Document:

exv4w1

Exhibit 4.1

Execution Copy

 

FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

TEEKAY LNG PARTNERS L.P.

AS AMENDED

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I
	 
	DEFINITIONS
	 
	Section 1.1 Definitions
	 	 	1	 
	Section 1.2 Construction
	 	 	22	 
	 
	ARTICLE II
	 
	ORGANIZATION
	 
	Section 2.1 Formation
	 	 	22	 
	Section 2.2 Name
	 	 	22	 
	Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices
	 	 	23	 
	Section 2.4 Purpose and Business
	 	 	23	 
	Section 2.5 Powers
	 	 	23	 
	Section 2.6 Power of Attorney
	 	 	24	 
	Section 2.7 Term
	 	 	25	 
	Section 2.8 Title to Partnership Assets
	 	 	25	 
	 
	ARTICLE III
	 
	RIGHTS OF LIMITED PARTNERS
	 
	Section 3.1 Limitation of Liability
	 	 	26	 
	Section 3.2 Management of Business
	 	 	26	 
	Section 3.3 Outside Activities of the Limited Partners
	 	 	26	 
	Section 3.4 Rights of Limited Partners
	 	 	26	 
	 
	ARTICLE IV
	 
	CERTIFICATES; RECORD HOLDERS; TRANSFER OF
 PARTNERSHIP INTERESTS; REDEMPTION OF 
PARTNERSHIP INTERESTS
	 
	Section 4.1 Certificates
	 	 	27	 
	Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	28	 
	Section 4.3 Record Holders
	 	 	28	 
	Section 4.4 Transfer Generally
	 	 	29	 
	Section 4.5 Registration and Transfer of Limited Partner Interests
	 	 	29	 
	Section 4.6 Transfer of the General Partner’s General Partner Interest
	 	 	30	 
	Section 4.7 Transfer of Incentive Distribution Rights
	 	 	31	 
	Section 4.8 Restrictions on Transfers
	 	 	31	 

TEEKAY LNG PARTNERS L.P.

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, AS AMENDED

 

 

	 	 	 	 	 

	ARTICLE V
	 
	CAPITAL CONTRIBUTIONS AND ISSUANCE OF 
PARTNERSHIP INTERESTS
	 
	Section 5.1 Organizational Contributions
	 	 	32	 
	Section 5.2 Contributions by the General Partner and its Affiliates
	 	 	32	 
	Section 5.3 Contributions by Initial Limited Partners and Distributions to the General Partner and its Affiliates
	 	 	33	 
	Section 5.4 Interest and Withdrawal
	 	 	33	 
	Section 5.5 Capital Accounts
	 	 	34	 
	Section 5.6 Issuances of Additional Partnership Securities
	 	 	36	 
	Section 5.7 Limitations on Issuance of Additional Partnership Securities
	 	 	37	 
	Section 5.8 Conversion of Subordinated Units
	 	 	37	 
	Section 5.9 Limited Preemptive Right
	 	 	39	 
	Section 5.10 Splits and Combinations
	 	 	39	 
	Section 5.11 Fully Paid and Non-Assessable Nature of Limited Partner Interests
	 	 	40	 
	 
	ARTICLE VI
	 
	ALLOCATIONS AND DISTRIBUTIONS
	 
	Section 6.1 Allocations for Capital Account Purposes
	 	 	40	 
	Section 6.2 Allocations for Tax Purposes
	 	 	48	 
	Section 6.3 Requirement and Characterization of Distributions; Distributions to Record Holders
	 	 	50	 
	Section 6.4 Distributions of Available Cash from Operating Surplus
	 	 	51	 
	Section 6.5 Distributions of Available Cash from Capital Surplus
	 	 	52	 
	Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
	 	 	53	 
	Section 6.7 Special Provisions Relating to the Holders of Subordinated Units
	 	 	53	 
	Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights
	 	 	54	 
	Section 6.9 Entity-Level Taxation
	 	 	54	 
	 
	ARTICLE VII
	 
	MANAGEMENT AND OPERATION OF BUSINESS
	 
	Section 7.1 Management
	 	 	54	 
	Section 7.2 Certificate of Limited Partnership
	 	 	57	 
	Section 7.3 Restrictions on the General Partner’s Authority
	 	 	57	 
	Section 7.4 Reimbursement of the General Partner
	 	 	58	 
	Section 7.5 Outside Activities
	 	 	59	 
	Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
	 	 	60	 
	Section 7.7 Indemnification
	 	 	60	 

TEEKAY LNG PARTNERS L.P.

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, AS AMENDED

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	Section 7.8 Liability of Indemnitees
	 	 	62	 
	Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
	 	 	63	 
	Section 7.10 Other Matters Concerning the General Partner
	 	 	64	 
	Section 7.11 Purchase or Sale of Partnership Securities
	 	 	65	 
	Section 7.12 Registration Rights of the General Partner and its Affiliates
	 	 	65	 
	Section 7.13 Reliance by Third Parties
	 	 	67	 
	 
	ARTICLE VIII	 	 	 	 
	 
	BOOKS, RECORDS, ACCOUNTING AND REPORTS	 	 	 	 
	 
	Section 8.1 Records and Accounting
	 	 	68	 
	Section 8.2 Fiscal Year
	 	 	68	 
	Section 8.3 Reports
	 	 	68	 
	 
	ARTICLE IX	 	 	 	 
	 
	TAX MATTERS	 	 	 	 
	 
	Section 9.1 Tax Returns and Information
	 	 	69	 
	Section 9.2 Tax Elections
	 	 	69	 
	Section 9.3 Tax Controversies
	 	 	69	 
	Section 9.4 Withholding
	 	 	69	 
	Section 9.5 Conduct of Operations
	 	 	70	 
	 
	ARTICLE X	 	 	 	 
	 
	ADMISSION OF PARTNERS	 	 	 	 
	 
	Section 10.1 Admission of Initial Limited Partners
	 	 	70	 
	Section 10.2 Admission of Substituted Limited Partners
	 	 	70	 
	Section 10.3 Admission of Successor General Partner
	 	 	71	 
	Section 10.4 Admission of Additional Limited Partners
	 	 	71	 
	Section 10.5 Amendment of Agreement and Certificate of Limited Partnership
	 	 	71	 
	 
	ARTICLE XI	 	 	 	 
	 
	WITHDRAWAL OR REMOVAL OF PARTNERS	 	 	 	 
	 
	Section 11.1 Withdrawal of the General Partner
	 	 	72	 
	Section 11.2 Removal of the General Partner
	 	 	73	 
	Section 11.3 Interest of Departing Partner and Successor General Partner
	 	 	74	 
	Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages
	 	 	75	 
	Section 11.5 Withdrawal of Limited Partners
	 	 	75	 

TEEKAY LNG PARTNERS L.P.

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, AS AMENDED

iii 

 

	 	 	 	 	 

	ARTICLE XII	 	 	 	 
	 
	DISSOLUTION AND LIQUIDATION	 	 	 	 
	 
	Section 12.1 Dissolution
	 	 	76	 
	Section 12.2 Continuation of the Business of the Partnership After Dissolution
	 	 	76	 
	Section 12.3 Liquidator
	 	 	77	 
	Section 12.4 Liquidation
	 	 	77	 
	Section 12.5 Cancellation of Certificate of Limited Partnership
	 	 	78	 
	Section 12.6 Return of Contributions
	 	 	78	 
	Section 12.7 Waiver of Partition
	 	 	78	 
	Section 12.8 Capital Account Restoration
	 	 	79	 
	 
	ARTICLE XIII	 	 	 	 
	 
	AMENDMENT OF PARTNERSHIP AGREEMENT; 
MEETINGS; RECORD DATE	 	 	 	 
	 
	Section 13.1 Amendments to be Adopted Solely by the General Partner
	 	 	79	 
	Section 13.2 Amendment Procedures
	 	 	80	 
	Section 13.3 Amendment Requirements
	 	 	81	 
	Section 13.4 Special Meetings
	 	 	81	 
	Section 13.5 Notice of a Meeting
	 	 	82	 
	Section 13.6 Record Date
	 	 	82	 
	Section 13.7 Adjournment
	 	 	82	 
	Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes
	 	 	82	 
	Section 13.9 Quorum and Voting
	 	 	83	 
	Section 13.10 Conduct of a Meeting
	 	 	83	 
	Section 13.11 Action Without a Meeting
	 	 	84	 
	Section 13.12 Right to Vote and Related Matters
	 	 	84	 
	 
	ARTICLE XIV	 	 	 	 
	 
	MERGER	 	 	 	 
	 
	Section 14.1 Authority
	 	 	85	 
	Section 14.2 Procedure for Merger or Consolidation
	 	 	85	 
	Section 14.3 Approval by Limited Partners of Merger or Consolidation
	 	 	86	 
	Section 14.4 Certificate of Merger
	 	 	87	 
	Section 14.5 Amendment of Partnership Agreement
	 	 	87	 
	Section 14.6 Effect of Merger
	 	 	87	 
	 
	ARTICLE XV	 	 	 	 
	 
	RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS	 	 	 	 
	 
	Section 15.1 Right to Acquire Limited Partner Interests
	 	 	88	 

TEEKAY LNG PARTNERS L.P.

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, AS AMENDED

iv 

 

	 	 	 	 	 

	ARTICLE XVI	 	 	 	 
	 
	GENERAL PROVISIONS	 	 	 	 
	 
	Section 16.1 Addresses and Notices
	 	 	90	 
	Section 16.2 Further Action
	 	 	90	 
	Section 16.3 Binding Effect
	 	 	90	 
	Section 16.4 Integration
	 	 	91	 
	Section 16.5 Creditors
	 	 	91	 
	Section 16.6 Waiver
	 	 	91	 
	Section 16.7 Counterparts
	 	 	91	 
	Section 16.8 Applicable Law
	 	 	91	 
	Section 16.9 Invalidity of Provisions
	 	 	91	 
	Section 16.10 Consent of Partners
	 	 	91	 

TEEKAY LNG PARTNERS L.P.

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, AS AMENDED

v 

 

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED 

PARTNERSHIP OF TEEKAY LNG PARTNERS L.P.

     THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TEEKAY LNG PARTNERS L.P.
dated as of May 10, 2005, and amended as of May 31, 2006 and January 1, 2007, is entered into by
and between Teekay GP L.L.C., a Marshall Islands limited liability company, as the General Partner,
and Teekay Shipping Corporation, a Marshall Islands corporation, as the Organizational Limited
Partner, together with any other Persons who become Partners in the Partnership or parties hereto
as provided herein. In consideration of the covenants, conditions and agreements contained herein,
the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

	Section 1.1 Definitions.

     The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.

     “Acquisition” means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing the operating
capacity or revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.

     “Additional Book Basis” means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:

     (i) Any negative adjustment made to the Carrying Value of an Adjusted Property as a
result of either a Book-Down Event or a Book-Up Event shall first be deemed to offset or
decrease that portion of the Carrying Value of such Adjusted Property that is attributable
to any prior positive adjustments made thereto pursuant to a Book-Up Event or Book-Down
Event.

     (ii) If Carrying Value that constitutes Additional Book Basis is reduced as a result of
a Book-Down Event and the Carrying Value of other property is increased as a result of such
Book-Down Event, an allocable portion of any such increase in Carrying Value shall be
treated as Additional Book Basis; provided, that the amount treated as Additional Book Basis
pursuant hereto as a result of such Book-Down Event shall not exceed the amount by which the
Aggregate Remaining Net Positive Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the Partnership’s Adjusted Property
after such Book-Down Event (determined without regard to the application of this clause (ii)
to such Book-Down Event).

 

 

     “Additional Book Basis Derivative Items” means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book Basis
attributable to all of the Partnership’s Adjusted Property as of the beginning of any taxable
period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period
(the “Excess Additional Book Basis”), the Additional Book Basis Derivative Items for such period
shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis
Derivative Items determined without regard to this sentence as the Excess Additional Book Basis
bears to the Additional Book Basis as of the beginning of such period.

     “Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner
pursuant to Section 10.4 and who is shown as such on the books and records of the Partnership.

     “Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end
of each fiscal year of the Partnership, (a) increased by any amounts that such Partner is obligated
to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year, are reasonably expected to be
made to such Partner in subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partner’s Capital Account that are
reasonably expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account
is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith. The “Adjusted Capital Account” of a Partner in respect
of a General Partner Interest, a Common Unit, a Subordinated Unit or an Incentive Distribution
Right or any other Partnership Interest shall be the amount which such Adjusted Capital Account
would be if such General Partner Interest, Common Unit, Subordinated Unit, Incentive Distribution
Right or other Partnership Interest were the only interest in the Partnership held by such Partner
from and after the date on which such General Partner Interest, Common Unit, Subordinated Unit,
Incentive Distribution Right or other Partnership Interest was first issued.

     “Adjusted Operating Surplus” means, with respect to any period, Operating Surplus generated
with respect to such period (a) less (i) any net increase in Working Capital Borrowings with
respect to such period and (ii) any net reduction in cash reserves for Operating Expenditures with
respect to such period to the extent such reduction does not relate to an Operating Expenditure
made with respect to such period, and (b) plus (i) any net decrease in Working Capital Borrowings
with respect to such period, and (ii) any net increase in cash reserves for Operating Expenditures
with respect to such period to the extent such reserve is required by any debt instrument for the
repayment of principal, interest or premium. Adjusted Operating Surplus does not include that
portion of Operating Surplus included in clauses (a)(i) and (a)(ii) of the definition of Operating
Surplus.

2

 

     “Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or 5.5(d)(ii).

     “Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries’ controls, is controlled by or is under common control with, the
Person in question. As used herein, the term “control” means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

     “Aggregate Remaining Net Positive Adjustments” means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.

     “Agreed Allocation” means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including, without
limitation, a Curative Allocation (if appropriate to the context in which the term “Agreed
Allocation” is used).

     “Agreed Value” of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution as determined by the General Partner. The General
Partner shall use such method as it determines to be appropriate to allocate the aggregate Agreed
Value of Contributed Properties contributed to the Partnership in a single or integrated
transaction among each separate property on a basis proportional to the fair market value of each
Contributed Property.

     “Agreement” means this First Amended and Restated Agreement of Limited Partnership of Teekay
LNG Partners L.P., as it may be amended, supplemented or restated from time to time.

     “Assignee” means a Person to whom one or more Limited Partner Interests have been transferred
in a manner permitted under this Agreement and who has executed and delivered a Transfer
Application as required by this Agreement, but who has not been admitted as a Substituted Limited
Partner.

     “Associate” means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.

     “Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:

     (a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the
Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that are
not wholly owned) on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash
equivalents in the case of Subsidiaries that are not wholly owned) on hand on the date of

3

 

determination of Available Cash with respect to such Quarter resulting from Working Capital
Borrowings made subsequent to the end of such Quarter, less

     (b) the amount of any cash reserves (or the Partnership’s proportionate share of cash reserves
in the case of Subsidiaries that are not wholly owned) established by the General Partner to (i)
provide for the proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the Partnership Group)
subsequent to such Quarter, (ii) comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is
a party or by which it is bound or its assets are subject or (iii) provide funds for distributions
under Section 6.4 or 6.5 in respect of any one or more of the next four Quarters; provided,
however, that the General Partner may not establish cash reserves pursuant to (iii) above if the
effect of such reserves would be that the Partnership is unable to distribute the Minimum Quarterly
Distribution on all Common Units, plus any Cumulative Common Unit Arrearage on all Common Units,
with respect to such Quarter; and, provided further, that disbursements made by a Group Member or
cash reserves established, increased or reduced after the end of such Quarter but on or before the
date of determination of Available Cash with respect to such Quarter shall be deemed to have been
made, established, increased or reduced, for purposes of determining Available Cash, within such
Quarter if the General Partner so determines.

     “Board of Directors” means the board of directors or managers of a corporation or limited
liability company, as applicable, or if a limited partnership, the board of directors or board of
managers of the general partner of such limited partnership.

     “Book Basis Derivative Items” means any item of income, deduction, gain or loss included in
the determination of Net Income or Net Loss that is computed with reference to the Carrying Value
of an Adjusted Property (e.g., depreciation, depletion, or gain or loss with respect to an Adjusted
Property).

     “Book-Down Event” means an event that triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).

     “Book-Tax Disparity” means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for United States federal
income tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the difference between
such Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical
balance of such Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.

     “Book-Up Event” means an event that triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).

4

 

     “Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of New York
shall not be regarded as a Business Day.

     “Capital Account” means the capital account maintained for a Partner pursuant to Section 5.5.
The “Capital Account” of a Partner in respect of a General Partner Interest, a Common Unit, a
Subordinated Unit, an Incentive Distribution Right or any other Partnership Interest shall be the
amount which such Capital Account would be if such General Partner Interest, Common Unit,
Subordinated Unit, Incentive Distribution Right or other Partnership Interest were the only
interest in the Partnership held by such Partner from and after the date on which such General
Partner Interest, Common Unit, Subordinated Unit, Incentive Distribution Right or other Partnership
Interest was first issued.

     “Capital Contribution” means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.

     “Capital Improvement” means any (a) addition or improvement to the capital assets owned by any
Group Member or (b) acquisition of existing, or the construction of new, capital assets (including,
without limitation, liquefied natural gas carriers, crude oil tankers and related assets), in each
case if such addition, improvement, acquisition or construction is made to increase the operating
capacity or revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such addition, improvement, acquisition or
construction.

     “Capital Surplus” has the meaning assigned to such term in Section 6.3(a).

     “Carrying Value” means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners’ and Assignees’ Capital Accounts in respect of such Contributed
Property, and (b) with respect to any other Partnership property, the adjusted basis of such
property for United States federal income tax purposes, all as of the time of determination. The
Carrying Value of any property shall be adjusted from time to time in accordance with Sections
5.5(d)(i) and 5.5(d)(ii) and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed appropriate by the
General Partner.

     “Cause” means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud, gross negligence or willful or wanton
misconduct in its capacity as a general partner of the Partnership.

     “Certificate” means a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or a certificate, in such form as may
be adopted by the General Partner, issued by the Partnership evidencing ownership of one or more
other Partnership Securities.

5

 

     “Certificate of Limited Partnership” means the Certificate of Limited Partnership of the
Partnership filed with the Registrar of Corporations of the Marshall Islands as referenced in
Section 7.2 as such Certificate of Registration may be amended, supplemented or restated from time
to time.

     “Citizenship Certification” means a properly completed certificate in such form as may be
specified by the General Partner by which an Assignee or a Limited Partner certifies that he (and
if he is a nominee holding for the account of another Person, that to the best of his knowledge
such other Person) is an Eligible Citizen.

     “Claim” (as used in Section 7.12(c)) has the meaning assigned to such term in Section 7.12(c).

     “Closing Date” means the first date on which Common Units are sold by the Partnership to the
Underwriters pursuant to the provisions of the Underwriting Agreement.

     “Closing Price” has the meaning assigned to such term in Section 15.1(a).

     “Code” means the United States Internal Revenue Code of 1986, as amended and in effect from
time to time. Any reference herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of any successor law.

     “Combined Interest” has the meaning assigned to such term in Section 11.3(a).

     “Commences Commercial Service” and “Commenced Commercial Service” shall mean the date a
Capital Improvement is first put into service following completion of construction and testing.

     “Commission” means the United States Securities and Exchange Commission.

     “Common Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees, and having the rights and obligations specified
with respect to Common Units in this Agreement. The term “Common Unit” does not refer to a
Subordinated Unit prior to its conversion into a Common Unit pursuant to the terms hereof.

     “Common Unit Arrearage” means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.4(a)(i).

     “Conflicts Committee” means a committee of the Board of Directors of the General Partner
composed entirely of two or more directors who are not (a) security holders, officers or employees
of the General Partner, (b) officers, directors or employees of any Affiliate of the General
Partner or (c) holders of any ownership interest in the Partnership Group other than Common Units
and who also meet the independence standards required of directors who serve on an audit committee
of a board of directors established by the Securities Exchange Act of

6

 

1934, as amended, and the rules and regulations of the Commission thereunder and by the
National Securities Exchange on which the Common Units are listed.

     “Contributed Property” means each property or other asset, in such form as may be permitted by
the Marshall Islands Act, but excluding cash, contributed to the Partnership. Once the Carrying
Value of a Contributed Property is adjusted pursuant to Section 5.5(d), such property shall no
longer constitute a Contributed Property, but shall be deemed an Adjusted Property.

     “Contribution Agreement” means that certain Contribution, Conveyance and Assumption Agreement,
dated as of the Closing Date, among the General Partner, the Partnership, the Operating Company,
Teekay Shipping Corporation and the other parties named therein, together with the additional
conveyance documents and instruments contemplated or referenced thereunder.

     “Cumulative Common Unit Arrearage” means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any distributions to be made in respect of
the last of such Quarters).

     “Curative Allocation” means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).

     “Current Market Price” has the meaning assigned to such term in Section 15.1(a).

     “Departing Partner” means a former General Partner from and after the effective date of any
withdrawal or removal of such former General Partner pursuant to Section 11.1 or 11.2.

     “Depositary” means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.

     “Disposed of Adjusted Property” has the meaning assigned to such term in Section
6.1(d)(xii)(B).

     “Economic Risk of Loss” has the meaning set forth in Treasury Regulation Section 1.752-2(a).

     “Eligible Citizen” means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner or Assignee does not or would not subject such Group Member to a
significant risk of cancellation or forfeiture of any of its properties or any interest therein.

     “Estimated Incremental Quarterly Tax Amount” has the meaning assigned to such term in Section
6.9.

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     “Estimated Maintenance Capital Expenditures” means an estimate made in good faith by the Board
of Directors of the General Partner (with the concurrence of the Conflicts Committee) of the
average quarterly Maintenance Capital Expenditures that the Partnership will incur over the long
term. The Board of Directors of the General Partner (with the concurrence of the Conflicts
Committee) will be permitted to make such estimate in any manner it determines reasonable. The
estimate will be made at least annually and whenever an event occurs that is likely to result in a
material adjustment to the amount of Maintenance Capital Expenditures on a long-term basis. The
Partnership shall disclose to its Partners any change in the amount of Estimated Maintenance
Capital Expenditures in its reports made in accordance with Section 8.3 to the extent not
previously disclosed. Except as provided in the definition of Subordination Period, any
adjustments to Estimated Maintenance Capital Expenditures shall be prospective only.

     “Expansion Capital Expenditures” means cash expenditures for Acquisitions or Capital
Improvements. Expansion Capital Expenditures shall not include Maintenance Capital Expenditures.
Expansion Capital Expenditures shall include interest (and related fees) on debt incurred and
distributions on equity incurred, in each case, to finance the construction of a Capital
Improvement and paid during the period beginning on the date that the Partnership enters into a
Capital Improvement and ending on the earlier to occur of the date that such Capital Improvement
Commences Commercial Service or the date that such Capital Improvement is abandoned or disposed of.
Debt incurred or equity issued to fund such construction period interest payments, or such
construction period distributions on equity paid during such period shall also be deemed to be debt
or equity, as the case may be, incurred to finance the construction of a Capital Improvement.

     “Event of Withdrawal” has the meaning assigned to such term in Section 11.1(a).

     “Final Subordinated Units” has the meaning assigned to such term in Section 6.1(d)(x).

     “First Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(D).

     “First Target Distribution” means $0.4625 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on June 30, 2005, it means the product of $0.4625
multiplied by a fraction of which the numerator is the number of days in such period, and of which
the denominator is 91), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “Fully Diluted Basis” means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
beyond the control of the holder other than the payment of consideration and the

8

 

compliance with administrative mechanics applicable to such conversion, exercise or exchange
and (d) that were not converted into or exercised or exchanged for such Units during the period for
which the calculation is being made; provided, that for purposes of determining the number of
Outstanding Units on a Fully Diluted Basis when calculating whether the Subordination Period has
ended or Subordinated Units are entitled to convert into Common Units pursuant to Section 5.8, such
Partnership Securities, options, rights, warrants and appreciation rights shall be deemed to have
been Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period; provided, further, that if consideration will be paid to any Group Member in
connection with such conversion, exercise or exchange, the number of Units to be included in such
calculation shall be that number equal to the difference between (i) the number of Units issuable
upon such conversion, exercise or exchange and (ii) the number of Units that such consideration
would purchase at the Current Market Price.

     “General Partner” means Teekay GP L.L.C., a Marshall Islands limited liability company, and
its successors and permitted assigns as general partner of the Partnership.

     “General Partner Interest” means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it) which may be evidenced by Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which the General Partner is entitled as provided in
this Agreement, together with all obligations of the General Partner to comply with the terms and
provisions of this Agreement.

     “Group” means a Person that with or through any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or
consent solicitation made to 10 or more Persons) or disposing of any Partnership Securities with
any other Person that beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, Partnership Securities.

     “Group Member” means a member of the Partnership Group.

     “Group Member Agreement” means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, as
such may be amended, supplemented or restated from time to time.

     “Holder” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).

     “Incentive Distribution Right” means a non-voting Limited Partner Interest issued to the
General Partner, which Partnership Interest will confer upon the holder thereof only the rights

9

 

and obligations specifically provided in this Agreement with respect to Incentive Distribution
Rights (and no other rights otherwise available to or other obligations of a holder of a
Partnership Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an
Incentive Distribution Right shall not be entitled to vote such Incentive Distribution Right on any
Partnership matter except as may otherwise be required by law.

     “Incentive Distributions” means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).

     “Indemnified Persons” has the meaning assigned to such term in Section 7.12(c).

     “Indemnitee” means (a) the General Partner, (b) any Departing Partner, (c) any Person who is
or was an Affiliate of the General Partner or any Departing Partner, (d) any Person who is or was a
member, partner, director, officer, fiduciary or trustee of any Person which any of the preceding
clauses of this definition describes, (e) any Person who is or was serving at the request of the
General Partner or any Departing Partner or any Affiliate of the General Partner or any Departing
Partner as an officer, director, member, partner, fiduciary or trustee of another Person, provided
that that Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis,
trustee, fiduciary or custodial services, and (f) any Person the General Partner designates as an
“Indemnitee” for purposes of this Agreement.

     “Initial Common Units” means the Common Units sold in the Initial Offering.

     “Initial Limited Partners” means Teekay Shipping Corporation and the General Partner (with
respect to the Incentive Distribution Rights received by it pursuant to Section 5.2), and the
Underwriters, in each case upon being admitted to the Partnership in accordance with Section 10.1.

     “Initial Offering” means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.

     “Initial Unit Price” means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the Registration Statement first
became effective or (b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially sold by the Partnership, as determined by the
General Partner, in each case adjusted as the General Partner determines to be appropriate to give
effect to any distribution, subdivision or combination of Units.

     “Interim Capital Transactions” means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working
Capital Borrowings and other than for items purchased on open account in the ordinary course of
business) by any Group Member and sales of debt securities of any Group Member; (b) sales of equity
interests of any Group Member (including the Common Units sold to the Underwriters pursuant to the
exercise of the Over-Allotment Option; (c) sales or other voluntary or involuntary dispositions of
any assets of any Group Member other than (i) sales or other

10

 

dispositions of inventory, accounts receivable and other assets in the ordinary course of
business, and (ii) sales or other dispositions of assets as part of normal retirements or
replacements; (d) the termination of interest rate swap agreements; (e) capital contributions; and
(f) corporate reorganizations or restructurings.

     “Issue Price” means the price at which a Unit is purchased from the Partnership, after
reflecting any sales commission or underwriting discount charged to the Partnership.

     “Limited Partner” means, unless the context otherwise requires, (a) the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each
Substituted Limited Partner, each Additional Limited Partner and any Departing Partner upon the
change of its status from General Partner to Limited Partner pursuant to Section 11.3 or (b) solely
for purposes of Articles V, VI, VII and IX, each Assignee; provided, however, that when the term
“Limited Partner” is used herein in the context of any vote or other approval, including without
limitation Article XIII, such term shall not, solely for such purpose, include any holder of an
Incentive Distribution Right except as may otherwise be required by law.

     “Limited Partner Interest” means the ownership interest of a Limited Partner or Assignee in
the Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive Distribution
Rights or other Partnership Securities or a combination thereof or interest therein, and includes
any and all benefits to which such Limited Partner or Assignee is entitled as provided in this
Agreement, together with all obligations of such Limited Partner or Assignee to comply with the
terms and provisions of this Agreement; provided, however, that when the term “Limited Partner
Interest” is used herein in the context of any vote or other approval, including without limitation
Article XIII, such term shall not, solely for such purpose, include any holder of an Incentive
Distribution Right except as may otherwise be required by law.

     “Liquidation Date” means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.

     “Liquidator” means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4.

     “Maintenance Capital Expenditures” means cash expenditures (including expenditures for the
addition or improvement to the capital assets owned by any Group Member or for the acquisition of
existing, or the construction of new, capital assets) if such expenditure is made to maintain,
including over the long term, the operating capacity of the capital assets of the Partnership
Group, as such assets existed at the time of the expenditure. Maintenance Capital Expenditures
shall not include Expansion Capital Expenditures. Maintenance Capital Expenditures shall include
interest (and related fees) on debt incurred and distributions on equity incurred, in each case, to
finance the construction of a replacement asset and paid during the period beginning on the date
that the Partnership enters into a binding obligation to commence constructing a replacement asset
and ending on the earlier to occur of the date that such

11

 

replacement asset Commences Commercial Service or the date that such replacement asset is
abandoned or disposed of. Debt incurred to pay or equity issued to fund the construction period
interest payments, or such construction period distributions on equity shall also be deemed to be
debt or equity, as the case may be, incurred to finance the construction of a replacement asset.

     “Marshall Islands Act” means the Limited Partnership Act of the Republic of the Marshall
Islands, as amended, supplemented or restated from time to time, and any successor to such statute.

     “Merger Agreement” has the meaning assigned to such term in Section 14.1.

     “Minimum Quarterly Distribution” means $0.4125 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on June 30, 2005, it means the product of $0.4125
multiplied by a fraction of which the numerator is the number of days in such period and of which
the denominator is 91), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “National Securities Exchange” means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act of 1934, as amended, supplemented or restated from time to
time, and any successor to such statute, or the Nasdaq Stock Market or any successor thereto.

     “Net Agreed Value” means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, and (b) in the case of any property
distributed to a Partner or Assignee by the Partnership, the Partnership’s Carrying Value of such
property (as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is distributed,
reduced by any indebtedness either assumed by such Partner or Assignee upon such distribution or to
which such property is subject at the time of distribution, in either case, as determined under
Section 752 of the Code.

     “Net Income” means, for any taxable year, the excess, if any, of the Partnership’s items of
income and gain (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable year over the Partnership’s items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d); provided, that the determination of the items that have been
specially allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.

     “Net Loss” means, for any taxable year, the excess, if any, of the Partnership’s items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnership’s items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall be
determined in accordance with Section 5.5(b) and shall not

12

 

include any items specially allocated under Section 6.1(d); provided, that the determination
of the items that have been specially allocated under Section 6.1(d) shall be made as if Section
6.1(d)(xii) were not in this Agreement.

     “Net Positive Adjustments” means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.

     “Net Termination Gain” means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Partnership (a) after the Liquidation Date or (b)
upon the sale, exchange or other disposition of all or substantially all of the assets of the
Partnership Group, taken as a whole, in a single transaction or a series of related transactions
(excluding any disposition to a member of the Partnership Group). The items included in the
determination of Net Termination Gain shall be determined in accordance with Section 5.5(b) and
shall not include any items of income, gain or loss specially allocated under Section 6.1(d).

     “Net Termination Loss” means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Partnership (a) after the Liquidation Date or (b)
upon the sale, exchange or other disposition of all or substantially all of the assets of the
Partnership Group, taken as a whole, in a single transaction or a series of related transactions
(excluding any disposition to a member of the Partnership Group). The items included in the
determination of Net Termination Loss shall be determined in accordance with Section 5.5(b) and
shall not include any items of income, gain or loss specially allocated under Section 6.1(d).

     “Nonrecourse Built-in Gain” means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of
any taxable gain that would be allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.

     “Nonrecourse Deductions” means any and all items of loss, deduction or expenditure (including,
without limitation, any expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a
Nonrecourse Liability.

     “Nonrecourse Liability” has the meaning set forth in Treasury Regulation Section
1.752-1(a)(2).

     “Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).

     “Omnibus Agreement” means that Omnibus Agreement, dated as of the Closing Date, among Teekay
Shipping Corporation, the General Partner, the Partnership, and the Operating Company.

     “Operating Company” means Teekay LNG Operating L.L.C., a Marshall Islands limited liability
company, and any successors thereto.

13

 

     “Operating Company Agreement” means the Limited Liability Company Agreement of the Operating
Company, as it may be amended, supplemented or restated from time to time.

     “Operating Expenditures” means all Partnership Group (or the Partnership’s proportionate share
of expenditures in the case of Subsidiaries that are not wholly owned) cash expenditures,
including, but not limited to, taxes, reimbursements of the General Partner, repayment of Working
Capital Borrowings, debt service payments and capital expenditures, subject to the following:

          (a) Payments (including prepayments and prepayment penalties) of principal of and premium on
indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures; and

          (b) Operating Expenditures shall not include (i) Expansion Capital Expenditures or actual
Maintenance Capital Expenditures, but shall include Estimated Maintenance Capital Expenditures,
(ii) payment of transaction expenses (including taxes) relating to Interim Capital Transactions or
(iii) distributions to Partners.

     Where capital expenditures consist of both Maintenance Capital Expenditures and Expansion
Capital Expenditures, the General Partner, with the concurrence of the Conflicts Committee, shall
determine the allocation between the portion consisting of Maintenance Capital Expenditures and the
portion consisting of Expansion Capital Expenditures, and the period over which the Maintenance
Capital Expenditures will be deducted as an Operating Expenditure in calculating Operating Surplus.

     “Operating Surplus” means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,

          (a) the sum of (i) $10 million, (ii) all cash and cash equivalents of the Partnership Group
(or the Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries
that are not wholly owned) on hand as of the close of business on the Closing Date, other than cash
reserved to terminate interest rate swap agreements, (iii) all cash receipts of the Partnership
Group (or the Partnership’s proportionate share of cash receipts in the case of Subsidiaries that
are not wholly owned) for the period beginning on the Closing Date and ending on the last day of
such period, other than cash receipts from Interim Capital Transactions (except to the extent
specified in Section 6.5), (iv) all cash receipts of the Partnership Group (or the Partnership’s
proportionate share of cash receipts in the case of Subsidiaries that are not wholly owned) after
the end of such period but on or before the date of determination of Operating Surplus with respect
to such period resulting from Working Capital Borrowings and (v) the amount of distributions paid
on equity issued in connection with the construction of a Capital Improvement or replacement asset
and paid during the period beginning on the date that the Partnership enters into a binding
obligation to commence construction of such Capital Improvement or replacement asset and ending on
the earlier to occur of the date that such Capital Improvement or replacement asset Commences
Commercial Service or the date that it is abandoned or disposed of (equity issued to fund the
construction period interest payments on debt incurred (including periodic net payments under
related interest rate swap agreements), or construction period distributions on equity issued, to
finance the construction of a Capital

14

 

Improvement or replacement asset shall also be deemed to be equity issued to finance the
construction of a Capital Improvement or replacement asset for purposes of this clause (v)), less

          (b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending on the last day of such period and (ii) the amount of cash reserves (or the Partnership’s
proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned)
established by the General Partner to provide funds for future Operating Expenditures; provided,
however, that disbursements made (including contributions to a Group Member or disbursements on
behalf of a Group Member) or cash reserves established, increased or reduced after the end of such
period but on or before the date of determination of Available Cash with respect to such period
shall be deemed to have been made, established, increased or reduced, for purposes of determining
Operating Surplus, within such period if the General Partner so determines.

     Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.

     “Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.

     “Option Closing Date” means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.

     “Organizational Limited Partner” means Teekay Shipping Corporation in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.

     “Outstanding” means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership’s books and records
as of the date of determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, all Partnership Securities owned by such
Person or Group shall not be voted on any matter and shall not be considered to be Outstanding when
sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required
by law), calculating required votes, determining the presence of a quorum or for other similar
purposes under this Agreement, except that Common Units so owned shall be considered to be
Outstanding for purposes of Section 11.1(b)(iv) (such Common Units shall not, however, be treated
as a separate class of Partnership Securities for purposes of this Agreement); provided, further,
that the foregoing limitation shall not apply (i) to any Person or Group who acquired 20% or more
of any Outstanding Partnership Securities of any class then Outstanding directly from the General
Partner or its Affiliates, (ii) to any Person or Group who acquired 20% or more of any Outstanding
Partnership Securities of any class then Outstanding directly or indirectly from a Person or Group
described in clause (i) provided that the General Partner shall have notified such Person or Group
in writing that such limitation shall not apply, or (iii) to any Person or Group who acquired 20%
or more of any Partnership Securities issued by the Partnership with the prior approval of the
board of directors of the General Partner.

15

 

     “Over-Allotment Option” means the over-allotment option granted to the Underwriters by the
Partnership pursuant to the Underwriting Agreement.

     “Partner Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).

     “Partner Nonrecourse Debt Minimum Gain” has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).

     “Partner Nonrecourse Deductions” means any and all items of loss, deduction or expenditure
(including, without limitation, any expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable
to a Partner Nonrecourse Debt.

     “Partners” means the General Partner and the Limited Partners.

     “Partnership” means Teekay LNG Partners L.P., a Marshall Islands limited partnership, and any
successors thereto.

     “Partnership Group” means the Partnership and its Subsidiaries treated as a single
consolidated entity.

     “Partnership Interest” means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.

     “Partnership Minimum Gain” means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).

     “Partnership Security” means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including without limitation, Common Units, Subordinated Units and Incentive
Distribution Rights.

     “Percentage Interest” means as of any date of determination (a) as to the General Partner (in
its capacity as General Partner without reference to any Limited Partner Interests held by it),
2.0%, (b) as to any Unitholder or Assignee holding Units, the product obtained by multiplying (i)
98% less the percentage applicable to paragraph (c) by (ii) the quotient obtained by dividing (A)
the number of Units held by such Unitholder or Assignee by (B) the total number of all Outstanding
Units, and (c) as to the holders of additional Partnership Securities issued by the Partnership in
accordance with Section 5.6, the percentage established as a part of such issuance. The Percentage
Interest with respect to an Incentive Distribution Right shall at all times be zero.

     “Person” means an individual or a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, governmental agency or political
subdivision thereof or other entity.

16

 

     “Per Unit Capital Amount” means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any
Affiliate of the General Partner who holds Units.

     “Pro Rata” means (a) when modifying Units or any class thereof, apportioned equally among all
designated Units in accordance with their relative Percentage Interests, (b) when modifying
Partners and Assignees or Record Holders, apportioned among all Partners and Assignees or Record
Holders in accordance with their relative Percentage Interests and (c) when modifying holders of
Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution
Rights in accordance with the relative number or percentage of Incentive Distribution Rights held
by each such holder.

     “Purchase Date” means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.

     “Quarter” means, unless the context requires otherwise, a fiscal quarter, or, with respect to
the first fiscal quarter after the Closing Date, the portion of such fiscal quarter after the
Closing Date, of the Partnership.

     “Recapture Income” means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.

     “Record Date” means the date established by the General Partner for determining (a) the
identity of the Record Holders entitled to notice of, or to vote at, any meeting of Limited
Partners or entitled to vote by ballot or give approval of Partnership action in writing without a
meeting or entitled to exercise rights in respect of any lawful action of Limited Partners or (b)
the identity of Record Holders entitled to receive any report or distribution or to participate in
any offer.

     “Record Holder” means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day, or with respect to other
Partnership Securities, the Person in whose name any such other Partnership Security is registered
on the books that the General Partner has caused to be kept as of the opening of business on such
Business Day.

     “Registrar” means the Registrar of Corporations as defined in Section 4 of the Marshall
Islands Business Corporation Act.

     “Registration Statement” means the Registration Statement on Form F-1 (Registration No.
333-120727) as it has been or as it may be amended or supplemented from time to time, filed by the
Partnership with the Commission under the Securities Act to register the offering and sale of the
Common Units in the Initial Offering.

     “Remaining Net Positive Adjustments” means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units or Subordinated Units, the excess of (a) the

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Net Positive Adjustments of the Unitholders holding Common Units or Subordinated Units as of
the end of such period over (b) the sum of those Partners’ Share of Additional Book Basis
Derivative Items for each prior taxable period, (ii) with respect to the General Partner (as holder
of the General Partner Interest), the excess of (a) the Net Positive Adjustments of the General
Partner as of the end of such period over (b) the sum of the General Partner’s Share of Additional
Book Basis Derivative Items with respect to the General Partner Interest for each prior taxable
period, and (iii) with respect to the holders of Incentive Distribution Rights, the excess of (a)
the Net Positive Adjustments of the holders of Incentive Distribution Rights as of the end of such
period over (b) the sum of the Share of Additional Book Basis Derivative Items of the holders of
the Incentive Distribution Rights for each prior taxable period.

     “Required Allocations” means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or
6.1(d)(ix).

     “Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the
Partnership recognized for United States federal income tax purposes resulting from a sale,
exchange or other disposition of a Contributed Property or Adjusted Property, to the extent such
item of gain or loss is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A),
respectively, to eliminate Book-Tax Disparities.

     “Second Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(E).

     “Second Target Distribution” means $0.5375 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on June 30, 2005, it means the product of $0.5375
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 91), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.

     “Share of Additional Book Basis Derivative Items” means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders
holding Common Units or Subordinated Units, the amount that bears the same ratio to such Additional
Book Basis Derivative Items as the Unitholders’ Remaining Net Positive Adjustments as of the end of
such period bears to the Aggregate Remaining Net Positive Adjustments as of that time, (ii) with
respect to the General Partner (as holder of the General Partner Interest), the amount that bears
the same ratio to such additional Book Basis Derivative Items as the General Partner’s Remaining
Net Positive Adjustments as of the end of such period bears to the Aggregate Remaining Net Positive
Adjustment as of that time, and (iii) with respect to the Partners holding Incentive Distribution
Rights, the amount that bears the same ratio to such Additional Book Basis Derivative Items as the
Remaining Net Positive Adjustments of the Partners holding the Incentive Distribution Rights as of
the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of that time.

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     “Special Approval” means approval by a majority of the members of the Conflicts Committee.

