); (b) the dates to which the
Minimum Rent and other charges hereunder have been paid; (c) that the Premises
have been completed on or before the date of such letter and that all conditions
precedent to the Lease taking effect have been carried out; (d) that Tenant
has accepted possession, that the Lease term has commenced, that Tenant is
occupying the Premises, that Tenant knows of no default under the Lease by
Landlord and that there are no defaults or offsets which Tenant has against
enforcement of this Lease by Landlord; (e) the actual commencement date of the
Lease and the expiration date of the Lease; and (f) that Tenant's store is open
for business, provided such facts are true and ascertainable.

      

      
        

         

        U.     MERCHANT'S
ASSOCIATION.    None. V.     QUIET
ENJOYMENT

      

      
        

         

        Landlord
hereby covenants and agrees that if Tenant shall perform all the covenants and
agreements herein stipulated to be performed on Tenant's part, Tenant shall at
all times during the continuance hereof have the peaceable and quiet enjoyment
and possession of the Premises without hindrance from Landlord or any
person.

      

      
        

         

        W.     LIABILITY
OF LANDLORD

      

      
        

         

        Notwithstanding
anything to the contrary provided in this Lease, it is specifically understood
and agreed, such agreement being a primary consideration for the execution of
this Lease by Landlord, that if Landlord shall fail to perform any covenant,
term or condition of this Lease upon Landlord's part to be performed and, as a
consequence of such default, Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of
sale received upon execution of such judgment and levied thereon against the
right, title, and interest of Landlord in the Shopping Center, as the same may
then be encumbered, and neither Landlord, nor, if Landlord be a partnership, any
of the partners comprising such partnership shall be liable for any deficiency.
It is understood that in no event shall Tenant have any right to levy execution
against any property of Landlord other than its interest in the Shopping
Center as hereinbefore expressly provided. In the event of the sale or
other transfer of Landlord's right, title and interest in the Premises or the
Shopping Center, Landlord shall be released from all liability and obligations
hereunder so long as its transferee shall assume in writing the obligations
of Landlord herein set forth. Nothing contained herein shall reduce the recovery
under Landlord's liability insurance policies covering the Shopping
Center.

      

      
        

         

        X.  ENVIRONMENTAL
MATTERS:  NO HAZARDOUS SUBSTANCES

      

      
        

         

        
          	
                   
      

                	
                  1.    Landlord
      warrants that upon delivery to Tenant the Premises are free of asbestos
      and other hazardous materials and gases, and if found, Landlord will
      remove at Landlord's expense.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    Tenant
      shall not engage in operations at the Premises which involve the
      generation, manufacture, refining, transportation, treatment, storage,
      handling or disposal of "hazardous substances" or "hazardous waste", as
      such terms are defined under the Environmental Cleanup Responsibility Act,
      N.J.S.A. !3:.1K-6, et.seq., without the prior written consent of
      Landlord, which consent shall be at Landlord's sole
      discretion.

                

        

      

      
        

         

        Y.      MISCELLANEOUS
PROVISIONS

      

      
        

         

        Page
13

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        
          	
                   
      

                	
                  2.   Accord
      and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser
      amount than the rental herein stipulated shall be deemed to be other than
      on account of the earliest stipulated rent, nor shall any endorsement
      or statement on any check
      or any letter accompanying any check or payment as rent be deemed an accord and
      satisfaction, and Landlord may accept such check or payment without
      prejudice to Landlord's right to recover the balance of such rent or
      pursue any other remedy provided for in this Lease or available under law
      or in equity.

                

        

      

      
        

         

        
          	
                   
      

                	
                  2.    No
      waiver of any condition or legal right or remedy shall be implied by the
      failure of Landlord to declare a forfeiture, or for any other reason, and
      no waiver of any condition or covenant shall be valid unless it be in
      writing and signed by Landlord. No waiver by Landlord with respect to one
      or more tenants or occupants of the Shopping Center shall constitute a
      waiver in favor of any other tenant, nor shall the waiver of a breach of
      any condition be claimed or pleaded to excuse a future breach of the same
      condition or covenant.

                

        

      

      
        

         

        
          	
                   
      

                	
                  3.    Broker's
      Commission. Landlord and Tenant hereby warrant to the other that there are
      no claims for broker's commissions or finder's fees in connection with the
      execution of this Lease, and Landlord and Tenant agree to indemnify and
      save the other harmless from any liability that may arise from such
      claims, including reasonable attorney's
fees.

                

        

      

      
        

         

        
          	
                   
      

                	
                  4.    No
      Partnership.     Landlord does
      not,   in any way or for any purpose,  become a
      partner of Tenant in the conduct of its business,  or otherwise,
      or joint venturer or a member of a joint enterprise with
      Tenant.

                

        

      

      
        

         

        
          	
                   
      

                	
                  5.    Section
      Headings. The section headings are inserted only as a matter of
      convenience and for reference and in no way define, limit or describe the
      scope or intent of this Lease nor in any way affect this
      Lease.

                

        

      

      
        

         

        
          	
                   
      

                	
                  6.    Lease
      Inures to the Benefit of Assignees. This Lease and all of the covenants,
      provisions, and conditions herein contained shall inure to the benefit of
      and be binding upon the heirs > personal representatives,
      successors and assigns respectively, of the parties hereto, provided,
      however, that no assignment by, from, through, or under Tenant in
      violation of the provisions hereof shall vest in the assigns any
      right, title, or interest
whatsoever.

                

        

      

      
        

         

        
          	
                   
      

                	
                  7.    Entire
      Agreement. This Lease and the exhibits attached hereto set forth all the
      covenants, promises, agreements, conditions, and understandings between
      Landlord and Tenant concerning the Premises, and there are no covenants,
      promises, agreements, conditions or understandings, either oral or
      written, between them other than are herein set forth. Except as herein
      otherwise provided, no subsequent alteration, amendment, change or
      addition to this Lease shall be binding upon Landlord or Tenant unless
      reduced to writing and signed by
them.

                

        

      

      
        

         

        
          	
                   
      

                	
                  8.    Surrender
      and Holding Over. Tenant shall deliver up and surrender to Landlord
      possession of the Premises upon the expiration of the Lease term, or its
      prior termination for any reason, in as good condition and repair as the
      same shall be at the commencement of said term (damage by fire and other
      perils covered by standard fire and extended coverage insurance and
      ordinary wear and decay only excepted). No agreement to accept a surrender
      of the Premises prior to the natural expiration of the term of this Lease
      shall be valid and binding against Landlord unless such agreement shall be
      in writing and signed by Landlord. Should Tenant remain in possession of
      the Premises after any termination of this Lease, no tenancy or
      interest in the Premises shall result therefrom, but such holding over
      shall be an unlawful detainer and all such parties shall be subject to
      immediate eviction and removal, and after a two (2) month "good faith
      grace period" necessary to complete negotiations for renewal, Tenant shall
      upon demand pay to Landlord, as liquidated damages, an amount equal
      to two hundred percent (200%) of the Minimum Rent payable during the
      calendar month immediately preceding the expiration or earlier termination
      of this Lease for any period during which Tenant shall hold the
      Premises after the stipulated term of this Lease shall have expired or may
      have terminated.

                

        

      

      
        

         

        
          	
                   
      

                	
                  9.    Additional
      Rent. Any amounts to be paid by Tenant to Landlord pursuant to the
      provisions of this Lease, whether such payments are to be periodic
      and recurring or not, shall be deemed to be "additional rent" and
      otherwise subject to all provisions of this Lease and of law as to the
      default in the payment of
rent.

                

        

      

      
        

         

        
          	
                   
      

                	
                  10.    Delivery
      of Documents.     In the event Tenant fails to
      execute,  acknowledge,  and deliver any documents or
      agreements required to be provided to Landlord under.. . Section
      J,   Section  R,   Section  S  or
      Section  T of this  Lease
      within  fifteen   (15)
      days    after    Tenant's receipt    of    Landlord's    written    request    therefor,     the

                

        

      

      
        

         

        1                                            Page
14                                /

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        documents
or agreements requested shall be deemed approved, acknowledged and accepted by
Tenant, provided that such documents or agreements in no way alter, diminish or
affect the terms of this Lease.

      

      
        

         

        
          	
                   
      

                	
                  11.    Severability.
      In the event that any provision or section of this Lease is rendered
      invalid by the decision of any court or by the enactment of any law,
      ordinance or regulation, such provision of this Lease shall be deemed to
      have never been included therein, and the balance of this Lease shall
      continue in effect in accordance with its
terms.

                

        

      

      
        

         

        
          	
                   
      

                	
                  12.    Option
      to Renew. Provided Tenant is not in default under any of the terms and
      provisions herein contained, Landlord hereby grants to Tenant the option
      to renew this Lease for the periods stipulated in Section A.7. The First
      Renewal Term and each succeeding Renewal Term shall be based upon all the
      terms and conditions contained in this Lease except for payment of
      Minimum Rent which shall be increased per Section A. 10. The foregoing
      options to renew shall be exercised by written notice to Landlord given
      not less than six (6) months prior to the expiration of the original Term
      of the Lease, or the First Renewal Term,, or each succeeding Renewal Term
      as the case may be.

                

        

      

      
        

         

        
          	
                   
      

                	
                  13.    Counterparts.
      This Lease may be executed in multiple counterparts, each of which shall
      constitute an original and all of which shall constitute a
      document.

                

        

      

      
        

         

        
          	
                   
      

                	
                  14.    Force
      Majeure. The period of time during which Landlord or Tenant is prevented
      or delayed in the performance of the making of any improvements or repairs
      or fulfilling any obligation required under this Lease due to delays
      caused by fire, catastrophe, strikes or labor trouble, civil commotion,
      acts of God, governmental prohibitions or regulations, inability or
      difficulty to obtain materials or other causes beyond either party's
      control, shall be added to that party's time for performance hereof, and
      Landlord or Tenant shall have no liability by reason thereof. This clause
      shall not apply to Tenant's obligations to pay
  rent.

                

        

      

      
        

         

        
          	
                   
      

                	
                  15.    Recording.
      This Lease shall not be recorded. However, upon the request of either
      Landlord or Tenant, the other party agrees to execute a memorandum of
      Lease setting forth such terms and provisions as may be acceptable to both
      Landlord and Tenant which may be recorded at the cost of the party
      desiring recording.

                

        

      

      
        

         

        
          	
                   
      

                	
                  16.    Early
      Termination. In the event Tenant's sales during the second full lease year
      do not exceed Six hundred thousand dollars and no/100 ($600,000.00),
      Tenant shall the right to vacate the premises and terminate the lease
      provided the Tenant has given Landlord sixty (60) days written
      notice of its intention to do so at the end of the second lease year along
      with a copy of Tenant's certified sales. If Tenant fails to exercise
      its termination right in the specified time period, then the
      right will expire and the Lease will remain in full
      force.

                

        

      

      
        

         

        Page
15

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        IN
WITNESS THEREOF,   Landlord and Tenant have caused this Lease to
be signed as of the date and year first above written.

      

      
        

         

        LANDLORD:      DMK
Associates,  L.P.

      

      
        a(n)
Virginia Limited Partnership

      

      

      
        

         

        By:___                                /s/ Macon
F. Brock, Jr._

      

      
        Typed
Name       Macon F. Brock,
Jr.

      

      
        Title                    General
Partner ____

      

      
        

      

      
        ATTEST:

      

      
        /Frederick
C,  Coble / Assistant Secretary

      

      
        

         

        (Corporate
Seal)

      

      
        

         

        
          	
                   
      

                	
                  TENANT:

                	
                  DOLLAR
      TREE
STORES,   INC.

                

        

      

      
        

         

        
          	
                   
      

                	
                  Virginia
      corporation

                

        

      

      
        

         

        
          	
                   
      

                	
                  /s/ H. R.
      Compton

                

        

      

      
        

         

        

      

      
        Typed
Name

      

      
        

         

        H.  R.  Compton

      

      
        

         

        Title     Executive_Vice P
resident_

      

      
        

         

        LANDLORD'S
NOTARY ACKNOWLEDGEMENT:

      

      
        

         

        STATE
OF                       VIRGINIA

      

      
        

         

        COUNTY
OF          NORFOLK

      

      
        

         

        ¥J
'

      

      
        , a
Notary Public for said County and State do hereby

      

      
        Macon   F.   Brock,   Jr.                                                 General
Partner       of     DMK
Associates     ,   a

      

      
        

         

        I,  .Brenda
A. Cox_

      

      
        certify   that
__________________    _________  __        ___        ______

      

      
        Virginia Limited Partnership
, and being duly authorized to sign in behaif of said Limited Partnership
personally appeared before me this day and acknowledged the due execution of the
foregoing instrument.

      

      
        

         

        Witness
my  hand  and   Notarial  Seal  this
17th
day of July, 1995.

      

      
        Notary
Public

      

      
        

         

        
          	
                  My
      Commission Expires;

                	
                  /s/ Brenda A.
      Cox

                

        

      

      
        

         

        
          	
                   
      

                	
                  August
      31.   1995

                

        

      

      
        

         

        (Notary
Seal)

      

      
        

         

        

         

        

      

      
        

         

        

         

        

      

      
        

         

        

         

        

      

      
        

         

        

         

        

      

      
        

         

        TENANT'S  NOTARY
ACKNOWLEDGEMENT:

         

        

      

      
        

         

        

         

        

      

      
        

         

        

      

      
        This
17th
day of July, 1995 personally came before me H. R. Compton, who being duly sworn,
says that he is the Executive Vice President of Dollar Tree Stores, Inc., and
that the seal affixed to the foregoing instrument in writing is the corporate
seal of the corporation and that said writing was signed and sealed by him in
behalf of said corporation by its authority duly given.

      

      
        

      

      
        My
commission expires:

      

      
        

      

      
        August
31,
1999                                                               /S/ Terry A.
Thompson

      

      
        Notary Public

      

      
        

         

        (Notary
Seal)

         

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      
        

         

        Dollar
tree stores, inc

      

      
        

         

        Lease
Administration Pax: (757) 321-5220 Direct Dial: (757)
321-5079

      

      
        

         

        September
27,2006

      

      
        

         

        1023
Laskin Road Suite 102, PO Box 869 Virginia Beach, Virginia
23451

      

      
        

         

        Re:     Occasions
Store #50001

      

      
        Volvo
Parkway Chesapcake, Virginia

      

      
        

         

        Dear Sir
or Madam;

      

      
        

         

        Pursuant
to Section C.2 of that certain Lease dated July 17, 1995 and Amendment dated
October 13, 2005, relating to the above referenced store; please confirm that
the following information is correct by signing and returning a copy of this
Commencement Certificate for our file.

      

      
        

         

        1
..           The store
opened as Occasions on September 26, 2006,

      

      
        3.            The turnover date for
Occasions was August 14, 2006.

      

      
        3.            The
rent will increase on December 1,2007.

      

      
        4.            The
expiration date of the current term is November 30, 2011.

      

      
        

         

        Your
prompt attention to that matter will be greatly appreciated. W« look forward to
a long and prosperous relationship with your company. Thank
you,

      

      
        

         

        Very
truly yours,

      

      
        DOLLAR
TREE STORES, INC.

      

      
        

         

        /s/
Patricia D, Iman,

      

      
        Manager,
Lease Administration

      

      
        

      

      
        

      

      
        

      

      
        

         

        The
foregoing is approved this 28th day of
September 2006.

      

      
        

         

        Name
of Company: DMK Associates

      

      
        By:
/s/ Terry Thompson

         

        

      

      
        500 Volvo
Parkway Chesapeake, VA
2.1320

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        

         

        Domin O
Adminlstrator/DLTR

      

      
        

         

        09/26/2006
10:27 AM

      

      
        

        To Susan Evans/REA/DLTR@DLTR
cc bcc
Subject  Store Announcements Subscription

      

      

      
        

         

        The Real
Estate Department is pleased to announce the following nev/ or re-opened
stores:

      

      
        

         

        H         50001
- Occasions, Chesapeake,
VA                                                                                     DT
- 5000 SF     09/26/2006, OPEN

      

      
        

         

        To cancel
your subscription, follow the doclink below and click 'Unsubscribe.'
-->PURCHASE AGREEMENT DATED JULY 24, 2007

Exhibit 10.1

Date: 24th July 2007

TEEKAY CORPORATION

and

TEEKAY OFFSHORE PARTNERS L.P.

 

PURCHASE AGREEMENT

 

relating to

the sale and purchase of

the entire ownership interests in

NAVION GOTHENBURG L.L.C.

And

NAVION GOTHENBURG AS

 

 

INDEX

	 	 	 	 	 
	Clause	 	Page	 
	1 DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	 	 	 	 
	2 AGREEMENT FOR SALE
	 	 	5	 
	 
	 	 	 	 
	3 CONSIDERATION
	 	 	6	 
	 
	 	 	 	 
	4 COMPLETION
	 	 	7	 
	 
	 	 	 	 
	5 WARRANTIES
	 	 	8	 
	 
	 	 	 	 
	6 REMEDIES OF THE PURCHASER
	 	 	10	 
	 
	 	 	 	 
	7 IMPLEMENTATION
	 	 	12	 
	 
	 	 	 	 
	8 COSTS
	 	 	13	 
	 
	 	 	 	 
	9 OTHER PROVISIONS
	 	 	13	 
	 
	 	 	 	 
	10 NOTICES
	 	 	15	 
	 
	 	 	 	 
	11 GOVERNING LAW AND JURISDICTION
	 	 	16	 
	 
	 	 	 	 
	12 TERMINATION
	 	 	17	 
	 
	 	 	 	 
	SCHEDULE A WARRANTIES AND REPRESENTATIONS
	 	 	18	 
	 
	 	 	 	 
	SCHEDULE B THE VESSEL
	 	 	32	 
	 
	 	 	 	 
	SCHEDULE C
COUNTER-INDEMNITY AGREEMENT
	 	 	 	 
	 
	 	 	 	 
	EXECUTION PAGE
	 	 	32	 

 

 

THIS AGREEMENT is made as of the 24th day of July 2007

BETWEEN:

	(1)	 	Teekay Corporation, a Marshall Islands company having a principal office at Bayside House,
Bayside Executive Park, West Bay Street & Blake Road, P.O. Box AP-59212, Nassau, Bahamas (the
“Vendor”); and
	 
	(2)	 	Teekay Offshore Partners L.P., a Marshall Islands limited partnership having a principal
office at Bayside House, Bayside Executive Park, West Bay Street & Blake Road, P.O. Box
AP-59212, Nassau, Bahamas (the “Purchaser”)

WHEREAS:

	(A)	 	Navion Gothenburg LLC, as owner of the m.v. NAVION GOTHENBURG (the “Vessel”), has
bareboat chartered the Vessel to Navion Gothenburg AS pursuant to a bareboat charterer dated
December 1, 2006 (the “Head Charter”) and Navion Gothenburg AS, as disponent owner of the
Vessel, has bareboat chartered the Vessel to Fronape International Company of P.O. Box 714
Georgetown, Grand Cayman, Cayman Islands (the “Charterer”) pursuant to a novation agreement on
December 1, 2006 of the bareboat charter dated January 16, 2006 between the Charterer,
counter-signed by Petrobras Transporte S.A. — Transpetro of Av Presidente Vargas,
328-20091-660 Rio de Janiero, RJ, Brazi,l and Teekay Norway AS (the bareboat charter as
novated is hereinafter referred to as the “Charter”).
	 
	(B)	 	The Vessel has been converted to a dynamically positioned shuttle tanker for service
under the Charter and the purchase of the Vessel by Navion Gothenburg LLC and its conversion
are financed or are to be financed by means of a US$106,000,000 secured revolving credit
facility from DnB Nor Bank ASA as agent.
	 
	(C)	 	The Vendor is the legal and beneficial owner of 100% of the limited liability interests
of Navion Gothenburg LLC and the ultimate beneficial indirect owner of 100% of all of the
shares of the Navion Gothenburg AS (together the “Interests”).
	 
	(D)	 	The Vendor has agreed to sell or procure the sale of, and the Purchaser has agreed to
purchase itself and through its wholly owned subsidiary Teekay Norway AS, 50% of the limited
liability interests of Navion Gothenburg LLC and the ultimate beneficial indirect owner of
100% of all of the shares of the Navion Gothenburg AS, on and subject to the terms and
conditions hereinafter appearing.

IT IS AGREED as follows:

	1	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	Definitions. In this Agreement, including the Schedules and the recitals, unless the context
requires otherwise:
	 
	 	 	“Business Day” means a day (other than a Saturday or Sunday) on which banks in New York are
open for the transaction of normal banking business (other than solely for trading and
settlement in Dollars) or, for the purposes of Clause 10, a day on which banks are open for
the transaction of normal banking business in the country of receipt of a notice.

 

 

	 	 	“Business Information” means all information and records (in whatever form held and whether
commercial, financial, technical or otherwise) relating to the Company or the business or
activities or affairs of the Company, which can be reasonably considered to be confidential
to the Company.
	 
	 	 	“Charter” means the bareboat charter in respect of the Vessel dated 16th January
2006 between Navion Gothenburg AS the Charterer and Transpetro (as novated by a novation
agreement dated December 1, 2006) as defined in Recital (A).
	 
	 	 	“Transpetro” means Petrobras Transporte S.A. — Transpetro of Av Presidente Vargas,
328-20091-660 Rio de Janiero, RJ, Brazil.
	 
	 	 	“Charterer” means Fronape International Company of P.O. Box 714 Georgetown, Grand Cayman,
Cayman Islands.
	 
	 	 	“Claim” means a claim for breach of Warranty by the Purchaser against the Vendor.
	 
	 	 	“Closing” means completion of the sale and purchase of the Interests in accordance with
Clause 4.1.
	 
	 	 	“Closing Date” means 24th July 2007, being the day on which Closing takes place.
	 
	 	 	“Companies” means:
	 
	 	 	(1) Navion Gothenburg L.L.C. (“Navion Gothenburg LLC”), a limited liability company formed
under the laws of the Republic of the Marshall Islands with a registered office at Trust
Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 and a
principal office c/o Teekay Corporation, Bayside House, Bayside Executive Park, West Bay
Street & Blake Road, P.O. Box AP-59212, Nassau, Bahamas.; and
	 
	 	 	(2) Navion Gothenburg AS (“Navion Gothenburg AS”) a limited company incorporated and
registered under the laws of Norway with a business address at Verven 4, 4014 Stavanger,
Norway.
	 
	 	 	“Consideration” means the consideration payable by the Purchaser for the Interests as stated
in Clause 3.
	 
	 	 	“Contracts” means those agreements, contracts, understandings and arrangements to which the
Companies respectively are a party or to which any of the Interests, the Vessel or any other
assets of the Companies are subject or by which they are bound which are material to the
Companies or their trading activities, set out in the Disclosure Schedule.
	 
	 	 	“Counter-Indemnity Agreement” means the agreement in the form set out in Schedule C.
	 
	 	 	“Covered Environmental Losses” means all environmental and toxic tort Losses and
Expenses suffered or incurred by the Purchaser, the Purchaser Group Companies or the Company
by reason of or arising out of:

2

 

	 	 	(a) any violation or correction of violation of Environmental Laws; or
	 
	 	 	(b) any event or condition associated with ownership or operation by the Vendor or the
Vendor Group Companies of the Interests (including, without limitation, the presence of
Hazardous Substances on, under, about or migrating to or from the Vessel or the disposal or
release of Hazardous Substances generated by operation of the Vessel), including, without
limitation, (i) the cost and expense of any investigation, assessment, evaluation,
monitoring, containment, cleanup, repair, restoration, remediation or other corrective
action required or necessary under Environmental Laws, (ii) the cost or expense of the
preparation and implementation of any closure, remedial, corrective action or other plans
required or necessary under Environmental Laws and (iii) the cost and expense for any
environmental or toxic tort pre-trial, trial or appellate legal or litigation support work,
	 
	 	 	but only to the extent that such violation complained of under clause (a), or such events or
conditions included in clause (b), occurred before the Closing Date; and, provided that, in
no event shall Losses or Expenses to the extent arising from a change in any Environmental
Law after the Closing Date be deemed “Covered Environmental Losses”.
	 
	 	 	“Disclosed” means fully, fairly and expressly disclosed by the Transaction Documents or the
Disclosure Schedule and, for this purpose “fairly disclosed” means any information disclosed
in such manner and in such detail or with sufficient explanation as to enable a reasonable
purchaser to make an informed assessment or estimation of the matter concerned and its
financial, operational or other consequences to the Companies.
	 