     “Subordinated Unit” means a Unit representing a fractional part of the Partnership Interests
of all Limited Partners and Assignees and having the rights and obligations specified with respect
to Subordinated Units in this Agreement. The term “Subordinated Unit” as used herein does not refer
to a Common Unit. A Subordinated Unit that is convertible into a Common Unit shall not constitute
a Common Unit until such conversion occurs.

     “Subordination Period” means the period commencing on the Closing Date and ending on the first
to occur of the following dates:

          (a) the first day of any Quarter beginning after March 31, 2010 in respect of which (i) (A)
distributions of Available Cash from Operating Surplus on each of the Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all Outstanding Common Units and Subordinated Units and any
other Outstanding Units that are senior or equal in right of distribution to the Subordinated Units
during such periods and (B) the Adjusted Operating Surplus generated during each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all of the Common Units and Subordinated
Units and any other Units that are senior or equal in right of distribution to the Subordinated
Units that were Outstanding during such periods on a Fully Diluted Basis, plus the related
distribution on the General Partner Interest, during such periods and (ii) there are no Cumulative
Common Unit Arrearages; and

          (b) the date on which the General Partner is removed as general partner of the Partnership
upon the requisite vote by holders of Outstanding Units under circumstances where Cause does not
exist and Units held by the General Partner and its Affiliates are not voted in favor of such
removal.

     For purposes of determining whether the test in subclause (a)(i)(B) above has been satisfied,
Adjusted Operating Surplus will be adjusted upwards or downwards if the Conflicts Committee
determines in good faith that the amount of Estimated Maintenance Capital Expenditures used in the
determination of Adjusted Operating Surplus in subclause (a)(i)(B) was materially incorrect, based
on circumstances prevailing at the time of original determination of Estimated Maintenance Capital
Expenditures, for any one or more of the preceding three four-Quarter periods.

     “Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries (as defined,
but excluding subsection (d) of the definition) of such Person or a combination thereof, (b) a
partnership (whether general or limited) in which such Person or a Subsidiary (as defined, but
excluding subsection (d) of the definition) of such Person is, at the date of determination, a

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general or limited partner of such partnership, but only if more than 50% of the partnership
interests of such partnership (considering all of the partnership interests of the partnership as a
single class) is owned, directly or indirectly, at the date of determination, by such Person, by
one or more Subsidiaries (as defined, but excluding subsection (d) of the definition) of such
Person, or a combination thereof, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such Person, or a combination
thereof, directly or indirectly, at the date of determination, has (i) at least a majority
ownership interest or (ii) the power to elect or direct the election of a majority of the directors
or other governing body of such Person, or (d) any other Person in which such Person, one or more
Subsidiaries (as defined, but excluding subsection (d) of the definition) of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) less than a
majority ownership interest or (ii) less than the power to elect or direct the election of a
majority of the directors or other governing body of such Person, provided that (A) such Person,
one or more Subsidiaries (as defined, but excluding subsection (d) of the definition) of such
Person, or a combination thereof, directly or indirectly, at the date of the determination, has at
least a 20% ownership interest in such other Person, (B) such Person accounts for such other Person
(under U.S. GAAP, as in effect on the later of the date of investment in such other Person or
material expansion of the operations of such other Person) on a consolidated or equity accounting
basis, (C) such Person has directly or indirectly material negative control rights regarding such
other Person including over such other Person’s ability to materially expand its operations beyond
that contemplated at the date of investment in such other Person, and (D) such other Person is (i)
formed and maintained for the sole purpose of owning or leasing, operating and chartering no more
than 10 vessels for a period of no more than 40 years, and (ii) obligated under its constituent
documents, or as a result of a unanimous agreement of its owners, to distribute to its owners all
of its income on at least an annual basis (less any cash reserves that are approved by such
Person).

     “Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the
Partnership pursuant to Section 10.2 in place of and with all the rights of a Limited Partner and
who is shown as a Limited Partner on the books and records of the Partnership.

     “Teekay Restricted Businesses” has the meaning assigned to such term in the Omnibus Agreement.

     “Third Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(F).

     “Third Target Distribution” means $0.65 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on June 30, 2005, it means the product of $0.65
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 91), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “Trading Day” has the meaning assigned to such term in Section 15.1(a).

     “Transfer” has the meaning assigned to such term in Section 4.4(a).

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     “Transfer Agent” means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the Partnership to act as
registrar and transfer agent for the Common Units; provided, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.

     “Transfer Application” means an application and agreement for transfer of Units in the form
set forth on the back of a Certificate or in a form substantially to the same effect in a separate
instrument.

     “Underwriter” means each Person named as an underwriter in Schedule I to the Underwriting
Agreement who purchases Common Units pursuant thereto.

     “Underwriting Agreement” means the Underwriting Agreement dated May 4, 2005 among the
Underwriters, the Partnership, the General Partner, the Operating Company, and Teekay Shipping
Corporation, providing for the purchase of Common Units by such Underwriters.

     “Unit” means a Partnership Security that is designated as a “Unit” and shall include Common
Units and Subordinated Units but shall not include (i) a General Partner Interest or (ii) Incentive
Distribution Rights.

     “Unitholders” means the holders of Common Units and Subordinated Units.

     “Unit Majority” means, during the Subordination Period, at least a majority of the Outstanding
Common Units (excluding Common Units owned by the General Partner and its Affiliates) voting as a
class and at least a majority of the Outstanding Subordinated Units voting as a class, and after
the end of the Subordination Period, at least a majority of the Outstanding Common Units.

     “Unit Register” means the register of the Partnership for the registration and transfer of
Limited Partnership Interests as provided in Section 4.5.

     “Unpaid MQD” has the meaning assigned to such term in Section 6.1(c)(i)(B).

     “Unrealized Gain” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).

     “Unrealized Loss” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).

     “Unrecovered Capital” means at any time, with respect to a Unit, the Initial Unit Price less
the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial
Common Unit and any distributions of cash (or the Net Agreed Value of any distributions

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in kind) in connection with the dissolution and liquidation of the Partnership theretofore
made in respect of an Initial Common Unit, adjusted as the General Partner determines to be
appropriate to give effect to any distribution, subdivision or combination of such Units.

     “U.S. GAAP” means United States generally accepted accounting principles consistently applied.

     “Withdrawal Opinion of Counsel” has the meaning assigned to such term in Section 11.1(b).

     “Working Capital Borrowings” means borrowings used solely for working capital purposes or to
pay distributions to Partners made pursuant to a credit facility or other arrangement to the extent
such borrowings are required to be reduced to a relatively small amount each year (or for the year
in which the Initial Offering is consummated, the 12-month period beginning on the Closing Date)
for an economically meaningful period of time.

Section 1.2 Construction.

     Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; and (c) the term “include” or “includes” means includes,
without limitation, and “including” means including, without limitation.

ARTICLE II

ORGANIZATION

Section 2.1 Formation.

     The General Partner and the Organizational Limited Partner have previously formed the
Partnership as a limited partnership pursuant to the provisions of the Marshall Islands Act and
hereby amend and restate the original Agreement of Limited Partnership of Teekay LNG Partners L.P.
in its entirety. This amendment and restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Marshall Islands Act. All
Partnership Interests shall constitute personal property of the owner thereof for all purposes and
a Partner has no interest in specific Partnership property.

Section 2.2 Name.

     The name of the Partnership shall be “Teekay LNG Partners L.P.” The Partnership’s business
may be conducted under any other name or names as determined by the General Partner, including the
name of the General Partner. The words “Limited Partnership” or the letters “L.P.,” or similar
words or letters shall be included in the Partnership’s name where necessary for the purpose of
complying with the laws of any jurisdiction that so requires. The

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General Partner may change the name of the Partnership at any time and from time to time and
shall notify the Limited Partners of such change in the next regular communication to the Limited
Partners.

Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices

     Unless and until changed by the General Partner, the registered office of the Partnership in
the Marshall Islands shall be located at Trust Company Complex, Ajeltake Island, Ajeltake Road,
Majuro, Marshall Islands MH 96960, and the registered agent for service of process on the
Partnership in the Marshall Islands at such registered office shall be The Trust Company of the
Marshall Islands, Inc. The principal office of the Partnership shall be located at Teekay Shipping
Limited, TK House, Bayside Executive Park, West Bay Street & Blake Road, P.O. Box AP-59212, Nassau,
Commonwealth of the Bahamas or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain offices at such other
place or places within or outside the Marshall Islands as the General Partner determines to be
necessary or appropriate. The address of the General Partner shall be TK House, Bayside Executive
Park, West Bay Street and Blake Road, P.O. Box AP-59212, Nassau, Commonwealth of the Bahamas or
such other place as the General Partner may from time to time designate by notice to the Limited
Partners.

Section 2.4 Purpose and Business.

     The purpose and nature of the business to be conducted by the Partnership shall be to
(a)engage directly in, or enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage indirectly in, any business activity that is
approved by the General Partner and that lawfully may be conducted by a limited partnership
organized pursuant to the Marshall Islands Act and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity, and (b) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member; provided, however, that the General
Partner shall not cause the Partnership to engage, directly or indirectly, in any business activity
that the General Partner determines would cause the Partnership to be treated as an association
taxable as a corporation or otherwise taxable as an entity for United States federal income tax
purposes. The General Partner shall have no duty or obligation to propose or approve, and may
decline to propose or approve, the conduct by the Partnership of any business free of any fiduciary
duty or obligation whatsoever to the Partnership, any Limited Partner or Assignee and, in declining
to so propose or approve, shall not be required to act in good faith or pursuant to any other
standard imposed by this Agreement, any Group Member Agreement, any other agreement contemplated
hereby or under the Marshall Islands Act or any other law, rule or regulation.

Section 2.5 Powers.

     The Partnership shall be empowered to do any and all acts and things necessary and appropriate
for the furtherance and accomplishment of the purposes and business described in Section 2.4 and
for the protection and benefit of the Partnership.

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Section 2.6 Power of Attorney.

     (a) Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner
and, if a Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any
successor to the Liquidator by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys-in-fact, as the case may be, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in
his name, place and stead, to:

     (i) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (A) all certificates, documents and other instruments (including this Agreement and
the Certificate of Limited Partnership and all amendments or restatements hereof or thereof)
that the General Partner or the Liquidator determines to be necessary or appropriate to
form, qualify or continue the existence or qualification of the Partnership as a limited
partnership (or a partnership in which the limited partners have limited liability) in the
Marshall Islands and in all other jurisdictions in which the Partnership may conduct
business or own property; (B) all certificates, documents and other instruments that the
General Partner or the Liquidator determines to be necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or restatement of this
Agreement; (C) all certificates, documents and other instruments (including conveyances and
a certificate of cancellation) that the General Partner or the Liquidator determines to be
necessary or appropriate to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement; (D) all certificates, documents and other
instruments relating to the admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Articles IV, X, XI or XII; (E) all certificates,
documents and other instruments relating to the determination of the rights, preferences and
privileges of any class or series of Partnership Securities issued pursuant to Section 5.6;
and (F) all certificates, documents and other instruments (including agreements and a
certificate of merger) relating to a merger, consolidation or conversion of the Partnership
pursuant to Article XIV; and

     (ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments that the General Partner
or the Liquidator determines to be necessary or appropriate to (A) make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action that is made or
given by the Partners hereunder or is consistent with the terms of this Agreement or (B)
effectuate the terms or intent of this Agreement; provided, that when required by Section
13.3 or any other provision of this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series required to take any action, the
General Partner and the Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the Limited Partners or of
the Limited Partners of such class or series, as applicable.

Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner to
amend this Agreement except in accordance with Article XIII or as may be otherwise expressly
provided for in this Agreement.

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     (b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner’s or Assignee’s Partnership Interest and shall extend to such Limited Partner’s or
Assignee’s heirs, successors, assigns and personal representatives. Each such Limited Partner or
Assignee hereby agrees to be bound by any representation made by the General Partner or the
Liquidator acting in good faith pursuant to such power of attorney; and each such Limited Partner
or Assignee, to the maximum extent permitted by law, hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or the Liquidator taken
in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or the Liquidator, within 15 days after receipt of the request
therefor, such further designation, powers of attorney and other instruments as the General Partner
or the Liquidator determines to be necessary or appropriate to effectuate this Agreement and the
purposes of the Partnership.

Section 2.7 Term.

     The term of the Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Marshall Islands Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation of the Certificate
of Limited Partnership as provided in the Marshall Islands Act.

Section 2.8 Title to Partnership Assets.

     Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner or
Assignee, individually or collectively, shall have any ownership interest in such Partnership
assets or any portion thereof. Title to any or all of the Partnership assets may be held in the
name of the Partnership, the General Partner, one or more of its Affiliates or one or more
nominees, as the General Partner may determine. The General Partner hereby declares and warrants
that any Partnership assets for which record title is held in the name of the General Partner or
one or more of its Affiliates or one or more nominees shall be held by the General Partner or such
Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions
of this Agreement; provided, however, that the General Partner shall use reasonable efforts to
cause record title to such assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably practicable;
provided, further, that, prior to the withdrawal or removal of the General Partner or as soon
thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer
of record title to the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records, irrespective of the name in
which record title to such Partnership assets is held.

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ARTICLE III

RIGHTS OF LIMITED PARTNERS

Section 3.1 Limitation of Liability.

     The Limited Partners and the Assignees shall have no liability under this Agreement except as
expressly provided in this Agreement or the Marshall Islands Act.

Section 3.2 Management of Business.

     No Limited Partner or Assignee, in its capacity as such, shall participate in the operation,
management or control (within the meaning of the Marshall Islands Act) of the Partnership’s
business, transact any business in the Partnership’s name or have the power to sign documents for
or otherwise bind the Partnership. Any action taken by any Affiliate of the General Partner or any
officer, director, employee, manager, member, general partner, agent or trustee of the General
Partner or any of its Affiliates, or any officer, director, employee, member, general partner,
agent or trustee of a Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a limited partner of the
Partnership (within the meaning of Section 30 of the Marshall Islands Act) and shall not affect,
impair or eliminate the limitations on the liability of the Limited Partners or Assignees under
this Agreement.

Section 3.3 Outside Activities of the Limited Partners.

     Subject to the provisions of Section 7.5 and the Omnibus Agreement, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such Persons shall also be
Limited Partners or Assignees, any Limited Partner or Assignee shall be entitled to and may have
business interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition with the Partnership
Group. Neither the Partnership nor any of the other Partners or Assignees shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or Assignee.

Section 3.4 Rights of Limited Partners.

     (a) In addition to other rights provided by this Agreement or by applicable law, and except as
limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable
written demand and at such Limited Partner’s own expense:

     (i) promptly after becoming available, to obtain a copy of the Partnership’s foreign,
federal, state and local income tax returns for each year;

     (ii) to have furnished to him a current list of the name and last known business,
residence or mailing address of each Partner;

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     (iii) to obtain true and full information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital Contribution by each
Partner and which each Partner has agreed to contribute in the future, and the date on which
each became a Partner;

     (iv) to have furnished to him a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate of Limited Partnership
and all amendments thereto have been executed;

     (v) to obtain true and full information regarding the status of the business and
financial condition of the Partnership Group; and

     (vi) to obtain such other information regarding the affairs of the Partnership as is
just and reasonable.

     (b) The General Partner may keep confidential from the Limited Partners and Assignees, for
such period of time as the General Partner deems reasonable, (i) any information that the General
Partner reasonably believes to be in the nature of trade secrets or (ii) other information the
disclosure of which the General Partner in good faith believes (A) is not in the best interests of
the Partnership Group, (B) could damage the Partnership Group or (C) that any Group Member is
required by law or by agreement with any third party to keep confidential (other than agreements
with Affiliates of the Partnership the primary purpose of which is to circumvent the obligations
set forth in this Section 3.4).

ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;

REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1 Certificates.

     Upon the Partnership’s issuance of Common Units or Subordinated Units to any Person, the
Partnership shall issue, upon the request of such Person, one or more Certificates in the name of
such Person evidencing the number of such Units being so issued. In addition, (a) upon the General
Partner’s request, the Partnership shall issue to it one or more Certificates in the name of the
General Partner evidencing its interests in the Partnership and (b) upon the request of any Person
owning Incentive Distribution Rights or any other Partnership Securities other than Common Units or
Subordinated Units, the Partnership shall issue to such Person one or more certificates evidencing
such Incentive Distribution Rights or other Partnership Securities other than Common Units or
Subordinated Units. Certificates shall be executed on behalf of the Partnership by the Chairman of
the Board, President or any Executive Vice President or Vice President and the Chief Financial
Officer or the Secretary or any Assistant Secretary of the General Partner. No Common Unit
Certificate shall be valid for any purpose until it has been countersigned by the Transfer Agent;
provided, however, that if the General Partner elects to issue Common Units in global form, the
Common Unit Certificates shall be valid upon receipt of a certificate from the Transfer Agent
certifying that the Common Units have been duly registered

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in accordance with the directions of the Partnership. Subject to the requirements of Section
6.7(b), the Partners holding Certificates evidencing Subordinated Units may exchange such
Certificates for Certificates evidencing Common Units on or after the date on which such
Subordinated Units are converted into Common Units pursuant to the terms of Section 5.8.

Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.

     (a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate
officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent
shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number
and type of Partnership Securities as the Certificate so surrendered.

     (b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any
Certificate previously issued if the Record Holder of the Certificate:

     (i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;

     (ii) requests the issuance of a new Certificate before the General Partner has notice
that the Certificate has been acquired by a purchaser for value in good faith and without
notice of an adverse claim;

     (iii) if requested by the General Partner, delivers to the General Partner a bond, in
form and substance satisfactory to the General Partner, with surety or sureties and with
fixed or open penalty as the General Partner may direct to indemnify the Partnership, the
Partners, the General Partner and the Transfer Agent against any claim that may be made on
account of the alleged loss, destruction or theft of the Certificate; and

     (iv) satisfies any other reasonable requirements imposed by the General Partner.

     If a Limited Partner or Assignee fails to notify the General Partner within a reasonable
period of time after he has notice of the loss, destruction or theft of a Certificate, and a
transfer of the Limited Partner Interests represented by the Certificate is registered before the
Partnership, the General Partner or the Transfer Agent receives such notification, the Limited
Partner or Assignee shall be precluded from making any claim against the Partnership, the General
Partner or the Transfer Agent for such transfer or for a new Certificate.

     (c) As a condition to the issuance of any new Certificate under this Section 4.2, the General
Partner may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Transfer Agent) reasonably connected therewith.

Section 4.3 Record Holders.

     The Partnership shall be entitled to recognize the Record Holder as the Partner or Assignee
with respect to any Partnership Interest and, accordingly, shall not be bound to

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recognize any equitable or other claim to, or interest in, such Partnership Interest on the
part of any other Person, regardless of whether the Partnership shall have actual or other notice
thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or
requirement of any National Securities Exchange on which such Partnership Interests are listed.
Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or
clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding Partnership Interests,
as between the Partnership on the one hand, and such other Persons on the other, such
representative Person (a) shall be the Partner or Assignee (as the case may be) of record and
beneficially, (b) must execute and deliver a Transfer Application and (c) shall be bound by this
Agreement and shall have the rights and obligations of a Partner or Assignee (as the case may be)
hereunder and as, and to the extent, provided for herein.

Section 4.4 Transfer Generally.

     (a) The term “transfer,” when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction (i) by which the General Partner assigns its General
Partner Interest to another Person or by which a holder of Incentive Distribution Rights assigns
its Incentive Distribution Rights to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii)
by which the holder of a Limited Partner Interest (other than an Incentive Distribution Right)
assigns such Limited Partner Interest to another Person who is or becomes a Limited Partner or an
Assignee, and includes a sale, assignment, gift, exchange or any other disposition by law or
otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or
mortgage.

     (b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of
a Partnership Interest not made in accordance with this Article IV shall be null and void.

     (c) Nothing contained in this Agreement shall be construed to prevent a disposition by any
stockholder, member, partner or other owner of the General Partner of any or all of the shares of
stock, membership interests, partnership interests or other ownership interests in the General
Partner.

Section 4.5 Registration and Transfer of Limited Partner Interests.

     (a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited
Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Common Units and transfers of such Common Units as herein provided. The
Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests
unless such transfers are effected in the manner described in this Section 4.5. Upon surrender of a
Certificate for registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate

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officers of the General Partner on behalf of the Partnership shall execute and deliver, and in
the case of Common Units, the Transfer Agent shall countersign and deliver, in the name of the
holder or the designated transferee or transferees, as required pursuant to the holder’s
instructions, one or more new Certificates evidencing the same aggregate number and type of Limited
Partner Interests as was evidenced by the Certificate so surrendered.

     (b) The General Partner shall not recognize any transfer of Limited Partner Interests until
the Certificates evidencing such Limited Partner Interests are surrendered for registration of
transfer and such Certificates are accompanied by a Transfer Application duly executed by the
transferee (or the transferee’s attorney-in-fact duly authorized in writing). No charge shall be
imposed by the General Partner for such transfer; provided, that as a condition to the issuance of
any new Certificate under this Section 4.5, the General Partner may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed with respect thereto.

     (c) Limited Partner Interests may be transferred only in the manner described in this Section
4.5. The transfer of any Limited Partner Interests and the admission of any new Limited Partner
shall not constitute an amendment to this Agreement.

     (d) Until admitted as a Substituted Limited Partner pursuant to Section 10.2, the Record
Holder of a Limited Partner Interest shall be an Assignee in respect of such Limited Partner
Interest. Limited Partners may include custodians, nominees or any other individual or entity in
its own or any representative capacity.

     (e) A transferee of a Limited Partner Interest who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted Limited Partner, (ii)
agreed to comply with and be bound by and to have executed this Agreement, (iii) represented and
warranted that such transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (iv) granted the powers of attorney set forth in this
Agreement and (v) given the consents and approvals and made the waivers contained in this
Agreement.

     (f) The General Partner and its Affiliates shall have the right at any time to transfer their
Subordinated Units and Common Units (whether issued upon conversion of the Subordinated Units or
otherwise) to one or more Persons.

Section 4.6 Transfer of the General Partner’s General Partner Interest.

     (a) Subject to Section 4.6(c) below, prior to March 31, 2015, the General Partner shall not
transfer all or any part of its General Partner Interest to a Person unless such transfer (i) has
been approved by the prior written consent or vote of the holders of at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) or
(ii) is of all, but not less than all, of its General Partner Interest to (A) an Affiliate of the
General Partner (other than an individual) or (B) another Person (other than an individual) in
connection with the transfer by the General Partner of all or substantially all of its assets to
such other Person.

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     (b) Subject to Section 4.6(c) below, on or after March 31, 2015, the General Partner may
transfer all or any of its General Partner Interest without Unitholder approval.

     (c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of any Limited Partner
or of any limited partner or member of any other Group Member or cause the Partnership or any other
Group Member to be treated as an association taxable as a corporation or otherwise to be taxed as
an entity for United States federal income tax purposes (to the extent not already so treated or
taxed) and (iii) such transferee also agrees to purchase all (or the appropriate portion thereof,
if applicable) of the partnership or membership interest of the General Partner as the general
partner or managing member, if any, of each other Group Member. In the case of a transfer pursuant
to and in compliance with this Section 4.6, the transferee or successor (as the case may be) shall,
subject to compliance with the terms of Section 10.3, be admitted to the Partnership as the General
Partner immediately prior to the transfer of the General Partner Interest, and the business of the
Partnership shall continue without dissolution.

Section 4.7 Transfer of Incentive Distribution Rights.

     Prior to March 31, 2015, a holder of Incentive Distribution Rights may transfer any or all of
the Incentive Distribution Rights held by such holder without any consent of the Unitholders to (a)
an Affiliate of such holder (other than an individual) or (b) another Person (other than an
individual) in connection with (i) the merger or consolidation of such holder of Incentive
Distribution Rights with or into such other Person or (ii) the transfer by such holder of all or
substantially all of its assets to such other Person. Any other transfer of the Incentive
Distribution Rights prior to March 31, 2015 shall require the prior approval of holders of at least
a majority of the Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates). On or after March 31, 2015, the General Partner or any other holder of Incentive
Distribution Rights may transfer any or all of its Incentive Distribution Rights without Unitholder
approval. Notwithstanding anything herein to the contrary, no transfer of Incentive Distribution
Rights to another Person shall be permitted unless the transferee agrees to be bound by the
provisions of this Agreement.

Section 4.8 Restrictions on Transfers.

     (a) Except as provided in Section 4.8(d) below, but notwithstanding the other provisions of
this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i)
violate the then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority with jurisdiction
over such transfer, (ii) terminate the existence or qualification of the Partnership or any Group
Member under the laws of the jurisdiction of its formation or (iii) cause the Partnership or any
Group Member to be treated as an association taxable as a corporation or otherwise to be taxed as
an entity for United States federal income tax purposes (to the extent not already so treated or
taxed).

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     (b) The General Partner may impose restrictions on the transfer of Partnership
Interests if it receives an Opinion of Counsel that such restrictions are necessary to avoid a
significant risk of any Group Member becoming taxable as a corporation or otherwise becoming
taxable as an entity for United States federal income tax purposes. The General Partner may impose
such restrictions by amending this Agreement; provided, however, that any amendment that would
result in the delisting or suspension of trading of any class of Limited Partner Interests on the
principal National Securities Exchange on which such class of Limited Partner Interests is then
listed must be approved, prior to such amendment being effected, by the holders of at least a
majority of the Outstanding Limited Partner Interests of such class.

     (c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be
subject to the restrictions imposed by Section 6.7(b).

     (d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude
the settlement of any transactions involving Partnership Interests entered into through the
facilities of any National Securities Exchange on which such Partnership Interests are listed for
trading.

ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

			
	Section 5.1	 	Organizational Contributions.

     (a) In connection with the formation of the Partnership under the Marshall Islands Act,
the General Partner made an initial Capital Contribution to the Partnership in the amount of
$20.00, for a 2% General Partner Interest in the Partnership and has been admitted as the General
Partner of the Partnership, and the Organizational Limited Partner made an initial Capital
Contribution to the Partnership in the amount of $980 for a 98% Limited Partner Interest in the
Partnership and has been admitted as a Limited Partner of the Partnership. Ninety-eight percent of
any interest or other profit that may have resulted from the investment or other use of such
initial Capital Contributions shall be allocated and distributed to the Organizational Limited
Partner, and the balance thereof shall be allocated and distributed to the General Partner.

     (b) Prior to the Closing Date (i) the General Partner contributed all of its ownership
interest in the Operating Company to the Partnership in exchange for (A) a continuation of its 2%
General Partner Interest and (B) the Incentive Distribution Rights and (ii) Teekay Shipping
Corporation contributed all of its ownership interest in the Operating Company, in exchange for a
continuation of its 98% limited partner interest and a promissory note.

			
	Section 5.2	 	Contributions by the General Partner and its Affiliates.

     (a) On the Closing Date and pursuant to the Contribution Agreement, Teekay Shipping
Corporation’s 98% initial limited partner interest shall be converted into (A) 8,734,572 Common
Units and (B) 14,734,572 Subordinated Units.

     (b) Upon the issuance of any additional Limited Partner Interests by the Partnership
(other than the issuance of the Common Units issued in the Initial Offering and other than the

32

 

issuance of the Common Units issued pursuant to the Over-Allotment Option), the General
Partner shall be required to make additional Capital Contributions equal to (i) 2/98ths of any
amount contributed to the Partnership by the Limited Partners in exchange for the additional
Limited Partner Interests issued to such Limited Partners less (ii) 2/98ths of any amount so
contributed by such Limited Partners that is used by the Partnership concurrently with such
contribution to redeem or repurchase from any Person outstanding Limited Partner Interests of the
same class as the Limited Partner Interests issued to such Limited Partners at a price per Limited
Partner Interest equal to the net proceeds per Limited Partner Interest, before expenses, that the
Partnership receives from such issuances. Except as set forth in the immediately preceding
sentence and Article XII, the General Partner shall not be obligated to make any additional Capital
Contributions to the Partnership.

			
	Section 5.3	 	Contributions by Initial Limited Partners and Distributions to the General
Partner and its Affiliates.

     (a) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter shall
contribute to the Partnership cash in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement to be purchased by
such Underwriter at the Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient obtained by dividing (i) the cash
contribution to the Partnership by or on behalf of such Underwriter by (ii) the Issue Price per
Initial Common Unit.

     (b) Upon the exercise of the Over-Allotment Option, each Underwriter shall contribute to
the Partnership cash in an amount equal to the Issue Price per Initial Common Unit, multiplied by
the number of Common Units to be purchased by such Underwriter at the Option Closing Date. In
exchange for such Capital Contributions by the Underwriters, the Partnership shall issue Common
Units to each Underwriter on whose behalf such Capital Contribution is made in an amount equal to
the quotient obtained by dividing (i) the cash contributions to the Partnership by or on behalf of
such Underwriter by (ii) the Issue Price per Initial Common Unit.

     (c) No Limited Partner Interests will be issued or issuable as of or at the Closing Date
other than (i) the Common Units issuable pursuant to subparagraph (a) hereof in aggregate number
equal to 6,000,000, (ii) the “Option Units” as such term is used in the Underwriting Agreement in
an aggregate number up to 900,000 issuable upon exercise of the Over-Allotment Option pursuant to
subparagraph (c) hereof, (iii) the 14,734,572 Subordinated Units issuable to pursuant to Section
5.2 hereof, (iv) the 8,734,572 Common Units issuable pursuant to Section 5.2 hereof, and (v) the
Incentive Distribution Rights and (vi) 1,000,000 Common Units issuable pursuant to the
Partnership’s 2005 Long-Term Incentive Plan.

			
	Section 5.4	 	Interest and Withdrawal.

     No interest shall be paid by the Partnership on Capital Contributions. No Partner or Assignee
shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if
any, that distributions made pursuant to this Agreement or upon termination of the Partnership may
be considered and permitted as such by law and then only to the extent provided

33

 

for in this Agreement. Except to the extent expressly provided in this Agreement, no Partner
or Assignee shall have priority over any other Partner or Assignee either as to the return of
Capital Contributions or as to profits, losses or distributions.

			
	Section 5.5	 	Capital Accounts.

     (a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with
respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made to the Partnership with respect to such Partnership Interest and (ii) all items
of Partnership income and gain (including, without limitation, income and gain exempt from tax)
computed in accordance with Section 5.5(b) and allocated with respect to such Partnership Interest
pursuant to Section 6.1, and decreased by (x) the amount of cash or Net Agreed Value of all actual
and deemed distributions of cash or property made with respect to such Partnership Interest and (y)
all items of Partnership deduction and loss computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1.

     (b) For purposes of computing the amount of any item of income, gain, loss or deduction
which is to be allocated pursuant to Article VI and is to be reflected in the Partners’ Capital
Accounts, the determination, recognition and classification of any such item shall be the same as
its determination, recognition and classification for United States federal income tax purposes
(including, without limitation, any method of depreciation, cost recovery or amortization used for
that purpose), provided, that:

     (i) Solely for purposes of this Section 5.5, the Partnership shall be treated as
owning directly its proportionate share (as determined by the General Partner based upon the
provisions of the applicable Group Member Agreement) of all property owned any other Group
Member that is classified as a partnership for United States federal income tax purposes.

     (ii) All fees and other expenses incurred by the Partnership to promote the sale of
(or to sell) a Partnership Interest that can neither be deducted nor amortized under Section
709 of the Code, if any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.

     (iii) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction shall
be made without regard to any election under Section 754 of the Code which may be made by
the Partnership and, as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of
the Code, without regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for United States federal income tax
purposes. To the extent an adjustment to the adjusted tax basis of any

34

 

Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment in the Capital Accounts shall be
treated as an item of gain or loss.

     (iv) Any income, gain or loss attributable to the taxable disposition of any
Partnership property shall be determined as if the adjusted basis of such property as of
such date of disposition were equal in amount to the Partnership’s Carrying Value with
respect to such property as of such date.

     (v) In accordance with the requirements of Section 704(b) of the Code, any
deductions for depreciation, cost recovery or amortization attributable to any Contributed
Property shall be determined as if the adjusted basis of such property on the date it was
acquired by the Partnership were equal to the Agreed Value of such property. Upon an
adjustment pursuant to Section 5.5(d) to the Carrying Value of any Partnership property
subject to depreciation, cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such property shall be
determined (A) as if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of depreciation,
cost recovery or amortization derived from the same method and useful life (or, if
applicable, the remaining useful life) as is applied for United States federal income tax
purposes; provided, however, that, if the asset has a zero adjusted basis for United States
federal income tax purposes, depreciation, cost recovery or amortization deductions shall be
determined using any method that the General Partner may adopt.

     (c) (i) A transferee of a Partnership Interest shall succeed to a pro rata portion of the
Capital Account of the transferor relating to the Partnership Interest so transferred.

     (ii) Immediately prior to the transfer of a Subordinated Unit or of a Subordinated
Unit that has converted into a Common Unit pursuant to Section 5.8 by a holder thereof
(other than a transfer to an Affiliate unless the General Partner elects to have this
subparagraph 5.5(c)(ii) apply), the Capital Account maintained for such Person with respect
to its Subordinated Units or converted Subordinated Units will (A) first, be allocated to
the Subordinated Units or converted Subordinated Units to be transferred in an amount equal
to the product of (x) the number of such Subordinated Units or converted Subordinated Units
to be transferred and (y) the Per Unit Capital Amount for a Common Unit, and (B) second, any
remaining balance in such Capital Account will be retained by the transferor, regardless of
whether it has retained any Subordinated Units or converted Subordinated Units. Following
any such allocation, the transferor’s Capital Account, if any, maintained with respect to
the retained Subordinated Units or converted Subordinated Units, if any, will have a balance
equal to the amount allocated under clause (B) hereinabove, and the transferee’s Capital
Account established with respect to the transferred Subordinated Units or converted
Subordinated Units will have a balance equal to the amount allocated under clause (A)
hereinabove.

(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an
issuance of additional Partnership Interests for cash or Contributed Property, the

35

 

issuance of Partnership Interests as consideration for the provision of services or the
conversion of the General Partner’s Combined Interest to Common Units pursuant to Section
11.3(b), the Capital Accounts of all Partners and the Carrying Value of each Partnership
property immediately prior to such issuance shall be adjusted upward or downward to reflect
any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such
property for an amount equal to its fair market value immediately prior to such issuance and
had been allocated to the Partners at such time pursuant to Section 6.1(c) in the same
manner as any item of gain or loss actually recognized following an event giving rise to the
dissolution of the Partnership would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership
assets (including cash or cash equivalents) immediately prior to the issuance of additional
Partnership Interests shall be determined by the General Partner using such method of
valuation as it may adopt; provided, however, that the General Partner, in arriving at such
valuation, must take fully into account the fair market value of the Partnership Interests
of all Partners at such time. The General Partner shall allocate such aggregate value among
the assets of the Partnership (in such manner as it determines) to arrive at a fair market
value for individual properties.

     (ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f),
immediately prior to any actual or deemed distribution to a Partner of any Partnership
property (other than a distribution of cash that is not in redemption or retirement of a
Partnership Interest), the Capital Accounts of all Partners and the Carrying Value of all
Partnership property shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each such property immediately
prior to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c) in the same manner as
any item of gain or loss actually recognized following an event giving rise to the
dissolution of the Partnership would have been allocated. In determining such Unrealized
Gain or Unrealized Loss the aggregate cash amount and fair market value of all Partnership
assets (including cash or cash equivalents) immediately prior to a distribution shall (A) in
the case of an actual distribution that is not made pursuant to Section 12.4 or in the case
of a deemed distribution, be determined and allocated in the same manner as that provided in
Section 5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4,
be determined and allocated by the Liquidator using such method of valuation as it may
adopt.

			
	Section 5.6	 	Issuances of Additional Partnership Securities.

     (a) The Partnership may issue additional Partnership Securities and options, rights,
warrants and appreciation rights relating to the Partnership Securities for any Partnership purpose
at any time and from time to time to such Persons for such consideration and on such terms and
conditions as the General Partner shall determine, all without the approval of any Limited
Partners.

36

 

     (b) Each additional Partnership Security authorized to be issued by the Partnership
pursuant to Section 5.6(a) may be issued in one or more classes, or one or more series of any such
classes, with such designations, preferences, rights, powers and duties (which may be senior to
existing classes and series of Partnership Securities), as shall be fixed by the General Partner,
including (i) the right to share Partnership profits and losses or items thereof; (ii) the right to
share in Partnership distributions; (iii) the rights upon dissolution and liquidation of the
Partnership; (iv) whether, and the terms and conditions upon which, the Partnership may redeem the
Partnership Security; (v) whether such Partnership Security is issued with the privilege of
conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (vi)
the terms and conditions upon which each Partnership Security will be issued, evidenced by
certificates and assigned or transferred; (vii) the method for determining the Percentage Interest
as to such Partnership Security; and (viii) the right, if any, of each such Partnership Security to
vote on Partnership matters, including matters relating to the relative rights, preferences and
privileges of such Partnership Security.

     (c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options, rights,
warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.6,
(ii) the conversion of the General Partner Interest or any Incentive Distribution Rights into Units
pursuant to the terms of this Agreement, (iii) the admission of Additional Limited Partners and
(iv) all additional issuances of Partnership Securities. The General Partner shall determine the
relative rights, powers and duties of the holders of the Units or other Partnership Securities
being so issued. The General Partner shall do all things necessary to comply with the Marshall
Islands Act and is authorized and directed to do all things that it determines to be necessary or
appropriate in connection with any future issuance of Partnership Securities or in connection with
the conversion of the General Partner Interest or any Incentive Distribution Rights into Units
pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or
guideline of any federal, state or other governmental agency or any National Securities Exchange on
which the Units or other Partnership Securities are listed.

			
	Section 5.7	 	Limitations on Issuance of Additional Partnership Securities.

     The Partnership may issue an unlimited number of Partnership Securities (or options, warrants
or appreciation rights related thereto) pursuant to Section 5.6 without the approval of the Limited
Partners; provided, however, that no fractional units shall be issued by the Partnership.

			
	Section 5.8	 	Conversion of Subordinated Units.

     (a) A total of 3,683,643 of the Outstanding Subordinated Units will convert into Common
Units on a one-for-one basis on the second Business Day following the distribution of Available
Cash to Partners pursuant to Section 6.3(a) in respect of any Quarter ending on or after March 31,
2008, in respect of which:

(i) distributions under Section 6.4 in respect of all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three consecutive, non-

37

 

overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum
of the Minimum Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods;

(ii) the Adjusted Operating Surplus generated during each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and
any other Units that are senior or equal in right of distribution to the Subordinated Units
that were Outstanding during such periods on a Fully Diluted Basis, plus the related
distribution on the General Partner Interest in the Partnership, during such periods; and

(iii) the Cumulative Common Unit Arrearage on all of the Common Units is zero

     (b) An additional 3,683,643 of the Outstanding Subordinated Units will convert into Common
Units on a one-for-one basis on the second Business Day following the distribution of Available
Cash to Partners pursuant to Section 6.3(a) in respect of any Quarter ending on or after March 31,
2009, in respect of which:

(i) distributions under Section 6.4 in respect of all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods;

(ii) the Adjusted Operating Surplus generated during each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and
any other Units that are senior or equal in right of distribution to the Subordinated Units
that were Outstanding during such periods on a Fully Diluted Basis, plus the related
distribution on the General Partner Interest during such periods; and

(iii) the Cumulative Common Unit Arrearage on all of the Common Units is zero;

     provided, however, that the conversion of Subordinated Units pursuant to this Section 5.8(b)
may not occur until at least one year following the conversion of Subordinated Units pursuant to
Section 5.8(a).

     (c) In the event that less than all of the Outstanding Subordinated Units shall convert
into Common Units pursuant to Sections 5.8(a) or 5.8(b) at a time when there shall be more than one
holder of Subordinated Units, then, unless all of the holders of Subordinated Units shall agree to
a different allocation, the Subordinated Units that are to be converted into Common Units shall be
allocated among the holders of Subordinated Units pro rata based on the number of Subordinated
Units held by each such holder.

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     (d) Any Subordinated Units that are not converted into Common Units pursuant to Sections
5.8(a) or 5.8(b) shall convert into Common Units on a one-for-one basis on the second Business Day
following the distribution of Available Cash to Partners pursuant to Section 6.3(a) in respect of
the final Quarter of the Subordination Period.

     (e) Notwithstanding any other provision of this Agreement, all the then Outstanding
Subordinated Units will automatically convert into Common Units on a one-for-one basis as set forth
in, and pursuant to the terms of, Section 11.4.

     (f) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7(b).

			
	Section 5.9	 	Limited Preemptive Right.

     Except as provided in this Section 5.9 and in Section 5.2(b), no Person shall have any
preemptive, preferential or other similar right with respect to the issuance of any Partnership
Security, whether unissued, held in the treasury or hereafter created. The General Partner shall
have the right, which it may from time to time assign in whole or in part to any of its Affiliates,
to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Partnership Securities to Persons other than the General Partner and its
Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and
its Affiliates equal to that which existed immediately prior to the issuance of such Partnership
Securities.

			
	Section 5.10	 	Splits and Combinations.

     (a) Subject to Sections 5.10(d), 6.6 and 6.9 (dealing with adjustments of distribution
levels), the Partnership may make a Pro Rata distribution of Partnership Securities to all Record
Holders or may effect a subdivision or combination of Partnership Securities so long as, after any
such event, each Partner shall have the same Percentage Interest in the Partnership as before such
event, and any amounts calculated on a per Unit basis (including any Common Unit Arrearage or
Cumulative Common Unit Arrearage) or stated as a number of Units (including the number of
Subordinated Units that may convert prior to the end of the Subordination Period) are
proportionately adjusted.

     (b) Whenever such a distribution, subdivision or combination of Partnership Securities is
declared, the General Partner shall select a Record Date as of which the distribution, subdivision
or combination shall be effective and shall send notice thereof at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Partnership Securities to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner shall be entitled to
rely on any certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.

     (c) Promptly following any such distribution, subdivision or combination, the Partnership
may issue Certificates to the Record Holders of Partnership Securities as of the applicable Record
Date representing the new number of Partnership Securities held by such

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Record Holders, or the General Partner may adopt such other procedures that it determines to
be necessary or appropriate to reflect such changes. If any such combination results in a smaller
total number of Partnership Securities Outstanding, the Partnership shall require, as a condition
to the delivery to a Record Holder of such new Certificate, the surrender of any Certificate held
by such Record Holder immediately prior to such Record Date.

     (d) The Partnership shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of this Section 5.10(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher
Unit).

			
	Section 5.11	 	Fully Paid and Non-Assessable Nature of Limited Partner Interests.

     All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 51 of the Marshall Islands Act.

ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

			
	Section 6.1	 	Allocations for Capital Account Purposes.

     For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership’s items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.

     (a) Net Income. After giving effect to the special allocations set forth in Section
6.1(d), Net Income for each taxable year and all items of income, gain, loss and deduction taken
into account in computing Net Income for such taxable year shall be allocated as follows:

     (i) First, 100% to the General Partner, in an amount equal to the aggregate Net
Losses allocated to the General Partner pursuant to Section 6.1(b)(iii) for all previous
taxable years until the aggregate Net Income allocated to the General Partner pursuant to
this Section 6.1(a)(i) for the current taxable year and all previous taxable years is equal
to the aggregate Net Losses allocated to the General Partner pursuant to Section 6.1(b)(iii)
for all previous taxable years;

     (ii) Second, 2% to the General Partner and 98% to the Unitholders, Pro Rata, until
the aggregate Net Income allocated pursuant to this Section 6.1(a)(ii) for the current
taxable year and all previous taxable years is equal to the aggregate Net Losses allocated
pursuant to Section 6.1(b)(ii) for all previous taxable years; and

     (iii) Third, 2% to the General Partner, and 98% to the Unitholders, Pro Rata.

40

 

     (b) Net Losses. After giving effect to the special allocations set forth in Section
6.1(d), Net Losses for each taxable period and all items of income, gain, loss and deduction taken
into account in computing Net Losses for such taxable period shall be allocated as follows:

     (i) First, 2% to the General Partner, and 98% to the Unitholders, Pro Rata, until
the aggregate Net Losses allocated pursuant to this Section 6.1(b)(i) for the current
taxable year and all previous taxable years is equal to the aggregate Net Income allocated
pursuant to Section 6.1(a)(iii) for all previous taxable years, provided that the Net Losses
shall not be allocated pursuant to this Section 6.1(b)(i) to the extent that such allocation
would cause any Unitholder to have a deficit balance in its Adjusted Capital Account at the
end of such taxable year (or increase any existing deficit balance in its Adjusted Capital
Account);

     (ii) Second, 2% to the General Partner, and 98% to the Unitholders, Pro Rata;
provided, that Net Losses shall not be allocated pursuant to this Section 6.1(b)(ii) to the
extent that such allocation would cause any Unitholder to have a deficit balance in its
Adjusted Capital Account at the end of such taxable year (or increase any existing deficit
balance in its Adjusted Capital Account);

     (iii) Third, the balance, if any, 100% to the General Partner.

     (c) Net Termination Gains and Losses. After giving effect to the special allocations set
forth in Section 6.1(d), all items of income, gain, loss and deduction taken into account in
computing Net Termination Gain or Net Termination Loss for such taxable period shall be allocated
in the same manner as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and after all distributions of
Available Cash provided under Sections 6.4 and 6.5 have been made; provided, however, that solely
for purposes of this Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 12.4.

     (i) If a Net Termination Gain is recognized (or deemed recognized pursuant to
Section 5.5(d)), such Net Termination Gain shall be allocated among the Partners in the
following manner (and the Capital Accounts of the Partners shall be increased by the amount
so allocated in each of the following subclauses, in the order listed, before an allocation
is made pursuant to the next succeeding subclause):

     (A) First, to each Partner having a deficit balance in its Capital Account,
in the proportion that such deficit balance bears to the total deficit balances in
the Capital Accounts of all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital Account;

     (B) Second, 98% to all Unitholders holding Common Units, Pro Rata, and 2%
to the General Partner, until the Capital Account in respect of each Common Unit
then Outstanding is equal to the sum of (1) its Unrecovered Capital plus (2) the
Minimum Quarterly Distribution for the Quarter during which the

41

 

Liquidation Date occurs, reduced by any distribution pursuant to Section
6.4(a)(i) or (b)(i) with respect to such Common Unit for such Quarter (the amount
determined pursuant to this clause (2) is hereinafter defined as the “Unpaid MQD”)
plus (3) any then existing Cumulative Common Unit Arrearage;

     (C) Third, if such Net Termination Gain is recognized (or is deemed to be
recognized) prior to the conversion of the last Outstanding Subordinated Unit, 98%
to all Unitholders holding Subordinated Units, Pro Rata, and 2% to the General
Partner, until the Capital Account in respect of each Subordinated Unit then
Outstanding equals the sum of (1) its Unrecovered Capital, determined for the
taxable year (or portion thereof) to which this allocation of gain relates, plus (2)
the Minimum Quarterly Distribution for the Quarter during which the Liquidation Date
occurs, reduced by any distribution pursuant to Section 6.4(a)(iii) with respect to
such Subordinated Unit for such Quarter;

     (D) Fourth, 98% to all Unitholders, Pro Rata, and 2% to the General
Partner, until the Capital Account in respect of each Common Unit then Outstanding
is equal to the sum of (1) its Unrecovered Capital, plus (2) the Unpaid MQD, plus
(3) any then existing Cumulative Common Unit Arrearage, plus (4) the excess of (aa)
the First Target Distribution less the Minimum Quarterly Distribution for each
Quarter of the Partnership’s existence over (bb) the cumulative per Unit amount of
any distributions of Available Cash that is deemed to be Operating Surplus made
pursuant to Sections 6.4(a)(iv) and 6.4(b)(ii) (the sum of (1) plus (2) plus (3)
plus (4) is hereinafter defined as the “First Liquidation Target Amount”);

     (E) Fifth, 85% to all Unitholders, Pro Rata, 13% to the holders of the
Incentive Distribution Rights, Pro Rata, and 2% to the General Partner, until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the First Liquidation Target Amount, plus (2) the excess of (aa) the Second
Target Distribution less the First Target Distribution for each Quarter of the
Partnership’s existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Sections 6.4(a)(v) and 6.4(b)(iii) (the sum of (1) plus (2) is hereinafter
defined as the “Second Liquidation Target Amount”);

     (F) Sixth, 75% to all Unitholders, Pro Rata, 23% to the holders of the
Incentive Distribution Rights, Pro Rata, and 2% to the General Partner, until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the Second Liquidation Target Amount, plus (2) the excess of (aa) the Third
Target Distribution less the Second Target Distribution for each Quarter of the
Partnership’s existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Sections 6.4(a)(vi)and 6.4(b)(iv) (the sum of (1) plus (2) is hereinafter defined
as the “Third Liquidation Target Amount”); and

42

 

     (G) Finally, any remaining amount 50% to all Unitholders, Pro Rata, 48% to
the holders of the Incentive Distribution Rights, Pro Rata, and 2% to the General
Partner.

     (ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to
Section 5.5(d)), such Net Termination Loss shall be allocated among the Partners in the
following manner:

     (A) First, if such Net Termination Loss is recognized (or is deemed to be
recognized) prior to the conversion of the last Outstanding Subordinated Unit, 98%
to the Unitholders holding Subordinated Units, Pro Rata, and 2% to the General
Partner, until the Capital Account in respect of each Subordinated Unit then
Outstanding has been reduced to zero;

     (B) Second, 98% to all Unitholders holding Common Units, Pro Rata, and 2%
to the General Partner, until the Capital Account in respect of each Common Unit
then Outstanding has been reduced to zero; and

     (C) Third, the balance, if any, 100% to the General Partner.

     (d) Special Allocations. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:

     (i) Partnership Minimum Gain Chargeback. Notwithstanding any other provision of
this Section 6.1, if there is a net decrease in Partnership Minimum Gain during any
Partnership taxable period, each Partner shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i),
or any successor provision. For purposes of this Section 6.1(d), each Partner’s Adjusted
Capital Account balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other allocations pursuant to
this Section 6.1(d) with respect to such taxable period (other than an allocation pursuant
to Sections 6.1(d)(vi) and 6.1(d)(vii)). This Section 6.1(d)(i) is intended to comply with
the Partnership Minimum Gain chargeback requirement in Treasury Regulation Section
1.704-2(f) and shall be interpreted consistently therewith.

     (ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding the other
provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Partnership taxable period, any Partner with a share of Partner
Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated
items of Partnership income and gain for such period (and, if necessary, subsequent periods)
in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d), each
Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income
or gain required hereunder

43

 

shall be effected, prior to the application of any other allocations pursuant to this
Section 6.1(d), other than Section 6.1(d)(i) and other than an allocation pursuant to
Sections 6.1(d)(vi) and 6.1(d)(vii), with respect to such taxable period. This Section
6.1(d)(ii) is intended to comply with the chargeback of items of income and gain requirement
in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.

     (iii) Priority Allocations.

     (A) If the amount of cash or the Net Agreed Value of any property
distributed (except cash or property distributed pursuant to Section 12.4) to any
Unitholder with respect to its Units for a taxable year is greater (on a per Unit
basis) than the amount of cash or the Net Agreed Value of property distributed to
the other Unitholders with respect to their Units (on a per Unit basis), then (1)
each Unitholder receiving such greater cash or property distribution shall be
allocated gross income in an amount equal to the product of (aa) the amount by which
the distribution (on a per Unit basis) to such Unitholder exceeds the distribution
(on a per Unit basis) to the Unitholders receiving the smallest distribution and
(bb) the number of Units owned by the Unitholder receiving the greater distribution;
and (2) the General Partner shall be allocated gross income in an aggregate amount
equal to 2/98ths of the sum of the amounts allocated in clause (1) above.

     (B) After the application of Section 6.1(d)(iii)(A), all or any portion of
the remaining items of Partnership gross income or gain for the taxable period, if
any, shall be allocated (1) to the holders of Incentive Distribution Rights, Pro
Rata, until the aggregate amount of such items allocated to the holders of Incentive
Distribution Rights pursuant to this paragraph 6.1(d)(iii)(B) for the current
taxable year and all previous taxable years is equal to the cumulative amount of all
Incentive Distributions made to the holders of Incentive Distribution Rights from
the Closing Date to a date 45 days after the end of the current taxable year and (2)
to the General Partner in an amount equal to 2/98ths of the sum of the amounts
allocated in clause (1) above.

     (iv) Qualified Income Offset. In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Treasury Regulations
promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).

     (v) Gross Income Allocations. In the event any Partner has a deficit balance in its
Capital Account at the end of any Partnership taxable period in excess of the sum of (A) the
amount such Partner is required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to

44

 

Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be
specially allocated items of Partnership gross income and gain in the amount of such excess
as quickly as possible; provided, that an allocation pursuant to this Section 6.1(d)(v)
shall be made only if and to the extent that such Partner would have a deficit balance in
its Capital Account as adjusted after all other allocations provided for in this Section 6.1
have been tentatively made as if this Section 6.1(d)(v) were not in this Agreement.

     (vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period shall be
allocated to the Partners in accordance with their respective Percentage Interests. If the
General Partner determines that the Partnership’s Nonrecourse Deductions should be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice
to the other Partners, to revise the prescribed ratio to the numerically closest ratio that
does satisfy such requirements.

     (vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
taxable period shall be allocated 100% to the Partner that bears the Economic Risk of Loss
with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one
Partner bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of Loss.

     (viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in excess
of the sum of (A) the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.

     (ix) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

     (x) Economic Uniformity. At the election of the General Partner with respect to any
taxable period ending upon, or after, the termination of the Subordination Period with
respect to any class of Units, all or a portion of the remaining items of Partnership gross
income or gain for such taxable period, after taking into account allocations pursuant to
Section 6.1(d)(iii), shall be allocated 100% to each Partner holding Subordinated Units of
that class that are Outstanding as of the termination of such

45

 

Subordination Period (“Final Subordinated Units”) in the proportion of the number of
Final Subordinated Units held by such Partner to the total number of Final Subordinated
Units then Outstanding, until each such Partner has been allocated an amount of gross income
or gain that increases the Capital Account maintained with respect to such Final
Subordinated Units to an amount equal to the product of (A) the number of Final Subordinated
Units held by such Partner and (B) the Per Unit Capital Amount for a Common Unit. The
purpose of this allocation is to establish uniformity between the Capital Accounts
underlying Final Subordinated Units and the Capital Accounts underlying Common Units held by
Persons other than the General Partner and its Affiliates immediately prior to the
conversion of such Final Subordinated Units into Common Units. This allocation method for
establishing such economic uniformity will be available to the General Partner only if the
method for allocating the Capital Account maintained with respect to the Subordinated Units
between the transferred and retained Subordinated Units pursuant to Section 5.5(c)(ii) does
not otherwise provide such economic uniformity to the Final Subordinated Units.

     (xi) Curative Allocation.

     (A) Notwithstanding any other provision of this Section 6.1, other than the
Required Allocations, the Required Allocations shall be taken into account in making
the Agreed Allocations so that, to the extent possible, the net amount of items of
income, gain, loss and deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to the net amount
of such items that would have been allocated to each such Partner under the Agreed
Allocations had the Required Allocations and the related Curative Allocation not
otherwise been provided in this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partnership Minimum
Gain and (2) Partner Nonrecourse Deductions shall not be taken into account except
to the extent that there has been a decrease in Partner Nonrecourse Debt Minimum
Gain. Allocations pursuant to this Section 6.1(d)(xi)(A) shall only be made with
respect to Required Allocations to the extent the General Partner determines that
such allocations will otherwise be inconsistent with the economic agreement among
the Partners. Further, allocations pursuant to this Section 6.1(d)(xi)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and (2) hereof to the
extent the General Partner determines that such allocations are likely to be offset
by subsequent Required Allocations.

     (B) The General Partner shall, with respect to each taxable period, (1)
apply the provisions of Section 6.1(d)(xi)(A) in whatever order is most likely to
minimize the economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to Section 6.1(d)(xi)(A) among
the Partners in a manner that is likely to minimize such economic distortions.

46

 

     (xii) Corrective and Other Allocations. In the event of any allocation of
Additional Book Basis Derivative Items or any Book-Down Event or any recognition of a Net
Termination Loss, the following rules shall apply:

     (A) Except as provided in Section 6.1(d)(xii)(B), in the case of any
allocation of Additional Book Basis Derivative Items (other than an allocation of
Unrealized Gain or Unrealized Loss under Section 5.5(d) hereof) with respect to any
Partnership property, the General Partner shall allocate such Additional Book Basis
Derivative Items (1) to (aa) the holders of Incentive Distribution Rights and (bb)
the General Partner in the same manner that the Unrealized Gain or Unrealized Loss
attributable to such property is allocated pursuant to Section 5.5(d)(i) or Section
5.5(d)(ii) and (2) to all Unitholders, Pro Rata, to the extent that the Unrealized
Gain or Unrealized Loss attributable to such property is allocated to any
Unitholders pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii).

     (B) In the case of any allocation of Additional Book Basis Derivative Items
(other than an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)
hereof or an allocation of Net Termination Gain or Net Termination Loss pursuant to
Section 6.1(c) hereof) as a result of a sale or other taxable disposition of any
Partnership asset that is an Adjusted Property (“Disposed of Adjusted Property”),
the General Partner shall allocate (1) additional items of income and gain (aa) away
from the holders of Incentive Distribution Rights and the General Partner and (bb)
to the Unitholders, or (2) additional items of deduction and loss (aa) away from the
Unitholders and (bb) to the holders of Incentive Distribution Rights and the General
Partner, to the extent that the Additional Book Basis Derivative Items allocated to
the Unitholders exceed their Share of Additional Book Basis Derivative Items with
respect to such Disposed of Adjusted Property. For this purpose, the Unitholders
shall be treated as being allocated Additional Book Basis Derivative Items to the
extent that such Additional Book Basis Derivative Items have reduced the amount of
income that would otherwise have been allocated to the Unitholders under this
Agreement (e.g., Additional Book Basis Derivative Items taken into account in
computing cost of goods sold would reduce the amount of book income otherwise
available for allocation among the Partners). Any allocation made pursuant to this
Section 6.1(d)(xii)(B) shall be made after all of the other Agreed Allocations have
been made as if this Section 6.1(d)(xii) were not in this Agreement and, to the
extent necessary, shall require the reallocation of items that have been allocated
pursuant to such other Agreed Allocations.

     (C) In the case of any negative adjustments to the Capital Accounts of the
Partners resulting from a Book-Down Event or from the recognition of a Net
Termination Loss, such negative adjustment (1) shall first be allocated, to the
extent of the Aggregate Remaining Net Positive Adjustments, in such a manner, as
determined by the General Partner, that to the extent possible the aggregate Capital
Accounts of the Partners will equal the amount that would have been the Capital
Account balance of the Partners if no prior Book-Up Events had occurred,

47

 

and (2) any negative adjustment in excess of the Aggregate Remaining Net
Positive Adjustments shall be allocated pursuant to Section 6.1(c) hereof.

     (D) In making the allocations required under this Section 6.1(d)(xii), the
General Partner may apply whatever conventions or other methodology it determines
will satisfy the purpose of this Section 6.1(d)(xii).

			
	Section 6.2	 	Allocations for Tax Purposes.

     (a) Except as otherwise provided herein, for United States federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the Partners in the same
manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to
Section 6.1.

     (b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property
or Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for United States federal income tax purposes among the Partners as
follows:

     (i) (A) In the case of a Contributed Property, such items attributable thereto
shall be allocated among the Partners in the manner provided under Section 704(c) of the
Code that takes into account the variation between the Agreed Value of such property and its
adjusted basis at the time of contribution; and (B) any item of Residual Gain or Residual
Loss attributable to a Contributed Property shall be allocated among the Partners in the
same manner as its correlative item of “book” gain or loss is allocated pursuant to Section
6.1.

     (ii) (A) In the case of an Adjusted Property, such items shall (1) first, be
allocated among the Partners in a manner consistent with the principles of Section 704(c) of
the Code to take into account the Unrealized Gain or Unrealized Loss attributable to such
property and the allocations thereof pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2)
second, in the event such property was originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of “book” gain or loss is allocated
pursuant to Section 6.1.

     (iii) The General Partner shall apply the principles of Treasury Regulation Section
1.704-3(d) to eliminate Book-Tax Disparities.

     (c) For the proper administration of the Partnership and for the preservation of
uniformity of the Limited Partner Interests (or any class or classes thereof), the General Partner
shall (i) adopt such conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for United States federal
income tax purposes of income (including, without limitation, gross income) or deductions; and
(iii) amend the provisions of this Agreement as appropriate (x) to reflect the proposal or
promulgation of Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Limited Partner Interests (or any

48

 

class or classes thereof). The General Partner may adopt such conventions, make such
allocations and make such amendments to this Agreement as provided in this Section 6.2(c) only if
such conventions, allocations or amendments would not have a material adverse effect on the
Partners, the holders of any class or classes of Limited Partner Interests issued and Outstanding
or the Partnership, and if such allocations are consistent with the principles of Section 704 of
the Code.

     (d) The General Partner may determine to depreciate or amortize the portion of an
adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted
Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the Partnership’s common
basis of such property, despite any inconsistency of such approach with Treasury Regulation Section
1.167(c)-l(a)(6) or any successor regulations thereto. If the General Partner determines that such
reporting position cannot reasonably be taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring Limited Partner Interests in the same
month would receive depreciation and amortization deductions, based upon the same applicable rate
as if they had purchased a direct interest in the Partnership’s property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use any other depreciation
and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any
Limited Partner Interests, so long as such conventions would not have a material adverse effect on
the Limited Partners or the Record Holders of any class or classes of Limited Partner Interests.

     (e) Any gain allocated to the Partners upon the sale or other taxable disposition of any
Partnership asset shall, to the extent possible, after taking into account other required
allocations of gain pursuant to this Section 6.2, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.

     (f) All items of income, gain, loss, deduction and credit recognized by the Partnership
for United States federal income tax purposes and allocated to the Partners in accordance with the
provisions hereof shall be determined without regard to any election under Section 754 of the Code
that may be made by the Partnership; provided, however, that such allocations, once made, shall be
adjusted (in the manner determined by the General Partner) to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.

     (g) Each item of Partnership income, gain, loss and deduction shall for United States
federal income tax purposes, be determined on an annual basis and prorated on a monthly basis and
shall be allocated to the Partners as of the opening of the New York Stock Exchange on the first
Business Day of each month; provided, however, such items for the period beginning on the Closing
Date and ending on the last day of the month in which the Option Closing Date or the expiration of
the Over-Allotment Option occurs shall be allocated to the Partners as of the opening of the New
York Stock Exchange on the first Business Day of the next succeeding month; and provided, further,
that gain or loss on a sale or other disposition of any assets of the Partnership or any other
extraordinary item of income or loss realized and recognized other than in the ordinary course of
business, as determined by the General Partner, shall be allocated to the

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Partners as of the opening of the New York Stock Exchange on the first Business Day of the
month in which such gain or loss is recognized for United States federal income tax purposes. The
General Partner may revise, alter or otherwise modify such methods of allocation to the extent
permitted or required by Section 706 of the Code and the regulations or rulings promulgated
thereunder.

     (h) Allocations that would otherwise be made to a Limited Partner under the provisions of
this Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by
a nominee in any case in which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any other method determined by the
General Partner.

			
	Section 6.3	 	Requirement and Characterization of Distributions; Distributions to Record
Holders.

     (a) Within 45 days following the end of each Quarter commencing with the Quarter ending on
June 30, 2005, an amount equal to 100% of Available Cash with respect to such Quarter shall,
subject to Section 51 of the Marshall Islands Act, be distributed in accordance with this Article
VI by the Partnership to the Partners as of the Record Date selected by the General Partner. All
amounts of Available Cash distributed by the Partnership on any date from any source shall be
deemed to be Operating Surplus until the sum of all amounts of Available Cash theretofore
distributed by the Partnership to the Partners pursuant to Section 6.4 equals the Operating Surplus
from the Closing Date through the close of the immediately preceding Quarter. Any remaining amounts
of Available Cash distributed by the Partnership on such date shall, except as otherwise provided
in Section 6.5, be deemed to be “Capital Surplus.” All distributions required to be made under this
Agreement shall be made subject to Section 51 of the Marshall Islands Act.

     (b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of Available Cash, shall
be applied and distributed solely in accordance with, and subject to the terms and conditions of,
Section 12.4.

     (c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash
to such Partners.

     (d) Each distribution in respect of a Partnership Interest shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person or agent, only to
the Record Holder of such Partnership Interest as of the Record Date set for such distribution.
Such payment shall constitute full payment and satisfaction of the Partnership’s liability in
respect of such payment, regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.

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	Section 6.4	 	Distributions of Available Cash from Operating Surplus.

     (a) During Subordination Period. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Sections
6.3 or 6.5 shall, subject to Section 51 of the Marshall Islands Act, be distributed as follows,
except as otherwise required by Section 5.6(b) in respect of other Partnership Securities issued
pursuant thereto:

     (i) First, 98% to the Unitholders holding Common Units, Pro Rata, and 2% to the
General Partner, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

     (ii) Second, 98% to the Unitholders holding Common Units, Pro Rata, and 2% to the
General Partner, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage existing with respect to
such Quarter;

     (iii) Third, 98% to the Unitholders holding Subordinated Units, Pro Rata, and 2% to
the General Partner, until there has been distributed in respect of each Subordinated Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

     (iv) Fourth, 98% to all Unitholders, Pro Rata, and 2% to the General Partner, until
there has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly Distribution for such
Quarter;

     (v) Fifth, 85% to all Unitholders, Pro Rata, 13% to the holders of the Incentive
Distribution Rights and 2% to the General Partner, until there has been distributed in
respect of each Unit then Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution for such Quarter;

     (vi) Sixth, 75% to all Unitholders, Pro Rata, 23% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Third Target Distribution over the Second Target Distribution for such Quarter; and

     (vii) Thereafter, 50% to all Unitholders, Pro Rata, 48% to the holders of the
Incentive Distribution Rights, Pro Rata, and 2% to the General Partner;

provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).

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     (b) After Subordination Period. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Sections
6.3 or 6.5, subject to Section 51 of the Marshall Islands Act, shall be distributed as follows,
except as otherwise required by Section 5.6(b) in respect of additional Partnership Securities
issued pursuant thereto:

     (i) First, 98% to all Unitholders, Pro Rata, and 2% to the General Partner, until there
has been distributed in respect of each Unit then Outstanding an amount equal to the Minimum
Quarterly Distribution for such Quarter;

     (ii) Second, 98% to all Unitholders, Pro Rata, and 2% to the General Partner, until
there has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly Distribution for such
Quarter;

     (iii) Third, 85% to all Unitholders, Pro Rata, 13% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Second Target Distribution over the First Target Distribution for such Quarter;

     (iv) Fourth, 75% to all Unitholders, Pro Rata, 23% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Third Target Distribution over the Second Target Distribution for such Quarter; and

     (v) Thereafter, 50% to all Unitholders, Pro Rata, 48% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner;

provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(b)(v).

Section 6.5 Distributions of Available Cash from Capital Surplus.

     Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section
6.3(a) shall, subject to Section 51 of the Marshall Islands Act, be distributed, unless the
provisions of Section 6.3 require otherwise, 98% to all Unitholders, Pro Rata, and 2% to the
General Partner, until a hypothetical holder of a Common Unit acquired on the Closing Date has
received with respect to such Common Unit, during the period since the Closing Date through such
date, distributions of Available Cash that are deemed to be Capital Surplus in an aggregate amount
equal to the Initial Unit Price. Available Cash that is deemed to be Capital Surplus shall then be
distributed 98% to all Unitholders holding Common Units, Pro Rata, and 2% to the General Partner,
until there has been distributed in respect of each Common Unit then Outstanding an amount equal to
the Cumulative Common Unit Arrearage. Thereafter, all

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Available Cash shall be distributed as if it were Operating Surplus and shall be distributed
in accordance with Section 6.4.

Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.

     (a) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in Units or otherwise) of Units or other Partnership Securities
in accordance with Section 5.10. In the event of a distribution of Available Cash that is deemed
to be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, shall be adjusted
proportionately downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third
Target Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered
Capital of the Common Units immediately after giving effect to such distribution and of which the
denominator is the Unrecovered Capital of the Common Units immediately prior to giving effect to
such distribution.

     (b) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, shall also be subject to adjustment pursuant to Section 6.9.

Section 6.7 Special Provisions Relating to the Holders of Subordinated Units.

     (a) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a
Unitholder holding Common Units hereunder; provided, however, that immediately upon the conversion
of Subordinated Units into Common Units pursuant to Section 5.8, the Unitholder holding a
Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding Common
Units hereunder, including the right to vote as a Common Unitholder and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units; provided, however, that such converted Subordinated Units shall remain subject to the
provisions of Sections 5.5(d)(ii), 6.1(d)(x) and 6.7(b).

     (b) The Unitholder holding a Subordinated Unit that has converted into a Common Unit pursuant
to Section 5.8 shall not be issued a Common Unit Certificate pursuant to Section 4.1, and shall not
be permitted to transfer its converted Subordinated Units to a Person that is not an Affiliate of
the holder until such time as the General Partner determines, based on advice of counsel, that a
converted Subordinated Unit should have, as a substantive matter, like intrinsic economic and
federal income tax characteristics, in all material respects, to the intrinsic economic and federal
income tax characteristics of an Initial Common Unit. In connection with the condition imposed by
this Section 6.7(b), the General Partner may take whatever steps are required to provide economic
uniformity to the converted Subordinated Units in preparation for a

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transfer of such converted Subordinated Units, including the application of Sections
5.5(c)(ii) and 6.1(d)(x); provided, however, that no such steps may be taken that would have a
material adverse effect on the Unitholders holding Common Units represented by Common Unit
Certificates.

Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights.

     Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Articles III and VII and (ii) have a
Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, (ii) be entitled to any distributions other than as provided in Sections
6.4(a)(v), (vi) and (vii), 6.4(b)(iii), (iv) and (v), and 12.4 or (iii) be allocated items of
income, gain, loss or deduction other than as specified in this Article VI.

Section 6.9 Entity-Level Taxation.

     If legislation is enacted or the interpretation of existing language is modified by a
governmental taxing authority so that a Group Member is treated as an association taxable as a
corporation or is otherwise subject to an entity-level tax for federal, state or local income tax
purposes, then the General Partner shall estimate for each Quarter the Partnership Group’s
aggregate liability (the “Estimated Incremental Quarterly Tax Amount”) for all such income taxes
that are payable by reason of any such new legislation or interpretation; provided that any
difference between such estimate and the actual tax liability for such Quarter that is owed by
reason of any such new legislation or interpretation shall be taken into account in determining the
Estimated Incremental Quarterly Tax Amount with respect to each Quarter in which any such
difference can be determined. For each such Quarter, the Minimum Quarterly Distribution, First
Target Distribution, Second Target Distribution and Third Target Distribution, shall be the product
obtained by multiplying (a) the amounts therefor that are set out herein prior to the application
of this Section 6.9 times (b) the quotient obtained by dividing (i) Available Cash with respect to
such Quarter by (ii) the sum of Available Cash with respect to such Quarter and the Estimated
Incremental Quarterly Tax Amount for such Quarter, as determined by the General Partner. For
purposes of the foregoing, Available Cash with respect to a Quarter will be deemed reduced by the
Estimated Incremental Quarterly Tax Amount for that Quarter.

ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1 Management.

     (a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and

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affairs of the Partnership. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or that are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to Section 7.3, shall
have full power and authority to do all things and on such terms as it determines to be necessary
or appropriate to conduct the business of the Partnership, to exercise all powers set forth in
Section 2.5 and to effectuate the purposes set forth in Section 2.4, including the following:

     (i) the making of any expenditures, the lending or borrowing of money, the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is convertible into Partnership
Securities, and the incurring of any other obligations;

     (ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership;

     (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other combination
of the Partnership with or into another Person (the matters described in this clause (iii)
being subject, however, to any prior approval that may be required by Section 7.3 and
Article XIV);

     (iv) the use of the assets of the Partnership (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to
other Persons (including other Group Members); the repayment or guarantee of obligations of
the Partnership Group; and the making of capital contributions to any member of the
Partnership Group;

     (v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the Partnership, with the other
party to the contract to have no recourse against the General Partner or its assets other
than its interest in the Partnership, even if same results in the terms of the transaction
being less favorable to the Partnership than would otherwise be the case);

     (vi) the distribution of Partnership cash;

     (vii) the selection and dismissal of employees (including employees having titles such
as “president,” “vice president,” “secretary” and “treasurer”) and agents, outside
attorneys, accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;

     (viii) the maintenance of insurance for the benefit of the Partnership Group, the
Partners and Indemnitees;

     (ix) the formation of, or acquisition of an interest in, and the contribution of
property and the making of loans to, any further limited or general partnerships, joint

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ventures, corporations, limited liability companies or other relationships (including
the acquisition of interests in, and the contributions of property to, any Group Member from
time to time) subject to the restrictions set forth in Section 2.4;

     (x) the control of any matters affecting the rights and obligations of the Partnership,
including the bringing and defending of actions at law or in equity and otherwise engaging
in the conduct of litigation, arbitration or mediation and the incurring of legal expense
and the settlement of claims and litigation;

     (xi) the indemnification of any Person against liabilities and contingencies to the
extent permitted by law;

     (xii) the entering into of listing agreements with any National Securities Exchange and
the delisting of some or all of the Limited Partner Interests from, or requesting that
trading be suspended on, any such exchange (subject to any prior approval that may be
required under Section 4.8);

     (xiii) the purchase, sale or other acquisition or disposition of Partnership
Securities, or the issuance of options, rights, warrants and appreciation rights relating to
Partnership Securities;

     (xiv) the undertaking of any action in connection with the Partnership’s participation
in any Group Member; and

     (xv) the entering into of agreements with any of its Affiliates to render services to a
Group Member or to itself in the discharge of its duties as General Partner of the
Partnership.

     (b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Marshall Islands Act or any applicable law, rule or regulation, each of the Partners and the
Assignees and each other Person who may acquire an interest in Partnership Securities hereby (i)
approves, ratifies and confirms the execution, delivery and performance by the parties thereto of
this Agreement, the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement, any
Group Member Agreement of any other Group Member and the other agreements described in or filed as
exhibits to the Registration Statement that are related to the transactions contemplated by the
Registration Statement; (ii) agrees that the General Partner (on its own or through any officer of
the Partnership) is authorized to execute, deliver and perform the agreements referred to in clause
(i) of this sentence and the other agreements, acts, transactions and matters described in or
contemplated by the Registration Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest
in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the
General Partner, any Group Member or any Affiliate of any of them of this Agreement or any
agreement authorized or permitted under this Agreement (including the exercise by the General
Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)
shall not constitute a breach by the General Partner of any duty that the General Partner may owe
the Partnership or the Limited Partners or

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any other Persons under this Agreement (or any other agreements) or of any duty stated or
implied by law or equity.

Section 7.2 Certificate of Limited Partnership.

     The General Partner has caused the Certificate of Limited Partnership to be filed with the
Registrar of Corporations of the Marshall Islands as required by the Marshall Islands Act. The
General Partner shall use all reasonable efforts to cause to be filed such other certificates or
documents that the General Partner determines to be necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a partnership in which the
limited partners have limited liability) in the Marshall Islands or any other jurisdiction in which
the Partnership may elect to do business or own property. To the extent the General Partner
determines such action to be necessary or appropriate, the General Partner shall file amendments to
and restatements of the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the Marshall Islands or of any other
jurisdiction in which the Partnership may elect to do business or own property. Subject to the
terms of Section 3.4(a), the General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any
amendment thereto to any Limited Partner.

Section 7.3 Restrictions on the General Partner’s Authority.

     (a) Except as otherwise provided in this Agreement, the General Partner may not, without
written approval of the specific act by holders of all of the Outstanding Limited Partner Interests
or by other written instrument executed and delivered by holders of all of the Outstanding Limited
Partner Interests subsequent to the date of this Agreement, take any action in contravention of
this Agreement, including, (i) committing any act that would make it impossible to carry on the
ordinary business of the Partnership; (ii) possessing Partnership property, or assigning any rights
in specific Partnership property, for other than a Partnership purpose; (iii) admitting a Person as
a Partner; (iv) amending this Agreement in any manner; or (v) transferring its interest as a
general partner of the Partnership.

     (b) Except as provided in Articles XII and XIV, the General Partner may not sell, exchange or
otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a
whole, in a single transaction or a series of related transactions (including by way of merger,
consolidation, other combination or sale of ownership interests of the Partnership’s Subsidiaries)
without the approval of holders of a Unit Majority; provided, however, that this provision shall
not preclude or limit the General Partner’s ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership Group and shall not
apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the
foreclosure of, or other realization upon, any such encumbrance. Without the approval of holders of
a Unit Majority, the General Partner shall not, on behalf of the Partnership, (i) consent to any
amendment to the Operating Company Agreement or, except as expressly permitted by Section 7.9(e),
take any action permitted to be taken by a member of the Operating Company, in either case, that
would adversely affect the Limited Partners (including any particular class of Partnership
Interests as compared to any other class of Partnership

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Interests) in any material respect or (ii) except as permitted under Sections 4.6, 11.1 and
11.2, elect or cause the Partnership to elect a successor general partner of the Partnership.

Section 7.4 Reimbursement of the General Partner.

     (a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.

     (b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership (including salary, bonus, incentive compensation and other
amounts paid to any Person including Affiliates of the General Partner to perform services for the
Partnership or for the General Partner in the discharge of its duties to the Partnership), and (ii)
all other expenses allocable to the Partnership or otherwise incurred by the General Partner in
connection with operating the Partnership’s business (including expenses allocated to the General
Partner by its Affiliates). The General Partner shall determine the expenses that are allocable to
the Partnership. Reimbursements pursuant to this Section 7.4 shall be in addition to any
reimbursement to the General Partner as a result of indemnification pursuant to Section 7.7.

     (c) The General Partner, without the approval of the Limited Partners (who shall have no right
to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices (including plans, programs and practices involving
the issuance of Partnership Securities or options to purchase or rights, warrants or appreciation
rights relating to Partnership Securities), or cause the Partnership to issue Partnership
Securities in connection with, or pursuant to, any employee benefit plan, employee program or
employee practice maintained or sponsored by the General Partner or any of its Affiliates, in each
case for the benefit of employees of the General Partner, any Group Member or any Affiliate, or any
of them, in respect of services performed, directly or indirectly, for the benefit of the
Partnership Group. The Partnership agrees to issue and sell to the General Partner or any of its
Affiliates any Partnership Securities that the General Partner or such Affiliates are obligated to
provide to any employees pursuant to any such employee benefit plans, employee programs or employee
practices. Expenses incurred by the General Partner in connection with any such plans, programs and
practices (including the net cost to the General Partner or such Affiliates of Partnership
Securities purchased by the General Partner or such Affiliates from the Partnership to fulfill
options or awards under such plans, programs and practices) shall be reimbursed in accordance with
Section 7.4(b). Any and all obligations of the General Partner under any employee benefit plans,
employee programs or employee practices adopted by the General Partner as permitted by this Section
7.4(c) shall constitute obligations of the General Partner hereunder and shall be assumed by any
successor General Partner approved pursuant to Section 11.1 or 11.2 or the transferee of or
successor to all of the General Partner’s General Partner Interest pursuant to Section 4.6.

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Section 7.5 Outside Activities.

     (a) After the Closing Date, the General Partner, for so long as it is the General Partner of
the Partnership (i) agrees that its sole business will be to act as a general partner or managing
member, as the case may be, of the Partnership and any other partnership or limited liability
company of which the Partnership or the Operating Company is, directly or indirectly, a partner or
member and to undertake activities that are ancillary or related thereto (including being a limited
partner in the Partnership), (ii) shall not engage in any business or activity or incur any debts
or liabilities except in connection with or incidental to (A) its performance as general partner or
managing member, if any, of one or more Group Members or as described in or contemplated by the
Registration Statement or (B) the acquiring, owning or disposing of debt or equity securities in
any Group Member and (iii) except to the extent permitted in the Omnibus Agreement, shall not, and
shall cause its controlled Affiliates not to, engage in any Teekay Restricted Businesses.

     (b) Teekay Shipping Corporation and certain of its Affiliates have entered into the Omnibus
Agreement, which agreement sets forth certain restrictions on the ability of Teekay Shipping
Corporation and its Affiliates to engage in Teekay Restricted Businesses.

     (c) Except as specifically restricted by Section 7.5(a) and the Omnibus Agreement, each
Indemnitee (other than the General Partner) shall have the right to engage in businesses of every
type and description and other activities for profit and to engage in and possess an interest in
other business ventures of any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by any Group Member, independently or with others, including business
interests and activities in direct competition with the business and activities of any Group
Member, and none of the same shall constitute a breach of this Agreement or any duty expressed or
implied by law to any Group Member or any Partner or Assignee. None of any Group Member, any
Limited Partner or any other Person shall have any rights by virtue of this Agreement, any Group
Member Agreement, or the partnership relationship established hereby in any business ventures of
any Indemnitee.

     (d) Subject to the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c) and the Omnibus
Agreement, but otherwise notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any Indemnitees (other than the General Partner) in
accordance with the provisions of this Section 7.5 is hereby approved by the Partnership and all
Partners, (ii) it shall be deemed not to be a breach of any fiduciary duty or any other obligation
of any type whatsoever of the General Partner or of any Indemnitee for the Indemnitees (other than
the General Partner) to engage in such business interests and activities in preference to or to the
exclusion of the Partnership and (iii) except as set forth in the Omnibus Agreement, the General
Partner and the Indemnitees shall have no obligation hereunder or as a result of any duty expressed
or implied by law to present business opportunities to the Partnership.

     (e) The General Partner and each of its Affiliates may acquire Units or other Partnership
Securities in addition to those acquired on the Closing Date and, except as otherwise provided in
this Agreement, shall be entitled to exercise, at their option, all rights relating to all Units or
other Partnership Securities acquired by them.

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     (f) The term “Affiliates” when used in Section 7.5(a) and Section 7.5(e) with respect to the
General Partner shall not include any Group Member.

     (g) Notwithstanding anything to the contrary in this Agreement, to the extent that any
provision of this Agreement purports or is interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Marshall Islands law or other applicable law,
be owed by the General Partner to the Partnership and its Limited Partners, or to constitute a
waiver or consent by the Limited Partners to any such restriction, such provisions shall be
inapplicable and have no effect in determining whether the General Partner has complied with its
fiduciary duties in connection with determinations made by it under this Section 7.5.

Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or
Group Members.

     (a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided, however, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arm’s-length basis (without reference to the
lending party’s financial abilities or guarantees), all as determined by the General Partner. The
borrowing party shall reimburse the lending party for any costs (other than any additional interest
costs) incurred by the lending party in connection with the borrowing of such funds. For purposes
of this Section 7.6(a) and Section 7.6(b), the term “Group Member” shall include any Affiliate of a
Group Member that is controlled by the Group Member.

     (b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions determined by the General Partner. No
Group Member may lend funds to the General Partner or any of its Affiliates (other than another
Group Member).

     (c) No borrowing by any Group Member or the approval thereof by the General Partner shall be
deemed to constitute a breach of any duty, expressed or implied, of the General Partner or its
Affiliates to the Partnership or the Limited Partners by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to (i) enable distributions to the General
Partner or its Affiliates (including in their capacities as Limited Partners) to exceed the General
Partner’s Percentage Interest of the total amount distributed to all partners or (ii) hasten the
expiration of the Subordination Period or the conversion of any Subordinated Units into Common
Units.

Section 7.7 Indemnification.

     (a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from
and against any and all losses, claims, damages, liabilities, joint or several,

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expenses (including legal fees and expenses), judgments, fines, penalties, interest,
settlements or other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which any Indemnitee may
be involved, or is threatened to be involved, as a party or otherwise, by reason of its status as
an Indemnitee; provided, that the Indemnitee shall not be indemnified and held harmless if there
has been a final and non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter for which the Indemnitee is seeking indemnification
pursuant to this Section 7.7, the Indemnitee acted in bad faith or engaged in fraud, willful
misconduct or gross negligence or, in the case of a criminal matter, acted with knowledge that the
Indemnitee’s conduct was unlawful; provided, further, no indemnification pursuant to this Section
7.7 shall be available to the General Partner or its Affiliates (other than a Group Member) with
respect to its or their obligations incurred pursuant to the Underwriting Agreement, the Omnibus
Agreement or the Contribution Agreement (other than obligations incurred by the General Partner on
behalf of the Partnership). Any indemnification pursuant to this Section 7.7 shall be made only out
of the assets of the Partnership, it being agreed that the General Partner shall not be personally
liable for such indemnification and shall have no obligation to contribute or loan any monies or
property to the Partnership to enable it to effectuate such indemnification.