	 	 	“Disclosure Schedule” means the Disclosure Schedule provided to the Purchaser by the Vendor
concurrently with the execution and delivery of this Agreement.
	 
	 	 	“Dollars” means United States Dollars.
	 
	 	 	“Environmental Laws” means all federal, state, foreign and local laws, statutes, rules,
regulations, orders, judgments and ordinances relating to protection of health and safety
and the environment, each as amended up to and including the Closing Date..
	 
	 	 	“Hazardous Substances” means (a) substances which contain substances defined in or regulated
under applicable Environmental Laws; (b) petroleum and petroleum products, including crude
oil and any fractions thereof; (c) natural gas, synthetic gas and any mixtures thereof; (d)
any substances with respect to which a federal, state, foreign or local agency requires
environmental investigation, monitoring, reporting or remediation; (e) any hazardous waste
or solid waste, within the meaning of any Environmental Law; (f) any solid, hazardous,
dangerous or toxic chemical, material, waste or substance, within the meaning of and
regulated by any Environmental Law; (g) any radioactive material; and (h) any
asbestos-containing materials that represent a health hazard.
	 
	 	 	“Head Charter” means the bareboat charter of the Vessel dated 1st December 2006
made between Navion Gothenburg LLC and Navion Gothenburg AS as defined in Recital (A).
	 
	 	 	“Indebtedness” means any borrowings or other indebtedness whatsoever owed by either of the
Companies.

3

 

	 	 	“Insolvency Event” means in relation to any of the Purchaser, the Vendor or either of the
Companies (as the context may require) that any of the following actions has occurred in
relation to it:

	 	(i)	 	an order has been made or an effective resolution passed or other proceedings
or actions taken (including, without limitation, the presentation of a petition) with
a view to its administration, bankruptcy, winding-up, liquidation or dissolution; or
	 
	 	(ii)	 	it has had a receiver, administrative receiver, manager or administrator
appointed over all or any substantial part of its undertaking or assets; or
	 
	 	(iii)	 	any event has occurred or situation arisen in any jurisdiction that has a
substantially similar effect to any of the foregoing.

	 	 	“Interests” means 50% of the limited liability interests of Navion Gothenburg LLC and 100%
of all of the shares of the Navion Gothenburg AS.
	 
	 	 	“Loan Facility Agreement” means the loan facility agreement dated July 11, 2007 among (i)
Navion Gothenburg L.L.C. as borrower, (ii) the banks and financial institutions listed
therein as lenders and (iii) DnB NOR Bank ASA as agents, mandated lead arranger, bookrunner
and security trustee (the “Agent”) and Fortis Capital Corp, as mandated lead arranger and
bookrunner, providing for a term loan facility of up to US$106,000,000.
	 
	 	 	“Losses and Expenses” means liabilities, losses, damages, claims, demands, awards and
expenses (including, without limitation, legal costs) and includes, for the avoidance of
doubt, any value added tax (VAT) (or similar tax) payable in relation to any such matter,
circumstance or item (except to the extent that the party claiming Losses and Expenses
obtains credit for such VAT as input tax).
	 
	 	 	“Purchaser Group Companies” means the Purchaser and any subsidiaries thereof and the
Purchaser’s general partner.
	 
	 	 	“Security Interest” means any mortgage, charge (whether fixed or floating), pledge,
lien, hypothecation, encumbrance, assignment, right of set-off, trust arrangement, title
retention or other security interest or other agreement or arrangement of any kind having
the effect of conferring security.
	 
	 	 	“Specified Rate” is the rate of interest equal to yearly LIBOR from time to time plus 100
basis points.
	 
	 	 	“Tax” or “Taxation” means any tax, duty, contribution, impost, levy or charge in the nature
of tax, whether domestic or foreign, and any fine, penalty, surcharge or interest in
relation thereto, including without limitation (and without prejudice to the foregoing)
corporation tax, income tax (including tax failing to be deducted or withheld from or
accounted for in respect of any payment), capital gains tax, value added tax, customs excise
and import duties, stamp duty, stamp duty reserve tax, and any other payment
whatsoever that the Company is or may be or become bound to make to any person and that is
or purports to be in the nature of taxation or otherwise by reason of any taxation statutes.

4

 

	 	 	“Taxation Authority” means any national, local municipal, governmental, state, federal or
fiscal, revenue, customs or excise authority, body, agency or official anywhere in the world
having, or purporting to have power or authority in relation to Tax.
	 
	 	 	“Transaction Documents” means this Agreement and the other documents delivered at Closing
pursuant to Clause 4.
	 
	 	 	“Vendor’s Account” means such account of the Vendor as the Vendor may specify to the
Purchaser from time to time.
	 
	 	 	“Vendor Group Companies” means the Vendor and any subsidiary of the Vendor, from time to
time (except, with effect from Closing, the Companies and any Purchaser Group Companies).
	 
	 	 	“Vessel” means the shuttle tanker vessel “NAVION GOTHENBURG” owned by Navion Gothenburg
L.L.C., details of which are set out in Schedule B.
	 
	 	 	“Warranties” means the representations and warranties set out in Clause 5.1 and Schedule A.
	 
	1.2	 	Interpretation
	 
	(a)	 	Reference to:

	 	(i)	 	a person includes a legal or natural person, partnership, trust, company,
government or local authority department or other body (whether corporate or
unincorporated);
	 
	 	(ii)	 	a statutory or regulatory body shall include its successors and any substituted
body;
	 
	 	(iii)	 	the singular includes the plural and vice versa; and
	 
	 	(iv)	 	one gender includes all genders.

	(b)	 	Unless otherwise stated, a reference to a Clause, sub-clause or Schedule is a reference to a
Clause or sub-clause of, or Schedule to, this Agreement and a reference to this Agreement
includes its Schedules.
	 
	(c)	 	Clause headings in this Agreement and in the Schedules are for ease of reference only and do
not affect its construction.
	 
	(d)	 	In construing this Agreement the so-called ejusdem generis rule does not apply and
accordingly the interpretation of general words shall not be restricted by words indicating a
particular class or particular examples.
	 
	2	 	AGREEMENT FOR SALE
	 
	2.1	 	Sale and purchase of Interests. Subject to the other provisions of this Agreement, the
Vendor shall sell the Interests of the Vendor in Navion Gothenburg L.L.C. to the

5

 

	 	 	Purchaser and
the Purchaser shall purchase the Interests with effect from July 24, 2007. The Vendor shall
procure the sale by wholly owned subsidiary Teekay Shipping Norway AS of all the Interests in
Navion Gothenburg AS to Teekay Norway AS. The purchase by Teekay Norway AS of the Interests in
Navion Gothenburg AS is at the direction of the Purchaser.
	 
	2.2	 	Absolute title to Interests; no Security Interest in Interests. The Vendor shall take all
steps within its power and control (but without any obligation to expend any material amount)
to procure that the Purchaser and Teekay Norway AS (as appropriate) will duly obtain absolute
title to the entire legal and beneficial interest in the Interests, and all rights (whether in
respect of distributions, voting or otherwise) that at the date of this Agreement or any later
time are conferred on or by any of the Interests, free from any Security Interest.
	 
	3	 	CONSIDERATION
	 
	3.1	 	Payment of Consideration. The Consideration shall be the sum of US$59,089,000 (Fifty Nine
Million and Eight Nine Thousand United States Dollars) which shall include the assumption of
50% of any amount drawn or to be drawn under the Loan Facility Agreement to a maximum of
$85,000,000, payable as follows:

	 	 	 
	Intermediary Bank:

	 	Bank of New York, 
New York
	Intermediary Bank’s SWIFT:

	 	IRVTUS3N 
	ABA: 

	 	021 000 018 
	Beneficiary Bank:

	 	DnB NOR Bank ASA,
 New York
	Address:

	 	200 Park Avenue,
	 

	 	New York, NY 10166-
0396 
	Account Number:

	 	8026001499 
	Beneficiary Bank’s SWIFT:

	 	DNBAUS33 
	Account Name:

	 	Teekay Corporation
	Account Number:

	 	14712001 
	Currency:

	 	USD

	3.2	 	Vendor’s Undertakings. In addition to the transfer of the Interests to the Purchaser, the
Vendor further undertakes as follows:
	 
	(a)	 	that on Closing, it shall procure that the Companies shall have no net liabilities other than
the liabilities disclosed in the Disclosure Statement;
	 
	(b)	 	following the Closing Date and upon receiving any notices, correspondence, information or
enquiries in relation to either of the Companies, the Interests, the Vessel or the Contracts,
it shall forthwith pass copies thereof to the Purchaser and shall hold in trust
for the Companies and account
forthwith for any monies received
after the Closing Date on account
of the Companies.

6

 

	4	 	COMPLETION
	 
	4.1	 	Timing and place of Closing. Subject to the provisions of this Agreement, Closing shall be
effected by the Vendor satisfying its obligations under Clauses 4.2 and by the Purchaser
satisfying its obligations under Clause 4.3 and shall take place on the Closing Date.
	 
	4.2	 	Vendor’s Closing obligations. The Vendor shall deliver or procure that there are delivered
to the Purchaser on or before the Closing Date (as the context may permit):
	 
	(a)	 	duly executed transfers in respect of the Interests in favour of the Purchaser and/or Teekay
Norway AS (as appropriate), or as it may direct;
	 
	(b)	 	the certificates, if any, for the Interests (or an indemnity in the approved form for any
lost certificates);
	 
	(c)	 	a certified copy of the minutes of a meeting of the directors of the Vendor (certified as at
the date of Closing to be a certified copy of such resolutions in full force and effect and
certifying that such resolutions have not been revoked), authorising the execution of the
Transaction Documents (to which it is party);
	 
	(d)	 	confirmation in a form satisfactory to the Purchaser that the transfer of the Interests in
Navion Gothenburg AS has been duly authorised and effected;
	 
	(e)	 	all statutory and minute books (in every case written up to, but not including, the Closing
Date), common seals, certificates of formation and certificates of amendment (or equivalent),
cheque books, bank mandates and other books and records (whether statutory, financial or
otherwise) of the Companies as applicable and all certificates and documents of title relating
to any investments of the Companies;
	 
	(f)	 	the original copies of the Contracts;
	 
	(g)	 	evidence satisfactory to the Purchaser that all amounts payable by the Companies under any
loan facilities made available by the Vendor (other than with respect to amounts Disclosed as
liabilities in the Disclosure Schedule), any bank, financial institution, or any other person
whether on the basis of any Security Interest provided by the Companies, and whether in
relation to the Vessel or otherwise, have been paid in full and all associated Security
Interests (including, without limitation, those identified in the Disclosure Schedule) and any
other agreements or obligations entered into by the Companies for the benefit of themselves
respectively or any other person have been terminated or released and, in relation to Security
Interests, reassigned to the Companies or to the person giving the same; and
	 
	(h)	 	the duly executed certificate of an officer of the Vendor dated on the Closing Date, in form
reasonably acceptable to the Purchaser, certifying on behalf of the Vendor to the accuracy of
representations and Warranties of the Vendor contained in this Agreement.
	 
	(i)	 	The duly executed certificate of an officer of the Vendor dated on the Closing Date, in form
reasonably acceptable to the Purchaser, certifying that the Vessel has been accepted by the
Charterer and in on hire under the terms of the Charter and attaching a

7

 

	 	 	copy of a protocol of
delivery and acceptance under the Charter duly executed by the Charterer to this effect or any
other document reasonably acceptable to the Purchaser and executed by the Charterer evidencing
such acceptance.
	 
	4.3	 	Purchaser’s Closing obligations. The Purchaser shall on Closing and subject to the transfer
of the Interests:
	 
	(a)	 	deliver or procure that there are delivered to the Vendor a certified copy of the minutes of
a meeting of the directors of its general partner, authorising the execution of this Agreement
and any other Transaction Document that it is to execute pursuant to this Agreement;
	 
	(b)	 	pay to the Vendor the Consideration by transferring such amount to the Vendor’s Account for
value on the Closing Date.
	 