     (b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section
7.7.

     (c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.

     (d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such
other Persons as the General Partner shall determine, against any liability that may be asserted
against, or expense that may be incurred by, such Person in connection with the Partnership’s
activities or such Person’s activities on behalf of the Partnership, regardless of whether the
Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.

     (e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute

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“fines” within the meaning of Section 7.7(a); and action taken or omitted by it with respect
to any employee benefit plan in the performance of its duties for a purpose reasonably believed by
it to be in the best interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose that is in the best interests of the Partnership.

     (f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.

     (g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

     (h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.

     (i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.

Section 7.8 Liability of Indemnitees.

     (a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners, the Assignees or any other
Persons who have acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a
final and non-appealable judgment entered by a court of competent jurisdiction determining that, in
respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful
misconduct or gross negligence or, in the case of a criminal matter, acted with knowledge that the
Indemnitee’s conduct was criminal.

     (b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.

     (c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.

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     (d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of the
Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties.

     (a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement,
whenever a potential conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Group Member, any Partner or any
Assignee, on the other, any resolution or course of action by the General Partner or its Affiliates
in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and
shall not constitute a breach of this Agreement, of any Group Member Agreement, of any agreement
contemplated herein or therein, or of any duty stated or implied by law or equity, if the
resolution or course of action in respect of such conflict of interest is (i) approved by Special
Approval, (ii) approved by the vote of a majority of the Common Units (excluding Common Units owned
by the General Partner and its Affiliates), (iii) on terms no less favorable to the Partnership
than those generally being provided to or available from unrelated third parties or (iv) fair and
reasonable to the Partnership, taking into account the totality of the relationships between the
parties involved (including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner shall be authorized but not required in connection with
its resolution of such conflict of interest to seek Special Approval of such resolution, and the
General Partner may also adopt a resolution or course of action that has not received Special
Approval. If Special Approval is not sought and the Board of Directors of the General Partner
determines that the resolution or course of action taken with respect to a conflict of interest
satisfies either of the standards set forth in clauses (iii) or (iv) above, then it shall be
presumed that, in making its decision, the Board of Directors of the General Partner acted in good
faith, and in any proceeding brought by any Limited Partner or Assignee or by or on behalf of such
Limited Partner or Assignee or any other Limited Partner or Assignee or the Partnership challenging
such approval, the Person bringing or prosecuting such proceeding shall have the burden of
overcoming such presumption. Notwithstanding anything to the contrary in this Agreement, the
existence of the conflicts of interest described in the Registration Statement are hereby approved
by all Partners.

     (b) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its capacity as the general partner of the
Partnership as opposed to in its individual capacity, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another
express standard is provided for in this Agreement, the General Partner, or such Affiliates causing
it to do so, shall make such determination or take or decline to take such other action in good
faith and shall not be subject to any other or different standards imposed by this Agreement, any
Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands Act
or any other law, rule or regulation. In order for a determination or other action to be in “good
faith” for purposes of this Agreement, the Person or Persons making

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such determination or taking or declining to take such other action must reasonably believe
that the determination or other action is in the best interests of the Partnership, unless the
context otherwise requires.

     (c) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in
its capacity as the general partner of the Partnership, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, are entitled to make such determination or to take or
decline to take such other action free of any fiduciary duty or obligation whatsoever to the
Partnership, any Limited Partner or Assignee, and the General Partner, or such Affiliates causing
it to do so, shall not be required to act in good faith or pursuant to any other standard imposed
by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Marshall Islands Act or any other law, rule or regulation. By way of illustration and not of
limitation, whenever the phrase, “at the option of the General Partner,” or some variation of that
phrase, is used in this Agreement, it indicates that the General Partner is acting in its
individual capacity.

     (d) Notwithstanding anything to the contrary in this Agreement, the General Partner and its
Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit
any Group Member to use any facilities or assets of the General Partner and its Affiliates, except
as may be provided in contracts entered into from time to time specifically dealing with such use.
Any determination by the General Partner or any of its Affiliates to enter into such contracts
shall be at its option.

     (e) Except as expressly set forth in this Agreement, neither the General Partner nor any other
Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or
any Limited Partner or Assignee and the provisions of this Agreement, to the extent that they
restrict or otherwise modify the duties and liabilities, including fiduciary duties, of the General
Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the Partners
to replace such other duties and liabilities of the General Partner or such other Indemnitee.

     (f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.

Section 7.10 Other Matters Concerning the General Partner.

     (a) The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.

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     (b) The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes to be within such Person’s
professional or expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.

     (c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.

Section 7.11 Purchase or Sale of Partnership Securities.

     The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities; provided that the General Partner may not cause any Group Member to purchase
Subordinated Units during the Subordination Period. As long as Partnership Securities are held by
any Group Member, such Partnership Securities shall not be considered Outstanding for any purpose,
except as otherwise provided herein. The General Partner or any Affiliate of the General Partner
may also purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Articles IV and X.

Section 7.12 Registration Rights of the General Partner and its Affiliates.

     (a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that is an Affiliate of the General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of the General Partner) or any of their
assignees holds Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities
Act (or any successor rule or regulation to Rule 144) or another exemption from registration is not
available to enable such holder of Partnership Securities (the “Holder”) to dispose of the number
of Partnership Securities it desires to sell at the time it desires to do so without registration
under the Securities Act, then at the option and upon the request of the Holder, the Partnership
shall file with the Commission as promptly as practicable after receiving such request, and use all
reasonable efforts to cause to become effective and remain effective for a period of not less than
six months following its effective date or such shorter period as shall terminate when all
Partnership Securities covered by such registration statement have been sold, a registration
statement under the Securities Act registering the offering and sale of the number of Partnership
Securities specified by the Holder; provided, however, that the Partnership shall not be required
to effect more than three registrations pursuant to this Section 7.12(a); and provided further,
however, that if the Conflicts Committee determines that a postponement of the requested
registration for up to six months would be in the best interests of the Partnership and its
Partners due to a pending transaction, investigation or other event, the filing of such
registration statement or the effectiveness thereof may be deferred for up to six months, but not
thereafter. In connection with any registration pursuant to the immediately preceding sentence, the
Partnership shall (i) promptly prepare and file (A) such documents as may be necessary to register
or qualify the securities subject to such registration under the securities laws of such states as
the Holder shall reasonably request; provided, however, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Partnership would become subject

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to general service of process or to taxation or qualification to do business as a foreign
corporation or partnership doing business in such jurisdiction solely as a result of such
registration, and (B) such documents as may be necessary to apply for listing or to list the
Partnership Securities subject to such registration on such National Securities Exchange as the
Holder shall reasonably request, and (ii) do any and all other acts and things that may be
necessary or appropriate to enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.12(c), all costs and expenses of any
such registration and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.

     (b) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of equity securities of the Partnership for cash (other than an
offering relating solely to an employee benefit plan), the Partnership shall use all reasonable
efforts to include such number or amount of securities held by the Holder in such registration
statement as the Holder shall request; provided, that the Partnership is not required to make any
effort or take any action to so include the securities of the Holder once the registration
statement is declared effective by the Commission, including any registration statement providing
for the offering from time to time of securities pursuant to Rule 415 of the Securities Act. If the
proposed offering pursuant to this Section 7.12(b) shall be an underwritten offering, then, in the
event that the managing underwriter or managing underwriters of such offering advise the
Partnership and the Holder in writing that in their opinion the inclusion of all or some of the
Holder’s Partnership Securities would adversely and materially affect the success of the offering,
the Partnership shall include in such offering only that number or amount, if any, of securities
held by the Holder that, in the opinion of the managing underwriter or managing underwriters, will
not so adversely and materially affect the offering. Except as set forth in Section 7.12(c), all
costs and expenses of any such registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the Holder.

     (c) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnership’s obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) against
any losses, claims, demands, actions, causes of action, assessments, damages, liabilities (joint or
several), costs and expenses (including interest, penalties and reasonable attorneys’ fees and
disbursements), resulting to, imposed upon, or incurred by the Indemnified Persons, directly or
indirectly, under the Securities Act or otherwise (hereinafter referred to in this Section 7.12(c)
as a “claim” and in the plural as “claims”) based upon, arising out of or resulting from any untrue
statement or alleged untrue statement of any material fact contained in any registration statement
under which any Partnership Securities were registered under the Securities Act or any state
securities or Blue Sky laws, in any preliminary prospectus (if used prior to the effective date of
such registration statement), or in any summary or final prospectus or in any amendment or
supplement thereto (if used during the period the Partnership is required to keep the registration
statement current), or arising out of, based upon or resulting from the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the

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statements made therein not misleading; provided, however, that the Partnership shall not be
liable to any Indemnified Person to the extent that any such claim arises out of, is based upon or
results from an untrue statement or alleged untrue statement or omission or alleged omission made
in such registration statement, such preliminary, summary or final prospectus or such amendment or
supplement, in reliance upon and in conformity with written information furnished to the
Partnership by or on behalf of such Indemnified Person specifically for use in the preparation
thereof.

     (d) The provisions of Section 7.12(a) and Section 1.1(b) shall continue to be applicable with
respect to the General Partner (and any of the General Partner’s Affiliates and any of the General
Partner’s or its Affiliates’ assignees) after it ceases to be a Partner of the Partnership, during
a period of two years subsequent to the effective date of such cessation and for so long thereafter
as is required for the Holder to sell all of the Partnership Securities with respect to which it
has requested during such two-year period inclusion in a registration statement otherwise filed or
that a registration statement be filed; provided, however, that the Partnership shall not be
required to file successive registration statements covering the same Partnership Securities for
which registration was demanded during such two-year period. The provisions of Section 1.1(c)
shall continue in effect thereafter.

     (e) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Person’s present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.

Section 7.13 Reliance by Third Parties.

     Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in connection with any
such dealing. In no event shall any Person dealing with the General Partner or any such officer or
its representatives be obligated to ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that
(a) at the time of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on

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behalf of the Partnership and (c) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and is binding upon the
Partnership.

ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1 Records and Accounting.

     The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnership’s business, including all books and
records necessary to provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders and Assignees of
Units or other Partnership Securities, books of account and records of Partnership proceedings, may
be kept on, or be in the form of, computer disks, hard drives, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided, that the books and
records so maintained are convertible into clearly legible written form within a reasonable period
of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an
accrual basis in accordance with U.S. GAAP.

Section 8.2 Fiscal Year.

     The fiscal year of the Partnership shall be a fiscal year ending December 31.

Section 8.3 Reports.

     (a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available to each
Record Holder of a Unit as of a date selected by the General Partner, an annual report containing
financial statements of the Partnership for such fiscal year of the Partnership, presented in
accordance with U.S. GAAP, including a balance sheet and statements of operations, Partnership
equity and cash flows, such statements to be audited by a firm of independent public accountants
selected by the General Partner.

     (b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made
available to each Record Holder of a Unit, as of a date selected by the General Partner, a report
containing unaudited financial statements of the Partnership and such other information as may be
required by applicable law, regulation or rule of any National Securities Exchange on which the
Units are listed, or as the General Partner determines to be necessary or appropriate.

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ARTICLE IX

TAX MATTERS

Section 9.1 Tax Returns and Information.

     The Partnership shall timely file all returns of the Partnership that are required for
foreign, federal, state and local income tax purposes on the basis of the accrual method and a
taxable year ending on December 31. The tax information reasonably required by Record Holders for
federal and state income tax reporting purposes with respect to a taxable year shall be furnished
to them within 90 days of the close of the calendar year in which the Partnership’s taxable year
ends. The classification, realization and recognition of income, gain, losses and deductions and
other items shall be on the accrual method of accounting for United States federal income tax
purposes.

Section 9.2 Tax Elections.

     (a) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the General Partner’s determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall
be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such Limited Partner Interests are
listed during the calendar month in which such transfer is deemed to occur pursuant to Section
6.2(g) without regard to the actual price paid by such transferee.

     (b) Except as otherwise provided herein, the General Partner shall determine whether the
Partnership should make any other elections permitted by the Code.

Section 9.3 Tax Controversies.

     Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner
(as defined in the Code) and is authorized and required to represent the Partnership (at the
Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax
authorities, including resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner agrees to cooperate
with the General Partner and to do or refrain from doing any or all things reasonably required by
the General Partner to conduct such proceedings.

Section 9.4 Withholding.

     Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that may be required to cause the Partnership and other Group Members to comply
with any withholding requirements established under the Code or any other federal, state or local
law including, without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To
the extent that the Partnership is required or elects to withhold and pay over to any

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taxing authority any amount resulting from the allocation or distribution of income to any
Partner or Assignee (including, without limitation, by reason of Section 1446 of the Code), the
General Partner may treat the amount withheld as a distribution of cash pursuant to Section 6.3 in
the amount of such withholding from such Partner.

Section 9.5 Conduct of Operations.

     The General Partner shall use commercially reasonable efforts to conduct the business of the
Partnership and its Affiliates in a manner that does not require a holder of Common Units to file a
tax return in any jurisdiction with which the holder has no contact other than through ownership of
Common Units. For greater certainty, the General Partner shall conduct the affairs and governance
of the Partnership so that the General Partner and the Partnership are not residents of Canada for
purposes of Canada’s tax legislation and neither the General Partner not the Partnership is
carrying on business in Canada for purposes of such legislation.

ARTICLE X

ADMISSION OF PARTNERS

Section 10.1 Admission of Initial Limited Partners.

     Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive
Distribution Rights to the General Partner, Teekay Shipping Corporation and the Underwriters as
described in Sections 5.2 and 5.3 in connection with the Initial Offering, the General Partner
shall admit such parties to the Partnership as Initial Limited Partners in respect of the Common
Units, Subordinated Units or Incentive Distribution Rights issued to them.

Section 10.2 Admission of Substituted Limited Partners.

     By transfer of a Limited Partner Interest in accordance with Article IV, the transferor shall
be deemed to have given the transferee the right to seek admission as a Substituted Limited Partner
subject to the conditions of, and in the manner permitted under, this Agreement. A transferor of a
Certificate representing a Limited Partner Interest shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and deliver a Transfer Application
(a) the right to negotiate such Certificate to a purchaser or other transferee and (b) the right to
transfer the right to request admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Limited Partner Interests. Each transferee of a Limited
Partner Interest (including any nominee holder or an agent acquiring such Limited Partner Interest
for the account of another Person) who executes and delivers a Transfer Application shall, by
virtue of such execution and delivery, be an Assignee. Such Assignee shall automatically be
admitted to the Partnership as a Substituted Limited Partner with respect to the Limited Partner
Interests so transferred to such Person at such time as such transfer is recorded on the books and
records of the Partnership, and until so recorded, such transferee shall be an Assignee. The
General Partner shall periodically, but no less frequently than on the first Business Day of each
calendar quarter, cause any unrecorded transfers of Limited Partner Interests with respect to which
a duly executed Transfer Application has been received to be recorded in the books and records of
the Partnership. An Assignee shall have an interest in the

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Partnership equivalent to that of a Limited Partner with respect to allocations and
distributions, including liquidating distributions, of the Partnership. With respect to voting
rights attributable to Limited Partner Interests that are held by Assignees, the General Partner
shall be deemed to be the Limited Partner with respect thereto and shall, in exercising the voting
rights in respect of such Limited Partner Interests on any matter, vote such Limited Partner
Interests at the written direction of the Assignee who is the Record Holder of such Limited Partner
Interests. If no such written direction is received, such Limited Partner Interests will not be
voted. An Assignee shall have no other rights of a Limited Partner.

Section 10.3 Admission of Successor General Partner.

     A successor General Partner approved pursuant to Section 5.1 or 5.2 or the transferee of or
successor to all of the General Partner Interest pursuant to Section 4.6 who is proposed to be
admitted as a successor General Partner shall be admitted to the Partnership as the General
Partner, effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner, pursuant to Section 5.1 or 5.2 or the transfer of the General
Partner Interest pursuant to Section 4.6, provided, however, that no such successor shall be
admitted to the Partnership until compliance with the terms of Section 4.6 has occurred and such
successor has executed and delivered such other documents or instruments as may be required to
effect such admission. Any such successor shall, subject to the terms hereof, carry on the business
of the members of the Partnership Group without dissolution.

Section 10.4 Admission of Additional Limited Partners.

     (a) A Person (other than the General Partner, an Initial Limited Partner or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in accordance with this
Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner:

     (i) evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including the power of attorney granted in Section
2.6, and

     (ii) such other documents or instruments as may be required by the General Partner to
effect such Person’s admission as an Additional Limited Partner.

     (b) Notwithstanding anything to the contrary in this Section 4.4, no Person shall be admitted
as an Additional Limited Partner without the consent of the General Partner. The admission of any
Person as an Additional Limited Partner shall become effective on the date upon which the name of
such Person is recorded as such in the books and records of the Partnership, following the consent
of the General Partner to such admission.

Section 10.5 Amendment of Agreement and Certificate of Limited Partnership.

     To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Marshall Islands Act to amend the records of the
Partnership to reflect such admission and, if necessary, to prepare as soon as practicable an
amendment to this Agreement and, if required by law, the General Partner shall prepare and file

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an amendment to the Certificate of Limited Partnership and the General Partner may for this
purpose, among others, exercise the power of attorney granted pursuant to Section 2.6.

ARTICLE XI

WITHDRAWAL OR REMOVAL OF PARTNERS

			
	Section 11.1	 	Withdrawal of the General Partner.

     (a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an “Event of
Withdrawal”);

     (i) The General Partner voluntarily withdraws from the Partnership by giving written
notice to the other Partners;

     (ii) The General Partner transfers all of its rights as General Partner pursuant to
Section 4.6;

     (iii) The General Partner is removed pursuant to Section 5.2;

     (iv) The General Partner (A) makes a general assignment for the benefit of creditors;
(B) files a voluntary petition in bankruptcy; (C) files a petition or answer seeking for
itself a liquidation, dissolution or similar relief (but not a reorganization) under any
law; (D) files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the General Partner in a proceeding of the type
described in clauses (A)-(B) of this Section 5.1(a)(iv); or (E) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of the General Partner or
of all or any substantial part of its properties;

     (v) The General Partner is adjudged bankrupt or insolvent, or has entered against him
or her an order for relief in any bankruptcy or insolvency proceeding;

     (vi) (A) in the case of a general partner that is a corporation, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the revocation of its
charter and the expiration of ninety (90) days after the date of notice to the corporation
of revocation without a reinstatement of its charter; (B) in the event the General Partner
is a partnership or a limited liability company, the dissolution and commencement of winding
up of the General Partner; (C) in the event the General Partner is acting in such capacity
by virtue of being a trustee of a trust, the termination of the trust; (D) in the event the
General Partner is a natural person, his death or adjudication of incompetency; and (E)
otherwise in the event of the termination of the General Partner.

If an Event of Withdrawal specified in Section 5.1(a)(iv), or Sections 11.1(a)(v)(A), (B), or (D)
occurs, the withdrawing General Partner shall give notice to the Limited Partners within 30 days
after such occurrence. The Partners hereby agree that only the Events of Withdrawal described in
this Section 5.1 shall result in the withdrawal of the General Partner from the Partnership.

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     (b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i)
at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Eastern
Standard Time, on March 31, 2015, the General Partner voluntarily withdraws by giving at least 90
days’ advance notice of its intention to withdraw to the Limited Partners; provided, that prior to
the effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a
majority of the Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel
(“Withdrawal Opinion of Counsel”) that such withdrawal (following the selection of the successor
General Partner) would not result in the loss of the limited liability of any Limited Partner or
any Group Member or cause any Group Member to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for United States federal income tax purposes (to the extent
not already so treated or taxed); (ii) at any time after 12:00 midnight, Eastern Standard Time, on
March 31, 2015, the General Partner voluntarily withdraws by giving at least 90 days’ advance
notice to the Unitholders, such withdrawal to take effect on the date specified in such notice;
(iii) at any time that the General Partner ceases to be the General Partner pursuant to Section
11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this
sentence, at any time that the General Partner voluntarily withdraws by giving at least 90 days’
advance notice of its intention to withdraw to the Limited Partners, such withdrawal to take effect
on the date specified in the notice, if at the time such notice is given one Person and its
Affiliates (other than the General Partner and its Affiliates) own beneficially or of record or
control at least 50% of the Outstanding Units. The withdrawal of the General Partner from the
Partnership upon the occurrence of an Event of Withdrawal shall also constitute the withdrawal of
the General Partner as general partner or managing member, if any, to the extent applicable, of the
other Group Members. If the General Partner gives a notice of withdrawal pursuant to Section
11.1(a)(i), the holders of a Unit Majority, may, prior to the effective date of such withdrawal,
elect a successor General Partner. The Person so elected as successor General Partner shall
automatically become the successor general partner or managing member, to the extent applicable, of
the other Group Members of which the General Partner is a general partner or a managing member.
If, prior to the effective date of the General Partner’s withdrawal, a successor is not selected by
the Unitholders as provided herein or the Partnership does not receive a Withdrawal Opinion of
Counsel, the Partnership shall be dissolved in accordance with Section 12.1. Any successor General
Partner elected in accordance with the terms of this Section 11.1 shall be subject to the
provisions of Section 10.3.

			
	Section 11.2	 	Removal of the General Partner.

     The General Partner may be removed if such removal is approved by the Unitholders holding at
least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates voting as a single class). Any such action by such holders for removal of the General
Partner must also provide for the election of a successor General Partner by the Unitholders
holding a majority of the outstanding Common Units voting as a class and a majority of the
outstanding Subordinated Units voting as a class (including Units held by the General Partner and
its Affiliates). Such removal shall be effective immediately following the admission of a successor
General Partner pursuant to Section 4.3. The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general partner or managing member,
to the extent applicable, of the other Group Members of which the General

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Partner is a general partner or a managing member. If a Person is elected as a successor
General Partner in accordance with the terms of this Section 5.2, such Person shall, upon
admission pursuant to Section 4.3, automatically become a successor general partner or managing
member, to the extent applicable, of the other Group Members of which the General Partner is a
general partner or a managing member. The right of the holders of Outstanding Units to remove the
General Partner shall not exist or be exercised unless the Partnership has received an opinion
opining as to the matters covered by a Withdrawal Opinion of Counsel. Any successor General Partner
elected in accordance with the terms of this Section 5.2 shall be subject to the provisions of
Section 4.3.

			
	Section 11.3	 	Interest of Departing Partner and Successor General Partner.

     (a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or 11.2, the Departing Partner shall have
the option, exercisable prior to the effective date of the departure of such Departing Partner, to
require its successor to purchase its General Partner Interest and its general partner interest (or
equivalent interest), if any, in the other Group Members and all of its Incentive Distribution
Rights (collectively, the “Combined Interest”) in exchange for an amount in cash equal to the fair
market value of such Combined Interest, such amount to be determined and payable as of the
effective date of its departure. If the General Partner is removed by the Unitholders under
circumstances where Cause exists or if the General Partner withdraws under circumstances where such
withdrawal violates this Agreement, and if a successor General Partner is elected in accordance
with the terms of Section 11.1 or 11.2 (or if the business of the Partnership is continued pursuant
to Section 12.2 and the successor General Partner is not the former General Partner), such
successor shall have the option, exercisable prior to the effective date of the departure of such
Departing Partner (or, in the event the business of the Partnership is continued, prior to the date
the business of the Partnership is continued), to purchase the Combined Interest for such fair
market value of such Combined Interest of the Departing Partner. In either event, the Departing
Partner shall be entitled to receive all reimbursements due such Departing Partner pursuant to
Section 7.4, including any employee-related liabilities (including severance liabilities), incurred
in connection with the termination of any employees employed by the Departing Partner for the
benefit of the Partnership or the other Group Members.

     For purposes of this Section 5.3(a), the fair market value of the Departing Partner’s
Combined Interest shall be determined by agreement between the Departing Partner and its successor
or, failing agreement within 30 days after the effective date of such Departing Partner’s
departure, by an independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts, and the
determination of which shall be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days after the effective
date of such departure, then the Departing Partner shall designate an independent investment
banking firm or other independent expert, the Departing Partner’s successor shall designate an
independent investment banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent expert,

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which third independent investment banking firm or other independent expert shall determine
the fair market value of the Combined Interest of the Departing Partner. In making its
determination, such third independent investment banking firm or other independent expert may
consider the then current trading price of Units on any National Securities Exchange on which Units
are then listed, the value of the Partnership’s assets, the rights and obligations of the Departing
Partner and other factors it may deem relevant.

     (b) If the Combined Interest is not purchased in the manner set forth in Section 5.3(a), the
Departing Partner (or its transferee) shall become a Limited Partner and its Combined Interest
shall be converted into Common Units pursuant to a valuation made by an investment banking firm or
other independent expert selected pursuant to Section 5.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the Departing Partner (or its transferee)
as to all debts and liabilities of the Partnership arising on or after the date on which the
Departing Partner (or its transferee) becomes a Limited Partner. For purposes of this Agreement,
conversion of the Combined Interest of the Departing Partner to Common Units will be characterized
as if the Departing Partner (or its transferee) contributed its Combined Interest to the
Partnership in exchange for the newly issued Common Units.

     (c) If a successor General Partner is elected in accordance with the terms of Section 5.1 or
5.2 (or if the business of the Partnership is continued pursuant to Section 6.2 and the successor
General Partner is not the former General Partner) and the option described in Section 5.3(a) is
not exercised by the party entitled to do so, the successor General Partner shall, at the effective
date of its admission to the Partnership, contribute to the Partnership cash in the amount equal to
2/98ths of the Net Agreed Value of the Partnership’s assets on such date. In such event, such
successor General Partner shall, subject to the following sentence, be entitled to 2% of all
Partnership allocations and distributions to which the Departing Partner was entitled. In addition,
the successor General Partner shall cause this Agreement to be amended to reflect that, from and
after the date of such successor General Partner’s admission, the successor General Partner’s
interest in all Partnership distributions and allocations shall be 2%.

			
	Section 11.4	 	Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages.

     Notwithstanding any provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and Units held by the
General Partner and its Affiliates are not voted in favor of such removal, (i) the Subordination
Period will end and all Outstanding Subordinated Units will immediately and automatically convert
into Common Units on a one-for-one basis, (ii) all Cumulative Common Unit Arrearages on the Common
Units will be extinguished and (iii) the General Partner will have the right to convert its General
Partner Interest and its Incentive Distribution Rights into Common Units or to receive cash in
exchange therefor.

			
	Section 11.5	 	Withdrawal of Limited Partners.

     No Limited Partner shall have any right to withdraw from the Partnership; provided, however,
that when a transferee of a Limited Partner’s Limited Partner Interest becomes a

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Record Holder of the Limited Partner Interest so transferred, such transferring Limited
Partner shall cease to be a Limited Partner with respect to the Limited Partner Interest so
transferred.

ARTICLE XII

DISSOLUTION AND LIQUIDATION

			
	Section 12.1	 	Dissolution.

     The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor
General Partner is elected pursuant to Sections 5.1 or 5.2, the Partnership shall not be
dissolved and such successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and (subject to Section 6.2) its affairs shall be wound up, upon:

     (a) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;

     (b) the sale of all or substantially all of the assets and properties of the Partnership
Group;

     (c) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Marshall Islands Act; or

     (d) an Event of Withdrawal of the General Partner as provided in Section 5.1(a) (other than
Section 5.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is received as
provided in Sections 5.1(b) or 5.2 and such successor is admitted to the Partnership pursuant to
Section 4.3.

			
	Section 12.2	 	Continuation of the Business of the Partnership After Dissolution.

     Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the
withdrawal or removal of the General Partner as provided in Sections 5.1(a)(i) or 11.1(a)(iii) and
the failure of the Partners to select a successor to such Departing Partner pursuant to Sections
5.1 or 5.2, then within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Sections 5.1(a)(iv) or 11.1(a)(vi), then, to the
maximum extent permitted by law, within 180 days thereafter, the holders of a Unit Majority may
elect to continue the business of the Partnership on the same terms and conditions set forth in
this Agreement by appointing as a successor General Partner a Person approved by the holders of a
Unit Majority. Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only activities necessary to wind up its affairs. If such an
election is so made, then:

     (i) the Partnership shall continue without dissolution unless earlier dissolved in
accordance with this Article VI;

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     (ii) if the successor General Partner is not the former General Partner, then the
interest of the former General Partner shall be treated in the manner provided in Section
5.3; and

     (iii) the successor General Partner shall be admitted to the Partnership as General
Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this
Agreement; provided, that the right of the holders of a Unit Majority to approve a successor
General Partner and to reconstitute and to continue the business of the Partnership shall
not exist and may not be exercised unless the Partnership has received an Opinion of Counsel
that (x) the exercise of the right would not result in the loss of limited liability of any
Limited Partner and (y) neither the Partnership, the reconstituted limited partnership nor
any Group Member would be treated as an association taxable as a corporation or otherwise be
taxable as an entity for United States federal income tax purposes upon the exercise of such
right to continue (to the extent not already so treated or taxed).

			
	Section 12.3	 	Liquidator.

     Upon dissolution of the Partnership, unless the business of the Partnership is continued
pursuant to Section 6.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by holders of at least a majority of the
Outstanding Common Units and Subordinated Units voting as a single class. The Liquidator (if other
than the General Partner) shall agree not to resign at any time without 15 days’ prior notice and
may be removed at any time, with or without cause, by notice of removal approved by holders of at
least a majority of the Outstanding Common Units and Subordinated Units voting as a single class.
Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the original Liquidator) shall
within 30 days thereafter be approved by holders of at least a majority of the Outstanding Common
Units and Subordinated Units voting as a single class. The right to approve a successor or
substitute Liquidator in the manner provided herein shall be deemed to refer also to any such
successor or substitute Liquidator approved in the manner herein provided. Except as expressly
provided in this Article VI, the Liquidator approved in the manner provided herein shall have and
may exercise, without further authorization or consent of any of the parties hereto, all of the
powers conferred upon the General Partner under the terms of this Agreement (but subject to all of
the applicable limitations, contractual and otherwise, upon the exercise of such powers, other than
the limitation on sale set forth in Section 7.3(b)) necessary or appropriate to carry out the
duties and functions of the Liquidator hereunder for and during the period of time required to
complete the winding up and liquidation of the Partnership as provided for herein.

			
	Section 12.4	 	Liquidation.

     The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its
liabilities, and otherwise wind up its affairs in such manner and over such period as determined by
the Liquidator, subject to Section 60 of the Marshall Islands Act and the following:

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     (a) The assets may be disposed of by public or private sale or by distribution in kind to one
or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 6.4(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may
defer liquidation or distribution of the Partnership’s assets for a reasonable time if it
determines that an immediate sale or distribution of all or some of the Partnership’s assets would
be impractical or would cause undue loss to the Partners. The Liquidator may distribute the
Partnership’s assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.

     (b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 6.3) and amounts to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to any liability that
is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall
be distributed as additional liquidation proceeds.

     (c) All property and all cash in excess of that required to discharge liabilities as provided
in Section 6.4(b) shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 6.4(c)) for the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable year
(or, if later, within 90 days after said date of such occurrence).

			
	Section 12.5	 	Cancellation of Certificate of Limited Partnership.

     Upon the completion of the distribution of Partnership cash and property as provided in
Section 6.4 in connection with the liquidation of the Partnership, the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the Marshall Islands shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.

			
	Section 12.6	 	Return of Contributions.

     The General Partner shall not be personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it
being expressly understood that any such return shall be made solely from Partnership assets.

			
	Section 12.7	 	Waiver of Partition.

     To the maximum extent permitted by law, each Partner hereby waives any right to partition of
the Partnership property.

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	Section 12.8	 	Capital Account Restoration.

     No Limited Partner shall have any obligation to restore any negative balance in its Capital
Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any
negative balance in its Capital Account upon liquidation of its interest in the Partnership by the
end of the taxable year of the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation.

ARTICLE XIII

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

			
	Section 13.1	 	Amendments to be Adopted Solely by the General Partner.

     Each Partner agrees that the General Partner, without the approval of any Partner or Assignee,
may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to reflect:

     (a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;

     (b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;

     (c) a change that the General Partner determines to be necessary or appropriate to qualify or
continue the qualification of the Partnership as a limited partnership or a partnership in which
the Limited Partners have limited liability under the laws of the Marshall Islands or to ensure
that the Group Members will not be treated as associations taxable as corporations or otherwise
taxed as entities for Marshall Islands income tax purposes;

     (d) a change that the General Partner determines, (i) does not adversely affect the Limited
Partners (including any particular class of Partnership Interests as compared to other classes of
Partnership Interests) in any material respect, (ii) to be necessary or appropriate to (A) satisfy
any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any Marshall Islands authority (including the Marshall Islands Act) or (B) facilitate
the trading of the Units (including the division of any class or classes of Outstanding Units into
different classes to facilitate uniformity of tax consequences within such classes of Units) or
comply with any rule, regulation, guideline or requirement of any National Securities Exchange on
which the Units are or will be listed, (iii) to be necessary or appropriate in connection with
action taken by the General Partner pursuant to Section 5.10 or (iv) is required to effect the
intent expressed in the Registration Statement or the intent of the provisions of this Agreement or
is otherwise contemplated by this Agreement;

     (e) a change in the fiscal year or taxable year of the Partnership and any other changes that
the General Partner determines to be necessary or appropriate as a result of a change in the fiscal
year or taxable year of the Partnership including, if the General Partner shall so

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determine, a change in the definition of “Quarter” and the dates on which distributions are to
be made by the Partnership;

     (f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or
the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States Department of Labor;

     (g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.6;

     (h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;

     (i) an amendment that the General Partner determines to be necessary or appropriate to reflect
and account for the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other entity, in connection
with the conduct by the Partnership of activities permitted by the terms of Section 2.4; or

     (j) any other amendments substantially similar to the foregoing.

			
	Section 13.2	 	Amendment Procedures.

     Except as provided in Sections 7.1 and 7.3, all amendments to this Agreement shall be made
in accordance with the following requirements. Amendments to this Agreement may be proposed only
by the General Partner; provided, however, that the General Partner shall have no duty or
obligation to propose any amendment to this Agreement and may decline to do so free of any
fiduciary duty or obligation whatsoever to the Partnership, any Limited Partner or Assignee and, in
declining to propose an amendment, shall not be required to act in good faith or pursuant to any
other standard imposed by this Agreement, any Group Member Agreement, any other agreement
contemplated hereby or under the Marshall Islands Act or any other law, rule or regulation. A
proposed amendment shall be effective upon its approval by the holders of a Unit Majority, unless a
greater or different percentage is required under this Agreement or by the Marshall Islands Act.
Each proposed amendment that requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment.
If such an amendment is proposed, the General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote
on such proposed amendment. The General Partner shall notify all Record Holders upon final adoption
of any such proposed amendments.

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	Section 13.3	 	Amendment Requirements.

     (a) Notwithstanding the provisions of Sections 7.1 and 7.2, no provision of this Agreement
that establishes a percentage of Outstanding Units (including Units deemed owned by the General
Partner) required to take any action shall be amended, altered, changed, repealed or rescinded in
any respect that would have the effect of reducing such voting percentage unless such amendment is
approved by the written consent or the affirmative vote of holders of Outstanding Units whose
aggregate Outstanding Units constitute not less than the voting requirement sought to be reduced.

     (b) Notwithstanding the provisions of Sections 7.1 and 7.2, no amendment to this Agreement
may (i) enlarge the obligations of any Limited Partner without its consent, unless such shall be
deemed to have occurred as a result of an amendment approved pursuant to Section 7.3(c), (ii)
enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way
the amounts distributable, reimbursable or otherwise payable to, the General Partner or any of its
Affiliates without its consent, which consent may be given or withheld at its option, (iii) change
Section 6.1(a), or (iv) change the term of the Partnership or, except as set forth in Section
6.1(a), give any Person the right to dissolve the Partnership.

     (c) Except as provided in Section 8.3, and without and without limitation of the General
Partner’s authority to adopt amendments to this Agreement without the approval of any Partners or
Assignees as contemplated in Section 7.1, any amendment that would have a material adverse effect
on the rights or preferences of any class of Partnership Interests in relation to other classes of
Partnership Interests must be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.

     (d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 7.1 and except as otherwise provided in Section 8.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable law.

     (e) Except as provided in Section 7.1, this Section 7.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.

			
	Section 13.4	 	Special Meetings.

     All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the
manner provided in this Article VII. Special meetings of the Limited Partners may be called by
the General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class
or classes for which a meeting is proposed. Limited Partners shall call a special meeting by
delivering to the General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably necessary for the Partnership to comply
with any statutes, rules, regulations, listing agreements or similar requirements
governing the holding of a meeting or the solicitation of proxies for use at such a meeting,
the

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General Partner shall send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and place determined by
the General Partner on a date not less than 10 days nor more than 60 days after the mailing of
notice of the meeting. Limited Partners shall not vote on matters that would cause the Limited
Partners to be deemed to be taking part in the management and control of the business and affairs
of the Partnership so as to jeopardize the Limited Partners’ limited liability under the Marshall
Islands Act or the law of any other state in which the Partnership is qualified to do business.

			
	Section 13.5	 	Notice of a Meeting.

     Notice of a meeting called pursuant to Section 7.4 shall be given to the Record Holders of
the class or classes of Units for which a meeting is proposed in writing by mail or other means of
written communication in accordance with Section 15.1. The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other means of written communication.

			
	Section 13.6	 	Record Date.

     For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners or to give approvals without a meeting as provided in Section 7.11 the
General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units are listed for trading, in
which case the rule, regulation, guideline or requirement of such exchange shall govern) or (b) in
the event that approvals are sought without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.

			
	Section 13.7	 	Adjournment.

     When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless such adjournment shall be for
more than 45 days. At the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more than 45 days or if a
new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with this Article VII.

			
	Section 13.8	 	Waiver of Notice; Approval of Meeting; Approval of Minutes.

     The transactions of any meeting of Limited Partners, however called and noticed, and whenever
held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy, and if, either before or after the meeting,
Limited Partners representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the meeting or an approval
of the minutes thereof. All waivers and approvals shall be filed with the Partnership records or
made a part of the minutes of the meeting. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited Partner
attends the meeting for the express purpose of objecting, at the beginning of the meeting, to
the

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transaction of any business because the meeting is not lawfully called or convened; and except
that attendance at a meeting is not a waiver of any right to disapprove the consideration of
matters required to be included in the notice of the meeting, but not so included, if the
disapproval is expressly made at the meeting.

			
	Section 13.9	 	Quorum and Voting.

     The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting
of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is
present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a
majority of the Outstanding Units entitled to vote and be present in person or by proxy at such
meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or
different percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed
owned by the General Partner). In the absence of a quorum any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the
General Partner) represented either in person or by proxy, but no other business may be transacted,
except as provided in Section 7.7.

			
	Section 13.10	 	Conduct of a Meeting.

     The General Partner shall have full power and authority concerning the manner of conducting
any meeting of the Limited Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 7.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The General Partner may make
such other regulations consistent with applicable law and this Agreement as it may deem advisable
concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in
writing, including regulations in regard to the appointment of proxies, the appointment and duties
of inspectors of votes and approvals, the submission and examination of proxies and other evidence
of the right to vote, and the revocation of approvals in writing.

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	Section 13.11	 	Action Without a Meeting.

     If authorized by the General Partner, any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if an approval in writing setting forth the action so taken
is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units
(including Units deemed owned by the General Partner) that would be necessary to authorize or take
such action at a meeting at which all the Limited Partners were present and voted (unless such
provision conflicts with any rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are listed, in which case the rule, regulation, guideline or
requirement of such exchange shall govern). Prompt notice of the taking of action without a meeting
shall be given to the Limited Partners who have not approved in writing. The General Partner may
specify that any written ballot submitted to Limited Partners for the purpose of taking any action
without a meeting shall be returned to the Partnership within the time period, which shall be not
less than 20 days, specified by the General Partner. If a ballot returned to the Partnership does
not vote all of the Units held by the Limited Partners, the Partnership shall be deemed to have
failed to receive a ballot for the Units that were not voted. If approval of the taking of any
action by the Limited Partners is solicited by any Person other than by or on behalf of the General
Partner, the written approvals shall have no force and effect unless and until (a) they are
deposited with the Partnership in care of the General Partner, (b) approvals sufficient to take the
action proposed are dated as of a date not more than 90 days prior to the date sufficient approvals
are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the General
Partner to the effect that the exercise of such right and the action proposed to be taken with
respect to any particular matter (i) will not cause the Limited Partners to be deemed to be taking
part in the management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners’ limited liability, and (ii) is otherwise permissible under the
state statutes then governing the rights, duties and liabilities of the Partnership and the
Partners.

			
	Section 13.12	 	Right to Vote and Related Matters.

     (a) Only those Record Holders of the Units on the Record Date set pursuant to Section 7.6
(and also subject to the limitations contained in the definition of “Outstanding”) shall be
entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to
matters as to which the holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding
Units.

     (b) With respect to Units that are held for a Person’s account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing),
in whose name such Units are registered, such other Person shall, in exercising the voting rights
in respect of such Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial
owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The
provisions of this Section 7.12(b) (as well as all other provisions of this Agreement) are subject
to the provisions of Section 4.3.

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ARTICLE XIV

MERGER

			
	Section 14.1	 	Authority.

     The Partnership may merge or consolidate with or into one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership (whether general or limited (including
a limited liability partnership)), formed under the laws of the Marshall Islands, pursuant to a
written agreement of merger or consolidation (“Merger Agreement”) in accordance with this Article
VIII.

			
	Section 14.2	 	Procedure for Merger or Consolidation.

     Merger or consolidation of the Partnership pursuant to this Article VIII requires the prior
consent of the General Partner, provided, however, that, to the fullest extent permitted by law,
the General Partner shall have no duty or obligation to consent to any merger or consolidation of
the Partnership and may decline to do so free of any fiduciary duty or obligation whatsoever to the
Partnership, any Limited Partner and, in declining to consent to a merger or consolidation, shall
not be required to act in good faith or pursuant to any other standard imposed by this Agreement,
any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands
Act or any other law, rule or regulation or at equity. If the General Partner shall determine to
consent to the merger or consolidation, the General Partner shall approve the Merger Agreement,
which shall set forth:

     (a) the names and jurisdictions of formation or organization of each of the business entities
proposing to merge or consolidate;

     (b) the name and jurisdiction of formation or organization of the business entity that is to
survive the proposed merger or consolidation (the “Surviving Business Entity”);

     (c) the terms and conditions of the proposed merger or consolidation;

     (d) the manner and basis of exchanging or converting the equity securities of each constituent
business entity for, or into, cash, property or interests, rights, securities or obligations of the
Surviving Business Entity; and (i) if any general or limited partner interests, securities or
rights of any constituent business entity are not to be exchanged or converted solely for, or into,
cash, property or interests, rights, securities or obligations of the Surviving Business Entity,
the cash, property or general or limited partner interests, rights, securities or obligations of
any general or limited partnership, corporation, trust, limited liability company, unincorporated
business or other entity (other than the Surviving Business Entity) which the holders of such
interests, securities or rights are to receive in exchange for, or upon conversion of their
interests, securities or rights, and (ii) in the case of securities represented by certificates,
upon the surrender of such certificates, which cash, property or interests, rights, securities or
obligations of the Surviving Business Entity or any general or limited partnership, corporation,
trust, limited liability company, unincorporated business or other entity (other than the Surviving
Business Entity), or evidences thereof, are to be delivered;

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     (e) a statement of any changes in the constituent documents or the adoption of new constituent
documents (the articles or certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or other similar charter or governing document) of
the Surviving Business Entity to be effected by such merger or consolidation;

     (f) the effective time of the merger, which may be the date of the filing of the certificate
of merger pursuant to Section 14.4 or a later date specified in or determinable in accordance with
the Merger Agreement (provided, that if the effective time of the merger is to be later than the
date of the filing of such certificate of merger, the effective time shall be fixed at a date or
time certain at or prior to the time of the filing of such certificate of merger and stated
therein); and

     (g) such other provisions with respect to the proposed merger or consolidation that the
General Partner determines to be necessary or appropriate.

			
	Section 14.3	 	Approval by Limited Partners of Merger or Consolidation.

     (a) Except as provided in Sections 8.3(d) and 8.3(e), the General Partner, upon its approval
of the Merger Agreement, shall direct that the Merger Agreement be submitted to a vote of Limited
Partners, whether at a special meeting or by written consent, in either case in accordance with the
requirements of Article VII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.

     (b) Except as provided in Sections 8.3(d) and 8.3(e), the Merger Agreement shall be approved
upon receiving the affirmative vote or consent of the holders of a Unit Majority.

     (c) Except as provided in Sections 8.3(d) and 8.3(e), after such approval by vote or consent
of the Limited Partners, and at any time prior to the filing of the certificate of merger pursuant
to Section 8.4, the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.

     (d) Notwithstanding anything else contained in this Article VIII or in this Agreement, the
General Partner is permitted, without Limited Partner approval, to convert the Partnership or any
Group Member into a new limited liability entity, to merge the Partnership or any Group Member
into, or convey all of the Partnership’s assets to, another limited liability entity which shall be
newly formed and shall have no assets, liabilities or operations at the time of such conversion,
merger or conveyance other than those it receives from the Partnership or other Group Member if (i)
the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance,
as the case may be, would not result in the loss of the limited liability of any Limited Partner or
cause the Partnership to be treated as an association taxable as a corporation or otherwise to be
taxed as an entity for federal income tax purposes (to the extent not previously treated as such),
(ii) the sole purpose of such conversion, merger or conveyance is to effect a mere change in the
legal form of the Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General Partner with the same
rights and obligations as are herein contained.

     (e) Additionally, notwithstanding anything else contained in this Article VIII or in this
Agreement, the General Partner is permitted, without Limited Partner approval, to merge or

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consolidate the Partnership with or into another entity if (i) the General Partner has
received an Opinion of Counsel that the merger or consolidation, as the case may be, would not
result in the loss of the limited liability of any Limited Partner or cause the Partnership to be
treated as an association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not previously treated as such), (ii) the merger or
consolidation would not result in an amendment to the Partnership Agreement, other than any
amendments that could be adopted pursuant to Section 7.1, (iii) the Partnership is the Surviving
Business Entity in such merger or consolidation, (iv) each Unit outstanding immediately prior to
the effective date of the merger or consolidation is to be an identical Unit of the Partnership
after the effective date of the merger or consolidation, and (v) the number of Partnership
Securities to be issued by the Partnership in such merger or consolidation do not exceed 20% of the
Partnership Securities Outstanding immediately prior to the effective date of such merger or
consolidation.

Section 14.4 Certificate of Merger.

     Upon the required approval by the General Partner and the Unitholders of a Merger Agreement, a
certificate of merger shall be executed and filed in conformity with the requirements of the
Marshall Islands Act.

Section 14.5 Amendment of Partnership Agreement.

     Pursuant to Section 20(2) of the Marshall Islands Act, an agreement of merger or consolidation
approved in accordance with Section 20(2) of the Marshall Islands Act may (a) effect any amendment
to this Agreement or (b) effect the adoption of a new partnership agreement for a limited
partnership if it is the Surviving Business Entity. Any such amendment or adoption made pursuant
to this Section 8.5 shall be effective at the effective time or date of the merger or
consolidation.

Section 14.6 Effect of Merger.

     (a) At the effective time of the certificate of merger:

     (i) all of the rights, privileges and powers of each of the business entities that has
merged or consolidated, and all property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of action belonging to each of
those business entities, shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business Entity to the extent
they were of each constituent business entity;

     (ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired because of the
merger or consolidation;

     (iii) all rights of creditors and all liens on or security interests in property of any
of those constituent business entities shall be preserved unimpaired; and

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     (iv) all debts, liabilities and duties of those constituent business entities shall
attach to the Surviving Business Entity and may be enforced against it to the same extent as
if the debts, liabilities and duties had been incurred or contracted by it.

     (b) A merger or consolidation effected pursuant to this Article shall not be deemed to result
in a transfer or assignment of assets or liabilities from one entity to another.

ARTICLE XV

RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

Section 15.1 Right to Acquire Limited Partner Interests.

     (a) Notwithstanding any other provision of this Agreement, if at any time the General Partner
and its Affiliates hold more than 80% of the total Limited Partner Interests of any class then
Outstanding, the General Partner shall then have the right, which right it may assign and transfer
in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its
option, to purchase all, but not less than all, of such Limited Partner Interests of such class
then Outstanding held by Persons other than the General Partner and its Affiliates, at the greater
of (x) the Current Market Price as of the date three days prior to the date that the notice
described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any
of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day
period preceding the date that the notice described in Section 15.1(b) is mailed. As used in this
Agreement, (i) “Current Market Price” as of any date of any class of Limited Partner Interests
means the average of the daily Closing Prices (as hereinafter defined) per Limited Partner Interest
of such class for the 20 consecutive Trading Days (as hereinafter defined) immediately prior to
such date; (ii) “Closing Price” for any day means the last sale price on such day, regular way, or
in case no such sale takes place on such day, the average of the closing bid and asked prices on
such day, regular way, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal National Securities Exchange (other than the Nasdaq
Stock Market) on which such Limited Partner Interests are listed or, if such Limited Partner
Interests of such class are not listed on any National Securities Exchange (other than the Nasdaq
Stock Market), the last quoted price on such day or, if not so quoted, the average of the high bid
and low asked prices on such day in the over-the-counter market, as reported by the Nasdaq Stock
Market or such other system then in use, or, if on any such day such Limited Partner Interests of
such class are not quoted by any such organization, the average of the closing bid and asked prices
on such day as furnished by a professional market maker making a market in such Limited Partner
Interests of such class selected by the General Partner, or if on any such day no market maker is
making a market in such Limited Partner Interests of such class, the fair value of such Limited
Partner Interests on such day as determined by the General Partner; and (iii) “Trading Day” means a
day on which the principal National Securities Exchange on which such Limited Partner Interests of
any class are listed is open for the transaction of business or, if Limited Partner Interests of a
class are not listed on any National Securities Exchange, a day on which banking institutions in
New York City generally are open.

     (b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section

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15.1(a), the General Partner shall deliver to the Transfer Agent notice of such election to
purchase (the “Notice of Election to Purchase”) and shall cause the Transfer Agent to mail a copy
of such Notice of Election to Purchase to the Record Holders of Limited Partner Interests of such
class (as of a Record Date selected by the General Partner) at least 10, but not more than 60, days
prior to the Purchase Date. Such Notice of Election to Purchase shall also be published for a
period of at least three consecutive days in at least two daily newspapers of general circulation
printed in the English language and published in the Borough of Manhattan, New York. The Notice of
Election to Purchase shall specify the Purchase Date and the price (determined in accordance with
Section 15.1(a)) at which Limited Partner Interests will be purchased and state that the General
Partner, its Affiliate or the Partnership, as the case may be, elects to purchase such Limited
Partner Interests, upon surrender of Certificates representing such Limited Partner Interests in
exchange for payment, at such office or offices of the Transfer Agent as the Transfer Agent may
specify, or as may be required by any National Securities Exchange on which such Limited Partner
Interests are listed. Any such Notice of Election to Purchase mailed to a Record Holder of Limited
Partner Interests at his address as reflected in the records of the Transfer Agent shall be
conclusively presumed to have been given regardless of whether the owner receives such notice. On
or prior to the Purchase Date, the General Partner, its Affiliate or the Partnership, as the case
may be, shall deposit with the Transfer Agent cash in an amount sufficient to pay the aggregate
purchase price of all of such Limited Partner Interests to be purchased in accordance with this
Section 15.1. If the Notice of Election to Purchase shall have been duly given as aforesaid at
least 10 days prior to the Purchase Date, and if on or prior to the Purchase Date the deposit
described in the preceding sentence has been made for the benefit of the holders of Limited Partner
Interests subject to purchase as provided herein, then from and after the Purchase Date,
notwithstanding that any Certificate shall not have been surrendered for purchase, all rights of
the holders of such Limited Partner Interests (including any rights pursuant to Articles IV, V, VI,
and XII) shall thereupon cease, except the right to receive the purchase price (determined in
accordance with Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon
surrender to the Transfer Agent of the Certificates representing such Limited Partner Interests,
and such Limited Partner Interests shall thereupon be deemed to be transferred to the General
Partner, its Affiliate or the Partnership, as the case may be, on the record books of the Transfer
Agent and the Partnership, and the General Partner or any Affiliate of the General Partner, or the
Partnership, as the case may be, shall be deemed to be the owner of all such Limited Partner
Interests from and after the Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to
Articles IV, V, VI, and XII).

     (c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 9.1 may surrender his Certificate
evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the
amount described in Section 9.1(a), therefor, without interest thereon.

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ARTICLE XVI

GENERAL PROVISIONS

Section 16.1 Addresses and Notices.

     Any notice, demand, request, report or proxy materials required or permitted to be given or
made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or
made when delivered in person or when sent by first class United States mail or by other means of
written communication to the Partner or Assignee at the address described below. Any notice,
payment or report to be given or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give such notice or report or to
make such payment shall be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership Securities at his address as
shown on the records of the Transfer Agent or as otherwise shown on the records of the Partnership,
regardless of any claim of any Person who may have an interest in such Partnership Securities by
reason of any assignment or otherwise. An affidavit or certificate of making of any notice, payment
or report in accordance with the provisions of this Section 10.1 executed by the General Partner,
the Transfer Agent or the mailing organization shall be prima facie evidence of the giving or
making of such notice, payment or report. If any notice, payment or report addressed to a Record
Holder at the address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Postal Service marked to indicate that
the United States Postal Service is unable to deliver it, such notice, payment or report and any
subsequent notices, payments and reports shall be deemed to have been duly given or made without
further mailing (until such time as such Record Holder or another Person notifies the Transfer
Agent or the Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year from the date of the
giving or making of such notice, payment or report to the other Partners and Assignees. Any notice
to the Partnership shall be deemed given if received by the General Partner at the principal office
of the Partnership designated pursuant to Section 2.3. The General Partner may rely and shall be
protected in relying on any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.

Section 16.2 Further Action.

     The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.

Section 16.3 Binding Effect.

     This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.

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Section 16.4 Integration.

     This Agreement constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 16.5 Creditors.

     None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.

Section 16.6 Waiver.

     No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

Section 16.7 Counterparts.

     This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a
Unit, upon accepting the certificate evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any other party.

Section 16.8 Applicable Law.

     This Agreement shall be construed in accordance with and governed by the laws of the Marshall
Islands, without regard to the principles of conflicts of law.

Section 16.9 Invalidity of Provisions.

     If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.

Section 16.10 Consent of Partners.

     Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of less than all of the Partners and
each Partner shall be bound by the results of such action.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a Deed as of the date
first written above.

	 	 	 	 	 
	 	GENERAL PARTNER:

Teekay GP L.L.C.

 	 
	 	By:  	/s/ Peter Evensen
 	 
	 	 	Name:  	Peter Evensen 	 
	 	 	Title:  	Chief Executive Officer and

Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	ORGANIZATIONAL LIMITED PARTNER:

Teekay Shipping Corporation

 	 
	 	By:  	/s/ Peter Evensen
 	 
	 	 	Name:  	Peter Evensen 	 
	 	 	Title:  	Executive Vice President and

Chief Financial Officer 	 

92

 

	 	 	 	 	 

	 	 	 	 	 
	 	LIMITED PARTNERS:

All Limited Partners now and hereafter admitted as Limited

Partners of the Partnership, pursuant to powers of attorney

now and hereafter executed in favor of, and granted and

delivered to the General Partner.

Teekay GP L.L.C.

 	 
	 	By:  	/s/ Peter Evensen
 	 
	 	 	Name:  	Peter Evensen 	 
	 	 	Title:  	Chief Executive Officer and

Chief Financial Officer 	 

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EXHIBIT A

to the First Amended and Restated

Agreement of Limited Partnership of

Teekay LNG Partners L.P.

Certificate Evidencing Common Units

Representing Limited Partner Interests in

Teekay LNG Partners L.P.

 

			
	No. __________
	 	__________ Common Units

     In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited
Partnership of Teekay LNG Partners L.P., as amended, supplemented or restated from time to time
(the “Partnership Agreement”), Teekay LNG Partners L.P., a Marshall Islands limited partnership
(the “Partnership”), hereby certifies that ___________________ (the “Holder”) is the registered
owner of Common Units representing limited partner interests in the Partnership (the “Common
Units”) transferable on the books of the Partnership, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed and accompanied by a properly executed
application for transfer of the Common Units represented by this Certificate. The rights,
preferences and limitations of the Common Units are set forth in, and this Certificate and the
Common Units represented hereby are issued and shall in all respects be subject to the terms and
provisions of, the Partnership Agreement. Copies of the Partnership Agreement are on file at, and
will be furnished without charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at TK House, Bayside Executive Park, West Bay Street
and Blake Road, P.O. Box AP 59213, Nassau, Commonwealth of the Bahamas. Capitalized terms used
herein but not defined shall have the meanings given them in the Partnership Agreement.

     The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and
(iv) made the waivers and given the consents and approvals contained in the Partnership Agreement.

     This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.

	 	 	 	 	 	 	 	 	 	 	 

	Dated:	 	 	 	 	Teekay LNG Partners L.P.
	 

	 	 	 	 	 	 	 	 
	 
	Countersigned and Registered by:	 	By: 	Teekay GP L.L.C.,
	 

	 	 	 	 	 	 	its General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 
	as Transfer Agent and Registrar	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 
	 	 	 
	 

	 	 	 	Authorized Signature
	 	 	 	 	 	Secretary
	 
	 	 	 	 	 	 	[Reverse of Certificate]

1

 

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:

	 	 	 	 	 

	TEN COM -

	 	as tenants in common
	 	UNIF GIFT/TRANSFERS MIN ACT
	TEN ENT -

	 	as tenants by the entireties
	 	__________ Custodian _________
	 

	 	 	 	(Cust)                  
                       (Minor)
	JT TEN -

	 	as joint tenants with right of
survivorship and not as
tenants in common
	 	under Uniform Gifts/Transfers to CD
Minors Act (State)

Additional abbreviations, though not in the above list, may also be used.

ASSIGNMENT OF COMMON UNITS

in

TEEKAY LNG PARTNERS L.P.

     FOR VALUE RECEIVED, __________ hereby assigns, conveys, sells and transfers unto

	 	 	 

	 
	 

	 	 
	(Please print or typewrite name
and address of Assignee)

	 	(Please insert Social Security or other
identifying number of Assignee)

__________ Common Units representing limited partner interests evidenced by this Certificate,
subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint __________
as its attorney-in-fact with full power of substitution to transfer the same on the books of Teekay
LNG Partners L.P.

	 	 	 	 	 	 	 
	Date: ___________________

	 	NOTE:
	 	The signature to any endorsement hereon must
correspond with the name as
written upon the face of this
Certificate in every
particular, without
alteration, enlargement or
change.
	 

	 	 	 	 	 	 

2

 

	 	 	 	 	 	 	 	 
	THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C.
RULE 17d-15	 	 	 	 
(Signature)

 
(Signature)	
	 							
	 

	 	 
	 	 	

     No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer and an Application for Transfer of Common Units has been executed by a
transferee either (a) on the form set forth below or (b) on a separate application that the
Partnership will furnish on request without charge. A transferor of the Common Units shall have no
duty to the transferee with respect to execution of the transfer application in order for such
transferee to obtain registration of the transfer of the Common Units.

3

 

APPLICATION FOR TRANSFER OF COMMON UNITS

     The undersigned (“Assignee”) hereby applies for transfer registration to the name of the
Assignee of the Common Units evidenced hereby.

     The Assignee (a) requests admission as a Substituted Limited Partner and agrees to comply with
and be bound by, and hereby executes, the First Amended and Restated Agreement of Limited
Partnership of Teekay LNG Partners L.P. (the “Partnership”), as amended, supplemented or restated
to the date hereof (the “Partnership Agreement”), and from time to time (b) represents and warrants
that the Assignee has all right, power and authority and, if an individual, the capacity necessary
to enter into the Partnership Agreement, (c) appoints the General Partner of the Partnership and,
if a Liquidator shall be appointed, the Liquidator of the Partnership as the Assignee’s
attorney-in-fact to execute, swear to, acknowledge and file any document, including, without
limitation, the Partnership Agreement and any amendment thereto and the Certificate of Registration
of the Partnership and any amendment thereto, necessary or appropriate for the Assignee’s admission
as a Substituted Limited Partner and as a party to the Partnership Agreement, (d) gives the powers
of attorney provided for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained in the Partnership Agreement. Capitalized terms not defined herein
have the meanings assigned to such terms in the Partnership Agreement.

Date:____________

	 	 	 

	 
	 

	 	 
	Social Security or other identifying number

	 	Signature of Assignee
	 
	 
	 
	 

	 	 
	Purchase Price including commissions, if any

	 	Name and Address of Assignee

Type of Entity (check one):

	 	 	 	 	 	 	 	 	 	 	 

	 ̈

	 	Individual
	 	 ̈
	 	Partnership
	 	 ̈
	 	Corporation
	 
	 ̈

	 	Trust
	 	 ̈
	 	Other (specify)	 	 	 	 

Nationality (for taxation purposes) (check one):

	 	 	 	 	 	 	 

	 ̈	 	U.S. Citizen, Resident or Domestic Entity
	 
	 ̈

	 	Foreign Corporation
	 	 ̈
	 	Non-resident Alien

     If the U.S. Citizen, Resident or Domestic Entity box is checked, Certification B-1 must be
completed.

4

 

     Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the “Code”), the
Partnership must withhold tax with respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the Partnership that no withholding is
required with respect to the undersigned interestholder’s interest in it, the undersigned hereby
certifies as set forth in B-1 (or, if applicable, certifies the following on behalf of the
interestholder).

     The interestholder understands that this certificate may be disclosed to the Internal
Revenue Service by the Partnership and that any false statement contained herein could be
punishable by fine, imprisonment or both.

     Under penalties of perjury, I declare that I have examined this certification and to the best
of my knowledge and belief it is true, correct and complete and, if applicable, I further declare
that I have authority to sign this document on behalf of:

 

Name of Interestholder
  

Signature and Date
  

Title (if applicable)

     Note: If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other
nominee holder or an agent of any of the foregoing, and is holding for the account of any other
person, this application should be completed by an officer thereof or, in the case of a broker or
dealer, by a registered representative who is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc., or, in the case of any other
nominee holder, a person performing a similar function. If the Assignee is a broker, dealer, bank,
trust company, clearing corporation, other nominee owner or an agent of any of the foregoing, the
above certification as to any person for whom the Assignee will hold the Common Units shall be made
to the best of the Assignee’s knowledge.

5exv4w1

Exhibit 4.1

FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

TEEKAY OFFSHORE PARTNERS L.P.

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE I DEFINITIONS
	 	 	 	 
	Section 1.1 Definitions
	 	 	 	 
	Section 1.2 Construction
	 	 	 	 
	ARTICLE II ORGANIZATION
	 	 	 	 
	Section 2.1 Formation
	 	 	 	 
	Section 2.2 Name
	 	 	 	 
	Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices
	 	 	 	 
	Section 2.4 Purpose and Business
	 	 	 	 
	Section 2.5 Powers
	 	 	 	 
	Section 2.6 Power of Attorney
	 	 	 	 
	Section 2.7 Term
	 	 	 	 
	Section 2.8 Title to Partnership Assets
	 	 	 	 
	ARTICLE III RIGHTS OF LIMITED PARTNERS
	 	 	 	 
	Section 3.1 Limitation of Liability
	 	 	 	 
	Section 3.2 Management of Business
	 	 	 	 
	Section 3.3 Outside Activities of the Limited Partners
	 	 	 	 
	Section 3.4 Rights of Limited Partners
	 	 	 	 
	ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS
	 	 	 	 
	Section 4.1 Certificates
	 	 	 	 
	Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	 	 
	Section 4.3 Record Holders
	 	 	 	 
	Section 4.4 Transfer Generally
	 	 	 	 
	Section 4.5 Registration and Transfer of Limited Partner Interests
	 	 	 	 
	Section 4.6 Transfer of the General Partner’s General Partner Interest
	 	 	 	 
	Section 4.7 Transfer of Incentive Distribution Rights
	 	 	 	 
	Section 4.8 Restrictions on Transfers
	 	 	 	 
	ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
	 	 	 	 
	Section 5.1 Organizational Contributions
	 	 	 	 
	Section 5.2 Initial Unit Issuances; General Partner Pre-emptive Rights
	 	 	 	 
	Section 5.3 Contributions by Initial Limited Partners and Distributions to the General Partner and its Affiliates
	 	 	 	 
	Section 5.4 Interest and Withdrawal
	 	 	 	 
	Section 5.5 Issuances of Additional Partnership Securities
	 	 	 	 
	Section 5.6 Limitations on Issuance of Additional Partnership Securities
	 	 	 	 
	Section 5.7 Conversion of Subordinated Units
	 	 	 	 
	Section 5.8 Limited Preemptive Right
	 	 	 	 
	Section 5.9 Splits and Combinations
	 	 	 	 
	Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests
	 	 	 	 
	ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS
	 	 	 	 
	Section 6.1 Allocations
	 	 	 	 
	Section 6.2 Requirement and Characterization of Distributions; Distributions to Record Holders
	 	 	 	 
	Section 6.3 Distributions of Available Cash from Operating Surplus
	 	 	 	 
	Section 6.4 Distributions of Available Cash from Capital Surplus
	 	 	 	 
	Section 6.5 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
	 	 	 	 
	Section 6.6 Special Provisions Relating to the Holders of Subordinated Units
	 	 	 	 
	Section 6.7 Special Provisions Relating to the Holders of Incentive Distribution Rights
	 	 	 	 
	ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS
	 	 	 	 
	Section 7.1 Management
	 	 	 	 
	Section 7.2 Certificate of Limited Partnership
	 	 	 	 
	Section 7.3 Restrictions on the General Partner’s Authority
	 	 	 	 
	Section 7.4 Reimbursement of the General Partner
	 	 	 	 
	Section 7.5 Outside Activities
	 	 	 	 
	Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
	 	 	 	 
	Section 7.7 Indemnification
	 	 	 	 
	Section 7.8 Liability of Indemnitees
	 	 	 	 
	Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
	 	 	 	 

2

 

	 	 	 	 	 

	Section 7.10 Other Matters Concerning the General Partner
	 	 	 	 
	Section 7.11 Purchase or Sale of Partnership Securities
	 	 	 	 
	Section 7.12 Registration Rights of the General Partner and its Affiliates
	 	 	 	 
	Section 7.13 Reliance by Third Parties
	 	 	 	 
	ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS
	 	 	 	 
	Section 8.1 Records and Accounting
	 	 	 	 
	Section 8.2 Fiscal Year
	 	 	 	 
	Section 8.3 Reports
	 	 	 	 
	ARTICLE IX TAX MATTERS
	 	 	 	 
	Section 9.1 Tax Elections and Information
	 	 	 	 
	Section 9.2 Withholding
	 	 	 	 
	Section 9.3 Conduct of Operations
	 	 	 	 
	ARTICLE X ADMISSION OF PARTNERS
	 	 	 	 
	Section 10.1 Admission of Initial Limited Partners
	 	 	 	 
	Section 10.2 Admission of Additional Limited Partners
	 	 	 	 
	Section 10.3 Admission of Successor General Partner
	 	 	 	 
	Section 10.4 Amendment of Agreement and Certificate of Limited Partnership
	 	 	 	 
	ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS
	 	 	 	 
	Section 11.1 Withdrawal of the General Partner
	 	 	 	 
	Section 11.2 Removal of the General Partner
	 	 	 	 
	Section 11.3 Interest of Departing General Partner and Successor General Partner
	 	 	 	 
	Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and Extinguishment of Cumulative Common Unit Arrearages
	 	 	 	 
	Section 11.5 Withdrawal of Limited Partners
	 	 	 	 
	ARTICLE XII DISSOLUTION AND LIQUIDATION
	 	 	 	 
	Section 12.1 Dissolution
	 	 	 	 
	Section 12.2 Continuation of the Business of the Partnership After Dissolution
	 	 	 	 
	Section 12.3 Liquidator
	 	 	 	 
	Section 12.4 Liquidation
	 	 	 	 
	Section 12.5 Cancellation of Certificate of Limited Partnership
	 	 	 	 
	Section 12.6 Return of Contributions
	 	 	 	 
	Section 12.7 Waiver of Partition
	 	 	 	 
	ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
	 	 	 	 
	Section 13.1 Amendments to be Adopted Solely by the General Partner
	 	 	 	 
	Section 13.2 Amendment Procedures
	 	 	 	 
	Section 13.3 Amendment Requirements
	 	 	 	 
	Section 13.4 Special Meetings
	 	 	 	 
	Section 13.5 Notice of a Meeting
	 	 	 	 
	Section 13.6 Record Date
	 	 	 	 
	Section 13.7 Adjournment
	 	 	 	 
	Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes
	 	 	 	 
	Section 13.9 Quorum and Voting
	 	 	 	 
	Section 13.10 Conduct of a Meeting
	 	 	 	 
	Section 13.11 Action Without a Meeting
	 	 	 	 
	Section 13.12 Right to Vote and Related Matters
	 	 	 	 
	ARTICLE XIV MERGER
	 	 	 	 
	Section 14.1 Authority
	 	 	 	 
	Section 14.2 Procedure for Merger or Consolidation
	 	 	 	 
	Section 14.3 Approval by Limited Partners of Merger or Consolidation
	 	 	 	 
	Section 14.4 Certificate of Merger
	 	 	 	 
	Section 14.5 Amendment of Partnership Agreement
	 	 	 	 
	Section 14.6 Effect of Merger
	 	 	 	 
	ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
	 	 	 	 
	Section 15.1 Right to Acquire Limited Partner Interests
	 	 	 	 
	ARTICLE XVI GENERAL PROVISIONS
	 	 	 	 
	Section 16.1 Addresses and Notices
	 	 	 	 
	Section 16.2 Further Action
	 	 	 	 
	Section 16.3 Binding Effect
	 	 	 	 
	Section 16.4 Integration
	 	 	 	 

3

 

	 	 	 	 	 

	Section 16.5 Creditors
	 	 	 	 
	Section 16.6 Waiver
	 	 	 	 
	Section 16.7 Counterparts
	 	 	 	 
	Section 16.8 Applicable Law
	 	 	 	 
	Section 16.9 Invalidity of Provisions
	 	 	 	 
	Section 16.10 Consent of Partners
	 	 	 	 
	Section 16.11 Facsimile Signatures
	 	 	 	 
	Section 16.12 Third-Party Beneficiaries
	 	 	 	 

4

 

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED

PARTNERSHIP OF TEEKAY OFFSHORE PARTNERS L.P.

     THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TEEKAY OFFSHORE PARTNERS
L.P., dated as of December 19, 2006, is entered into by and between Teekay Offshore GP L.L.C., a
Marshall Islands limited liability company, as the General Partner, and Teekay Shipping
Corporation, a Marshall Islands corporation, as the Organizational Limited Partner, together with
any other Persons who become Partners in the Partnership or parties hereto as provided herein. In
consideration of the covenants, conditions and agreements contained herein, the parties agree as
follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definitions.

     The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.

     “Acquisition” means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing the operating
capacity or asset base of the Partnership Group from the operating capacity or asset base of the
Partnership Group existing immediately prior to such transaction; provided however, that any
acquisition of properties or assets of another Person that is made solely for investment purposes
shall not constitute an Acquisition under this Agreement.

     “Adjusted Operating Surplus” means, with respect to any period, Operating Surplus generated
with respect to such period (a) less (i) any net increase in Working Capital Borrowings (or the
Partnership’s proportionate share of any net increase in Working Capital Borrowings in the case of
Subsidiaries that are not wholly owned) with respect to such period and (ii) any net decrease in
cash reserves for Operating Expenditures with respect to such period to the extent such reduction
does not relate to an Operating Expenditure made with respect to such period, and (b) plus (i) any
net decrease in Working Capital Borrowings (or the Partnership’s proportionate share of any net
decrease in Working Capital Borrowings in the case of Subsidiaries that are not wholly owned) with
respect to such period, and (ii) any net increase in cash reserves (or the Partnership’s
proportionate share of any net increase in cash reserves in the case of Subsidiaries that are not
wholly owned) for Operating Expenditures with respect to such period to the extent such reserve is
required by any debt instrument for the repayment of principal, interest or premium. Adjusted
Operating Surplus does not include that portion of Operating Surplus included in clause (a)(i) of
the definition of Operating Surplus.

     “Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. As used herein, the term “control” means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.

     “Agreed Value” means the fair market value of the applicable property or other consideration
at the time of contribution or distribution, as the case may be, as determined by the General
Partner.

     “Agreement” means this First Amended and Restated Agreement of Limited Partnership of Teekay
Offshore Partners L.P., as it may be amended, supplemented or restated from time to time.

     “Associate” means, when used to indicate a relationship with any Person: (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.

     “Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:

5

 

     (a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the
Partnership’s proportionate share of cash and cash equivalents in the case of Subsidiaries that
are not wholly owned) on hand at the end of such Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group (or the Partnership’s proportionate share of cash and cash
equivalents in the case of Subsidiaries that are not wholly owned) on hand on the date of
determination of Available Cash with respect to such Quarter resulting from Working Capital
Borrowings made subsequent to the end of such Quarter, less

     (b) the amount of any cash reserves (or the Partnership’s proportionate share of cash
reserves in the case of Subsidiaries that are not wholly owned) established by the General
Partner to (i) provide for the proper conduct of the business of the Partnership Group (including
reserves for future capital expenditures and for anticipated future credit needs of the
Partnership Group) subsequent to such Quarter, (ii) comply with applicable law or any loan
agreement, security agreement, mortgage, debt instrument or other agreement or obligation to
which any Group Member is a party or by which it is bound or its assets are subject or (iii)
provide funds for distributions under Section 6.3 or 6.4 in respect of any one or more of the
next four Quarters; provided, however, that the General Partner may not establish cash reserves
pursuant to (iii) above if the effect of such reserves would be that the Partnership is unable to
distribute the Minimum Quarterly Distribution on all Common Units, plus any Cumulative Common
Unit Arrearage on all Common Units, with respect to such Quarter; and, provided further, that
disbursements made by a Group Member or cash reserves established, increased or reduced after the
end of such Quarter but on or before the date of determination of Available Cash with respect to
such Quarter shall be deemed to have been made, established, increased or reduced, for purposes
of determining Available Cash, within such Quarter if the General Partner so determines.

     Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.

     “Board of Directors” means the board of directors or managers of a corporation or limited
liability company, as applicable, or if a limited partnership, the board of directors or board of
managers of the general partner of such limited partnership.

     “Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of New York shall
not be regarded as a Business Day.

     “Capital Contribution” means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.

     “Capital Improvement” means any (a) addition or improvement to the capital assets owned by any
Group Member or (b) acquisition of existing, or the construction of new, capital assets (including
shuttle tankers, floating storage and offtake units, floating production, storage and offloading
units, crude oil tankers and related assets), in each case if such addition, improvement,
acquisition or construction is made to increase the operating capacity or asset base of the
Partnership Group from the operating capacity or asset base of the Partnership Group existing
immediately prior to such addition, improvement, acquisition or construction.

     “Capital Surplus” has the meaning assigned to such term in Section 6.2(a).

     “Cause” means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.

     “Certificate” means a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global or book entry form in accordance with the rules and regulations of
the Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or a certificate, in such form as may
be adopted by the General Partner, issued by the Partnership evidencing ownership of one or more
other Partnership Securities.

     “Certificate of Limited Partnership” means the Certificate of Limited Partnership of the
Partnership filed with the Registrar of Corporations of The Marshall Islands as referenced in
Section 7.2 as such Certificate of Limited Partnership may be amended, supplemented or restated
from time to time.

     “claim” (as used in Section 7.12(c)) has the meaning assigned to such term in Section 7.12(c).

     “Closing Date” means the first date on which Common Units are sold by the Partnership to the
Underwriters pursuant to the provisions of the Underwriting Agreement.

6

 

     “Closing Price” means, in respect of any class of Limited Partner Interests, as of the date of
determination, the last sale price on such day, regular way, or in case no such sale takes place on
such day, the average of the closing bid and asked prices on such day, regular way, as reported in
the principal consolidated transaction reporting system with respect to securities listed on the
principal National Securities Exchange on which the respective Limited Partner Interests are listed
or admitted to trading or, if such Limited Partner Interests are not listed or admitted to trading
on any National Securities Exchange, the last quoted price on such day or, if not so quoted, the
average of the high bid and low asked prices on such day in the over-the-counter market, as
reported by any quotation system then in use with respect to such Limited Partner Interests, or, if
on any such day such Limited Partner Interests of such class are not quoted by any such system, the
average of the closing bid and asked prices on such day as furnished by a professional market maker
making a market in such Limited Partner Interests of such class selected by the General Partner, or
if on any such day no market maker is making a market in such Limited Partner Interests of such
class, the fair value of such Limited Partner Interests on such day as determined by the General
Partner.

     “Code” means the United States Internal Revenue Code of 1986, as amended and in effect from
time to time. Any reference herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of any successor law.

     “Combined Interest” has the meaning assigned to such term in Section 11.3(a).

     “Commences Commercial Service” and “Commenced Commercial Service” shall mean the date a
Capital Improvement is first put into service by a Group Member following, if applicable,
completion of construction and testing.

     “Commission” means the United States Securities and Exchange Commission.

     “Common Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners, and having the rights and obligations specified with respect to
Common Units in this Agreement. The term “Common Unit” does not refer to a Subordinated Unit prior
to its conversion into a Common Unit pursuant to the terms hereof.

     “Common Unit Arrearage” means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.3(a)(i).

     “Conflicts Committee” means a committee of the Board of Directors of the General Partner
composed entirely of two or more directors who are not (a) security holders, officers or employees
of the General Partner, (b) officers, directors or employees of any Affiliate of the General
Partner or (c) holders of any ownership interest in the Partnership Group other than Common Units
and who also meet the independence standards required of directors who serve on an audit committee
of a board of directors established by the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder and by the National Securities Exchange on which
the Common Units are listed or admitted to trading.

     “Contributed Property” means each property or other asset, in such form as may be permitted by
the Marshall Islands Act, but excluding cash, contributed to the Partnership.

     “Contribution Agreement” means that certain Contribution, Conveyance and Assumption Agreement,
dated as of the Closing Date, among the General Partner, the Partnership, the Operating Company,
Teekay Shipping Corporation and the other parties named therein, together with the additional
conveyance documents and instruments contemplated or referenced thereunder.

     “Cumulative Common Unit Arrearage” means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.3(a)(ii) and the second sentence of Section
6.4 with respect to an Initial Common Unit (including any distributions to be made in respect of
the last of such Quarters).

     “Current Market Price” means, in respect of any class of Limited Partner Interests, as of the
date of determination, the average of the daily Closing Prices per Limited Partner Interest of such
class for the 20 consecutive Trading Days immediately prior to such date.

7

 

     “Departing General Partner” means a former General Partner from and after the effective date
of any withdrawal or removal of such former General Partner pursuant to Section 11.1 or 11.2.

     “Depositary” means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.

     “Estimated Maintenance Capital Expenditures” means an estimate made in good faith by the Board
of Directors of the General Partner (with the concurrence of the Conflicts Committee) of the
average quarterly Maintenance Capital Expenditures that the Partnership will need to incur to
maintain the operating capacity or asset base of the Partnership Group (including the Partnership’s
proportionate share of the average quarterly Maintenance Capital Expenditures of its Subsidiaries
that are not wholly owned), existing at the time the estimate is made. The Board of Directors of
the General Partner (with the concurrence of the Conflicts Committee) will be permitted to make
such estimate in any manner it determines reasonable. The estimate will be made at least annually
and whenever an event occurs that is likely to result in a material adjustment to the amount of
Maintenance Capital Expenditures on a long-term basis. The Partnership shall disclose to its
Partners any change in the amount of Estimated Maintenance Capital Expenditures in its reports made
in accordance with Section 8.3 to the extent not previously disclosed. Except as provided in the
definition of Subordination Period, any adjustments to Estimated Maintenance Capital Expenditures
shall be prospective only.

     “Event of Withdrawal” has the meaning assigned to such term in Section 11.1(a).

     “Expansion Capital Expenditures” means cash expenditures for Acquisitions or Capital
Improvements. Expansion Capital Expenditures shall not include Maintenance Capital Expenditures.
Expansion Capital Expenditures shall include interest (and related fees) on debt incurred and
distributions on equity incurred, in each case, to finance the construction of a Capital
Improvement and paid during the period beginning on the date that the Partnership enters into a
binding obligation to commence construction of the Capital Improvement and ending on the earlier to
occur of the date that such Capital Improvement Commences Commercial Service or the date that such
Capital Improvement is abandoned or disposed of. Debt incurred or equity issued to fund any such
construction period interest payments, or such construction period distributions on equity paid
during such period shall also be deemed to be debt or equity, as the case may be, incurred to
finance the construction of a Capital Improvement.

     “First Target Distribution” means $0.4025 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on December 31, 2006, it means the product of $0.4025
multiplied by a fraction of which the numerator is the number of days in such period, and of which
the denominator is the total number of days in the Quarter in which the Closing Date occurs),
subject to adjustment in accordance with Section 6.5.

     “Fully Diluted Basis” means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
beyond the control of the holder other than the payment of consideration and the compliance with
administrative mechanics applicable to such conversion, exercise or exchange and (d) that were not
converted into or exercised or exchanged for such Units during the period for which the calculation
is being made; provided, however, that for purposes of determining the number of Outstanding Units
on a Fully Diluted Basis when calculating whether the Subordination Period has ended or
Subordinated Units are entitled to convert into Common Units pursuant to Section 5.7, such
Partnership Securities, options, rights, warrants and appreciation rights shall be deemed to have
been Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period; and, provided further, that if consideration will be paid to any Group Member
in connection with such conversion, exercise or exchange, the number of Units to be included in
such calculation shall be that number equal to the difference between (i) the number of Units
issuable upon such conversion, exercise or exchange and (ii) the number of Units that such
consideration would purchase at the Current Market Price.

     “General Partner” means Teekay Offshore GP L.L.C., a Marshall Islands limited liability
company, and its successors and permitted assigns that are admitted to the Partnership as general
partner of the Partnership, in its capacity as general partner of the Partnership (except as the
context otherwise requires).

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     “General Partner Interest” means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner and without reference to any Limited Partner
Interest held by it) which is evidenced by General Partner Units, and includes any and all benefits
to which the General Partner is entitled as provided in this Agreement, together with all
obligations of the General Partner to comply with the terms and provisions of this Agreement.

     “General Partner Unit” means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.

     “Group” means a Person that with or through any of its Affiliates or Associates has any
agreement, arrangement, understanding or relationship for the purpose of acquiring, holding, voting
(except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons) or disposing of any Partnership Securities with
any other Person that beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, Partnership Securities.

     “Group Member” means a member of the Partnership Group.

     “Group Member Agreement” means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
(or similar organizational documents) of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, in
each case as such may be amended, supplemented or restated from time to time.

     “Holder” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).

     “Incentive Distribution Right” means a non-voting Limited Partner Interest issued to the
General Partner, which Partnership Interest will confer upon the holder thereof only the rights and
obligations specifically provided in this Agreement with respect to Incentive Distribution Rights
(and no other rights otherwise available to or other obligations of a holder of a Partnership
Interest). Notwithstanding anything in this Agreement to the contrary, the holder of an Incentive
Distribution Right shall not be entitled to vote such Incentive Distribution Right on any
Partnership matter except as may otherwise be required by law.

     “Incentive Distributions” means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Sections 6.3(a)(v), (vi) and (vii) and 6.3(b)(iii), (iv) and (v).

     “Indemnified Persons” has the meaning assigned to such term in Section 7.12(c).