	4.4	 	Closing obligations not fulfilled. If either party fails, for any reason, to comply with any
of its obligations under the foregoing provisions of this Clause 4, the other party may, at
its option:
	 
	(a)	 	by written notice to the first party defer the date for Closing by one or more periods that
shall not exceed 20 (twenty) Business Days in aggregate in respect of either all of the
parties’ obligations under the foregoing provisions of this Clause 4 or such of those
obligations that have not been complied with; or
	 
	(b)	 	proceed to Closing so far as practicable but without prejudice to the second party’s rights
(whether under this Agreement or the general law) as regards the obligations with which the
first party has not complied; or
	 
	(c)	 	waive all or any of the obligations in question of the first party.
	 
	(d)	 	If Closing is deferred to another date in accordance with Clause 4.4(a), and Closing is
effected, the provisions of this Agreement shall apply as if that other date were the Closing
Date.
	 
	5	 	WARRANTIES
	 
	5.1	 	General. The Vendor represents, warrants and undertakes, subject to Clause 5.8, that each
statement in Schedule A is at the date of this Agreement, and will (save as Disclosed [in the
Disclosure Schedule] [in writing not later than the time of Closing]) at the Closing Date
remain, true, accurate and not misleading in any respect on the basis that a reference to the
Closing Date were substituted for any express or implied reference to the date of this
Agreement in that Schedule.
	 
	5.2	 	Claims. The Vendor hereby unconditionally and irrevocably covenants with the Purchaser that,
subject always to the limitations set out in Clause 6, it will indemnify the Purchaser, Teekay
Norway AS and the Companies against all Losses and Expenses that any of the Purchaser Group
Companies or the Companies may suffer or incur or
pay in enforcing its rights in connection with any matter referred to in this Agreement or
any of the Transaction Documents including, without limitation:

8

 

	 	(i)	 	the disputing and/or settlement of any Claims and any steps taken to avoid
and advice sought in connection with any actual, threatened or anticipated Claims;
	 
	 	(ii)	 	any legal proceedings in which any of the Purchaser Group Companies or the
Companies makes a Claim; and
	 
	 	(iii)	 	the enforcement of any such settlement or judgement.

	5.3	 	Reliance on Warranties. The Vendor acknowledges that:

	 	(a)	 	the Purchaser has been induced to enter and is entering into this Agreement and
the other Transaction Documents on the basis of and in reliance upon the Warranties;
	 
	 	(b)	 	the Purchaser may rely on the Warranties to the exclusion of any other
information, and that, with the exception of matters set forth in the Disclosure
Schedule, the Purchaser’s rights in respect thereof will not be in any way impaired as
a result of any other information being possessed by or available to any Purchaser
Group Companies or any officer, employee, professional or financial adviser of, or
person acting on behalf of, the Purchaser or any Purchaser Group Companies.

	5.4	 	Warranties are separate and independent. Each Warranty shall be construed as a separate and
independent warranty and, save as expressly provided otherwise, shall not be limited or
restricted by reference to or inference from any other terms of this Agreement or any other
Warranty.
	 
	5.5	 	Reduction in Consideration. Any payments made by the Vendor to the Purchaser in respect of
Claims shall, to the extent lawfully possible, be treated by the parties as a reduction in the
Consideration; provided, however, that this Clause 5.5 shall not in any way limit or restrict
the amount recoverable by the Purchaser or any other person under this agreement to the amount
of the Consideration or any other amount (but this is without prejudice to the limitations set
out in Clause 6).
	 
	5.6	 	Awareness of Vendor and Ordinary Course of Business. Where any Warranty is qualified by
reference to the awareness, knowledge, information or belief of the Vendor (or any similar
expression), the Vendor shall be deemed to have such awareness, knowledge, information or
belief as it would have after having made reasonable enquiry of the senior executive managers
and officers of the Vendor. In relation to each of the Warranties concerning the assets,
liabilities, Contracts, Vessel or results of the Companies, such Warranties shall be deemed to
be qualified by reference to exclude any matters (whether or not Disclosed) arising in the
ordinary and normal course of trading since 1st May 2007.
	 
	5.7	 	Provision of information. The Vendor undertakes promptly to provide the Purchaser with any
information that the Purchaser may by written notice request in relation to:
	 
	(a)	 	any of the Warranties or any statement of fact contained elsewhere in this Agreement or any
other Transaction Document; or

9

 

	(b)	 	the Disclosure Schedule or any other disclosure made or information provided (or purportedly
made or provided) under this Clause 5.7; or
	 
	(c)	 	any matter or question connected with or arising out of any of the foregoing,
	 
	 	 	but this only applies to information that is (either at the date of the Agreement or at the
date of the request) in the possession of the Vendor or that the Vendor or any of its
professional advisers can reasonably be expected to obtain and present without undue
efforts.
	 
	5.8	 	Disclosure in Disclosure Schedule. The Vendor shall not have any liability in respect of any
Claim if and to the extent that any fact, matter or circumstance that causes any of the
Warranties to be breached or that might result in a Claim or possible Claim has been Disclosed
in the Disclosure Schedule or otherwise in any of the Transaction Documents.
	 
	5.9	 	Notification of potential Claims before Closing. If, at any time before Closing, the Vendor
becomes aware of any Claim or any matter that could reasonably be expected to cause a Claim to
arise or any matter that at Closing would constitute a Claim or could reasonably be expected
to cause a Claim to arise, it shall forthwith disclose the same in writing to the Purchaser.
	 
	6	 	REMEDIES OF THE PURCHASER
	 
	6.1	 	Survival. Subject to the limitations and other provisions of this Agreement and the
Transaction Documents, the representations and warranties of the Vendor contained in this
Agreement (including the Schedules hereto), the Disclosure Schedule and the Transaction
Documents shall survive the Closing and remain in full force and effect for a period of
12 months after the Closing Date; provided, however, that (a) the Warranties in Clauses 1.2
(Title to Interests), 1.3 (No arrangements relating to share capital), 11 (Taxation) and 12.1
(No brokers fees) of Schedule A to this Agreement shall survive until, and shall terminate
upon, the date of expiration of the applicable statute of limitations with respect to the
liability in question. The covenants and agreements of the Vendor contained in this Agreement
and the Transactions Documents that by their terms extend beyond the Closing Date shall not
terminate until all obligations with respect thereto have been performed or satisfied or shall
have expired or been terminated in accordance with their terms.
	 
	6.2	 	Indemnification by the Vendor
	 
	(a)	 	The Vendor agrees, subject to the other terms and conditions of this Agreement and the
Transaction Documents, to indemnify the Purchaser, Teekay Norway AS and the Purchaser Group
Companies against and hold it harmless from any and all (i) Losses and Expenses to the
Purchaser, Teekay Norway AS, any Purchaser Group Company or the Companies arising out of or
related to the breach of any representation, warranty, covenant or agreement of the Vendor in
this Agreement (including the Schedules hereto), the Disclosure Schedule and the Transaction
Documents, to the extent Vendor
is notified by the Purchaser of such Losses or Expenses prior to expiration of the
applicable survival period set forth in Clause 6.1 above, (ii) any Covered Environmental
Losses relating to the Interests to the extent that the Vendor is notified by the Purchaser
of any such Covered Environmental Losses within five (5) years after the Closing Date;

10

 

	 	 	(iii) Losses or Expenses to the Purchaser, the Purchaser Group Companies or the Companies
arising from (A) the failure of the Purchaser Group Companies, immediately after the Closing
Date, to be the owner of such ownership interests in and to the Interests as are necessary
to enable the Purchaser Group Companies to own and operate the Interests in substantially
the same manner that the Interests were owned and operated by the Vendor Group Companies
immediately prior to the Closing Date or (B) the failure of the Purchaser Group Companies to
have on the Closing Date any consent or governmental permit necessary to allow the Purchaser
Group Companies to own or operate the Interests in substantially the same manner that the
Interests were owned and operated by the Vendor Group Companies immediately prior to the
Closing Date, in each of clauses (A) and (B) above, to the extent that the Vendor is
notified by the Purchaser of such Losses or Expenses within three (3) years after the
Closing Date; and (iv) all federal, state, foreign and local income tax liabilities
attributable to the operation of the Interests prior to the Closing Date.
	 
	(b)	 	The aggregate liability of Vendor under Clause 6.2(a) above shall not exceed $10 million.
Furthermore, no claim may be made against Vendor for indemnification pursuant to Clause 6.2(a)
unless the aggregate dollar amount of all claims for indemnification pursuant to such clause
shall exceed $500,000, in which case Vendor shall be liable for claims for indemnification
only to the extent such aggregate amount exceeds $500,000.
	 
	6.3	 	General Provisions.
	 
	(a)	 	The Purchaser agrees that within a reasonable period of time after it becomes aware of facts
giving rise to a claim for indemnification pursuant to Clause 6.2, it will provide notice
thereof in writing to the Vendor specifying the nature of and specific basis for such claim.
	 
	(b)	 	The Vendor shall have the right to control all aspects of the defence of (and any
counterclaims with respect to) any claims brought against the Purchaser, Teekay Norway AS, the
Purchaser Group Companies or the Companies that are covered by the indemnification set forth
in Clause 6.2, including, without limitation, the selection of counsel, determination of
whether to appeal any decision of any court and the settling of any such matter or any issues
relating thereto; provided, however, that no such settlement shall be entered into without the
consent (which consent shall not be unreasonably withheld) of the Purchaser (with the
concurrence of the conflicts committee of Teekay Offshore Operating GP L.L.C.) unless it
includes a full release of the Purchaser, Teekay Norway AS, the Purchaser Group Companies and
the Companies from such matter or issues, as the case may be.
	 
	(c)	 	The Purchaser agrees to cooperate fully with the Vendor with respect to all aspects of the
defence of any claims covered by the indemnification set forth in Clause 6.2, including,
without limitation, the prompt furnishing to the Vendor of any correspondence or other notice
relating thereto that the Purchaser, Teekay Norway AS, the Purchaser Group Companies or the
Companies may receive, permitting the names of such parties
to be utilized in connection with such defence, the making available to the Vendor of any
files, records or other information of such parties that the Vendor considers relevant to
such defence and the making available to the Vendor of any employees of the Purchaser,
Teekay Norway AS, the Purchaser Group Companies or the Comapnies;

11

 

	 	 	provided, however, that in
connection therewith the Vendor agrees to use reasonable efforts to minimize the impact
thereof on the operations of such parties and further agrees to maintain the confidentiality
of all files, records and other information furnished by any such party pursuant to this
Clause 6.3. In no event shall the obligation of the Purchaser to cooperate with the Vendor
as set forth in the immediately preceding sentence be construed as imposing upon the
Purchaser an obligation to hire and pay for counsel in connection with the defence of any
claims covered by the indemnification set forth in this Clause 6; provided, however, that
the Purchaser may, at its own option, cost and expense, hire and pay for counsel in
connection with any such defence. The Vendor agrees to keep any such counsel hired by the
Purchaser reasonably informed as to the status of any such defence (including providing such
counsel with such information related to any such defence as such counsel may reasonably
request) but the Vendor shall have the right to retain sole control over such defence.
	 
	(d)	 	In determining the amount of any Loss or Expense for which the Purchaser, Teekay Norway AS,
any Purchaser Group Company or any of the Companies is entitled to indemnification under this
Agreement, the gross amount of the indemnification will be reduced by (i) any insurance
proceeds realized by such parties, and such correlative insurance benefit shall be net of any
incremental insurance premium that becomes due and payable by such parties as a result of such
claim, and (ii) all amounts recovered by such parties under contractual indemnities from third
persons. The Purchaser hereby agrees to use commercially reasonable efforts to realize any
applicable insurance proceeds or amounts recoverable under such contractual indemnities;
provided, however, that the costs and expenses (including, without limitation, court costs and
reasonable attorneys’ fees) of the Purchaser, Teekay Norway AS, the Purchaser Group Companies
or the Companies in connection with such efforts shall be promptly reimbursed by the Vendor in
advance of any determination of whether such insurance proceeds or other amounts will be
recoverable.
	 
	(e)	 	The Purchaser hereby acknowledges and agrees that its sole and exclusive remedy with respect
to any and all claims relating to the subject matter of this Agreement and the Transaction
Documents shall be pursuant to the indemnification provisions set forth in this Clause 6. In
furtherance of the foregoing, the Purchaser hereby waives, to the fullest extent permitted
under applicable law, any and all rights, claims and causes of action it may have against the
Vendor and the Vendor Group Companies arising under or based upon any federal, state, foreign
or local statute, law, ordinance, rule or regulation (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or otherwise).
	 
	7	 	IMPLEMENTATION
	 
	7.1	 	Further assurances. The Vendor shall (and shall procure that any other relevant person
shall) execute any deeds or documents and exercise or waive any rights and generally take any
action, including passing (or procuring that there is passed) any resolution of the Vendor or
(whilst the Vendor remains the registered owner) the
Companies that the Purchaser
may reasonably require, which
may be necessary for the
Transaction Documents to be
carried into effect.

12

 

	8	 	COSTS
	 
	8.1	 	Responsibility for costs. Except where expressly provided otherwise, each party shall pay
its own costs connected with the negotiation, preparation, execution and implementation of the
Transaction Documents and any matters connected therewith and investigating the affairs of the
Companies.
	 
	9	 	OTHER PROVISIONS
	 
	9.1	 	Performance Guarantees. The Vendor shall continue to guarantee the performance of the
Companies’ obligations under the Charter and the financing arrangements of the Vessel under
the Loan Facility Agreement. In consideration for such guarantees the Purchaser shall provide
a counter-indemnity in the form attached in Schedule C and pay a fee based on an amount of 5
bps per annum on the Loan as defined in the Loan Facility Agreement payable semi-annually to
the Vendor such amount becoming due and payable within 30 days after the relevant semi-annual
period following the Closing Date and each semi-annual period thereafter. In respect of a
period of less than semi-annual, the fee shall be paid on a pro rata basis accordingly.
	 
	9.2	 	Entire agreement. This Agreement together with the other Transaction Documents constitutes
the entire agreement between the parties regarding the sale and purchase of the Interests and
related matters and supersedes any prior drafts, agreements, undertakings, representations,
warranties and arrangements of any kind, whether or not in writing, regarding the same, all of
which are hereby terminated and shall cease to have effect in all respects, and the parties
confirm that there are no collateral or supplemental agreements relating to the Transaction
Documents, except as expressly set forth herein or therein.
	 
	9.3	 	Assignment.
	 
	(a)	 	This Agreement shall be binding on and enure for the benefit of each party’s successors and
permitted assigns. Save as provided in Clause 9.3(b), no party shall, without the prior
written consent of the other party, assign, transfer, charge or deal in any other manner with
this Agreement or any of its rights (whether to damages or otherwise) or obligations arising
under or in connection with the Agreement, or purport to do any of the same, nor sub-contract
any or all of its obligations under this Agreement, and any such assignment, transfer, charge
or dealing shall be void for all purposes.
	 
	(b)	 	The Purchaser may assign all or any part of its rights and benefits under this Agreement to
any Purchaser Group Companies.
	 
	(c)	 	Subject to and upon any succession or assignment permitted by this Agreement, any such
successor or assignee shall in its own right be able to enforce any term of this Agreement in
accordance with the terms of this Agreement as if it were a party, but until such time shall
have no rights whether as a third party or otherwise. The Vendor shall
have no greater liabilities towards any successor or assignee of the Purchaser than it
would have had to the Purchaser had the Purchaser remained fully and solely entitled under
this Agreement.

13

 

	9.4	 	Right of set-off, deductions and withholdings and Tax on payments.
	 
	(a)	 	The Purchaser shall not be entitled to set off against the Consideration any sums owing to it
by the Vendor.
	 
	(b)	 	If any deduction or withholding is required by law to be made from any payment from one party
to another party under any Transaction Document, the party making the payment shall increase
the amount thereof so as to ensure that the recipient receives and is able to retain that
amount that it would have received and retained had the payment not been the subject matter of
such deduction or withholding provided always that if the recipient is entitled to a credit or
some other benefit as a consequence of the payment to it being the subject matter of a
deduction or withholding it shall use its reasonable endeavours to utilise the credit (whether
by set off, or by claiming a repayment in respect thereof, or otherwise) or benefit so arising
and in the event that it is able so to do it shall repay to the party who made the payment an
amount equal to the credit or benefit so utilised, provided always that this clause is without
prejudice to the limitations on the Vendor’s liabilities as set out in Clause 6. For the
avoidance of doubt, this clause shall not impose upon the recipient of the payment any
obligation to utilise any credit or benefit in priority to any other economic credit or
benefit available to it or to pay to the party making the payment an amount greater than that
by which the original payment was increased under this Clause 9.3.
	 
	(c)	 	If any payment from the Vendor to the Purchaser under any Transaction Document is liable to
Tax in the hands of the Purchaser, the Vendor shall increase the payment by such an amount as
will ensure that the Purchaser is able to receive and retain, after paying Tax in respect of
its receipt, an amount equal to that which would otherwise have been paid to it had the
receipt not been subject to Tax in its hands, provided always that this clause is without
prejudice to the limitations on the Vendor’s liabilities as set out in Clause 6. The parties
shall agree to the amount of any increase in a relevant payment to give effect to this Clause
9.3. In the event that the parties are not able to agree the amount of any increase, the
amount thereof shall be certified by the Purchaser’s auditors acting as experts whose decision
in respect thereof shall be binding on the relevant parties except in the case of manifest
error.
	 
	9.5	 	Waivers, rights and remedies.
	 
	(a)	 	No failure or delay on the part of either party to this Agreement in exercising any right or
remedy provided by law or under this Agreement shall impair such right or remedy or operate as
a waiver or variation of it or preclude its exercise at any subsequent time and no single or
partial exercise of any such right or remedy shall preclude or restrict any other or further
exercise of it or the exercise of any other right or remedy.
	 
	(b)	 	A waiver by either party to this Agreement of a breach of or default under any Transaction
Document shall not constitute a waiver of any other breach or default, shall not affect the
other terms of any Transaction Document or the rights of any other person thereto and shall
not prevent the Purchaser from subsequently requiring compliance with the waived obligation.
	 
	(c)	 	Any waiver (in whole or in part) of any right or remedy under this Agreement must be set out
in writing, signed by or on behalf of the person granting the waiver and may be given

14

 

	 	 	subject
to any conditions thought fit by the grantor and, unless otherwise expressly stated, any
waiver shall be effective only in the instance and only for the purpose for, and in favour of
the person to, which it is given.
	 
	(d)	 	Unless specifically provided otherwise, the rights and remedies of the Purchaser and the
Vendor under or pursuant to any Transaction Document are cumulative, may be exercised as often
as the Purchaser or the Vendor, as applicable considers appropriate and are in addition to its
rights and remedies under the general law.
	 
	9.6	 	Variations. No variation of any Transaction Document shall be valid unless it is agreed in
writing and signed by or on behalf of each of the parties thereto.
	 
	9.7	 	Effect of Closing. This Agreement (other than obligations that have already been fully
performed) remains in full force after Closing.
	 
	9.8	 	Provisions of Agreement severable. If any provisions of this Agreement or any other
Transaction Document is, or becomes, invalid, unenforceable or illegal, in whole or in part,
under the laws of any jurisdiction, such term or provision or part shall to that extent be
deemed not to form part of this Agreement or the relevant Transaction Document (as the case
may be), but the validity, enforceability or legality of the remaining provisions of this
Agreement or the relevant Transaction Document shall not be impaired.
	 
	9.9	 	Interest for late payment. Any sum owing by either party under this Agreement shall carry
interest from (and excluding) the date on which it is payable until (and including) the date
of actual payment at the Specified Rate; such interest will be compounded semi-annually and be
payable after as well as before any judgment.
	 
	9.10	 	Counterparts. This Agreement and each of the other Transaction Documents may be entered into
in any number of counterparts and by the parties thereto on separate counterparts, each of
which when so executed and delivered shall be an original but each such Transaction Document
shall not be effective until each party thereto has executed at least one counterpart, but all
the counterparts for each Transaction Document shall together constitute one and the same
instrument.
	 
	9.11	 	Third party rights. Except pursuant to Clause 9.12, this Agreement and the other Transaction
Documents are made for the benefit of the respective parties hereto and thereto and their
successors and permitted assigns only and are not intended to benefit, and no term thereof
shall be enforceable by, any other person by virtue of the Contracts (Rights of Third Parties)
Act 1999.
	 
	9.12	 	Exception. Teekay Norway AS shall be entitled to the benefit of
any of the provisions of this Agreement expressed to
be in its favour as if it were a party to this
Agreement.
	 
	10	 	NOTICES
	 
	10.1	 	General. Any notice under or in connection with this Agreement shall be in writing and may
be delivered by hand or fax to the address of the relevant party that is set out below or to
such other address as that party may have notified in writing from time to time to the party
serving the notice, which notice so served by fax shall be deemed to have been received at the
time of despatch:

15

 

	(a)	 	the Vendor

	 	 	 	 	 
	 

	 	Name:
	 	Teekay Corporation
	 

	 	Address:
	 	Bayside House, Bayside Executive Park,
	 

	 	 	 	West Bay Street & Blake Road,
	 

	 	 	 	P.O. Box AP-59212,
	 

	 	 	 	Nassau, The Bahamas
	 

	 	Fax Number:
	 	+1 242 502 8840

marked for the attention of the Corporate Secretary

	(b)	 	the Purchaser

	 	 	 	 	 
	 

	 	Name:
	 	Teekay Offshore Partners L.P.
	 

	 	Address:
	 	Bayside House, Bayside Executive Park,
	 

	 	 	 	West Bay Street & Blake Road,
	 

	 	 	 	P.O. Box AP-59212,
	 

	 	 	 	Nassau, The Bahamas
	 

	 	Fax Number:
	 	+1 242 502 8840

	11	 	GOVERNING LAW AND JURISDICTION

	11.1	 	English law. This Agreement is governed by, and shall be construed in accordance with,
English law.
	 
	11.2	 	Arbitration.
	 
	(a)	 	Any dispute arising out of this Agreement shall be referred to arbitration in London in
accordance with the Arbitration Act 1996 and any statutory re-enactment or modification
thereof before a sole arbitrator agreed by the parties or failing agreement within 7 days of
receipt by one party of a notice (the “First Notice”) from the other proposing an arbitrator,
a tribunal of three arbitrators comprising:

	 	(i)	 	the arbitrator proposed in the First Notice;
	 
	 	(ii)	 	an arbitrator appointed by the party that received the First Notice; and
	 
	 	(iii)	 	an arbitrator, who shall be the chairman, appointed by the two arbitrators
referred to in (i) and (ii) above.

If the party receiving the First Notice does not within 14 days of receipt thereof notify
the other party of its appointed arbitrator, the arbitrator referred to in (i) above shall
be deemed appointed as sole arbitrator.

16

 

	(b)	 	Once appointed in relation to a dispute, a sole arbitrator or tribunal shall resolve all
other disputes between the parties in relation to this Agreement, subject to the availability
of the arbitrator(s).
	 
	12	 	TERMINATION
	 
	12.1	 	Termination. This Agreement may be terminated upon written notice given at any time before
the Closing:
	 
	(a)	 	by the mutual written consent of Vendor and Purchaser;
	 
	(b)	 	by the Vendor of the Purchaser, if the Closing shall not have occurred prior to July
31st 2007 (the “Expiration Date”); provided, however, that the right to terminate
this Agreement under this Clause 12.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur prior to such date;
	 
	(c)	 	by the Vendor, in the event of a material breach by the Purchaser of any representation,
Warranty, covenant or agreement of the Purchaser contained herein that has not been cured or
is not curable by the Expiration Date; or
	 
	(d)	 	by the Purchaser, in the event of a material breach by the Vendor of any representation,
Warranty, covenant or agreement of the Vendor contained herein that has not been cured or is
not curable by the Expiration Date.
	 
	12.2	 	Effect of Termination. In the event of the termination of this Agreement pursuant to Clause
12.1 above, the parties shall be relieved of their obligations under this Agreement, save that
Clauses 1 and 10 to 11 shall continue in full force and effect, and neither party shall have
any claims against the other party in connection with this Agreement except in respect of any
accrued rights or obligations arising under this Agreement before termination or in connection
with any antecedent breach by any party of any provision of this Agreement or any breach by
any party of any continuing provision of this Agreement.

[Remainder of This Page Intentionally Left Blank]

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SCHEDULE A

WARRANTIES AND REPRESENTATIONS

	1	 	THE COMPANIES AND THE INTERESTS
	 
	1.1	 	Information.
	 
	 	 	Navion Gothenburg L.L.C. is duly formed and validly existing under the laws of The
Republic of the Marshall Islands. Navion Gothenburg LLC has the requisite power and
authority to own and operate its properties and assets and to carry on its business.
	 