     “Indemnitee” means (a) the General Partner, (b) any Departing General Partner, (c) any Person
who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person
who is or was a member, partner, director, officer, fiduciary or trustee of any Person which any of
the preceding clauses of this definition describes, (e) any Person who is or was serving at the
request of the General Partner or any Departing General Partner or any Affiliate of the General
Partner or any Departing General Partner as an officer, director, member, partner, fiduciary or
trustee of another Person (provided, however, that a Person shall not be an Indemnitee by reason of
providing, on a fee-for-services basis, trustee, fiduciary or custodial services), and (f) any
other Person the General Partner designates as an “Indemnitee” for purposes of this Agreement.

     “Initial Common Units” means the Common Units sold in the Initial Offering.

     “Initial Limited Partners” means Teekay Shipping Corporation and the General Partner (with
respect to the Incentive Distribution Rights received by it pursuant to Section 5.1(b)), and the
Underwriters, in each case upon being admitted to the Partnership in accordance with Section 10.1.

     “Initial Offering” means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.

     “Initial Unit Price” means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the Registration Statement first
became effective or (b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially

9

 

sold by the Partnership, as determined by the General Partner, in each case adjusted as the
General Partner determines to be appropriate to give effect to any distribution, subdivision or
combination of Units.

     “Interim Capital Transactions” means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working
Capital Borrowings and other than for items purchased on open account in the ordinary course of
business) by any Group Member and sales of debt securities of any Group Member; (b) sales of equity
interests of any Group Member (including the Common Units sold to the Underwriters pursuant to the
exercise of the Over-Allotment Option); (c) sales or other voluntary or involuntary dispositions of
any assets of any Group Member other than (i) sales or other dispositions of inventory, accounts
receivable and other assets in the ordinary course of business and (ii) sales or other dispositions
of assets as part of normal retirements or replacements; (d) the termination of interest rate swap
agreements; (e) capital contributions received; and (f) corporate reorganizations or
restructurings.

     “Investment Capital Expenditures” means capital expenditures other than Maintenance Capital
Expenditures or Expansion Capital Expenditures.

     “Issue Price” means the price at which a Unit is purchased from the Partnership, after
reflecting any sales commission or underwriting discount charged to the Partnership.

     “Limited Partner” means, unless the context otherwise requires, the Organizational Limited
Partner prior to its withdrawal from the Partnership, each Initial Limited Partner, each additional
Person that becomes a Limited Partner pursuant to the terms of this Agreement and any Departing
General Partner upon the change of its status from General Partner to Limited Partner pursuant to
Section 11.3, in each case, in such Person’s capacity as a limited partner of the Partnership;
provided, however, that when the term “Limited Partner” is used herein in the context of any vote
or other approval, including Articles XIII and XIV, such term shall not, solely for such purpose,
include any holder of an Incentive Distribution Right (solely with respect to its Incentive
Distribution Rights and not with respect to any other Limited Partner Interest held by such Person)
except as may otherwise be required by law. Limited Partners may include custodians, nominees or
any other individual or entity in its own or any representative capacity.

     “Limited Partner Interest” means the ownership interest of a Limited Partner in the
Partnership, which may be evidenced by Common Units, Subordinated Units, Incentive Distribution
Rights or other Partnership Securities or a combination thereof or interest therein, and includes
any and all benefits to which such Limited Partner is entitled as provided in this Agreement,
together with all obligations of such Limited Partner to comply with the terms and provisions of
this Agreement; provided, however, that when the term “Limited Partner Interest” is used herein in
the context of any vote or other approval, including Articles XIII and XIV, such term shall not,
solely for such purpose, include any Incentive Distribution Right except as may otherwise be
required by law.

     “Liquidation Date” means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.

     “Liquidator” means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4.

     “Maintenance Capital Expenditures” means cash expenditures (including expenditures for the
addition or improvement to the capital assets owned by any Group Member or for the acquisition of
existing, or the construction of new, capital assets) if such expenditure is made to maintain the
operating capacity or asset base of the Partnership Group. Maintenance Capital Expenditures shall
not include (a) Expansion Capital Expenditures or (b) expenditures made solely for investment
purposes (as opposed to maintenance purposes). Maintenance Capital Expenditures shall include
interest (and related fees) on debt incurred and distributions on equity incurred, in each case, to
finance the construction of a replacement asset and paid during the period beginning on the date
that the Group Member enters into a binding obligation to commence constructing a replacement asset
and ending on the earlier to occur of the date that such replacement asset Commences Commercial
Service or the date that such replacement asset is abandoned or disposed of. Debt incurred to pay
or equity issued to fund the construction period interest payments, or such construction period
distributions on equity shall also be deemed to be debt or equity, as the case may be, incurred to
finance the construction of a replacement asset.

     “Marshall Islands Act” means the Limited Partnership Act of The Republic of the Marshall
Islands, as amended, supplemented or restated from time to time, and any successor to such statute.

10

 

     “Merger Agreement” has the meaning assigned to such term in Section 14.1.

     “Minimum Quarterly Distribution” means $0.35 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on December 31, 2006, it means the product of
$0.35 multiplied by a fraction of which the numerator is the number of days in such period and of
which the denominator is the total number of days in the Quarter in which the Closing Date occurs),
subject to adjustment in accordance with Sections 6.5.

     “National Securities Exchange” means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act of 1934, as amended, supplemented or restated from time to
time, and any successor to such statute.

     “Net Agreed Value” means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, and (b) in the case of any property
distributed to a Partner by the Partnership, the Agreed Value of such property, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution.

     “Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).

     “Omnibus Agreement” means that Amended and Restated Omnibus Agreement, dated as of the Closing
Date, among Teekay Shipping Corporation, Teekay LNG Partners L.P., Teekay GP L.L.C., Teekay LNG
Operating L.L.C., the General Partner, the Partnership, Teekay Offshore Operating GP L.L.C. and the
Operating Company.

     “Operating Company” means Teekay Offshore Operating L.P., a Marshall Islands limited
partnership, and any successors thereto.

     “Operating Company Agreement” means the First Amended and Restated Agreement of Limited
Partnership of the Operating Company, as it may be amended, supplemented or restated from time to
time.

     “Operating Expenditures” means all Partnership Group expenditures (or the Partnership’s
proportionate share of expenditures in the case of Subsidiaries that are not wholly owned),
including taxes, reimbursements of the General Partner, repayment of Working Capital Borrowings,
debt service payments and capital expenditures, subject to the following:

     (a) repayment of Working Capital Borrowings deducted from Operating Surplus pursuant to
clause (b)(iii) of the definition of Operating Surplus shall not constitute Operating
Expenditures when actually repaid;

     (b) payments (including prepayments and prepayment penalties) of principal of and premium on
indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures;
and

     (c) Operating Expenditures shall not include (i) Expansion Capital Expenditures, Investment
Capital Expenditures or actual Maintenance Capital Expenditures, but shall include Estimated
Maintenance Capital Expenditures, (ii) payment of transaction expenses (including taxes) relating
to Interim Capital Transactions or (iii) distributions to Partners.

     Where capital expenditures consist of both (x) Maintenance Capital Expenditures and (y)
Expansion Capital Expenditures and/or Investment Capital Expenditures, the General Partner, with
the concurrence of the Conflicts Committee, shall determine the allocation between the amounts
paid for each.

     “Operating Surplus” means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication:

     (a) the sum of (i) $15 million, (ii) all cash receipts of the Partnership Group (or the
Partnership’s proportionate share of cash receipts in the case of Subsidiaries that are not
wholly owned) for the period beginning on the Closing Date and ending on the last day of such
period, other than cash receipts from Interim Capital Transactions, (iii) all cash receipts of
the Partnership Group (or the Partnership’s proportionate share of cash receipts in the case of
Subsidiaries that are not wholly owned) after the end of such period but on or before the date of
determination of Operating Surplus with respect to such period resulting from Working Capital
Borrowings and (iv) the amount of distributions paid on equity issued in connection with the
construction of a Capital Improvement or replacement asset and paid during the period beginning
on the date that the Group Member enters into a binding obligation to commence construction of
such Capital Improvement or replacement asset and ending on the earlier to occur of the

11

 

date that such Capital Improvement or replacement asset Commences Commercial Service or the
date that it is abandoned or disposed of (equity issued to fund the construction period interest
payments on debt incurred (including periodic net payments under related interest rate swap
agreements), or construction period distributions on equity issued, to finance the construction
of a Capital Improvement or replacement asset shall also be deemed to be equity issued to finance
the construction of a Capital Improvement or replacement asset for purposes of this clause (iv)),
less

     (b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending on the last day of such period, (ii) the amount of cash reserves (or the Partnership’s
proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned)
established by the General Partner to provide funds for future Operating Expenditures and (iii)
all Working Capital Borrowings not repaid within twelve months after having been incurred;
provided, however, that disbursements made (including contributions to a Group Member or
disbursements on behalf of a Group Member) or cash reserves established, increased or reduced
after the end of such period but on or before the date of determination of Available Cash with
respect to such period shall be deemed to have been made, established, increased or reduced, for
purposes of determining Operating Surplus, within such period if the General Partner so
determines.

     Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.

     “Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.

     “Option Closing Date” means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.

     “Organizational Limited Partner” means Teekay Shipping Corporation in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.

     “Outstanding” means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership’s books and records
as of the date of determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of the Outstanding
Partnership Securities of any class then Outstanding, all Partnership Securities owned by such
Person or Group shall not be voted on any matter and shall not be considered to be Outstanding when
sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required
by law), calculating required votes, determining the presence of a quorum or for other similar
purposes under this Agreement, except that Partnership Securities so owned shall be considered to
be Outstanding for purposes of Section 11.1(b)(iv) (such Partnership Securities shall not, however,
be treated as a separate class of Partnership Securities for purposes of this Agreement); provided,
further, that the foregoing limitation shall not apply to (i) any Person or Group who acquired 20%
or more of the Outstanding Partnership Securities of any class then Outstanding directly from the
General Partner or its Affiliates, (ii) any Person or Group who acquired 20% or more of any
Outstanding Partnership Securities of any class then Outstanding directly or indirectly from a
Person or Group described in clause (i) provided that the General Partner shall have notified such
Person or Group in writing that such limitation shall not apply, or (iii) any Person or Group who
acquired 20% or more of any Partnership Securities issued by the Partnership with the prior
approval of the Board of Directors of the General Partner.

     “Over-Allotment Option” means the over-allotment option granted to the Underwriters by the
Partnership pursuant to the Underwriting Agreement.

     “Partners” means the General Partner and the Limited Partners.

     “Partnership” means Teekay Offshore Partners L.P., a Marshall Islands limited partnership, and
any successors thereto.

     “Partnership Group” means the Partnership and its Subsidiaries, including the Operating
Company, treated as a single entity.

     “Partnership Interest” means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.

12

 

     “Partnership Security” means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including Common Units, Subordinated Units and Incentive Distribution Rights.

     “Percentage Interest” means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder with respect to Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the
quotient obtained by dividing (A) the number of Units held by such Unitholder or the number of
General Partner Units held by the General Partner, as the case may be, by (B) the total number of
all Outstanding Units and General Partner Units, and (b) as to the holders of other Partnership
Securities issued by the Partnership in accordance with Section 5.5, the percentage established as
a part of such issuance. The Percentage Interest with respect to an Incentive Distribution Right
shall at all times be zero.

     “Person” means an individual or a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, governmental agency or political
subdivision thereof or other entity.

     “Pro Rata” means (a) when used with respect to Units or any class thereof, apportioned equally
among all designated Units in accordance with their relative Percentage Interests, (b) when used
with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in
accordance with their relative Percentage Interests and (c) when used with respect to holders of
Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution
Rights in accordance with the relative number or percentage of Incentive Distribution Rights held
by each such holder.

     “Purchase Date” means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.

     “Quarter” means, unless the context requires otherwise, a fiscal quarter, or, with respect to
the first fiscal quarter including the Closing Date, the portion of such fiscal quarter after the
Closing Date, of the Partnership.

     “Record Date” means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.

     “Record Holder” means (a) the Person in whose name a Common Unit is registered on the books of
the Transfer Agent as of the opening of business on a particular Business Day, or (b) with respect
to other Partnership Interests, the Person in whose name any such other Partnership Interest is
registered on the books that the General Partner has caused to be kept as of the opening of
business on such Business Day.

     “Registrar” means the Registrar of Corporations as defined in Section 4 of the Marshall
Islands Business Corporation Act.

     “Registration Statement” means the Registration Statement on Form F-1 (Registration No.
333-139116) as it has been or as it may be amended or supplemented from time to time, filed by the
Partnership with the Commission under the Securities Act to register the offering and sale of the
Common Units in the Initial Offering.

     “Second Target Distribution” means $0.4375 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2006, it means the product of
$0.4375 multiplied by a fraction of which the numerator is equal to the number of days in such
period and of which the denominator is the total number of days in the Quarter in which the Closing
Date occurs), subject to adjustment in accordance with Section 6.5.

     “Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.

     “Special Approval” means approval by a majority of the members of the Conflicts Committee.

     “Subordinated Unit” means a Unit representing a fractional part of the Partnership Interests
of all Limited Partners and having the rights and obligations specified with respect to
Subordinated Units in this Agreement. The term “Subordinated Unit” does not include

13

 

a Common Unit. A Subordinated Unit that is convertible into a Common Unit shall not constitute
a Common Unit until such conversion occurs.

     “Subordination Period” means the period commencing on the Closing Date and ending on the first
to occur of the following dates:

     (a) the first day of any Quarter beginning after December 31, 2009, in respect of which
(i)(A) distributions of Available Cash from Operating Surplus on each of the Outstanding Common
Units, Subordinated Units, General Partner Units and any other Outstanding Units that are senior
or equal in right of distribution to the Subordinated Units equaled or exceeded the Minimum
Quarterly Distribution during each of the three consecutive, non-overlapping four-Quarter periods
immediately preceding such date and (B) the Adjusted Operating Surplus for each of the three
consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled or
exceeded the sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated
Units, General Partner Units and any other Units that are senior or equal in right of
distribution to the Subordinated Units that were Outstanding during such periods on a Fully
Diluted Basis with respect to each such period and (ii) there are no Cumulative Common Unit
Arrearages; and

     (b) the date on which the General Partner is removed as general partner of the Partnership
upon the requisite vote by holders of Outstanding Units under circumstances where Cause does not
exist and no Units held by the General Partner and its Affiliates are voted in favor of such
removal.

     For purposes of determining whether the test in subclause (a)(i)(B) above has been satisfied,
Adjusted Operating Surplus will be adjusted upwards or downwards if the Conflicts Committee
determines in good faith that the amount of Estimated Maintenance Capital Expenditures used in the
determination of Adjusted Operating Surplus in subclause (a)(i)(B) was materially incorrect, based
on circumstances prevailing at the time of original determination of Estimated Maintenance Capital
Expenditures, for any one or more of the preceding three four-Quarter periods.

     “Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries (as defined,
but excluding subsection (d) of this definition) of such Person or a combination thereof, (b) a
partnership (whether general or limited) in which such Person or a Subsidiary (as defined, but
excluding subsection (d) of this definition) of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the partnership
interests of such partnership (considering all of the partnership interests of the partnership as a
single class) is owned, directly or indirectly, at the date of determination, by such Person, by
one or more Subsidiaries (as defined, but excluding subsection (d) of this definition) of such
Person, or a combination thereof, (c) any other Person (other than a corporation or a partnership)
in which such Person, one or more Subsidiaries (as defined, but excluding subsection (d) of this
definition) of such Person, or a combination thereof, directly or indirectly, at the date of
determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct
the election of a majority of the directors or other governing body of such Person, or (d) any
other Person in which such Person, one or more Subsidiaries (as defined, but excluding subsection
(d) of this definition) of such Person, or a combination thereof, directly or indirectly, at the
date of determination, has (i) less than a majority ownership interest or (ii) less than the power
to elect or direct the election of a majority of the directors or other governing body of such
Person, provided that (A) such Person, one or more Subsidiaries (as defined, but excluding this
subsection (d) of this definition) of such Person, or a combination thereof, directly or
indirectly, at the date of the determination, has at least a 20% ownership interest in such other
Person, (B) such Person accounts for such other Person (under U.S. GAAP, as in effect on the later
of the date of investment in such other Person or material expansion of the operations of such
other Person) on a consolidated or equity accounting basis, (C) such Person has directly or
indirectly material negative control rights regarding such other Person including over such other
Person’s ability to materially expand its operations beyond that contemplated at the date of
investment in such other Person, and (D) such other Person is (i) other than with respect to the
Operating Company, formed and maintained for the sole purpose of owning or leasing, operating and
chartering no more than 10 vessels for a period of no more than 40 years, and (ii) obligated under
its constituent documents, or as a result of a unanimous agreement of its owners, to distribute to
its owners all of its income on at least an annual basis (less any cash reserves that are approved
by such Person).

     “Surviving Business Entity” has the meaning assigned to such term in Section 14.2(b).

     “Third Target Distribution” means $0.525 per unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on December 31, 2006, it means the product of $0.525
multiplied by a fraction of which the numerator is equal to the

14

 

number of days in such period and of which the denominator is the total number of days in the
Quarter in which the Closing Date occurs), subject to adjustment in accordance with Section 6.5.

     “Trading Day” means, for the purpose of determining the Current Market Price of any class of
Limited Partner Interests, a day on which the principal National Securities Exchange on which such
class of Limited Partner Interests is listed is open for the transaction of business or, if Limited
Partner Interests of a class are not listed on any National Securities Exchange, a day on which
banking institutions in New York City generally are open.

     “transfer” has the meaning assigned to such term in Section 4.4(a).

     “Transfer Agent” means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the Partnership to act as
registrar and transfer agent for the Common Units; provided, however, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.

     “Underwriter” means each Person named as an underwriter in Schedule I to the Underwriting
Agreement who purchases Common Units pursuant thereto.

     “Underwriting Agreement” means the Underwriting Agreement dated December 13, 2006 among the
Underwriters, the Partnership, the General Partner, the Operating Company, and Teekay Shipping
Corporation, providing for the purchase of Common Units by such Underwriters.

     “Unit” means a Partnership Security that is designated as a “Unit” and shall include Common
Units and Subordinated Units but shall not include (i) General Partner Units (or the General
Partner Interest represented thereby) or (ii) the Incentive Distribution Rights.

     “Unitholders” means the holders of Units.

     “Unit Majority” means, during the Subordination Period, at least a majority of the Outstanding
Common Units (excluding Common Units owned by the General Partner and its Affiliates) voting as a
class and at least a majority of the Outstanding Subordinated Units voting as a class, and after
the end of the Subordination Period, at least a majority of the Outstanding Common Units.

     “Unit Register” means the register of the Partnership for the registration and transfer of
Limited Partnership Interests as provided in Section 4.5.

     “Unrecovered Capital” means at any time, with respect to a Unit, the Initial Unit Price less
the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial
Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore made in respect of
an Initial Common Unit, adjusted as the General Partner determines to be appropriate to give effect
to any distribution, subdivision or combination of such Units.

     “U.S. GAAP” means United States generally accepted accounting principles consistently applied.

     “Withdrawal Opinion of Counsel” has the meaning assigned to such term in Section 11.1(b).

     “Working Capital Borrowings” means borrowings used solely for working capital purposes or to
pay distributions to Partners made pursuant to a credit facility, commercial paper facility or
similar financing arrangement available to a Group Member, provided that when such borrowing is
incurred it is the intent of the borrower to repay such borrowing within 12 months from other than
additional Working Capital Borrowings.

     Section 1.2 Construction.

     Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the term “include” or “includes” means includes,
without limitation,

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and “including” means including, without limitation; and (d) the terms “hereof”, “herein” and
“hereunder” refer to this Agreement as a whole and not to any particular provision of this
Agreement. The table of contents and headings contained in this Agreement are for reference
purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.

ARTICLE II

ORGANIZATION

     Section 2.1 Formation.

     The General Partner and the Organizational Limited Partner have previously formed the
Partnership as a limited partnership pursuant to the provisions of the Marshall Islands Act and
hereby amend and restate the original Agreement of Limited Partnership of Teekay Offshore Partners
L.P. in its entirety. This amendment and restatement shall become effective on the date of this
Agreement. Except as expressly provided to the contrary in this Agreement, the rights, duties
(including fiduciary duties), liabilities and obligations of the Partners and the administration,
dissolution and termination of the Partnership shall be governed by the Marshall Islands Act. All
Partnership Interests shall constitute personal property of the owner thereof for all purposes and
a Partner has no interest in specific Partnership property.

     Section 2.2 Name.

     The name of the Partnership shall be “Teekay Offshore Partners L.P.” The Partnership’s
business may be conducted under any other name or names as determined by the General Partner,
including the name of the General Partner. The words “Limited Partnership” or the letters “L.P.” or
similar words or letters shall be included in the Partnership’s name where necessary for the
purpose of complying with the laws of any jurisdiction that so requires. The General Partner may
change the name of the Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited Partners.

     Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices.

     Unless and until changed by the General Partner, the registered office of the Partnership in
The Marshall Islands shall be located at Trust Company Complex, Ajeltake Island, Ajeltake Road,
Majuro, Marshall Islands MH 96960, and the registered agent for service of process on the
Partnership in The Marshall Islands at such registered office shall be The Trust Company of The
Marshall Islands, Inc. The principal office of the Partnership shall be located at Bayside House,
Bayside Executive Park, West Bay Street and Blake Road, P.O. Box AP-59212, Nassau, Commonwealth of
the Bahamas or such other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place or places within or
outside The Marshall Islands as the General Partner determines to be necessary or appropriate. The
address of the General Partner shall be Bayside House, Bayside Executive Park, West Bay Street and
Blake Road, P.O. Box AP-59212, Nassau, Commonwealth of the Bahamas or such other place as the
General Partner may from time to time designate by notice to the Limited Partners.

     Section 2.4 Purpose and Business.

     The purpose and nature of the business to be conducted by the Partnership shall be to (a)
engage directly in, or enter into or form any corporation, partnership, joint venture, limited
liability company or other arrangement to engage indirectly in, any business activity that is
approved by the General Partner and that lawfully may be conducted by a limited partnership
organized pursuant to the Marshall Islands Act and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity, and (b) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member. The General Partner shall have no duty
or obligation to propose or approve, and may decline to propose or approve, the conduct by the
Partnership of any business free of any fiduciary duty or obligation whatsoever to the Partnership,
any Limited Partner and, in declining to so propose or approve, shall not be required to act in
good faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement,
any other agreement contemplated hereby or under the Marshall Islands Act or any other law, rule or
regulation.

     Section 2.5 Powers.

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     The Partnership shall be empowered to do any and all acts and things necessary and appropriate
for the furtherance and accomplishment of the purposes and business described in Section 2.4 and
for the protection and benefit of the Partnership.

     Section 2.6 Power of Attorney.

     (a) Each Limited Partner hereby constitutes and appoints the General Partner and, if a
Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any successor to
the Liquidator by merger, transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, as the case may be, with full power of substitution, as his true
and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead,
to:

     (i) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (A) all certificates, documents and other instruments (including this Agreement and the
Certificate of Limited Partnership and all amendments or restatements hereof or thereof) that the
General Partner or the Liquidator determines to be necessary or appropriate to form, qualify or
continue the existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the Marshall Islands and in
all other jurisdictions in which the Partnership may conduct business or own property; (B) all
certificates, documents and other instruments that the General Partner or the Liquidator
determines to be necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C) all certificates, documents
and other instruments (including conveyances and a certificate of cancellation) that the General
Partner or the Liquidator determines to be necessary or appropriate to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this Agreement; (D) all certificates,
documents and other instruments relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in, Articles IV, X, XI or XII; (E) all
certificates, documents and other instruments relating to the determination of the rights,
preferences and privileges of any class or series of Partnership Securities issued pursuant to
Section 5.5; and (F) all certificates, documents and other instruments (including agreements and
a certificate of merger) relating to a merger, consolidation or conversion of the Partnership
pursuant to Article XIV; and

     (ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments that the General Partner or the
Liquidator determines to be necessary or appropriate to (A) make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is made or given by the
Partners hereunder or is consistent with the terms of this Agreement or (B) effectuate the terms
or intent of this Agreement; provided, however, that when required by Section 13.3 or any other
provision of this Agreement that establishes a percentage of the Limited Partners or of the
Limited Partners of any class or series required to take any action, the General Partner and the
Liquidator may exercise the power of attorney made in this Section 2.6(a)(ii) only after the
necessary vote, consent or approval of the Limited Partners or of the Limited Partners of such
class or series, as applicable.

Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner to
amend this Agreement except in accordance with Article XIII or as may be otherwise expressly
provided for in this Agreement.

     (b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner and the transfer of all or any portion of such Limited Partner’s
Partnership Interest and shall extend to such Limited Partner’s heirs, successors, assigns and
personal representatives. Each such Limited Partner hereby agrees to be bound by any representation
made by the General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner, to the maximum extent permitted by law, hereby waives any
and all defenses that may be available to contest, negate or disaffirm the action of the General
Partner or the Liquidator taken in good faith under such power of attorney. Each Limited Partner
shall execute and deliver to the General Partner or the Liquidator, within 15 days after receipt of
the request therefor, such further designation, powers of attorney and other instruments as the
General Partner or the Liquidator determines to be necessary or appropriate to effectuate this
Agreement and the purposes of the Partnership.

     Section 2.7 Term.

     The term of the Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Marshall Islands Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation of the Certificate
of Limited Partnership as provided in the Marshall Islands Act.

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     Section 2.8 Title to Partnership Assets.

     Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such Partnership assets or any
portion thereof. Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its Affiliates or one or more nominees, as the
General Partner may determine. The General Partner hereby declares and warrants that any
Partnership assets for which record title is held in the name of the General Partner or one or more
of its Affiliates or one or more nominees shall be held by the General Partner or such Affiliate or
nominee for the use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use commercially reasonable efforts to
cause record title to such assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably practicable; and,
provided further, that, prior to the withdrawal or removal of the General Partner or as soon
thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer
of record title to the Partnership and, prior to any such transfer, will provide for the use of
such assets in a manner satisfactory to the General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records, irrespective of the name in
which record title to such Partnership assets is held.

ARTICLE III

RIGHTS OF LIMITED PARTNERS

     Section 3.1 Limitation of Liability.

     The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement or the Marshall Islands Act.

     Section 3.2 Management of Business.

     No Limited Partner, in its capacity as such, shall participate in the operation, management or
control (within the meaning of the Marshall Islands Act) of the Partnership’s business, transact
any business in the Partnership’s name or have the power to sign documents for or otherwise bind
the Partnership. Any action taken by any Affiliate of the General Partner or any officer, director,
employee, manager, member, general partner, agent or trustee of the General Partner or any of its
Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee
of a Group Member, in its capacity as such, shall not be deemed to be participation in the control
of the business of the Partnership by a limited partner of the Partnership (within the meaning of
Section 30 of the Marshall Islands Act) and shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners under this Agreement.

     Section 3.3 Outside Activities of the Limited Partners.

     Subject to the provisions of Section 7.5 and the Omnibus Agreement, which shall continue to be
applicable to the Persons referred to therein, regardless of whether such Persons shall also be
Limited Partners, any Limited Partner shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership, including business
interests and activities in direct competition with the Partnership Group. Neither the Partnership
nor any of the other Partners shall have any rights by virtue of this Agreement in any business
ventures of any Limited Partner.

     Section 3.4 Rights of Limited Partners.

     (a) In addition to other rights provided by this Agreement or by applicable law, and except as
limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner’s interest as a Limited Partner in the Partnership, upon reasonable
written demand and at such Limited Partner’s own expense, to:

     (i) obtain, promptly after becoming available, a copy of the Partnership’s financial
statements or income tax returns, if applicable, for each year;

     (ii) have furnished to him a current list of the name and last known business, residence or
mailing address of each Partner;

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     (iii) obtain true and full information regarding the amount of cash and a description and
statement of the Net Agreed Value of any other Capital Contribution by each Partner and which
each Partner has agreed to contribute in the future, and the date on which each became a Partner;

     (iv) have furnished to him a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;

     (v) obtain true and full information regarding the status of the business and financial
condition of the Partnership Group; and

     (vi) obtain such other information regarding the affairs of the Partnership as is just and
reasonable.

     (b) The General Partner may keep confidential from the Limited Partners, for such period of
time as the General Partner deems reasonable, (i) any information that the General Partner
reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure
of which the General Partner in good faith believes (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or (C) that any Group Member is required
by law or by agreement with any third party to keep confidential (other than agreements with
Affiliates of the Partnership the primary purpose of which is to circumvent the obligations set
forth in this Section 3.4).

ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS

     Section 4.1 Certificates.

     Upon the Partnership’s issuance of Common Units or Subordinated Units to any Person, the
Partnership shall issue, upon the request of such Person, one or more Certificates in the name of
such Person evidencing the number of such Units being so issued. In addition, (a) upon the General
Partner’s request, the Partnership shall issue to it one or more Certificates in the name of the
General Partner evidencing its General Partner Units and (b) upon the request of any Person owning
Incentive Distribution Rights or any other Partnership Securities other than Common Units or
Subordinated Units, the Partnership shall issue to such Person one or more certificates evidencing
such Incentive Distribution Rights or other Partnership Securities other than Common Units or
Subordinated Units. Certificates shall be executed on behalf of the Partnership by the Chairman of
the Board, President or any Executive Vice President or Vice President and the Chief Financial
Officer or the Secretary or any Assistant Secretary of the General Partner. No Common Unit
Certificate shall be valid for any purpose until it has been countersigned by the Transfer Agent;
provided, however, that if the General Partner elects to issue Common Units in global form, the
Common Unit Certificates shall be valid upon receipt of a certificate from the Transfer Agent
certifying that the Common Units have been duly registered in accordance with the directions of the
Partnership. Subject to the requirements of Section 6.6(b), the Partners holding Certificates
evidencing Subordinated Units may exchange such Certificates for Certificates evidencing Common
Units on or after the date on which such Subordinated Units are converted into Common Units
pursuant to the terms of Section 5.7.

     Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.

     (a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate
officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent
shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number
and type of Partnership Securities as the Certificate so surrendered.

     (b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any
Certificate previously issued if the Record Holder of the Certificate:

     (i) makes proof by affidavit, in form and substance satisfactory to the General Partner,
that a previously issued Certificate has been lost, destroyed or stolen;

     (ii) requests the issuance of a new Certificate before the General Partner has notice that
the Certificate has been acquired by a purchaser for value in good faith and without notice of an
adverse claim;

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     (iii) if requested by the General Partner, delivers to the General Partner a bond, in
form and substance satisfactory to the General Partner, with surety or sureties and with fixed or
open penalty as the General Partner may direct to indemnify the Partnership, the Partners, the
General Partner and the Transfer Agent against any claim that may be made on account of the
alleged loss, destruction or theft of the Certificate; and

     (iv) satisfies any other reasonable requirements imposed by the General Partner.

     If a Limited Partner fails to notify the General Partner within a reasonable period of time
after he has notice of the loss, destruction or theft of a Certificate, and a transfer of the
Limited Partner Interests represented by the Certificate is registered before the Partnership, the
General Partner or the Transfer Agent receives such notification, the Limited Partner shall be
precluded from making any claim against the Partnership, the General Partner or the Transfer Agent
for such transfer or for a new Certificate.

     (c) As a condition to the issuance of any new Certificate under this Section 4.2, the General
Partner may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Transfer Agent) reasonably connected therewith.

     Section 4.3 Record Holders.

     The Partnership shall be entitled to recognize the Record Holder as the Partner with respect
to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or
other claim to, or interest in, such Partnership Interest on the part of any other Person,
regardless of whether the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are listed or admitted to trading.
Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or
clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding Partnership Interests,
as between the Partnership on the one hand, and such other Persons on the other, such
representative Person shall be the Record Holder of such Partnership Interest.

     Section 4.4 Transfer Generally.

     (a) The term “transfer,” when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction (i) by which the General Partner assigns its General
Partner Interest to another Person or by which a holder of Incentive Distribution Rights assigns
its Incentive Distribution Rights to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii)
by which the holder of a Limited Partner Interest (other than an Incentive Distribution Right)
assigns such Limited Partner Interest to another Person who is or becomes a Limited Partner, and
includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, including
any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.

     (b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article IV shall be null and void.

     (c) Nothing contained in this Agreement shall be construed to prevent a disposition by any
stockholder, member, partner or other owner of the General Partner of any or all of the shares of
stock, membership interests, partnership interests or other ownership interests in the General
Partner.

     Section 4.5 Registration and Transfer of Limited Partner Interests.

     (a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited
Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Common Units and transfers of such Common Units as herein provided. The
Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests
unless such transfers are effected in the manner described in this Section 4.5. Upon surrender of a
Certificate for registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate officers of the
General Partner on behalf of the Partnership shall execute and deliver, and in the case of

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Common Units, the Transfer Agent shall countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder’s instructions, one or more new Certificates evidencing the
same aggregate number and type of Limited Partner Interests as was evidenced by the Certificate so
surrendered.

     (b) The General Partner shall not recognize any transfer of Limited Partner Interests until
the Certificates evidencing such Limited Partner Interests are surrendered for registration of
transfer. No charge shall be imposed by the General Partner for such transfer; provided, however,
that as a condition to the issuance of any new Certificate under this Section 4.5, the General
Partner may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed with respect thereto.

     (c) The General Partner and its Affiliates shall have the right at any time to transfer their
Subordinated Units and Common Units (whether issued upon conversion of the Subordinated Units or
otherwise) to one or more Persons.

     Section 4.6 Transfer of the General Partner’s General Partner Interest.

     (a) Subject to Section 4.6(c) below, prior to December 31, 2016, the General Partner shall not
transfer all or any part of its General Partner Interest (represented by General Partner Units) to
a Person unless such transfer (i) has been approved by the prior written consent or vote of the
holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the
General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General
Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or (B)
another Person (other than an individual) in connection with (1) the merger or consolidation of the
General Partner with or into such other Person or (2) the transfer by the General Partner of all or
substantially all of its assets to such other Person.

     (b) Subject to Section 4.6(c) below, on or after December 31, 2016, the General Partner may
transfer all or any of its General Partner Interest without Unitholder approval.

     (c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of any Limited Partner
or of any limited partner or member of any other Group Member and (iii) such transferee also agrees
to purchase all (or the appropriate portion thereof, if applicable) of the partnership or
membership interest of the General Partner as the general partner or managing member, if any, of
each other Group Member. In the case of a transfer pursuant to and in compliance with this Section
4.6, the transferee or successor (as the case may be) shall, subject to compliance with the terms
of Section 10.3, be admitted to the Partnership as the General Partner immediately prior to the
transfer of the General Partner Interest, and the business of the Partnership shall continue
without dissolution.

     Section 4.7 Transfer of Incentive Distribution Rights.

     Prior to December 31, 2016, a holder of Incentive Distribution Rights may transfer any or all
of the Incentive Distribution Rights held by such holder without any consent of the Unitholders to
(a) an Affiliate of such holder (other than an individual) or (b) another Person (other than an
individual) in connection with (i) the merger or consolidation of such holder of Incentive
Distribution Rights with or into such other Person or (ii) the transfer by such holder of all or
substantially all of its assets to such other Person. Any other transfer of the Incentive
Distribution Rights prior to December 31, 2016 shall require the prior approval of holders of at
least a majority of the Outstanding Common Units (excluding Common Units held by the General
Partner and its Affiliates). On or after December 31, 2016, the General Partner or any other holder
of Incentive Distribution Rights may transfer any or all of its Incentive Distribution Rights
without Unitholder approval. Notwithstanding anything herein to the contrary, no transfer of
Incentive Distribution Rights to another Person shall be permitted unless the transferee agrees to
be bound by the provisions of this Agreement. The General Partner and any transferee or transferees
of the Incentive Distribution Rights may agree in a separate instrument as to the General Partner’s
exercise of its rights with respect to the Incentive Distribution Rights under Section 11.3 hereof.

     Section 4.8 Restrictions on Transfers.

     (a) Except as provided in Section 4.8(c) below, but notwithstanding the other provisions of
this Article IV, no transfer of any Partnership Interests shall be made if such transfer would (i)
violate the then applicable U.S. federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority with jurisdiction
over such

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transfer or (ii) terminate the existence or qualification of the Partnership or any Group
Member under the laws of the jurisdiction of its formation.

     (b) The transfer of a Subordinated Unit that has converted into a Common Unit shall be subject
to the restrictions imposed by Section 6.6(b).

     (c) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Partnership Interests entered into through the facilities
of any National Securities Exchange on which such Partnership Interests are listed or admitted to
trading.

ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

     Section 5.1 Organizational Contributions.

     (a) In connection with the formation of the Partnership under the Marshall Islands Act, the
General Partner made an initial Capital Contribution to the Partnership in the amount of $20, for a
2% General Partner Interest in the Partnership and has been admitted as the General Partner of the
Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $980 for a 98% Limited Partner Interest in the Partnership and has
been admitted as a Limited Partner of the Partnership.

     (b) Prior to the Closing Date (i) the General Partner contributed its 0.52% ownership interest
in the Operating Company to the Partnership in exchange for (A) a continuation of its 2% General
Partner Interest, (B) the Incentive Distribution Rights and (C) the assumption by the Partnership
of a $2.7 million note representing 2% of the total cash to be paid to Teekay Shipping Corporation
from the proceeds of the Initial Offering, and (ii) Teekay Shipping Corporation contributed to the
Partnership (A) all of its ownership interest in the general partner of the Operating Company and
(B) a 25.47% limited partner interest in the Operating Company, in exchange for a continuation of
its 98% limited partner interest in the Partnership and a $131.7 million note representing 98% of
the total cash to be paid to Teekay Shipping Corporation from the proceeds of the Initial Offering.

     Section 5.2 Initial Unit Issuances; General Partner Pre-emptive Rights.

     (a) On or prior to the Closing Date and pursuant to the Contribution Agreement, (i) Teekay
Shipping Corporation’s 98% initial limited partner interest shall be converted into (A) 2,800,000
Common Units and (B) 9,800,000 Subordinated Units and (ii) the Partnership shall issue to the
General Partner, for no additional consideration, 400,000 General Partner Units evidencing the
General Partner’s 2% General Partner Interest.

     (b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other
than Common Units issued in the Initial Offering, including any Common Units issued pursuant to the
Over-Allotment Option), the General Partner may, in exchange for a proportionate number of General
Partner Units, make additional Capital Contributions in an amount equal to the product obtained by
multiplying (i) the quotient determined by dividing (A) the General Partner’s Percentage Interest
immediately prior to such issuance by (B) 100 less the General Partner’s Percentage Interest
immediately prior to such issuance by (ii) the amount contributed to the Partnership by the Limited
Partners in exchange for such additional Limited Partner Interests. The General Partner shall not
be obligated to make any additional Capital Contributions to the Partnership.

     Section 5.3 Contributions by Initial Limited Partners and Distributions to the
General Partner and its Affiliates.

     (a) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter shall
contribute to the Partnership cash in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement to be purchased by
such Underwriter at the Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the number of Common Units specified in the
Underwriting Agreement to be purchased by such Underwriter on the Closing Date.

     (b) Upon any exercise of the Over-Allotment Option, each Underwriter shall contribute to the
Partnership cash in an amount equal to the Issue Price per Initial Common Unit, multiplied by the
number of Common Units to be purchased by such Underwriter at the

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Option Closing Date. In exchange for such Capital Contributions by the Underwriters, the Partnership shall issue Common Units to
each Underwriter on whose behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (i) the cash contributions to the Partnership by or on behalf of such Underwriter by (ii) the Issue
Price per Initial Common Unit. Upon receipt by the Partnership of the Capital Contributions from
the Underwriters as provided in this Section 5.3(b), the Partnership shall use such cash to redeem
from Teekay Shipping Corporation that number of Common Units equal to the number of Common Units
issued to the Underwriters as provided in this Section 5.3(b).

     (c) No Limited Partner Interests will be issued or issuable as of or at the Closing Date other
than (i) the Common Units issuable pursuant to subparagraph (a) of this Section 5.3 in aggregate
number equal to 7,000,000, (ii) the “Option Units” as such term is used in the Underwriting
Agreement in an aggregate number up to 1,050,000 issuable upon exercise of the Over-Allotment
Option pursuant to subparagraph (c) hereof, (iii) the 9,800,000 Subordinated Units issuable to
pursuant to Section 5.2 hereof, (iv) the 2,800,000 Common Units issuable pursuant to Section 5.2
hereof, and (v) the Incentive Distribution Rights.

     Section 5.4 Interest and Withdrawal.

     No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the Partnership may be
considered and permitted as such by law and then only to the extent provided for in this Agreement.
Except to the extent expressly provided in this Agreement, no Partner shall have priority over any
other Partner either as to the return of Capital Contributions or as to profits, losses or
distributions.

     Section 5.5 Issuances of Additional Partnership Securities.

     (a) The Partnership may issue additional Partnership Securities and options, rights, warrants
and appreciation rights relating to the Partnership Securities for any Partnership purpose at any
time and from time to time to such Persons for such consideration and on such terms and conditions
as the General Partner shall determine, all without the approval of any Limited Partners.

     (b) Each additional Partnership Security authorized to be issued by the Partnership pursuant
to Section 5.5(a) may be issued in one or more classes, or one or more series of any such classes,
with such designations, preferences, rights, powers and duties (which may be senior to existing
classes and series of Partnership Securities), as shall be fixed by the General Partner, including
(i) the right to share in Partnership distributions; (ii) the rights upon dissolution and
liquidation of the Partnership; (iii) whether, and the terms and conditions upon which, the
Partnership may or shall be required to redeem the Partnership Security (including sinking fund
provisions); (iv) whether such Partnership Security is issued with the privilege of conversion or
exchange and, if so, the terms and conditions of such conversion or exchange; (v) the terms and
conditions upon which each Partnership Security will be issued, evidenced by certificates and
assigned or transferred; (vi) the method for determining the Percentage Interest as to such
Partnership Security; and (vii) the right, if any, of each such Partnership Security to vote on
Partnership matters, including matters relating to the relative rights, preferences and privileges
of such Partnership Security.