	 	 	Navion Gothenburg AS is duly incorporated and registered under the laws of Norway.
Navion Gothenburg AS has the requisite power and authority to own and operate its properties
and assets and to carry on its business.
	 
	1.2	 	Title to Interests. The Interests constitute 50% of the limited liability interests of
Navion Gothenburg LLC and 100% of all of the shares of the Navion Gothenburg AS, the Vendor in
the case of Navion Gothenburg L.L.C. and its wholly owned subsidiary Teekay Shipping Norway AS
in the case of Navion Gothenburg AS is the sole legal and beneficial owner of the Interests,
and no claim has been made by any person to be entitled to any of them. The Interests have
been duly authorized, properly allotted and validly issued and are fully paid, or credited as
fully paid, and non-assessable. There is no Security Interest, option, conversion right,
right to acquire, or other adverse interest, right, equity, claim or potential claim of any
description on or over or affecting any of the Interests nor are there any agreements,
arrangements or commitments to give or create any such Security Interest, right or claim, and
no claim has been made by any person to be entitled to any.
	 
	1.3	 	No arrangements relating to share capital. Neither of the Companies have created or issued
any shares or equity interests (other than the Interests). There is no agreement, arrangement,
obligation or commitment (including an option or right of pre-emption or conversion) requiring
or granting any person the right to require the creation, allotment, issue, transfer,
redemption or repayment of, or creating or requiring the creation of any Security Interest
over, or requiring the grant to a person of the right (conditional or not) to require the
allotment, issue, transfer, redemption or repayment of, any shares, equity or loan capital in
either of the Companies (or any unissued shares, equity capital, loan capital or other
securities of the Companies) now or at any time in the future, and neither of the Companies
have agreed to do or enter into any of the foregoing and no person has made any claim to be
entitled to any of the foregoing.
	 
	1.4	 	No capital reorganisation. Neither of the Companies since their incorporation or formation
have:
	 
	(a)	 	made any issue of securities by way of capitalisation of profits or reserves (including share
premium account and capital redemption reserve); or

18

 

	(b)	 	repaid, purchased or redeemed any shares of any class of its share capital or otherwise
reduced its share capital or any class of it;
	 
	 	 	and have not agreed to do any of the foregoing (whether at the option of any other person or
otherwise).
	 
	1.5	 	No agreement/arrangement. Neither the Vendor nor the Companies are party to any agreement or
arrangement concerning:
	 
	(a)	 	the transfer or disposal of the Interests or any interest therein or any restriction thereon
or obligation relating thereto;
	 
	(b)	 	the exercise of votes at meetings of the board of either of the Companies (if any) or of the
holders of any class of Interests; or
	 
	(c)	 	the right to appoint or remove any directors or officers of either of the Companies (where
applicable).
	 
	1.6	 	No Security Interest over assets. There is no Security Interest (other than liens arising in
the usual course of business consistent with past practices) affecting the whole or any
material part of the assets of the Companies.
	 
	2	 	THE VENDOR
	 
	2.1	 	Capacity of Vendor and Teekay Shipping Norway AS. As regards the Vendor and Teekay Shipping
Norway AS:
	 
	(a)	 	it has the requisite power and authority to enter into the Transaction Documents to which it
is a party and perform all its obligations thereunder;
	 
	(b)	 	the Transaction Documents to which it is a party constitute (or will constitute when
executed) its legal, valid and binding obligations enforceable against it in accordance with
their terms;
	 
	(c)	 	it has the power and authority to absolutely and unconditionally sell and transfer the full
legal and beneficial ownership in the Interests registered in its name to the Purchaser on the
terms set out in this Agreement;
	 
	(d)	 	the execution and delivery of the Transaction Documents and performance by it of the
obligations thereunder do not and will not result in a breach of, or constitute any default
under, any law or regulation, any order, judgement or decree by any court or governmental
agency to which it is a party or by which it is bound, its Articles of Incorporation and
Bylaws or any agreement to which it is a party;
	 
	(e)	 	all consents, licences, approvals and authorisations required by it in connection with the
Transaction Documents to which it is a party and the transactions contemplated thereby have
been obtained and are in full force and effect;
	 
	(f)	 	no action, suit, proceeding, litigation or dispute against it or any Vendor Group Company is
presently taking place or pending or, to its knowledge, threatened that
would or might

19

 

	 	 	reasonably be expected to inhibit its ability to perform its obligations
under the Transaction Documents to which it is a party or that could materially and
adversely affect the Interests; and

	(g)	 	in so far as it is a body corporate:

	 	(i)	 	it is a body corporate duly incorporated and validly existing under the laws
of the jurisdiction in which it is incorporated;
	 
	 	(ii)	 	no Insolvency Event has occurred in relation to it and no events or
circumstances have arisen that entitle or could entitle any person to take any action,
appoint any person, commence proceedings or obtain any order instigating an Insolvency
Event.

	2.2	 	Vendor/Company relationship. Neither the Vendor, Teekay Shipping Norway AS nor any Vendor
Group Companies:
	 
	(a)	 	owe any indebtedness or other liability which has not been Disclosed and which in aggregate
exceeds $100,000 to either of the Companies whether actually or contingently, whether solely
or jointly with any other person and whether as principal or surety, and there is no such
indebtedness or liability which has not been Disclosed and which in aggregate exceeds $100,000
due or owing by either of the Companies to the Vendor, Teekay Shipping Norway AS or any Vendor
Group Companies and there is no guarantee or Security Interest in respect of any such
indebtedness or liability outstanding;
	 
	(b)	 	are party to any agreement, arrangement or understanding, other than the Transaction
Documents, with the Companies or relating to the Companies or the Interests in which the
Vendor, Teekay Shipping Norway AS or any Vendor Group Company is or has been interested,
whether directly or indirectly, and there is no agreement, arrangement or understanding to
which either of the Companies is a party and in which the Vendor, Teekay Shipping Norway AS or
any Vendor Group Company has or has had an interest, whether directly or indirectly; or
	 
	(c)	 	is entitled to a claim of any nature against the Companies, which has not been Disclosed or
which individually does not exceed $100,000, or has assigned to any person the benefit of a
claim against either of the Companies to which it would otherwise be entitled.
	 
	3	 	AGREEMENTS
	 
	3.1	 	Disclosure of Contracts. Complete and accurate copies of all Contracts (including all
amendments and supplemental agreements relating thereto) have been provided to the Purchaser
and all Contracts are set out in the Disclosure Schedule.
	 
	3.2	 	Enforceability of and compliance with agreements. In relation to each Contract:
	 
	(a)	 	the Vendor has no reason to believe that the Companies will be unable to complete and fulfil
each of the Contracts by the due date and within the estimated level of costs
or that

20

 

	 	 	any products sold or to be sold by the Companies are or will be unable to meet the
specifications contracted for;

	(b)	 	the Companies are in the possession or in the control of each such Contract;
	 
	(c)	 	so far as the Vendor is aware, there are no written or oral agreements that derogate from the
obligations of any person other than the Companies or increase the obligations of the
Companies under the Contracts;
	 
	(d)	 	each such Contract has been validly executed by the respective Companies, is valid and
subsisting, has not been terminated and is fully enforceable against the such of the Companies
and, to the Vendor’s knowledge, the other parties to such agreement in accordance with its
terms;
	 
	(e)	 	none of such Contracts is subject to a Security Interest granted or created by the Companies
or the Vendor Group Companies other than under the terms of the relevant Contract;
	 
	(f)	 	to the Vendor’s knowledge, there is no and has not been, at any time, any breach of, or any
default in the performance of, the terms of any such Contracts by any person other than the
Companies nor are there any circumstances likely to give rise to such breach or default. The
Companies have not granted any time or indulgence, or waived any right, in relation to any
such Contract and, in particular, but without prejudice to the generality of the foregoing,
all amounts due and payable under such agreements have been duly paid in full on, or within a
reasonable period of, the due date for payment of the same;
	 
	(g)	 	so far as the Vendor is aware, the Companies have fulfilled all of their obligations and
performed and observed all warranties, undertakings, covenants and agreements on their part to
be fulfilled, performed and observed under each of such Contracts;
	 
	(h)	 	no notice of any intention to terminate, repudiate, rescind, modify or disclaim any provision
of any Contract has been given by the Companies or, so far as the Vendor is aware, received
from a person other than the Companies by the Companies in respect of any such Contract;
	 
	(i)	 	so far as the Vendor is aware, the Companies have paid all Taxes, duties, imposts and other
charges payable in respect of the Contracts so far as such Taxes, duties, imposts and other
charges fall upon the Companies and have become due and payable;
	 
	(j)	 	all necessary licences, approvals and consents required by the Companies prior to the entry
into of each of such Contracts and for their continuation were duly obtained and are
subsisting and, to the Vendor’s knowledge, no circumstances have arisen that may lead to
withdrawal or failure to renew, if applicable, of any such licence, approval or consent;
	 
	(k)	 	there are no disputes or outstanding claims pending or, to the Vendor’s knowledge, threatened
against either of the Companies under such Contracts and, to the Vendor’s knowledge, no person
is entitled to make, or has threatened to make, a claim against the Companies in respect of
any representation, breach of condition or warranty or
other express or implied term relating to any such Contracts and no matter exists that would
or

21

 

	 	 	might enable a person other than the respective Companies to make such a claim or raise a
set-off, deduction, withholding or counterclaim in any action for breach of the relevant
Contract or otherwise give any person other than the Company the right to withhold or delay
payment of any sum due from it under the terms of the relevant Contract or the performance
of any of its obligations thereunder;

	(l)	 	so far as the Vendor is aware, no person (other than the parties to such Contracts) has any
rights (including any Security Interests) in respect of any such Contracts or the assets the
subject thereof;
	 
	(m)	 	the execution of this Agreement by the Vendor and the exercise of its rights and performance
of its obligations under the Agreement does not constitue and will not result in any breach of
any agreement or treaty to which the Vendor, Teekay Shipping Norway AS or the Companies are a
party;
	 
	(n)	 	the obligations expressed to be assumed by the Vendor or which the Vendor is to procure by
Teekay Shipping Norway AS in this Agreement are legal and valid obligations, binding on them
in accordance with the terms of this Agreement and no limit on any of their powers will be
exceeded as a result of the transaction contemplated by this Agreement or the performance by
the Vendor of its obligations herein or by Teekay Shipping Norway AS of such obligations on
behalf of the Vendor;and
	 
	(o)	 	so far as the Vendor is aware, no Insolvency Event has occurred in relation to any third
party to such Contracts.
	 
	3.3	 	No powers of attorney. There are in force no powers of attorney given by the Companies nor
any other authority (express, implied or ostensible) given by the Companies to or in favour of
any person (as agent or otherwise) to enter into any agreement, contract or commitment or to
do anything on their behalf except as set out in the Disclosure Schedule. The Disclosure
Schedule sets out details of all persons who have authority to bind the Companies in the
ordinary course of their business.
	 
	3.4	 	Change of control. Neither the sale of the Interests hereunder nor any change in the
management of the Companies as a result of this Agreement will:
	 
	(a)	 	entitle any person to modify or terminate any Contract or other arrangement with the
Companies;
	 
	(b)	 	result in the breach by the Companies under any of the terms, conditions or provisions of any
Contract or other instrument to which either of the Companies are now a party;
	 
	(c)	 	result in any present or future Indebtedness becoming due and payable or capable of being
declared due and payable prior to its stated maturity; or
	 
	(d)	 	entitle any person to receive from either of the Companies any finder’s fee, brokerage or
other commission in connection with the sale of the Interests.
	 
	3.5	 	Offers and tenders. No offer or tender or similar arrangement given or made by the Companies
are capable of giving rise to an agreement solely by the unilateral act of any person other
than the Companies.

22

 

	3.6	 	Joint Ventures etc. The Companies do not, and have not agreed to, act or carry on business
in partnership with any other person and are not and have not agreed to act or become a member
of any joint venture, consortium, corporate or unincorporated body, association or
undertaking.
	 
	3.7	 	Competition/Anti-trust. The Companies are not party to any practice, arrangement or
agreement that infringes or is likely to require registration or notification under any
relevant anti-trust or competition law.
	 
	3.8	 	Restrictive practices. The Companies are not and have not been a party to any agreement,
arrangement, understanding or practice restricting the freedom of the respective Companies to
carry on the whole or any part of their business in any place in such manner as they think fit
or to provide or take goods and/or services by such means and from and to such persons and
into or from such places as they may from time to time think fit and/or to compete in any area
or in any field or with any person.
	 
	3.9	 	Directors or Officers.
	 
	 	 	The management of Navion Gothenburg LLC is vested exclusively in its members. The
Vendor is, and the Purchaser shall be upon the Closing, the sole member of Navion Gothenburg
LLC with, in its capacity as sole member, authority to make all decisions and take all
actions for Navion Gothenburg LLC as, in its sole discretion, it shall deem necessary and
appropriate to enable Navion Gothenburg LLC to carry out any lawful activity, including but
not limited to carrying on the acquisition, ownership, operation and disposition of
oceangoing vessels. Notwithstanding its authority to do so as sole member of Navion
Gothenburg LLC, the Vendor has not appointed or elected any individuals to officer positions
of Navion Gothenburg LLC.
	 
	 	 	The management of Navion Gothenburg AS is vested in its Board of Directors: Kenneth
Hvid — Chairman; Arve Torkjel Ustgard — Managing Director; and, Stein Rynning. Teekay
Shipping Norway AS is, and Teekay Norway AS shall be upon the Closing, the sole shareholder
of Navion Gothenburg AS with, in its capacity as shareholder, authority to appoint Directors
to the Board of Navion Gothenburg AS to make all decisions and take all actions for Navion
Gothenburg AS as, in its sole discretion, it shall deem necessary and appropriate to enable
Navion Gothenburg AS to carry out any lawful activity.
	 
	4	 	FINANCIAL ARRANGEMENTS
	 
	4.1	 	Indebtedness. The Companies do not have outstanding nor have they incurred or agreed to
incur any Indebtedness (including, without limitation, any indebtedness for moneys borrowed or
raised under any acceptance credit, bond, rate, bill of exchange or commercial paper, finance
lease, hire purchase agreement, trade bills, forward sale or
purchase agreement or conditional sale agreement or other transaction having the commercial
effect of a borrowing).
	 
	4.2	 	Borrowings. The purchase of the Vessel by the LLC and the cost of conversion are financed by
means of a US$106,000,000 secured revolving credit facility from DnB Nor

23

 

	 	 	Bank ASA as facility
agent. At the Closing Date the amount of US$60,000,000 has been drawn on the loan with
US$46,000,000 remaining available to be drawn.

	 	 	The Companies have not borrowed any monies from the Vendor, any Vendor Group Companies or
any third party.
	 
	4.3	 	Loans by the Companies. The Companies have not made any loans to the Vendor, any Vendor
Group Companies or any third party.
	 
	4.4	 	Debts. The Companies have not factored any of its debts. There are no debts owing to the
Companies.
	 
	4.5	 	No guarantee or Security Interests. No guarantee or Security Interest has been given or
entered into by the Companies or any third party in respect of Indebtedness or other
obligations of the Companies and no guarantee or Security Interest has been given or entered
into by the Companies in respect of any other person.
	 
	4.6	 	No indemnities given by the Companies. The Companies are not responsible (including on a
contingent basis) for the indebtedness, or for the default in the performance of any
obligation, of any person nor are they party to any option or pre-emption right or any
guarantee, suretyship or any other obligation (whatever called) to pay, purchase or provide
funds (whether by advance of money, the purchase of or subscription for shares or other
securities or the purchase of assets or services or otherwise) for the payment of, or as an
indemnity against the consequence of default in the payment of, any indebtedness of any
person.
	 
	4.7	 	Bank accounts. Details of all bank accounts of the Companies, and particulars of the
balances of all the Companies’ bank accounts as at a date not more than 2 (two) Business Days
before the date of this Agreement, have been disclosed to the Purchaser, and the Companies
have no other bank accounts. Since the date of such particulars, there have been no material
payments out of any such bank accounts, except for routine payments in the ordinary course of
business consistent with past practices.
	 
	5	 	ASSETS, LIABILITIES AND OTHER ARRANGEMENTS
	 
	5.1	 	No other assets and liabilities. The LLC has no assets other than the Vessel and the
Companies have no liabilities other than those arising in connection with the Contracts and as
set forth in the Disclosure Schedule and, save for their obligations under the Contracts,
there are no agreements or arrangements to which the Companies are a party that increase the
obligations of the Companies under the Contracts or that create or include any other
obligation that might be binding on the Companies.
	 
	5.2	 	Business activity. The only business activities of the Companies collectively since
incorporation or formation have been the acquisition, ownership, and operation of the Vessel.
	 
	6	 	PROPERTIES
	 
	6.1	 	Properties. The Companies do not own, occupy or use any real property.

24

 

	7	 	INSURANCE
	 
	7.1	 	Insurance policies. The Companies maintain the policies of insurance listed in the
Disclosure Schedule and attached to the Disclosure Schedule, each of which is in full force
and effect and, to the Vendor’s knowledge, not subject to being avoided for any reason.
	 
	8	 	LITIGATION AND OTHER DISPUTES
	 
	8.1	 	No proceedings. Neither of the Companies are, and, to the Vendor’s knowledge, no director or
officer of the Companies (in relation to the Companies’ affairs or, if resolved in a manner
adverse to such director or officer, could result in a materially adverse effect on the
Companies’ business) is, engaged in or a party to any dispute, litigation, arbitration,
prosecution or other legal proceedings or in any proceedings or hearings before any statutory
or governmental body, department, board or agency, nor are any of the foregoing pending or, to
the Vendor’s knowledge, threatened or expected either against or by the Companies, and, to the
Vendor’s knowledge, there is no fact or circumstance or any other form of written demand in
existence that might give rise to the same, or form the basis of any criminal prosecution
against either of the Companies.
	 
	8.2	 	No orders or judgements. There is no order, decree or judgement of any court, tribunal or
any governmental agency of any country outstanding against the Companies or, to the Vendor’s
knowledge, any person for whose acts either of the Companies may be vicariously liable, and,
to the Vendor’s knowledge, there are no circumstances likely to give rise to vicarious
liability of the Companies, and no injunction has been granted against the Companies.
	 
	8.3	 	No unlawful acts. Neither of the Companies has committed, or been prosecuted for, any breach
of a statutory or regulatory duty or any tortious or other criminal or unlawful or
unauthorised act that could reasonably be expected to lead, or has led, to a claim for damages
or an injunction or other order of a court or tribunal of competent jurisdiction being made
against it, and there are no circumstances likely to give rise to such a breach or act.
	 
	9	 	COMPLIANCE WITH LEGAL REQUIREMENTS
	 
	9.1	 	Compliance by Companies. The Companies have, so far as the Vendor is aware, complied and are
continuing to comply in all material respects with all relevant legislation and regulations
and guidelines in any part of the world applicable to them and/or their business and/or their
assets.
	 
	9.2	 	Ultra vires. The Companies are empowered and duly qualified to carry on business in all
jurisdictions in which their present businesses are now carried on and have not entered into
any ultra vires transaction.
	 
	9.3	 	Returns. All returns, particulars, resolutions and other documents required to be filed with
or delivered to the Registrar of Corporations in the Republic of the Marshall Islands by
Navion Gothenburg LLC and the Registrar of Corporations in Norway by Navion Gothenburg AS have
been properly prepared and so filed or delivered.

25

 

	9.4	 	Limited Liability Company Agreement. The Limited Liability Company Agreement of, and all
resolutions passed by, Navion Gothenburg LLC and all other legal requirements concerning
Navion Gothenburg LLC have been complied with. A copy of Navion Gothenburg LLC’s Limited
Liability Company Agreement has been provided to the Purchaser, which is complete and accurate
in all material respects, has attached thereto or incorporated therein copies of all
resolutions and other documents required by law to be so attached or incorporated, and fully
sets out the rights and restrictions attaching to the Interests.
	 
	9.5	 	Constitutional documents. The articles of, and all resolutions passed by, Navion Gothenburg
AS and all other legal requirements concerning Navion Gothenburg AS have been complied with. A
copy of Navion Gothenburg AS’ constitutional documents has been provided to the Purchaser,
which is complete and accurate in all material respects, and fully sets out the rights and
restrictions attaching to the Interests.
	 
	9.6	 	Books and records. The statutory books (including all registers and minute books whether
electronic or otherwise), books of account and other statutory records of the Companies have
been properly and accurately written up or maintained in accordance with all applicable laws
and are up to date (but not including the date of the Agreement) and comprise complete and
accurate records of all information required to record therein other than to the extent that
they are not material to the business of the respective Companies. The Companies have not
received any notice or allegation that any of the statutory books, books of accounts or other
records of whatsoever kind of such of the Companies are inaccurate or incomplete or should be
rectified.
	 
	9.7	 	Companies’ name. The Companies do not use or otherwise carry on business under any name
other than their full corporate name. The Companies have the full right to use their
corporate name without restriction, and the Companies and the Vendor are not aware of any
actual or threatened challenge to the use of those names or any of them in respect of the
business of the Companies or any claim that any such use infringes any rights of any third
party.
	 
	9.8	 	Consents and licences. The Companies hold any and all licences (including statutory
licences), permissions, authorisations, consents, registrations and exemptions required by
them for the operation of their business as now carried on, and, to the Vendor’s knowledge,
none of these is subject to revocation or cancellation for any reason.
	 
	9.9	 	No penalties or fines. Neither of the Companies nor any of their officers (or agents during
the course of their duties) have committed or omitted to do any act or thing that has given or
could give rise to a material claim, fine, penalty or other liability, at law or
in equity, in respect of the physical or environmental condition of any of their fixed or
moveable assets, real property or products.
	 
	9.10	 	No investigations and inquiries. No investigations, inquiries or reviews by or on behalf of
any governmental or other body in respect of the Companies or their business or assets are
pending or, to the Vendor’s knowledge, in existence or have been conducted or threatened, and
there are no circumstances that might give rise to such investigation, inquiry or review.

26

 

	10	 	EMPLOYMENT
	 
	10.1	 	Employees. The Companies do not, and have never had any employees and there are no
arrangements (written or otherwise) under which remuneration or benefit or other sum
whatsoever is paid or given to any person (including any officer or consultant of the
Companies).
	 
	11	 	TAXATION
	 
	11.1	 	Tax Residence.
	 
	(a)	 	Navion Gothenburg LLC is and always has been resident in The Bahamas for the purposes of
Taxation and has never been resident in any other country for the purposes of Taxation or
treated as so resident for the purposes of any double taxation agreement.
	 
	(b)	 	Navion Gothenburg LLC has never traded through a branch, agency or permanent establishment
situated outside The Bahamas.
	 
	(c)	 	No circumstances exist whereby a person not resident in The Bahamas is assessable and
chargeable to tax in the name of Navion Gothenburg LLC.
	 
	(d)	 	Navion Gothenburg LLC is not liable to pay nor has it at any time incurred any liability to
Tax chargeable under the laws of any jurisdiction other than The Bahamas.
	 
	(e)	 	Navion Gothenburg AS is and always has been resident in Norway for the purposes of Taxation
and has never been resident in any other country for the purposes of Taxation or treated as so
resident for the purposes of any double taxation agreement.
	 
	(f)	 	Navion Gothenburg AS has never traded through a branch, agency or permanent establishment
situated outside Norway.
	 
	(g)	 	No circumstances exist whereby a person not resident in Norway is assessable and chargeable
to tax in the name of Navion Gothenburg AS.
	 
	(h)	 	Navion Gothenburg AS is not liable to pay nor has it at any time incurred any liability to
Tax chargeable under the laws of any jurisdiction other than Norway.
	 
	11.2	 	Disclosures, Notices, Returns, Clearances and Records.
	 
	(a)	 	All notices, reports, disclosures, accounts, computations, statements, assessments,
registrations, de-registrations and any other information that ought to have been made or
supplied by or in respect of the Companies for any Taxation purposes have been made or
supplied on a proper basis, were punctually submitted, were accurate and complete when
submitted and remain accurate and complete and are not the subject of any dispute, enquiry or
investigation with any Taxation Authority, and, to the Vendor’s knowledge, there are no
present circumstances that are likely to give rise to any such dispute, enquiry or
investigation.