     (c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options, rights,
warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.5,
(ii) the conversion of the General Partner Interest (represented by General Partner Units) or any
Incentive Distribution Rights into Units pursuant to the terms of this Agreement, (iii) the
admission of additional Limited Partners and (iv) all additional issuances of Partnership
Securities. The General Partner shall determine the relative rights, powers and duties of the
holders of the Units or other Partnership Securities being so issued. The General Partner shall do
all things necessary to comply with the Marshall Islands Act and is authorized and directed to do
all things that it determines to be necessary or appropriate in connection with any future issuance
of Partnership Securities or in connection with the conversion of the General Partner Interest or
any Incentive Distribution Rights into Units pursuant to the terms of this Agreement, including
compliance with any statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Units or other Partnership
Securities are listed or admitted to trading.

     Section 5.6 Limitations on Issuance of Additional Partnership Securities.

     The Partnership may issue an unlimited number of Partnership Securities (or options, rights,
warrants or appreciation rights related thereto) pursuant to Section 5.5 without the approval of
the Limited Partners; provided, however, that no fractional units shall be issued by the
Partnership.

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     Section 5.7 Conversion of Subordinated Units.

     (a) All of the Outstanding Subordinated Units will convert into Common Units on a one-for-one
basis on the first day following the distribution of Available Cash to Partners pursuant to Section
6.2(a) in respect of any Quarter ending on or after December 31, 2006, in respect of which:

     (i) distributions of Available Cash from Operating Surplus under Section 6.3(a) on each of
the Outstanding Common Units, Subordinated Units, General Partner Units and any other Outstanding
Units that are senior or equal in right of distribution to the Subordinated Units equaled or
exceeded the Third Target Distribution during the four-Quarter period immediately preceding such
date;

     (ii) the Adjusted Operating Surplus for the four-Quarter period immediately preceding such
date equaled or exceeded the sum of the Third Target Distribution on all of the Common Units,
Subordinated Units, General Partner Units and any other Units that are senior or equal in right
of distribution to the Subordinated Units that were Outstanding during such period on a Fully
Diluted Basis with respect to such period; and

     (iii) there are no Cumulative Common Unit Arrearages.

     (b) If the Subordinated Units are not converted into Common Units pursuant to Sections 5.7(a),
the Subordinated Units shall convert into Common Units on a one-for-one basis upon the expiration
of the Subordination Period.

     (c) Notwithstanding any other provision of this Agreement, the Subordinated Units will
automatically convert into Common Units on a one-for-one basis as set forth in, and pursuant to the
terms of, Section 11.4.

     (d) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.6(b).

     Section 5.8 Limited Preemptive Right.

     Except as provided in this Section 5.8 and in Section 5.2(b), no Person shall have any
preemptive, preferential or other similar right with respect to the issuance of any Partnership
Security, whether unissued, held in the treasury or hereafter created. The General Partner shall
have the right, which it may from time to time assign in whole or in part to any of its Affiliates,
to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Partnership Securities to Persons other than the General Partner and its
Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and
its Affiliates equal to that which existed immediately prior to the issuance of such Partnership
Securities.

     Section 5.9 Splits and Combinations.

     (a) Subject to Sections 5.9(d) and 6.5 (dealing with adjustments of distribution levels), the
Partnership may make a Pro Rata distribution of Partnership Securities to all Record Holders or may
effect a subdivision or combination of Partnership Securities so long as, after any such event,
each Partner shall have the same Percentage Interest in the Partnership as before such event, and
any amounts calculated on a per Unit basis (including any Common Unit Arrearage or Cumulative
Common Unit Arrearage) or stated as a number of Units are proportionately adjusted.

     (b) Whenever such a distribution, subdivision or combination of Partnership Securities is
declared, the General Partner shall select a Record Date as of which the distribution, subdivision
or combination shall be effective and shall send notice thereof at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Partnership Securities to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner shall be entitled to
rely on any certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.

     (c) Promptly following any such distribution, subdivision or combination, the Partnership may
issue Certificates to the Record Holders of Partnership Securities as of the applicable Record Date
representing the new number of Partnership Securities held by such Record Holders, or the General
Partner may adopt such other procedures that it determines to be necessary or appropriate to
reflect such changes. If any such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall

24

 

require, as a condition to the delivery to a Record
Holder of such new Certificate, the surrender of any Certificate held by such Record Holder
immediately prior to such Record Date.

     (d) The Partnership shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of this Section 5.9(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher
Unit).

     Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests.

     All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by the Marshall Islands Act.

ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

     Section 6.1 Allocations.

     For purposes of the Marshall Islands Act, the Partnership’s items of income, gain, loss and
deduction shall be allocated among the Partners in each taxable year (or portion thereof) as
follows:

     (a) in a taxable year (or portion thereof) in which items of income and gain exceed items of
loss and deduction, in a manner such that the allocations to the Partners (i) first reverse any
allocations made to the Partners pursuant to Section 6.1(b)(ii) and (ii) thereafter, are in
proportion to the distributions of Available Cash from Operating Surplus (actual or deemed) made
to the Partners pursuant to Article VI and Section 12.4; and

     (b) in a taxable year (or portion thereof) in which items of loss and deduction exceed items
of income and gain, in a manner such that the allocations to the Partners (i) first reverse any
allocations made to the Partners pursuant to Section 6.1(a)(ii) and (ii) thereafter, are in
proportion to the Partners’ Percentage Interests.

     Section 6.2 Requirement and Characterization of Distributions; Distributions to
Record Holders.

     (a) Within 45 days following the end of each Quarter commencing with the Quarter ending on
December 31, 2006, an amount equal to 100% of Available Cash with respect to such Quarter shall,
subject to Section 51 of the Marshall Islands Act, be distributed in accordance with this Article
VI by the Partnership to the Partners as of the Record Date selected by the General Partner. All
amounts of Available Cash distributed by the Partnership on any date from any source shall be
deemed to be Operating Surplus until the sum of all amounts of Available Cash theretofore
distributed by the Partnership to the Partners pursuant to Section 6.3 equals the Operating Surplus
from the Closing Date through the close of the immediately preceding Quarter. Any remaining amounts
of Available Cash distributed by the Partnership on such date shall, except as otherwise provided
in Section 6.4, be deemed to be “Capital Surplus.”

     (b) Notwithstanding Section 6.2(a), in the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of Available Cash, shall
be applied and distributed solely in accordance with, and subject to the terms and conditions of,
Section 12.4.

     (c) Each distribution in respect of a Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent, only to the Record
Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment
shall constitute full payment and satisfaction of the Partnership’s liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.

     Section 6.3 Distributions of Available Cash from Operating Surplus.

     (a) During Subordination Period. Available Cash with respect to any Quarter or portion thereof
within the Subordination Period that is deemed to be Operating Surplus pursuant to the provisions
of Sections 6.2 or 6.4 shall, subject to Section 51 of the Marshall

25

 

Islands Act, be distributed as
follows, except as otherwise contemplated by Section 5.5 in respect of other Partnership Securities
issued pursuant thereto:

     (i) First, (x) to the General Partner in accordance with its Percentage Interest and (y) to
all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General
Partner’s Percentage Interest, until there has been distributed in respect of each Common Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

     (ii) Second, (x) to the General Partner in accordance with its Percentage Interest and (y)
to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the General
Partner’s Percentage Interest, until there has been distributed in respect of each Common Unit
then Outstanding an amount equal to the Cumulative Common Unit Arrearage existing with respect to
such Quarter;

     (iii) Third, (x) to the General Partner in accordance with its Percentage Interest and (y)
to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less the
General Partner’s Percentage Interest, until there has been distributed in respect of each
Subordinated Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such
Quarter;

     (iv) Fourth, to the General Partner and all Unitholders, in accordance with their respective
Percentage Interests, until there has been distributed in respect of each Unit then Outstanding
an amount equal to the excess of the First Target Distribution over the Minimum Quarterly
Distribution for such Quarter;

     (v) Fifth, (A) to the General Partner in accordance with its Percentage Interest; (B) 13% to
the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro Rata,
a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and (B)
of this clause (v) until there has been distributed in respect of each Unit then Outstanding an
amount equal to the excess of the Second Target Distribution over the First Target Distribution
for such Quarter;

     (vi) Sixth, (A) to the General Partner in accordance with its Percentage Interest, (B) 23%
to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro
Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and
(B) of this subclause (vi), until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Third Target Distribution over the Second Target
Distribution for such Quarter; and

     (vii) Thereafter, (A) to the General Partner in accordance with its Percentage Interest; (B)
48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders,
Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A)
and (B) of this clause (vii);

provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to
the second sentence of Section 6.5, the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.3(a)(vii).

     (b) After Subordination Period. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Sections
6.2 or 6.4, shall subject to Section 51 of the Marshall Islands Act, be distributed as follows,
except as otherwise required by Section 5.5(b) in respect of additional Partnership Securities
issued pursuant thereto:

     (i) First, 100% to the General Partner and the Unitholders in accordance with their
respective Percentage Interests, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter

     (ii) Second, 100% to the General Partner and the Unitholders in accordance with their
respective Percentage Interests, until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the First Target Distribution over the Minimum
Quarterly Distribution for such Quarter;

     (iii) Third, (A) to the General Partner in accordance with its Percentage Interest; (B) 13%
to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro
Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A) and
(B) of this clause (iii), until there has been distributed in respect of each Unit then
Outstanding an amount equal to the excess of the Second Target Distribution over the First Target
Distribution for such Quarter;

26

 

     (iv) Fourth, (A) to the General Partner in accordance with its Percentage Interest; (B) 23%
to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders, Pro
Rata, a percentage equal to 100% less the sum of the percentages
applicable to subclause (A) and (B) of this clause (iv), until there has been distributed in
respect of each Unit then Outstanding an amount equal to the excess of the Third Target
Distribution over the Second Target Distribution for such Quarter; and

     (v) Thereafter, (A) to the General Partner in accordance with its Percentage Interest; (B)
48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all Unitholders,
Pro Rata, a percentage equal to 100% less the sum of the percentages applicable to subclauses (A)
and (B) of this clause (v);

provided, however, that if the Minimum Quarterly Distribution, the First Target Distribution, the
Second Target Distribution and the Third Target Distribution have been reduced to zero pursuant to
the second sentence of Section 6.5, the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.3(b)(v).

     Section 6.4 Distributions of Available Cash from Capital Surplus.

     Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section
6.2(a) shall, subject to Section 51 of the Marshall Islands Act, be distributed, unless the
provisions of Section 6.2 require otherwise, 100% to the General Partner and the Unitholders in
accordance with their respective Percentage Interests, until a hypothetical holder of a Common Unit
acquired on the Closing Date has received with respect to such Common Unit, during the period since
the Closing Date through such date, distributions of Available Cash that are deemed to be Capital
Surplus in an aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be
Capital Surplus shall then be distributed (a) to the General Partner in accordance with its
Percentage Interest and (b) to all Unitholders holding Common Units their Pro Rata share of a
percentage equal to 100% less the General Partner’s Percentage Interest, until there has been
distributed in respect of each Common Unit then Outstanding an amount equal to the Cumulative
Common Unit Arrearage. Thereafter, all Available Cash shall be distributed as if it were Operating
Surplus and shall be distributed in accordance with Section 6.3.

     Section 6.5 Adjustment of Minimum Quarterly Distribution and Target Distribution
Levels.

     The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in Units or otherwise) of Units or other Partnership Securities
in accordance with Section 5.9. In the event of a distribution of Available Cash that is deemed to
be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, shall be reduced in the
same proportion that the distribution had to the fair market value of the Common Units prior to the
announcement of the distribution. If the Common Units are publicly traded on a National Securities
Exchange, the fair market value will be the Current Market Price before the ex-dividend date. If
the Common Units are not publicly traded, the fair market value will be determined by the Board of
Directors of the General Partner.

     Section 6.6 Special Provisions Relating to the Holders of Subordinated Units.

     (a) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
distributions made with respect to Common Units, the holder of a Subordinated Unit shall have all
of the rights and obligations of a Unitholder holding Common Units hereunder; provided, however,
that immediately upon the conversion of Subordinated Units into Common Units pursuant to Section
5.7, the Unitholder holding a Subordinated Unit shall possess all of the rights and obligations of
a Unitholder holding Common Units hereunder, including the right to vote as a Common Unitholder and
the right to participate in distributions made with respect to Common Units.

     (b) A Unitholder holding a Subordinated Unit that has converted into a Common Unit pursuant to
Section 5.8 shall not be issued a Common Unit Certificate pursuant to Section 4.1, and shall not be
permitted to transfer its converted Subordinated Units to a Person that is not an Affiliate of the
holder until such time as the General Partner determines, based on advice of counsel, that a
converted Subordinated Unit should have, as a substantive matter, like intrinsic economic and U.S.
federal income tax characteristics, in all material respects, to the intrinsic economic and U.S.
federal income tax characteristics of an Initial Common Unit.

     Section 6.7 Special Provisions Relating to the Holders of Incentive Distribution
Rights.

27

 

     Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Articles III and VII and (b)
shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, except as provided by law, or (ii) be entitled to any distributions other
than as provided in Sections 6.3(a)(v), (vi) and (vii), 6.3(b)(iii), (iv) and (v), and 12.4.

ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS

     Section 7.1 Management.

     (a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner shall have any management power over the business and affairs of the Partnership. In
addition to the powers now or hereafter granted a general partner of a limited partnership under
applicable law or that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do
all things and on such terms as it determines to be necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the
purposes set forth in Section 2.4, including the following:

     (i) the making of any expenditures, the lending or borrowing of money, the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness, including indebtedness that is convertible into Partnership
Securities, and the incurring of any other obligations;

     (ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of the
Partnership;

     (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange
of any or all of the assets of the Partnership or the merger, consolidation or other combination
of the Partnership with or into another Person (the matters described in this clause (iii) being
subject, however, to any prior approval that may be required by Section 7.3 and Article XIV);

     (iv) the use of the assets of the Partnership (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to other
Persons (including other Group Members); the repayment or guarantee of obligations of any Group
Member; and the making of capital contributions to any Group Member;

     (v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Partnership under contractual
arrangements to all or particular assets of the Partnership, with the other party to the contract
to have no recourse against the General Partner or its assets other than its interest in the
Partnership, even if such non-recourse provision results in the terms of the transaction being
less favorable to the Partnership than would otherwise be the case);

     (vi) the distribution of Partnership cash;

     (vii) the selection and dismissal of employees (including employees having titles such as
“president,” “vice president,” “secretary” and “treasurer”) and agents, outside attorneys,
accountants, consultants and contractors and the determination of their compensation and other
terms of employment or hiring;

     (viii) the maintenance of insurance for the benefit of the Partnership Group, the Partners
and Indemnitees;

     (ix) the formation of, or acquisition of an interest in, and the contribution of property
and the making of loans to, any further limited or general partnerships, joint ventures,
corporations, limited liability companies or other relationships (including the acquisition of
interests in, and the contributions of property to, any Group Member from time to time) subject
to the restrictions set forth in Section 2.4;

28

 

     (x) the control of any matters affecting the rights and obligations of the Partnership,
including the bringing and defending of actions at law or in equity and otherwise engaging in the
conduct of litigation, arbitration or mediation and the incurring of legal expenses and the
settling of claims and litigation;

     (xi) the indemnification of any Person against liabilities and contingencies to the extent
permitted by law;

     (xii) the entering into of listing agreements with any National Securities Exchange and the
delisting of some or all of the Limited Partner Interests from, or requesting that trading be
suspended on, any such exchange (subject to any prior approval that may be required under Section
4.8);

     (xiii) the purchase, sale or other acquisition or disposition of Partnership Securities, or
the issuance of options, rights, warrants and appreciation rights relating to Partnership
Securities;

     (xiv) the undertaking of any action in connection with the Partnership’s participation in
any Group Member; and

     (xv) the entering into of agreements with any of its Affiliates to render services to a
Group Member or to itself in the discharge of its duties as General Partner of the Partnership.

     (b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Marshall Islands Act or any applicable law, rule or regulation, each of the Partners and each other
Person who may acquire an interest in Partnership Securities hereby (i) approves, ratifies and
confirms the execution, delivery and performance by the parties thereto of this Agreement, the
Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement, any Group Member
Agreement of any other Group Member and the other agreements described in or filed as exhibits to
the Registration Statement that are related to the transactions contemplated by the Registration
Statement; (ii) agrees that the General Partner (on its own or on behalf of the Partnership) is
authorized to execute, deliver and perform the agreements referred to in clause (i) of this
sentence and the other agreements, acts, transactions and matters described in or contemplated by
the Registration Statement on behalf of the Partnership without any further act, approval or vote
of the Partners or the other Persons who may acquire an interest in Partnership Securities; and
(iii) agrees that the execution, delivery or performance by the General Partner, any Group Member
or any Affiliate of any of them of this Agreement or any agreement authorized or permitted under
this Agreement (including the exercise by the General Partner or any Affiliate of the General
Partner of the rights accorded pursuant to Article XV) shall not constitute a breach by the General
Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any
other Persons under this Agreement (or any other agreements) or of any duty stated or implied by
law or equity.

     Section 7.2 Certificate of Limited Partnership.

     The General Partner has caused the Certificate of Limited Partnership to be filed with the
Registrar of Corporations of The Marshall Islands as required by the Marshall Islands Act. The
General Partner shall use all commercially reasonable efforts to cause to be filed such other
certificates or documents that the General Partner determines to be necessary or appropriate for
the formation, continuation, qualification and operation of a limited partnership (or a partnership
or other entity in which the limited partners have limited liability) in The Marshall Islands or
any other jurisdiction in which the Partnership may elect to do business or own property. To the
extent the General Partner determines such action to be necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a partnership or other entity
in which the limited partners have limited liability) under the laws of The Marshall Islands or of
any other jurisdiction in which the Partnership may elect to do business or own property. Subject
to the terms of Section 3.4(a), the General Partner shall not be required, before or after filing,
to deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or
any amendment thereto to any Limited Partner.

     Section 7.3 Restrictions on the General Partner’s Authority.

     (a) Except as otherwise provided in this Agreement, the General Partner may not, without
written approval of the specific act by holders of all of the Outstanding Limited Partner Interests
or by other written instrument executed and delivered by holders of all of the Outstanding Limited
Partner Interests subsequent to the date of this Agreement, take any action in contravention of
this Agreement.

29

 

     (b) Except as provided in Articles XII and XIV, the General Partner may not sell, exchange or
otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a
whole, in a single transaction or a series of related transactions (including by way of merger,
consolidation, other combination or sale of ownership interests in the Partnership’s Subsidiaries)
without the approval of holders of a Unit Majority; provided, however, that this provision shall
not preclude or limit the General Partner’s ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership Group and shall not
apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the
foreclosure of, or other realization upon, any such encumbrance. Without the approval of holders of
a Unit Majority, the General Partner shall not, on behalf of the Partnership, except as permitted
under Sections 4.6, 11.1 and 11.2, elect or cause the Partnership to elect a successor general
partner of the Partnership.

     Section 7.4 Reimbursement of the General Partner.

     (a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.

     (b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership Group (including salary, bonus, incentive compensation and other
amounts paid to any Person, including Affiliates of the General Partner, to perform services for
the Partnership or for the General Partner in the discharge of its duties to the Partnership Group,
which amounts shall also include reimbursement for any Common Units purchased to satisfy
obligations of the Partnership under any of its equity compensation plans), and (ii) all other
direct and indirect expenses allocable to the Partnership or otherwise incurred by the General
Partner in connection with operating the Partnership Group’s business (including expenses allocated
to the General Partner by its Affiliates). The General Partner shall determine the expenses that
are allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4 shall be in
addition to any reimbursement to the General Partner as a result of indemnification pursuant to
Section 7.7.

     (c) The General Partner and its Affiliates may charge any member of the Partnership Group a
management fee to the extent necessary to allow the Partnership Group to reduce the amount of any
U.S. federal, state or local or any non-U.S. franchise or income tax or any other tax based upon
the revenues or gross margin of any member of the Partnership Group if the tax benefit produced by
the payment of such management fee or fees exceeds the amount of such fee or fees.

     (d) The General Partner, without the approval of the Limited Partners (who shall have no right
to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices (including plans, programs and practices involving
the issuance of Partnership Securities or options to purchase or rights, warrants or appreciation
rights relating to Partnership Securities), or cause the Partnership to issue Partnership
Securities in connection with, or pursuant to, any employee benefit plan, employee program or
employee practice maintained or sponsored by the General Partner or any of its Affiliates, in each
case for the benefit of employees of the General Partner, any Group Member or any Affiliate
thereof, or any of them, in respect of services performed, directly or indirectly, for the benefit
of the Partnership Group. The Partnership agrees to issue and sell to the General Partner or any of
its Affiliates any Partnership Securities that the General Partner or such Affiliates are obligated
to provide to any employees pursuant to any such employee benefit plans, employee programs or
employee practices. Expenses incurred by the General Partner in connection with any such plans,
programs and practices (including the net cost to the General Partner or such Affiliates of
Partnership Securities purchased by the General Partner or such Affiliates from the Partnership or
in the open market to fulfill options or awards under such plans, programs and practices) shall be
reimbursed in accordance with Section 7.4(b). Any and all obligations of the General Partner under
any employee benefit plans, employee programs or employee practices adopted by the General Partner
as permitted by this Section 7.4(c) shall constitute obligations of the General Partner hereunder
and shall be assumed by any successor General Partner approved pursuant to Section 11.1 or 11.2 or
the transferee of or successor to all of the General Partner’s General Partner Interest pursuant to
Section 4.6.

     Section 7.5 Outside Activities.

     (a) After the Closing Date, the General Partner, for so long as it is the General Partner of
the Partnership (i) agrees that its sole business will be to act as a general partner or managing
member, as the case may be, of the Partnership and any other partnership or limited liability
company of which the Partnership is, directly or indirectly, a partner or member and to undertake
activities that are ancillary or related thereto (including being a limited partner in the
Partnership), (ii) shall not engage in any business or activity or incur any debts or liabilities
except in connection with or incidental to (A) its performance as general partner or managing
member, if any, of one or more Group Members or as described in or contemplated by the Registration
Statement or (B) the acquiring, owning or

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disposing of debt or equity securities in any Group Member and (iii) except to the extent
permitted in the Omnibus Agreement, shall not, and shall cause its controlled Affiliates not to,
engage in any LNG Restricted Business or Crude Oil Restricted Business (as such terms are defined
in the Omnibus Agreement).

     (b) Teekay Shipping Corporation, Teekay LNG Partners L.P. and certain of their respective
Affiliates have entered into the Omnibus Agreement, which agreement sets forth certain restrictions
on the ability of Teekay Shipping Corporation, Teekay LNG Partners L.P. and certain of their
Affiliates to engage in any Offshore Restricted Business (as defined in the Omnibus Agreement).

     (c) Except as specifically restricted by Section 7.5(a) and the Omnibus Agreement, each
Indemnitee (other than the General Partner) shall have the right to engage in businesses of every
type and description and other activities for profit and to engage in and possess an interest in
other business ventures of any and every type or description, whether in businesses engaged in or
anticipated to be engaged in by any Group Member, independently or with others, including business
interests and activities in direct competition with the business and activities of any Group
Member, and none of the same shall constitute a breach of this Agreement or any duty expressed or
implied by law to any Group Member or any Partner. Notwithstanding anything to the contrary in this
Agreement, (i) the possessing of competitive interests and engaging in competitive activities by
any Indemnitees (other than the General Partner) in accordance with the provisions of this Section
7.5 is hereby approved by the Partnership and all Partners and (ii) it shall be deemed not to be a
breach of any fiduciary duty or any other obligation of any type whatsoever of the General Partner
or of any Indemnitee for the Indemnitees (other than the General Partner) to engage in such
business interests and activities in preference to or to the exclusion of the Partnership.

     (d) Notwithstanding anything to the contrary in this Agreement, the doctrine of corporate
opportunity, or any analogous doctrine, shall not apply to an Indemnitee (including the General
Partner) and, subject to the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c) and the
Omnibus Agreement, no Indemnitee (including the General Partner) who acquires knowledge of a
potential transaction, agreement, arrangement or other matter that may be an opportunity for the
Partnership shall have any duty to communicate or offer such opportunity to the Partnership, and,
subject to the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c) and the Omnibus Agreement,
such Indemnitee (including the General Partner) shall not be liable to the Partnership, to any
Limited Partner or any other Person for breach of any fiduciary or other duty by reason of the fact
that such Indemnitee (including the General Partner) pursues or acquires such opportunity for
itself, directs such opportunity to another Person or does not communicate such opportunity or
information to the Partnership.

     (e) The General Partner and each of its Affiliates may acquire Units or other Partnership
Securities in addition to those acquired on the Closing Date and, except as otherwise provided in
this Agreement, shall be entitled to exercise, at their option, all rights relating to all Units or
other Partnership Securities acquired by them. The term “Affiliates” as used in this Section 7.5(e)
with respect to the General Partner shall not include any Group Member.

     Section 7.6 Loans from the General Partner; Loans or Contributions from the
Partnership or Group Members.

     (a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided, however, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arms’-length basis (without reference to the
lending party’s financial abilities or guarantees), all as determined by the General Partner. The
borrowing party shall reimburse the lending party for any costs (other than any additional interest
costs) incurred by the lending party in connection with the borrowing of such funds. For purposes
of this Section 7.6(a) and Section 7.6(b), the term “Group Member” shall include any Affiliate of a
Group Member that is controlled by the Group Member.

     (b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions determined by the General Partner. No
Group Member may lend funds to the General Partner or any of its Affiliates (other than another
Group Member).

     (c) No borrowing by any Group Member or the approval thereof by the General Partner shall be
deemed to constitute a breach of any duty, expressed or implied, of the General Partner or its
Affiliates to the Partnership or the Limited Partners by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to (i) enable distributions to the General
Partner or its Affiliates

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(including in their capacities as Limited Partners) to exceed the General Partner’s Percentage
Interest of the total amount distributed to all partners or (ii) hasten the expiration of the
Subordination Period or the conversion of any Subordinated Units into Common Units.

     Section 7.7 Indemnification.

     (a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from
and against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as an Indemnitee; provided, however ,
that the Indemnitee shall not be indemnified and held harmless if there has been a final and
non-appealable judgment entered by a court of competent jurisdiction determining that, in respect
of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 7.7, the
Indemnitee acted in bad faith or engaged in fraud or willful misconduct or, in the case of a
criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful; and, provided
further, that no indemnification pursuant to this Section 7.7 shall be available to the General
Partner or its Affiliates (other than a Group Member) with respect to its or their obligations
incurred pursuant to the Underwriting Agreement, the Omnibus Agreement or the Contribution
Agreement (other than obligations incurred by the General Partner on behalf of the Partnership).
Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, it being agreed that the General Partner shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies or property to the
Partnership to enable it to effectuate such indemnification.

     (b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section
7.7.

     (c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity, and shall continue
as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.

     (d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such
other Persons as the General Partner shall determine, against any liability that may be asserted
against, or expense that may be incurred by, such Person in connection with the Partnership’s
activities or such Person’s activities on behalf of the Partnership, regardless of whether the
Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.

     (e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by the
Indemnitee of its duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute
“fines” within the meaning of Section 7.7(a); and action taken or omitted by the Indemnitee with
respect to any employee benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the best interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose that is in the best interests of the Partnership.

     (f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.

     (g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

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     (h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.

     (i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.

     Section 7.8 Liability of Indemnitees.

     (a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners or any other Persons who
have acquired interests in the Partnership Securities, for losses sustained or liabilities incurred
as a result of any act or omission of an Indemnitee unless there has been a final and
non-appealable judgment entered by a court of competent jurisdiction determining that, in respect
of the matter in question, the Indemnitee acted in bad faith or engaged in fraud or willful
misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct
was criminal.

     (b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.

     (c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.

     (d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of the
Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

     Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and
Modification of Duties.

     (a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement,
whenever a potential conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Group Member or any Partner, on the
other, any resolution or course of action by the General Partner or its Affiliates in respect of
such conflict of interest shall be permitted and deemed approved by all Partners, and shall not
constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated
herein or therein, or of any duty stated or implied by law or equity, if the resolution or course
of action in respect of such conflict of interest is (i) approved by Special Approval, (ii)
approved by the vote of a majority of the Common Units (excluding Common Units owned by the General
Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iv) fair and reasonable
to the Partnership, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or advantageous to the
Partnership). The General Partner shall be authorized but not required in connection with its
resolution of such conflict of interest to seek Special Approval of such resolution, and the
General Partner may also adopt a resolution or course of action that has not received Special
Approval. If Special Approval is not sought and the Board of Directors of the General Partner
determines that the resolution or course of action taken with respect to a conflict of interest
satisfies either of the standards set forth in clauses (iii) or (iv) above, then it shall be
presumed that, in making its decision, the Board of Directors of the General Partner acted in good
faith, and in any proceeding brought by any Limited Partner or by or on behalf of such Limited
Partner or any other Limited Partner or the Partnership challenging such approval, the Person
bringing or prosecuting such proceeding shall have the burden of overcoming such presumption.
Notwithstanding anything to the contrary in this Agreement, the existence of the conflicts of
interest described in the Registration Statement are hereby approved by all Partners.

     (b) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its capacity as the general partner of the
Partnership as opposed to in its individual capacity, whether under this

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Agreement, any Group Member Agreement or any other agreement contemplated hereby or otherwise,
then, unless another express standard is provided for in this Agreement, the General Partner, or
such Affiliates causing it to do so, shall make such determination or take or decline to take such
other action in good faith and shall not be subject to any other or different standards imposed by
this Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Marshall Islands Act or any other law, rule or regulation or at equity. In order for a
determination or other action to be in “good faith” for purposes of this Agreement, the Person or
Persons making such determination or taking or declining to take such other action must reasonably
believe that the determination or other action is in the best interests of the Partnership, unless
the context otherwise requires.

     (c) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in
its capacity as the general partner of the Partnership, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, are entitled to make such determination or to take or
decline to take such other action free of any fiduciary duty or obligation whatsoever to the
Partnership or any Limited Partner, and the General Partner, or such Affiliates causing it to do
so, shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Marshall Islands Act or any other law, rule or regulation or at equity. By way of illustration and
not of limitation, whenever the phrase, “at the option of the General Partner,” or some variation
of that phrase, is used in this Agreement, it indicates that the General Partner is acting in its
individual capacity. For the avoidance of doubt, whenever the General Partner votes or transfers
its Units, General Partner Interest or Incentive Distribution Rights, to the extent permitted under
this Agreement, or refrains from voting or transferring its Units, General Partner Units or
Incentive Distribution Rights, as appropriate, it shall be acting in its individual capacity. The
General Partner’s organizational documents may provide that determinations to take or decline to
take any action in its individual, rather than representative, capacity may or shall be determined
by its members, if the General Partner is a limited liability company, stockholders, if the General
Partner is a corporation, or the members or stockholders of the General Partner’s general partner,
if the General Partner is a limited partnership.

     (d) Notwithstanding anything to the contrary in this Agreement, the General Partner and its
Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit
any Group Member to use any facilities or assets of the General Partner and its Affiliates, except
as may be provided in contracts entered into from time to time specifically dealing with such use.
Any determination by the General Partner or any of its Affiliates to enter into such contracts
shall be at its option.

     (e) Except as expressly set forth in this Agreement, neither the General Partner nor any other
Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or
any Limited Partner and the provisions of this Agreement, to the extent that they restrict,
eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the
General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of the General Partner or such other
Indemnitee.

     (f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.

     Section 7.10 Other Matters Concerning the General Partner.

     (a) The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.

     (b) The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the advice or opinion (including an Opinion of
Counsel) of such Persons as to matters that the General Partner reasonably believes to be within
such Person’s professional or expert competence shall be conclusively presumed to have been done or
omitted in good faith and in accordance with such advice or opinion.

     (c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.

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     Section 7.11 Purchase or Sale of Partnership Securities.

     The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities; provided, however, that the General Partner may not cause any Group Member to purchase
Subordinated Units during the Subordination Period. As long as Partnership Securities are held by
any Group Member, such Partnership Securities shall not be considered Outstanding for any purpose,
except as otherwise provided herein. The General Partner or any Affiliate of the General Partner
may also purchase or otherwise acquire and sell or otherwise dispose of Partnership Securities for
its own account, subject to the provisions of Articles IV and X.

     Section 7.12 Registration Rights of the General Partner and its Affiliates.

     (a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that is an Affiliate of the General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of the General Partner) holds
Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or any
successor rule or regulation to Rule 144) or another exemption from registration is not available
to enable such holder of Partnership Securities (the “Holder”) to dispose of the number of
Partnership Securities it desires to sell at the time it desires to do so without registration
under the Securities Act, then at the option and upon the request of the Holder, the Partnership
shall file with the Commission as promptly as practicable after receiving such request, and use all
commercially reasonable efforts to cause to become effective and remain effective for a period of
not less than six months following its effective date or such shorter period as shall terminate
when all Partnership Securities covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however, that the Partnership shall not
be required to effect more than three registrations pursuant to this Section 7.12(a); and, provided
further, that if the Conflicts Committee determines in good faith that the requested registration
would be materially detrimental to the Partnership and its Partners because such registration would
(x) materially interfere with a significant acquisition, reorganization or other similar
transaction involving the Partnership, (y) require premature disclosure of material information
that the Partnership has a bona fide business purpose for preserving as confidential or (z) render
the Partnership unable to comply with requirements under applicable securities laws, then the
Partnership shall have the right to postpone such requested registration for a period of not more
than six months after receipt of the Holder’s request, such right pursuant to this Section 7.12(a)
not to be utilized more than once in any 12-month period. Except as provided in the preceding
sentence, the Partnership shall be deemed not to have used all commercially reasonable efforts to
keep the registration statement effective during the applicable period if it voluntarily takes any
action that would result in Holders of Partnership Securities covered thereby not being able to
offer and sell such Partnership Securities at any time during such period, unless such action is
required by applicable law. In connection with any registration pursuant to the immediately
preceding sentence, the Partnership shall (i) promptly prepare and file (A) such documents as may
be necessary to register or qualify the securities subject to such registration under the
securities laws of such states as the Holder shall reasonably request ( provided, however, that no
such qualification shall be required in any jurisdiction where, as a result thereof, the
Partnership would become subject to general service of process or to taxation or qualification to
do business as a foreign corporation or partnership doing business in such jurisdiction solely as a
result of such registration), and (B) such documents as may be necessary to apply for listing or to
list the Partnership Securities subject to such registration on such National Securities Exchange
as the Holder shall reasonably request, and (ii) do any and all other acts and things that may be
necessary or appropriate to enable the Holder to consummate a public sale of such Partnership
Securities in such states. Except as set forth in Section 7.12(c), all costs and expenses of any
such registration and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.

     (b) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of Partnership Securities for cash (other than an offering relating
solely to an employee benefit plan), the Partnership shall use all commercially reasonable efforts
to include such number or amount of Partnership Securities held by any Holder in such registration
statement as the Holder shall request; provided, however, that the Partnership is not required to
make any effort or take any action to so include the Partnership Securities of the Holder once the
registration statement becomes or is declared effective by the Commission, including any
registration statement providing for the offering from time to time of Partnership Securities
pursuant to Rule 415 of the Securities Act. If the proposed offering pursuant to this Section
7.12(b) shall be an underwritten offering, then, in the event that the managing underwriter or
managing underwriters of such offering advise the Partnership and the Holder in writing that in
their opinion the inclusion of all or some of the Holder’s Partnership Securities would adversely
and materially affect the success of the offering, the Partnership shall include in such offering
only that number or amount, if any, of Partnership Securities held by the Holder that, in the
opinion of the managing underwriter or managing underwriters, will not so adversely and materially
affect the offering. Except as set forth in Section 7.12(c), all costs and expenses of any such
registration and offering (other than the underwriting discounts and commissions) shall be paid by
the Partnership, without reimbursement by the Holder.

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     (c) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnership’s obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) from and
against any and all losses, claims, demands, actions, causes of action, assessments, damages,
liabilities (joint or several), costs and expenses (including interest, penalties and reasonable
attorneys’ fees and disbursements), resulting to, imposed upon, or incurred by the Indemnified
Persons, directly or indirectly, under the Securities Act or otherwise (hereinafter referred to in
this Section 7.12(c) as a “claim” and in the plural as “claims”) based upon, arising out of or
resulting from any untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which any Partnership Securities were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus or issuer
free writing prospectus as defined in Rule 433 of the Securities Act (if used prior to the
effective date of such registration statement), or in any summary or final prospectus or in any
amendment or supplement thereto (if used during the period the Partnership is required to keep the
registration statement current), or arising out of, based upon or resulting from the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements made therein not misleading; provided, however, that the Partnership shall not
be liable to any Indemnified Person to the extent that any such claim arises out of, is based upon
or results from an untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, such preliminary, summary or final prospectus or such
amendment or supplement, in reliance upon and in conformity with written information furnished to
the Partnership by or on behalf of such Indemnified Person specifically for use in the preparation
thereof.

     (d) The provisions of Section 7.12(a) and Section 7.12(b) shall continue to be applicable with
respect to the General Partner (and any of the General Partner’s Affiliates) after it ceases to be
a general partner of the Partnership, during a period of two years subsequent to the effective date
of such cessation and for so long thereafter as is required for the Holder to sell all of the
Partnership Securities with respect to which it has requested during such two-year period inclusion
in a registration statement otherwise filed or that a registration statement be filed; provided,
however, that the Partnership shall not be required to file successive registration statements
covering the same Partnership Securities for which registration was demanded during such two-year
period. The provisions of Section 7.12(c) shall continue in effect thereafter.

     (e) The rights to cause the Partnership to register Partnership Securities pursuant to this
Section 7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such Partnership Securities, provided (i) the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name and address of such transferee or
assignee and the Partnership Securities with respect to which such registration rights are being
assigned, and (ii) such transferee or assignee agrees in writing to be bound by and subject to the
terms set forth in this Section 7.12.

     (f) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Person’s present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.

     Section 7.13 Reliance by Third Parties.

     Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in connection with any
such dealing. In no event shall any Person dealing with the General Partner or any such officer or
its representatives be obligated to ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner, its officers or its representatives
shall be conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (a) at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the

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Person executing and delivering such certificate, document or instrument was duly authorized
and empowered to do so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.

ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

     Section 8.1 Records and Accounting.

     The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnership’s business, including all books and
records necessary to provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders of Units or other
Partnership Securities, books of account and records of Partnership proceedings, may be kept on, or
be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, however, that the books and
records so maintained are convertible into clearly legible written form within a reasonable period
of time. The books of the Partnership shall be maintained, for financial reporting purposes, on an
accrual basis in accordance with U.S. GAAP.

     Section 8.2 Fiscal Year.

     The fiscal year of the Partnership shall be a fiscal year ending December 31.

     Section 8.3 Reports.

     (a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available, by any
reasonable means (including posting on the Partnership’s website), to each Record Holder of a Unit
as of a date selected by the General Partner, an annual report containing financial statements of
the Partnership for such fiscal year of the Partnership, presented in accordance with U.S. GAAP,
including a balance sheet and statements of operations, Partnership equity and cash flows, such
statements to be audited by a firm of independent public accountants selected by the General
Partner.

     (b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made
available, by any reasonable means (including posting on the Partnership’s website), to each Record
Holder of a Unit, as of a date selected by the General Partner, a report containing unaudited
financial statements of the Partnership and such other information as may be required by applicable
law, regulation or rule of any National Securities Exchange on which the Units are listed or
admitted to trading, or as the General Partner determines to be necessary or appropriate.

ARTICLE IX

TAX MATTERS

     Section 9.1 Tax Elections and Information.

     (a) The Partnership has elected to be treated as an association taxable as a corporation for
United States federal income tax purposes. Except as otherwise provided herein, the General Partner
shall determine whether the Partnership should make any other elections permitted by the Code.

     (b) The tax information reasonably required by Record Holders generally for United States
federal and state income tax reporting purposes with respect to a taxable year shall be furnished
to them within 90 days of the close of the calendar year in which the Partnership’s taxable year
ends.

     Section 9.2 Withholding.

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     Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that may be required to cause the Partnership and other Group Members to comply
with any withholding requirements established under the Code or any other U.S. federal, state or
local or any non-U.S. law including pursuant to Sections 1441, 1442 and 1445 of the Code. To the
extent that the Partnership is required or elects to withhold and pay over to any taxing authority
any amount resulting from the distribution of income to any Partner, the General Partner may treat
the amount withheld as a distribution of cash pursuant to Section 6.2 in the amount of such
withholding from such Partner.

     Section 9.3 Conduct of Operations.

     The General Partner shall use commercially reasonable efforts to conduct the business of the
Partnership and its Affiliates in a manner that does not require a holder of Common Units to file a
tax return in any jurisdiction with which the holder has no contact other than through ownership of
Common Units.

     For greater certainty, the General Partner shall conduct the affairs and governance of the
Partnership so that the General Partner and the Partnership are not residents of Canada for
purposes of Canada’s tax legislation and neither the General Partner nor the Partnership is
carrying on business in Canada for purposes of such legislation.

ARTICLE X

ADMISSION OF PARTNERS

     Section 10.1 Admission of Initial Limited Partners.

     Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive
Distribution Rights to the General Partner, Teekay Shipping Corporation and the Underwriters as
described in Sections 5.1(b), 5.2 and 5.3, the General Partner shall admit such parties to the
Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or
Incentive Distribution Rights issued to them.

     Section 10.2 Admission of Additional Limited Partners.

     (a) By acceptance of the transfer of any Limited Partner Interests in accordance with Article
IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a
merger or consolidation pursuant to Article XIV, each transferee of, or other such Person
acquiring, a Limited Partner Interest (including any nominee holder or an agent or representative
acquiring such Limited Partner Interests for the account of another Person) (i) shall be admitted
to the Partnership as a Limited Partner with respect to the Limited Partner Interests so
transferred or issued to such Person when any such transfer, issuance or admission is reflected in
the books and records of the Partnership and such Limited Partner becomes the Record Holder of the
Limited Partner Interests so transferred, (ii) shall become bound by the terms of this Agreement,
(iii) represents that the transferee has the capacity, power and authority to enter into this
Agreement, (iv) grants the powers of attorney set forth in this Agreement and (v) makes the
consents and waivers contained in this Agreement, all with or without execution of this Agreement
by such Person. The transfer of any Limited Partner Interests and the admission of any new Limited
Partner shall not constitute an amendment to this Agreement. A Person may become a Limited Partner
or Record Holder of a Limited Partner Interest without the consent or approval of any of the
Partners. A Person may not become a Limited Partner until such Person acquires a Limited Partner
Interest and such Person is reflected in the books and records of the Partnership as the Record
Holder of such Limited Partner Interest.