27

 

	(b)	 	No action has been taken by the Companies in respect of which any consent or clearance from
any Taxation Authority was required except in circumstances where such consent or clearance
was validly obtained, and no conditions were attaching thereto.
	 
	(c)	 	The Companies have made and submitted each claim, disclaimer, election, notice and consent to
have been made and submitted, and details of all such claims, disclaimers, elections, notices
and consents are set forth in the Disclosure Schedule.
	 
	(d)	 	The Companies have never been subject to any enquiry, visit, audit, investigation or
discovery order by any Taxation Authority nor, to the Vendor’s knowledge, are there any
circumstances existing that make it likely that any such enquiry, visit, audit, investigation
or discovery order will be made in the next 12 months.
	 
	(e)	 	The Disclosure Schedule sets out details of all notices given by any Taxation Authority to or
in relation to the Companies, the provisions of which remain in force.
	 
	(f)	 	The Companies have sufficient records relating to past events to permit accurate calculation
of the Taxation liability or relief that would arise upon a disposal or realisation on
completion of each asset owned by the Companies before Closing.
	 
	(g)	 	Except as set out in the Disclosure Schedule, the Companies’ Taxation affairs are not
dependent on or subject to any concession, agreement or other formal or informal arrangement
with any Taxation Authority.
	 
	11.3	 	All Tax Paid.
	 
	(a)	 	All Taxation for which the Companies are liable and that ought to have been paid has been
paid on a timely basis to the appropriate Taxation Authority.
	 
	(b)	 	The Companies have not paid, within the three years ending on the date of this Agreement, nor
will become liable to pay, any interest, penalty, fine or surcharge to any Taxation Authority.
	 
	(c)	 	The Companies have not received from any Taxation Authority (and have not subsequently repaid
to or settled with that Taxation Authority) any payment to which they were not entitled or any
notice in which their liability to Taxation was understated.
	 
	11.4	 	Stamp Duty.
	 
	(a)	 	All documents that are in the possession of the Companies or under their control or to which
the Companies are a party and that attract stamp duty have been properly stamped, and the
Companies have duly paid all stamp duty to which they are, have been or may be made liable,
and there is no liability for any penalty in respect of such duty nor, to the Vendor’s
knowledge, are there any circumstances or transactions to which the Companies are or have been
a party, which may result in the Companies becoming liable for any such penalty.
	 
	11.5	 	U.S. Tax Classification. Navion Gothenburg LLC is classified for United States federal
income tax purposes as a disregarded entity pursuant to Treas. Reg. Section 301.7701-

28

 

3.
Neither the Vendor nor Navion Gothenburg LLC will take any action to change the U.S. federal
income tax classification of Navion Gothenburg LLC.

	12	 	MISCELLANEOUS
	 
	12.1	 	No broker’s fees. No one is entitled to receive from either of the Companies any finder’s
fee, brokerage, or other commission in connection with the purchase of the Interests.
	 
	12.2	 	Effect of entering into this Agreement. Compliance with the terms of this Agreement or
Closing does not and will not:
	 
	(a)	 	conflict with or result in the breach of or constitute a default under any of the terms,
conditions or provisions of:

	 	(i)	 	any agreement or instrument to which the Companies are now a party, including
the Contracts; or
	 
	 	(ii)	 	Navion Gothenburg LLC’s Limited Liability Agreement or give rise to or cause
to become exercisable any right of pre-emption or right of first refusal;
	 
	 	(iii)	 	the articles and constitutional documents of Navion Gothenburg AS or give
rise to or cause to become exercisable any right of pre-emption or right of first
refusal; or
	 
	 	(iv)	 	any loan to or mortgage created by either of the Companies or any lien,
lease, order, judgment, award, injunction, decree, ordinance or regulation or any
other restriction of any kind or character to which any property of the Companies are
subject or by which the Companies are bound;

	(b)	 	result in any present or future Indebtedness becoming due or capable of becoming due and
payable prior to its stated maturity;
	 
	(c)	 	relieve any other party to an agreement or arrangement with the Companies, including the
Contracts, of its obligations thereunder (whether contractual or otherwise) or enable it to
vary or terminate its rights or obligations thereunder or determine any right or benefit
enjoyed by the Companies or to exercise any right, whether under an agreement with, or
otherwise in respect of, the Companies;
	 
	(d)	 	result in the creation or imposition of any Security Interest on any assets of the Companies;
	 
	(e)	 	cause the Companies to lose the benefit of any right or privilege either of them presently
enjoys;
	 
	(f)	 	cause any person who normally does business with either of the Companies not to continue to
do so on the same basis as previously; or

29

 

	(g)	 	cause any licence or authority necessary or desirable for the continuation of the Companies’
respective business to be determined or not renewed or continued or renewed on less favourable
terms.
	 
	12.3	 	Accurate information provided. All information given by the Vendor or any Vendor Group
Companies or officials or professional advisers of the Companies or the Vendor to any of the
directors, officials or professional advisers of the Purchaser in the course of negotiations
leading to this Agreement, taken as a whole, was, when given, and remains and will at Closing
be true and accurate in all material respects, and there is no matter or fact that has not
been disclosed to the Purchaser that renders any such information untrue or misleading in any
material respect.
	 
	12.4	 	Disclosure Schedule etc accurate. All information contained in the Disclosure Schedule is
true, complete and accurate in all respects and nothing has been omitted and, there is no
matter or fact, which renders any such information untrue, inaccurate, incomplete or
misleading in any material respect.
	 
	12.5	 	All information disclosed. All information relating to the Companies that the Vendor knows
or should reasonably know and that is material to be known by the Purchaser in the context of
the sale of the Interests has been disclosed to the Purchaser and, to the best of the
knowledge, information and belief of the Vendor, there are no other facts or matters
undisclosed to the Purchaser that could reasonably be expected to have a material adverse
effect on the Companies or the Interests.
	 
	13	 	INSOLVENCY
	 
	13.1	 	No Insolvency event. No Insolvency Event has occurred in relation to the Companies and no
events or circumstances have arisen that entitle or could entitle any person to take any
action, appoint any person, commence proceedings or obtain any order instigating an Insolvency
Event.
	 
	14	 	THE VESSEL
	 
	14.1	 	Vessel Commitments. In relation to the Vessel:

	 	(i)	 	the Vessel is properly registered in the name of Navion Gothenburg LLC under
and pursuant to the flag and law of the Bahamas and all fees due and payable in
connection with such registration have been paid;
	 
	 	(ii)	 	the Vessel is entered with Det norske Veritas (or another classification
society of like standing) and has the highest classification rating issued by such
society for a vessel of the type, age and class of the Vessel;
	 
	 	(iii)	 	the Vessel is in class without any recommendations or notation as to class or
other requirement of the relevant classification society, and if the Vessel is in a
port, it is in such condition that it can not be detached by any port state authority
or the flag state authority for any deficiency;
	 
	 	(iv)	 	the Vessel is owned free of all maritime liens, encumbrances and mortgages
except those that have been Disclosed in the Disclosure Schedule and accepted

30

 

by the
Purchaser and the terms of any charters that continue beyond the Closing Date,
mortgages and loan documents do not prohibit the sale of the Companies;

	 	(v)	 	the Vessel has been maintained in a proper and efficient manner in accordance
with internationally accepted standards for good ship maintenance, is in good operating
order, condition and repair and is seaworthy and all repairs made to the Vessel during
the last two years and all known scheduled repairs due to be made and all know
deficiencies have been Disclosed in the Disclosure Schedule;
	 
	 	(vi)	 	the Vessel is not (i) under arrest or otherwise detained, (ii) other than in
the ordinary course of business, in the possession of any person (other than her master
and crew) or subject to a possessory lien; or (iii) other than in the ordinary course
of business, subject to any other lien;
	 
	 	(vii)	 	the Vessel complies in all material respects with all laws, the requirements
of any government agency having jurisdiction over the Vessel, the provisions of all
international conventions and the provisions of the rules and regulations issued under
international conventions applicable to that Vessel;
	 
	 	(viii)	 	the Vessel is supplied with valid and up-to-date safety, safety construction, safety
equipment, radio, loadline, health, tonnage, trading and other certificates or
documents as may for the time being be prescribed by the law of the flag of the Vessel
or of any other pertinent jurisdiction, or that would otherwise be deemed necessary by
a shipowner acting in accordance with internationally accepted standards for good ship
management and operations; and
	 
	 	(ix)	 	The Vessel has been delivered by Navion Gothenburg AS to and accepted on an
unconditional basis by the Charterer for service under and in accordance with the terms
and conditions of the Charter.
	 
	 	(x)	 	no blacklisting or boycotting of any description whatsoever has been applied or
currently exists against or in respect of the Vessel.

31

 

SCHEDULE B

THE VESSEL

	 	 	 
	Vessel	 	“NAVION GOTHENBURG”
	Built
	 	2007
	 
	 	 
	Yard
	 	Samsung
	 
	 	 
	Class
	 	DNV (Det norske Veritas)
	 
	 	 
	Flag
	 	Bahamas
	 
	 	 
	Place of Registration
	 	Nassau
	 
	 	 
	Call sign
	 	C6VR2
	 
	 	 
	IMO (Registration) No.
	 	9308077
	 
	 	 
	Grt/Nrt
	 	82647/46578

32

 

DISCLOSURE SCHEDULE

	1.	 	Bareboat Charter of the Vessel dated 1st December 2006 made between Navion
Gothenburg LLC and Navion Gothenburg AS.
	 
	2.	 	Bareboat Charter in respect of the Vessel dated 16th January 2006 made
between Teekay Norway AS and Fronape International Company of P.O. Box 714 Georgetown,
Grand Cayman, Cayman Islands and counter-signed by Petrobras Transporte S.A. — Transpetro
of Av Presidente Vargas, 328-20091-660 Rio de Janiero, RJ, Brazi,l (as novated by agreement
dated December 1, 2006)
	 
	3.	 	Novation agreement dated December 1, 2006 between Teekay Norway AS, Navion Gothenburg
AS, Fronape International Company and Petrobras Transporte S.A. — Transpetro.
	 
	4.	 	Performance guarantee of Teekay Corporation dated December 1, 2006 in relation to the
Bareboat Charter in respect of the Vessel dated 16th January 2006 made between
Teekay Norway AS and Fronape International Company
	 
	5.	 	The Loan Facility Agreement dated July 11, 2007 among (i) Navion Gothenburg L.L.C. as
borrower, (ii) the banks and financial institutions listed therein as lenders and (iii) DnB
NOR Bank ASA as agents, mandated lead arranger, bookrunner and security trustee (the
“Agent”) and Fortis Capital Corp, as mandated lead arranger and bookrunner, providing for a
term loan facility of up to US$106,000,000.
	 
	6.	 	Guaranty and Indemnity of Teekay Corporation dated July 11, 2006.
	 
	7.	 	First Priority Bahamas Ship Mortgage dated July 11, 2006.
	 
	8.	 	Deed of Covenants dated July 11, 2006.
	 
	9.	 	General Deed of Assignment dated July 11, 2006.
	 
	10.	 	ISDA Master Agreement in favour of Navion Gothenburg L.L.C. to be entered into between
(i) Teekay Corporation (ii) Navion Gothenburg L.L.C. and (iii) the Swap Provider pursuant
to which Teekay Corporation shall novate to Navion Gothenburg L.L.C. its rights and
obligations in relation to an interest rate swap dated 15 December 2006
	 
	11.	 	Actions by Written Consent of Navion Gothenburg L.L.C. dated August 11, 2006, January
12, 2007, July 10, 2007.
	 
	12.	 	Powers of Attorney dated January 12, 2007 and July 10, 2007.
	 
	13.	 	List of insurance policies in effect to be provided: Gard Certificate of Entry number
193,182 dated March 30, 2007 and Sul America Hull & Machinery War Risks Policy No.
292512-5.

33

 

EXECUTION PAGE

IN WITNESS WHEREOF this Purchase Agreement has been executed by or on behalf of the parties the day
and year first above written.

EXECUTED by

TEEKAY CORPORATION

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 

Name: Arthur Bensler

Title: Authorized Person

EXECUTED by

BY: TEEKAY OFFSHORE PARTNERS L.P.,

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 

Name:

Title:

Purchase Agreement

34

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