     (b) The name and mailing address of each Limited Partner shall be listed on the books and
records of the Partnership maintained for such purpose by the Partnership or the Transfer Agent.
The General Partner shall update the books and records of the Partnership from time to time as
necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do
so, as applicable). A Limited Partner Interest may be represented by a Certificate, as provided in
Section 4.1 hereof.

     (c) Any transfer of a Limited Partner Interest shall not entitle the transferee to receive
distributions or to any other rights to which the transferor was entitled until the transferee
becomes a Limited Partner pursuant to Section 10.1(a).

     Section 10.3 Admission of Successor General Partner.

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     A successor General Partner approved pursuant to Section 11.1 or 11.2 or the transferee of or
successor to all of the General Partner Interest (represented by General Partner Units) pursuant to
Section 4.6 who is proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective immediately prior to the withdrawal or removal of the
predecessor or transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer of
the General Partner Interest (represented by General Partner Units) pursuant to Section 4.6;
provided, however, that no such successor shall be admitted to the Partnership until compliance
with the terms of Section 4.6 has occurred and such successor has executed and delivered such other
documents or instruments as may be required to effect such admission. Any such successor shall,
subject to the terms hereof, carry on the business of the members of the Partnership Group without
dissolution.

     Section 10.4 Amendment of Agreement and Certificate of Limited Partnership.

     To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Marshall Islands Act to amend the records of the
Partnership to reflect such admission and, if necessary, to prepare as soon as practicable an
amendment to this Agreement and, if required by law, the General Partner shall prepare and file an
amendment to the Certificate of Limited Partnership and the General Partner may for this purpose,
among others, exercise the power of attorney granted pursuant to Section 2.6.

ARTICLE XI

WITHDRAWAL OR REMOVAL OF PARTNERS

     Section 11.1 Withdrawal of the General Partner.

     (a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an “Event of
Withdrawal”):

     (i) The General Partner voluntarily withdraws from the Partnership by giving written notice
to the other Partners;

     (ii) The General Partner transfers all of its rights as General Partner pursuant to Section
4.6;

     (iii) The General Partner is removed pursuant to Section 11.2;

     (iv) The General Partner (A) makes a general assignment for the benefit of creditors; (B)
files a voluntary petition in bankruptcy; (C) files a petition or answer seeking for itself a
liquidation, dissolution or similar relief (but not a reorganization) under any law; (D) files an
answer or other pleading admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described in clauses (A), (B) or
(C) of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the General Partner or of all or any substantial part of its
properties;

     (v) The General Partner is adjudged bankrupt or insolvent, or has entered against it an
order for relief in any bankruptcy or insolvency proceeding;

     (vi) (A) in the event the General Partner is a corporation, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its charter and the
expiration of ninety (90) days after the date of notice to the corporation of revocation without
a reinstatement of its charter; (B) in the event the General Partner is a partnership or a
limited liability company, the dissolution and commencement of winding up of the General Partner;
(C) in the event the General Partner is acting in such capacity by virtue of being a trustee of a
trust, the termination of the trust; (D) in the event the General Partner is a natural person,
his death or adjudication of incompetency; and (E) otherwise in the event of the termination of
the General Partner.

If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within 30 days after such
occurrence. The Partners hereby agree that only the Events of Withdrawal described in this Section
11.1 shall result in the withdrawal of the General Partner from the Partnership.

     (b) Withdrawal of the General Partner from the Partnership upon the occurrence of an
Event of Withdrawal shall not constitute a breach of this Agreement under the following
circumstances: (i) at any time during the period beginning on the Closing Date and

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ending at 12:00 midnight, prevailing Eastern Time, on December 31, 2016, the General Partner
voluntarily withdraws by giving at least 90 days’ advance notice of its intention to withdraw to
the Limited Partners; provided, however, that prior to the effective date of such withdrawal, the
withdrawal is approved by Unitholders holding at least a majority of the Outstanding Common Units
(excluding Common Units held by the General Partner and its Affiliates) and the General Partner
delivers to the Partnership an Opinion of Counsel (“Withdrawal Opinion of Counsel”) that such
withdrawal (following the selection of the successor General Partner) would not result in the loss
of the limited liability of any Limited Partner or any Group Member; (ii) at any time after 12:00
midnight, prevailing Eastern Time, on December 31, 2016, the General Partner voluntarily withdraws
by giving at least 90 days’ advance notice to the Unitholders, such withdrawal to take effect on
the date specified in such notice; (iii) at any time that the General Partner ceases to be the
General Partner pursuant to Section 11.1(a)(ii) or is removed pursuant to Section 11.2; or (iv)
notwithstanding clause (i) of this sentence, at any time that the General Partner voluntarily
withdraws by giving at least 90 days’ advance notice of its intention to withdraw to the Limited
Partners, such withdrawal to take effect on the date specified in the notice, if at the time such
notice is given one Person and its Affiliates (other than the General Partner and its Affiliates)
own beneficially or of record or control at least 50% of the Outstanding Units. The withdrawal of
the General Partner from the Partnership upon the occurrence of an Event of Withdrawal shall also
constitute the withdrawal of the General Partner as general partner or managing member, if any, to
the extent applicable, of the other Group Members. If the General Partner gives a notice of
withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit Majority, may, prior to the
effective date of such withdrawal, elect a successor General Partner. The Person so elected as
successor General Partner shall automatically become the successor general partner or managing
member, to the extent applicable, of the other Group Members of which the General Partner is a
general partner or a managing member. If, prior to the effective date of the General Partner’s
withdrawal, a successor is not selected by the Unitholders as provided herein or, if applicable,
the Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 12.1. Any successor General Partner elected in accordance with
the terms of this Section 11.1 shall be subject to the provisions of Section 10.3.

     Section 11.2 Removal of the General Partner.

     The General Partner may be removed if such removal is approved by the Unitholders holding at
least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates voting as a single class). Any such action by such holders for removal of the General
Partner must also provide for the election of a successor General Partner by the Unitholders
holding a majority of the outstanding Common Units voting as a class and a majority of the
outstanding Subordinated Units voting as a class (including Units held by the General Partner and
its Affiliates). Such removal shall be effective immediately following the admission of a successor
General Partner pursuant to Section 10.3. The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general partner or managing member,
to the extent applicable, of the other Group Members of which the General Partner is a general
partner or a managing member. If a Person is elected as a successor General Partner in accordance
with the terms of this Section 11.2, such Person shall, upon admission pursuant to Section 10.3,
automatically become a successor general partner or managing member, to the extent applicable, of
the other Group Members of which the General Partner is a general partner or a managing member. The
right of the holders of Outstanding Units to remove the General Partner shall not exist or be
exercised unless the Partnership has received an Opinion of Counsel opining as to the matters
covered by a Withdrawal Opinion of Counsel. Any successor General Partner elected in accordance
with the terms of this Section 11.2 shall be subject to the provisions of Section 10.3.

     Section 11.3 Interest of Departing General Partner and Successor General Partner.

     (a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or 11.2, the Departing General Partner
shall have the option, exercisable prior to the effective date of the departure of such Departing
General Partner, to require its successor to purchase its General Partner Interest (represented by
General Partner Units) and its general partner interest (or equivalent interest), if any, in the
other Group Members and all of the Incentive Distribution Rights (collectively, the “Combined
Interest”) in exchange for an amount in cash equal to the fair market value of such Combined
Interest, such amount to be determined and payable as of the effective date of its departure. If
the General Partner is removed by the Unitholders under circumstances where Cause exists or if the
General Partner withdraws under circumstances where such withdrawal violates this Agreement, and if
a successor General Partner is elected in accordance with the terms of Section 11.1 or 11.2 (or if
the business of the Partnership is continued pursuant to Section 12.2 and the successor General
Partner is not the former General Partner), such successor shall have the option, exercisable prior
to the effective date of the departure of such Departing General Partner (or, in the event the
business of the Partnership is continued, prior to the date the business of the Partnership is
continued), to purchase the Combined Interest for such fair market value of such Combined Interest
of the Departing General Partner. In either event, the Departing General Partner shall be entitled
to receive all reimbursements

40

 

due such Departing General Partner pursuant to Section 7.4, including any employee-related
liabilities (including severance liabilities), incurred in connection with the termination of any
employees employed by the Departing General Partner for the benefit of the Partnership or the other
Group Members.

     For purposes of this Section 11.3(a), the fair market value of the Departing General Partner’s
Combined Interest shall be determined by agreement between the Departing General Partner and its
successor or, failing agreement within 30 days after the effective date of such Departing General
Partner’s departure, by an independent investment banking firm or other independent expert selected
by the Departing General Partner and its successor, which, in turn, may rely on other experts, and
the determination of which shall be conclusive as to such matter. If such parties cannot agree upon
one independent investment banking firm or other independent expert within 45 days after the
effective date of such departure, then the Departing General Partner shall designate an independent
investment banking firm or other independent expert, the Departing General Partner’s successor
shall designate an independent investment banking firm or other independent expert, and such firms
or experts shall mutually select a third independent investment banking firm or independent expert,
which third independent investment banking firm or other independent expert shall determine the
fair market value of the Combined Interest of the Departing General Partner. In making its
determination, such third independent investment banking firm or other independent expert may
consider the then current trading price of Units on any National Securities Exchange on which Units
are then listed or admitted to trading, the value of the Partnership’s assets, the rights and
obligations of the Departing General Partner and other factors it may deem relevant.

     (b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the
Departing General Partner (or its transferee) shall become a Limited Partner and its Combined
Interest shall be converted into Common Units pursuant to a valuation made by an investment banking
firm or other independent expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the Departing General Partner (or its
transferee) as to all debts and liabilities of the Partnership arising on or after the date on
which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of
this Agreement, conversion of the Combined Interest of the Departing General Partner to Common
Units will be characterized as if the Departing General Partner (or its transferee) contributed its
Combined Interest to the Partnership in exchange for the newly issued Common Units.

     (c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or
11.2 (or if the Partnership is continued pursuant to Section 12.2 and the successor General Partner
is not the former General Partner) and the option described in Section 11.3(a) is not exercised by
the party entitled to do so, the successor General Partner shall, at the effective date of its
admission to the Partnership, contribute to the Partnership cash in the amount equal to the product
of the Percentage Interest of the Departing General Partner and the Net Agreed Value of the
Partnership’s assets on such date. In such event, such successor General Partner shall, subject to
the following sentence, be entitled to its Percentage Interest of all Partnership allocations and
distributions to which the Departing General Partner was entitled. In addition, the successor
General Partner shall cause this Agreement to be amended to reflect that, from and after the date
of such successor General Partner’s admission, the successor General Partner’s interest in all
Partnership distributions and allocations shall be its Percentage Interest.

     Section 11.4 Termination of Subordination Period, Conversion of Subordinated
Units and Extinguishment of Cumulative Common Unit Arrearages.

     Notwithstanding any provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and no Units held by the
General Partner and its Affiliates are voted in favor of such removal, (i) the Subordination Period
will end and all Outstanding Subordinated Units will immediately and automatically convert into
Common Units on a one-for-one basis, (ii) all Cumulative Common Unit Arrearages on the Common Units
will be extinguished and (iii) the General Partner will have the right to convert its General
Partner Interest (represented by General Partner Units) and its Incentive Distribution Rights into
Common Units or to receive cash in exchange therefor, as provided in Section 11.3.

     Section 11.5 Withdrawal of Limited Partners.

     No Limited Partner shall have any right to withdraw from the Partnership; provided, however,
that when a transferee of a Limited Partner’s Limited Partner Interest becomes a Record Holder of
the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a
Limited Partner with respect to the Limited Partner Interest so transferred.

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ARTICLE XII

DISSOLUTION AND LIQUIDATION

     Section 12.1 Dissolution.

     The Partnership shall not be dissolved by the admission of additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner is elected
pursuant to Sections 11.1 or 11.2, the Partnership shall not be dissolved and such successor
General Partner shall continue the business of the Partnership. The Partnership shall dissolve, and
(subject to Section 12.2) its affairs shall be wound up, upon:

     (a) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;

     (b) at any time there are no Limited Partners, unless the Partnership is continued without
dissolution in accordance with the Marshall Islands Act;

     (c) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Marshall Islands Act; or

     (d) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is received as
provided in Sections 11.1(b) or 11.2 and such successor is admitted to the Partnership pursuant
to Section 10.3.

     Section 12.2 Continuation of the Business of the Partnership After Dissolution.

     Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the
withdrawal or removal of the General Partner as provided in Sections 11.1(a)(i) or (iii) and the
failure of the Partners to select a successor to such Departing General Partner pursuant to
Sections 11.1 or 11.2, then within 90 days thereafter, or (b) dissolution of the Partnership upon
an event constituting an Event of Withdrawal as defined in Sections 11.1(a)(iv), (v) or (vi), then,
to the maximum extent permitted by law, within 180 days thereafter, the holders of a Unit Majority
may elect to continue the business of the Partnership on the same terms and conditions set forth in
this Agreement by appointing as a successor General Partner a Person approved by the holders of a
Unit Majority. Unless such an election is made within the applicable time period as set forth
above, the Partnership shall conduct only activities necessary to wind up its affairs. If such an
election is so made, then:

     (i) the Partnership shall continue without dissolution unless earlier dissolved in
accordance with this Article XII;

     (ii) if the successor General Partner is not the former General Partner, then the interest
of the former General Partner shall be treated in the manner provided in Section 11.3; and

     (iii) the successor General Partner shall be admitted to the Partnership as General Partner,
effective as of the Event of Withdrawal, by agreeing in writing to be bound by this Agreement;
provided, however, that the right of the holders of a Unit Majority to approve a successor
General Partner and to reconstitute and to continue the business of the Partnership shall not
exist and may not be exercised unless the Partnership has received an Opinion of Counsel that the
exercise of the right would not result in the loss of limited liability of any Limited Partner.

     Section 12.3 Liquidator.

     Upon dissolution of the Partnership, unless the business of the Partnership is continued
pursuant to Section 12.2, the General Partner shall select one or more Persons to act as
Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive such
compensation for its services as may be approved by holders of at least a majority of the
Outstanding Common Units and Subordinated Units voting as a single class. The Liquidator (if other
than the General Partner) shall agree not to resign at any time without 15 days’ prior notice and
may be removed at any time, with or without cause, by notice of removal approved by holders of at
least a majority of the Outstanding Common Units and Subordinated Units voting as a single class.
Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator
(who shall have and succeed to all rights, powers and duties of the original Liquidator) shall
within 30 days thereafter be approved by holders of at least a majority of the Outstanding Common
Units and Subordinated Units voting as a single class. The right to approve a successor or
substitute Liquidator in the manner provided

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herein shall be deemed to refer also to any such successor or substitute Liquidator approved
in the manner herein provided. Except as expressly provided in this Article XII, the Liquidator
approved in the manner provided herein shall have and may exercise, without further authorization
or consent of any of the parties hereto, all of the powers conferred upon the General Partner under
the terms of this Agreement (but subject to all of the applicable limitations, contractual and
otherwise, upon the exercise of such powers, other than the limitation on sale set forth in Section
7.3(b)) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder
for and during the period of time required to complete the winding up and liquidation of the
Partnership as provided for herein.

     Section 12.4 Liquidation.

     The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its
liabilities, and otherwise wind up its affairs in such manner and over such period as determined by
the Liquidator, subject to Section 60 of the Marshall Islands Act and the following:

     (a) The assets may be disposed of by public or private sale or by distribution in kind to
one or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If
any property is distributed in kind, the Partner receiving the property shall be deemed for
purposes of Section 12.4(c) to have received cash equal to its fair market value, and
contemporaneously therewith, appropriate cash distributions must be made to the other Partners.
The Liquidator may defer liquidation or distribution of the Partnership’s assets for a reasonable
time if it determines that an immediate sale or distribution of all or some of the Partnership’s
assets would be impractical or would cause undue loss to the Partners. The Liquidator may
distribute the Partnership’s assets, in whole or in part, in kind if it determines that a sale
would be impractical or would cause undue loss to the Partners.

     (b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation
for serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners
otherwise than in respect of their distribution rights under Article VI. With respect to any
liability that is contingent, conditional or unmatured or is otherwise not yet due and payable,
the Liquidator shall either settle such claim for such amount as it thinks appropriate or
establish a reserve of cash or other assets to provide for its payment. When paid, any unused
portion of the reserve shall be distributed as additional liquidation proceeds.

     (c) All property and all cash in excess of that required to discharge liabilities as
provided in Section 12.4(b) shall be distributed as follows:

     (i) If the Current Market Price of the Common Units as of the date three trading days
prior to the announcement of the proposed liquidation exceeds the Unrecovered Capital for a
Common Unit plus the Cumulative Common Unit Arrearage:

     (A) First, (x) to the General Partner in accordance with its Percentage Interest and
(y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100%
less the General Partner’s Percentage Interest, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to such Current Market Price
of a Common Unit;

     (B) Second (x) to the General Partner in accordance with its Percentage Interest and
(y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100%
less the General Partner’s Percentage Interest, until there has been distributed in
respect of each Subordinated Unit then Outstanding an amount equal to such Current Market
Price of a Common Unit; and

     (C) Thereafter (x) to the General Partner in accordance with its Percentage
Interest; (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (z)
to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages
applicable to subclauses (x) and (y) of this clause (i)(C);

     (ii) If the Current Market Price of the Common Units as of the date three trading days
prior to the announcement of the proposed liquidation is equal to or less than the
Unrecovered Capital for a Common Unit plus the Cumulative Common Unit Arrearage:

     (A) First, (x) to the General Partner in accordance with its Percentage Interest and
(y) to all the Unitholders holding Common Units, Pro Rata, a percentage equal to 100%
less the General Partner’s Percentage Interest, until there has been

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distributed in respect of each Common Unit then Outstanding an amount equal to the
Unrecovered Capital for a Common Unit;

     (B) Second, (x) to the General Partner in accordance with its Percentage Interest
and (y) to all Unitholders holding Common Units, Pro Rata, a percentage equal to 100%
less the General Partner’s Percentage Interest, until there has been distributed in
respect of each Common Unit then Outstanding an amount equal to the Cumulative Common
Unit Arrearage;

     (C) Third, (x) to the General Partner in accordance with its Percentage Interest and
(y) to all Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100%
less the General Partner’s Percentage Interest, until there has been distributed in
respect of each Subordinated Unit then Outstanding an amount equal to the Unrecovered
Capital for a Common Unit (as calculated prior to the distribution specified in clause
(ii)(A) above); and

     (D) Thereafter, (x) to the General Partner in accordance with its Percentage
Interest; (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (z)
to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages
applicable to subclauses (x) and (y) of this clause (ii)(D);

     Section 12.5 Cancellation of Certificate of Limited Partnership.

     Upon the completion of the distribution of Partnership cash and property as provided in
Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the Marshall Islands shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.

     Section 12.6 Return of Contributions.

     The General Partner shall not be personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it
being expressly understood that any such return shall be made solely from Partnership assets.

     Section 12.7 Waiver of Partition.

     To the maximum extent permitted by law, each Partner hereby waives any right to partition of
the Partnership property.

ARTICLE XIII

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

     Section 13.1 Amendments to be Adopted Solely by the General Partner.

     Each Partner agrees that the General Partner, without the approval of any Partner, may amend
any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record
whatever documents may be required in connection therewith, to reflect:

     (a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;

     (b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;

     (c) a change that the General Partner determines to be necessary or appropriate to qualify
or continue the qualification of the Partnership as a limited partnership or a partnership in
which the Limited Partners have limited liability under the laws of The Marshall Islands or to
ensure that the Group Members will not be treated as associations taxable as corporations or
otherwise taxed as entities for Marshall Islands income tax purposes;

     (d) a change that the General Partner determines (i) does not adversely affect the Limited
Partners (including any particular class of Partnership Interests as compared to other classes of
Partnership Interests) in any material respect, (ii) to be necessary or

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appropriate to (A) satisfy any requirements, conditions or guidelines contained in any
opinion, directive, order, ruling or regulation of any Marshall Islands authority (including the
Marshall Islands Act) or (B) facilitate the trading of the Units (including the division of any
class or classes of Outstanding Units into different classes to facilitate uniformity of tax
consequences within such classes of Units) or comply with any rule, regulation, guideline or
requirement of any National Securities Exchange on which the Units are or will be listed, (iii)
to be necessary or appropriate in connection with action taken by the General Partner pursuant to
Section 5.10 or (iv) is required to effect the intent expressed in the Registration Statement or
the intent of the provisions of this Agreement or is otherwise contemplated by this Agreement;

     (e) a change in the fiscal year or taxable year of the Partnership and any other changes
that the General Partner determines to be necessary or appropriate as a result of a change in the
fiscal year or taxable year of the Partnership including, if the General Partner shall so
determine, a change in the definition of “Quarter” and the dates on which distributions are to be
made by the Partnership;

     (f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership,
or the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the U.S. Investment Company Act of 1940, as amended, the U.S.
Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the U.S.
Employee Retirement Income Security Act of 1974, as amended, regardless of whether such
regulations are substantially similar to plan asset regulations currently applied or proposed by
the United States Department of Labor;

     (g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.5;

     (h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;

     (i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in
accordance with Section 14.3;

     (j) an amendment that the General Partner determines to be necessary or appropriate to
reflect and account for the formation by the Partnership of, or investment by the Partnership in,
any corporation, partnership, joint venture, limited liability company or other Person, in
connection with the conduct by the Partnership of activities permitted by the terms of Section
2.4;

     (k) a conversion, merger or conveyance pursuant to Section 14.3(d); or

     (l) any other amendments substantially similar to the foregoing.

     Section 13.2 Amendment Procedures.

     Except as provided in Sections 13.1 and 13.3, all amendments to this Agreement shall be made
in accordance with the following requirements. Amendments to this Agreement may be proposed only by
the General Partner; provided, however, that the General Partner shall have no duty or obligation
to propose any amendment to this Agreement and may decline to do so free of any fiduciary duty or
obligation whatsoever to the Partnership or any Limited Partner and, in declining to propose an
amendment, to the fullest extent permitted by applicable law shall not be required to act in good
faith or pursuant to any other standard imposed by this Agreement, any Group Member Agreement, any
other agreement contemplated hereby or under the Marshall Islands Act or any other law, rule or
regulation. A proposed amendment shall be effective upon its approval by the General Partner and
the holders of a Unit Majority, unless a greater or different percentage is required under this
Agreement or by the Marshall Islands Act. Each proposed amendment that requires the approval of the
holders of a specified percentage of Outstanding Units shall be set forth in a writing that
contains the text of the proposed amendment. If such an amendment is proposed, the General Partner
shall seek the written approval of the requisite percentage of Outstanding Units or call a meeting
of the Unitholders to consider and vote on such proposed amendment. The General Partner shall
notify all Record Holders upon final adoption of any such proposed amendments.

     Section 13.3 Amendment Requirements.

     (a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provision of this Agreement
that establishes a percentage of Outstanding Units (including Units deemed owned by the General
Partner) required to take any action shall be amended, altered, changed, repealed or rescinded in
any respect that would have the effect of reducing such voting percentage unless such amendment is
approved by the written consent or the affirmative vote of holders of Outstanding Units whose
aggregate Outstanding Units constitute not less than the voting requirement sought to be reduced.

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     (b) Notwithstanding the provisions of Sections 13.1 and 13.2, no amendment to this Agreement
may (i) enlarge the obligations of any Limited Partner without its consent, unless such enlargement
shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c),
(ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any
way the amounts distributable, reimbursable or otherwise payable to, the General Partner or any of
its Affiliates without its consent, which consent may be given or withheld at the General Partner’s
option, (iii) change Section 12.1(a), or (iv) change the term of the Partnership or, except as set
forth in Section 12.1(a), give any Person the right to dissolve the Partnership.

     (c) Except as provided in Section 14.3, and without limitation of the General Partner’s
authority to adopt amendments to this Agreement without the approval of any Partners as
contemplated in Section 13.1, any amendment that would have a material adverse effect on the rights
or preferences of any class of Partnership Interests in relation to other classes of Partnership
Interests must be approved by the holders of not less than a majority of the Outstanding
Partnership Interests of the class affected.

     (d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable law.

     (e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.

     Section 13.4 Special Meetings.

     All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the
manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the
General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class or
classes for which a meeting is proposed. Limited Partners shall call a special meeting by
delivering to the General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably necessary for the Partnership to comply
with any statutes, rules, regulations, listing agreements or similar requirements governing the
holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner
shall send a notice of the meeting to the Limited Partners either directly or indirectly through
the Transfer Agent. A meeting shall be held at a time and place determined by the General Partner
on a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting.
Limited Partners shall not vote on matters that would cause the Limited Partners to be deemed to be
taking part in the management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners’ limited liability under the Marshall Islands Act or the law of any
other jurisdiction in which the Partnership is qualified to do business.

     Section 13.5 Notice of a Meeting.

     Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of
the class or classes of Units for which a meeting is proposed in writing by mail or other means of
written communication in accordance with Section 16.1. The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other means of written communication.

     Section 13.6 Record Date.

     For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners or to give approvals without a meeting as provided in Section 13.11, the
General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units are listed or admitted to
trading, in which case the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern) or (b) in the event that approvals are sought without a meeting, the date by
which Limited Partners are requested in writing by the General Partner to give such approvals. If
the General Partner does not set a Record Date, then (a) the Record Date for determining the
Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the
close of business on the day next preceding the day on which notice is given, and (b) the Record
Date for determining the Limited Partners entitled to give approvals without a meeting shall be the
date the first written approval is deposited with the Partnership in care of the General Partner in
accordance with Section 13.11.

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     Section 13.7 Adjournment.

     When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless such adjournment shall be for
more than 45 days. At the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more than 45 days or if a
new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with this Article XIII.

     Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes.

     The transactions of any meeting of Limited Partners, however called and noticed, and whenever
held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting
shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the
meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened; and except that attendance
at a meeting is not a waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval is expressly made at
the meeting.

     Section 13.9 Quorum and Voting.

     The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting
of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is
present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a
majority of the Outstanding Units entitled to vote and be present in person or by proxy at such
meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or
different percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed
owned by the General Partner). In the absence of a quorum, any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the
General Partner) represented either in person or by proxy, but no other business may be transacted,
except as provided in Section 13.7.

     Section 13.10 Conduct of a Meeting.

     The General Partner shall have full power and authority concerning the manner of conducting
any meeting of the Limited Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The General Partner may make
such other regulations consistent with applicable law and this Agreement as it may deem advisable
concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in
writing, including regulations in regard to the appointment of proxies, the appointment and duties
of inspectors of votes and approvals, the submission and examination of proxies and other evidence
of the right to vote, and the revocation of approvals in writing.

     Section 13.11 Action Without a Meeting.

     If authorized by the General Partner, any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if an approval in writing setting forth the action so taken
is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units
(including Units deemed owned by the General Partner) that would be necessary to authorize or take
such action at a meeting at which all the Limited Partners were present and voted (unless such
provision conflicts with any rule,

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regulation, guideline or requirement of any National Securities Exchange on which the Units
are listed or admitted to trading, in which case the rule, regulation, guideline or requirement of
such National Securities Exchange shall govern). Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not approved the action in writing. The
General Partner may specify that any written ballot submitted to Limited Partners for the purpose
of taking any action without a meeting shall be returned to the Partnership within the time period,
which shall be not less than 20 days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partners, the Partnership shall be
deemed to have failed to receive a ballot for the Units that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any Person other than by or on behalf
of the General Partner, the written approvals shall have no force and effect unless and until (a)
they are deposited with the Partnership in care of the General Partner, (b) approvals sufficient to
take the action proposed are dated as of a date not more than 90 days prior to the date sufficient
approvals are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the
General Partner to the effect that the exercise of such right and the action proposed to be taken
with respect to any particular matter (i) will not cause the Limited Partners to be deemed to be
taking part in the management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners’ limited liability, and (ii) is otherwise permissible under the
applicable statutes then governing the rights, duties and liabilities of the Partnership and the
Partners.

     Section 13.12 Right to Vote and Related Matters.

     (a) Only those Record Holders of the Units on the Record Date set pursuant to Section 13.6
(and also subject to the limitations contained in the definition of “Outstanding”) shall be
entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to
matters as to which the holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding
Units.

     (b) With respect to Units that are held for a Person’s account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing),
in whose name such Units are registered, such other Person shall, in exercising the voting rights
in respect of such Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial
owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The
provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are subject
to the provisions of Section 4.3.

ARTICLE XIV

MERGER

     Section 14.1 Authority.

     The Partnership may merge or consolidate with or into one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership (whether general or limited (including
a limited liability partnership)), formed under the laws of The Marshall Islands or the state of
Delaware or any other state of the United States, pursuant to a written agreement of merger or
consolidation (“Merger Agreement”) in accordance with this Article XIV.

     Section 14.2 Procedure for Merger or Consolidation.

     Merger or consolidation of the Partnership pursuant to this Article XIV requires the prior
consent of the General Partner; provided, however, that, to the fullest extent permitted by law,
the General Partner shall have no duty or obligation to consent to any merger or consolidation of
the Partnership and may decline to do so free of any fiduciary duty or obligation whatsoever to the
Partnership or any Limited Partner and, in declining to consent to a merger or consolidation, shall
not be required to act in good faith or pursuant to any other standard imposed by this Agreement,
any Group Member Agreement, any other agreement contemplated hereby or under the Marshall Islands
Act or any other law, rule or regulation or at equity. If the General Partner shall determine to
consent to the merger or consolidation, the General Partner shall approve the Merger Agreement,
which shall set forth:

     (a) the names and jurisdictions of formation or organization of each of the business
entities proposing to merge or consolidate;

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     (b) the name and jurisdiction of formation or organization of the business entity that is to
survive the proposed merger or consolidation (the “Surviving Business Entity”);

     (c) the terms and conditions of the proposed merger or consolidation;

     (d) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited partner
interests, securities or rights of any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property or interests, rights, securities or obligations of
the Surviving Business Entity, the cash, property or general or limited partner interests,
rights, securities or obligations of any general or limited partnership, corporation, trust,
limited liability company, unincorporated business or other Person (other than the Surviving
Business Entity) which the holders of such interests, securities or rights are to receive in
exchange for, or upon conversion of their interests, securities or rights, and (ii) in the case
of securities represented by certificates, upon the surrender of such certificates, which cash,
property or interests, rights, securities or obligations of the Surviving Business Entity or any
general or limited partnership, corporation, trust, limited liability company, unincorporated
business or other Person (other than the Surviving Business Entity), or evidences thereof, are to
be delivered;

     (e) a statement of any changes in the constituent documents or the adoption of new
constituent documents (the articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership or other similar charter or
governing document) of the Surviving Business Entity to be effected by such merger or
consolidation;

     (f) the effective time of the merger, which may be the date of the filing of the certificate
of merger pursuant to Section 14.4 or a later date specified in or determinable in accordance
with the Merger Agreement (provided, that if the effective time of the merger is to be later than
the date of the filing of such certificate of merger, the effective time shall be fixed at a date
or time certain at or prior to the time of the filing of such certificate of merger and stated
therein); and

     (g) such other provisions with respect to the proposed merger or consolidation that the
General Partner determines to be necessary or appropriate.

     Section 14.3 Approval by Limited Partners of Merger or Consolidation.

     (a) Except as provided in Sections 14.3(d) and 14.3(e), the General Partner, upon its approval
of the Merger Agreement, shall direct that the Merger Agreement be submitted to a vote of Limited
Partners, whether at a special meeting or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.

     (b) Except as provided in Sections 14.3(d) and 14.3(e), the Merger Agreement shall be approved
upon receiving the affirmative vote or consent of the holders of a Unit Majority.

     (c) Except as provided in Sections 14.3(d) and 14.3(e), after such approval by vote or consent
of the Limited Partners, and at any time prior to the filing of the certificate of merger pursuant
to Section 14.4, the merger or consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the Merger Agreement.

     (d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the
General Partner is permitted, without Limited Partner approval, to convert the Partnership or any
Group Member into a new limited liability entity, to merge the Partnership or any Group Member
into, or convey all of the Partnership’s assets to, another limited liability entity which shall be
newly formed and shall have no assets, liabilities or operations at the time of such conversion,
merger or conveyance other than those it receives from the Partnership or other Group Member if (i)
the General Partner has received an Opinion of Counsel that the conversion, merger or conveyance,
as the case may be, would not result in the loss of the limited liability of any Limited Partner,
(ii) the sole purpose of such conversion, merger or conveyance is to effect a mere change in the
legal form of the Partnership into another limited liability entity and (iii) the governing
instruments of the new entity provide the Limited Partners and the General Partner with the same
rights and obligations as are herein contained.

     (e) Additionally, notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, without Limited Partner approval, to merge or
consolidate the Partnership with or into another entity if (i) the General Partner has received an
Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the
loss of the

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limited liability of any Limited Partner, (ii) the merger or consolidation would not result in
an amendment to this Agreement, other than any amendments that could be adopted pursuant to Section
13.1, (iii) the Partnership is the Surviving Business Entity in such merger or consolidation, (iv)
each Unit outstanding immediately prior to the effective date of the merger or consolidation is to
be an identical Unit of the Partnership after the effective date of the merger or consolidation,
and (v) the number of Partnership Securities to be issued by the Partnership in such merger or
consolidation does not exceed 20% of the Partnership Securities Outstanding immediately prior to
the effective date of such merger or consolidation.

     Section 14.4 Certificate of Merger.

     Upon the required approval by the General Partner and the Unitholders of a Merger Agreement, a
certificate of merger shall be executed and filed in conformity with the requirements of the
Marshall Islands Act.

     Section 14.5 Amendment of Partnership Agreement.

     Pursuant to Section 20(2) of the Marshall Islands Act, an agreement of merger or consolidation
approved in accordance with Section 20(2) of the Marshall Islands Act may (a) effect any amendment
to this Agreement or (b) effect the adoption of a new partnership agreement for a limited
partnership if it is the Surviving Business Entity. Any such amendment or adoption made pursuant to
this Section 14.5 shall be effective at the effective time or date of the merger or consolidation.

     Section 14.6 Effect of Merger.

     (a) At the effective time of the certificate of merger:

     (i) all of the rights, privileges and powers of each of the business entities that has
merged or consolidated, and all property, real, personal and mixed, and all debts due to any of
those business entities and all other things and causes of action belonging to each of those
business entities, shall be vested in the Surviving Business Entity and after the merger or
consolidation shall be the property of the Surviving Business Entity to the extent they were of
each constituent business entity;

     (ii) the title to any real property vested by deed or otherwise in any of those constituent
business entities shall not revert and is not in any way impaired because of the merger or
consolidation;

     (iii) all rights of creditors and all liens on or security interests in property of any of
those constituent business entities shall be preserved unimpaired; and

     (iv) all debts, liabilities and duties of those constituent business entities shall attach
to the Surviving Business Entity and may be enforced against it to the same extent as if the
debts, liabilities and duties had been incurred or contracted by it.

     (b) A merger or consolidation effected pursuant to this Article shall not be deemed to result
in a transfer or assignment of assets or liabilities from one entity to another.

ARTICLE XV

RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS

     Section 15.1 Right to Acquire Limited Partner Interests.

     (a) Notwithstanding any other provision of this Agreement, if at any time the General Partner
and its Affiliates hold more than 80% of the total Limited Partner Interests of any class then
Outstanding, the General Partner shall then have the right, which right it may assign and transfer
in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its
option, to purchase all, but not less than all, of such Limited Partner Interests of such class
then Outstanding held by Persons other than the General Partner and its Affiliates, at the greater
of (x) the Current Market Price as of the date three days prior to the date that the notice
described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any
of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day
period preceding the date that the notice described in Section 15.1(b) is mailed.

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     (b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the
General Partner shall deliver to the Transfer Agent notice of such election to purchase (the
“Notice of Election to Purchase”) and shall cause the Transfer Agent to mail a copy of such Notice
of Election to Purchase to the Record Holders of Limited Partner Interests of such class (as of a
Record Date selected by the General Partner) at least 10, but not more than 60, days prior to the
Purchase Date. Such Notice of Election to Purchase shall also be published for a period of at least
three consecutive days in at least two daily newspapers of general circulation printed in the
English language and published in the Borough of Manhattan, New York. The Notice of Election to
Purchase shall specify the Purchase Date and the price (determined in accordance with Section
15.1(a)) at which Limited Partner Interests will be purchased and state that the General Partner,
its Affiliate or the Partnership, as the case may be, elects to purchase such Limited Partner
Interests, upon surrender of Certificates representing such Limited Partner Interests in exchange
for payment, at such office or offices of the Transfer Agent as the Transfer Agent may specify, or
as may be required by any National Securities Exchange on which such Limited Partner Interests are
listed. Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner
Interests at his address as reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given regardless of whether the owner receives such notice. On or prior to
the Purchase Date, the General Partner, its Affiliate or the Partnership, as the case may be, shall
deposit with the Transfer Agent cash in an amount sufficient to pay the aggregate purchase price of
all of such Limited Partner Interests to be purchased in accordance with this Section 15.1. If the
Notice of Election to Purchase shall have been duly given as aforesaid at least 10 days prior to
the Purchase Date, and if on or prior to the Purchase Date the deposit described in the preceding
sentence has been made for the benefit of the holders of Limited Partner Interests subject to
purchase as provided herein, then from and after the Purchase Date, notwithstanding that any
Certificate shall not have been surrendered for purchase, all rights of the holders of such Limited
Partner Interests (including any rights pursuant to Articles IV, V, VI and XII) shall thereupon
cease, except the right to receive the applicable purchase price (determined in accordance with
Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon surrender to the
Transfer Agent of the Certificates representing such Limited Partner Interests, and such Limited
Partner Interests shall thereupon be deemed to be transferred to the General Partner, its Affiliate
or the Partnership, as the case may be, on the record books of the Transfer Agent and the
Partnership, and the General Partner or any Affiliate of the General Partner, or the Partnership,
as the case may be, shall be deemed to be the owner of all such Limited Partner Interests from and
after the Purchase Date and shall have all rights as the owner of such Limited Partner Interests
(including all rights as owner of such Limited Partner Interests pursuant to Articles IV, V, VI and
XII).

     (c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate
evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the
amount described in Section 15.1(a), without interest thereon.

ARTICLE XVI

GENERAL PROVISIONS

     Section 16.1 Addresses and Notices.

     Any notice, demand, request, report or proxy materials required or permitted to be given or
made to a Partner under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other means of written
communication to the Partner at the address described below. Any notice, payment or report to be
given or made to a Partner hereunder shall be deemed conclusively to have been given or made, and
the obligation to give such notice or report or to make such payment shall be deemed conclusively
to have been fully satisfied, upon sending of such notice, payment or report to the Record Holder
of such Partnership Securities at his address as shown on the records of the Transfer Agent or as
otherwise shown on the records of the Partnership, regardless of any claim of any Person who may
have an interest in such Partnership Securities by reason of any assignment or otherwise. An
affidavit or certificate of making of any notice, payment or report in accordance with the
provisions of this Section 16.1 executed by the General Partner, the Transfer Agent or the mailing
organization shall be prima facie evidence of the giving or making of such notice, payment or
report. If any notice, payment or report addressed to a Record Holder at the address of such Record
Holder appearing on the books and records of the Transfer Agent or the Partnership is returned by
the United States Postal Service marked to indicate that the United States Postal Service is unable
to deliver it, such notice, payment or report and any subsequent notices, payments and reports
shall be deemed to have been duly given or made without further mailing (until such time as such
Record Holder or another Person notifies the Transfer Agent or the Partnership of a change in his
address) if they are available for the Partner at the principal office of the Partnership for a
period of one year from the date of the giving or making of such notice, payment or report to the
other Partners. Any notice to the Partnership shall be deemed given if

51

 

received by the General Partner at the principal office of the Partnership designated pursuant
to Section 2.3. The General Partner may rely and shall be protected in relying on any notice or
other document from a Partner or other Person if believed by it to be genuine.

     Section 16.2 Further Action.

     The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.

     Section 16.3 Binding Effect.

     This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors, legal representatives and permitted
assigns.

     Section 16.4 Integration.

     This Agreement constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

     Section 16.5 Creditors.

     None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.

     Section 16.6 Waiver.

     No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

     Section 16.7 Counterparts.

     This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a
Limited Partner Interest, pursuant to Section 10.2(a) without execution hereof.

     Section 16.8 Applicable Law.

     This Agreement shall be construed in accordance with and governed by the laws of The Republic
of the Marshall Islands, without regard to the principles of conflicts of law.

     Section 16.9 Invalidity of Provisions.

     If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.

     Section 16.10 Consent of Partners.

     Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of less than all of the Partners and
each Partner shall be bound by the results of such action.

     Section 16.11 Facsimile Signatures.

     The use of facsimile signatures affixed in the name and on behalf of the transfer agent and
registrar of the Partnership on certificates representing Common Units is expressly permitted by
this Agreement.

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     Section 16.12 Third-Party Beneficiaries.

     Each Partner agrees that any Indemnitee shall be entitled to assert rights and remedies
hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement
affording a right, benefit or privilege to such Indemnitee.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the parties hereto have executed this First Amended and Restated Agreement
of Limited Partnership as a Deed as of the date first written above.

	 	 	 	 	 
	 	GENERAL PARTNER:

Teekay Offshore GP L.L.C.

 
 	 
	 	By:  	/s/  Peter Evensen 	 
	 	 	Name:  	Peter Evensen 	 
	 	 	Title:  	 	 
	 
 
	 	ORGANIZATIONAL LIMITED PARTNER:

Teekay Shipping Corporation

 
 	 
	 	By:  	/s/  Peter Evensen 	 
	 	 	Name:  	Peter Evensen 	 
	 	 	Title:  	 	 
	 
 
	 	LIMITED PARTNERS:

All Limited Partners now and hereafter admitted as Limited

Partners of the Partnership, pursuant to powers of attorney

now and hereafter executed in favor of, and granted and

delivered to the General Partner.

Teekay Offshore GP L.L.C.

 
 	 
	 	By:  	/s/  Peter Evensen 	 
	 	 	Name:  	Peter Evensen 	 
	 	 	Title:  	 	 
	 

54

 

EXHIBIT A

to the First Amended and Restated

Agreement of Limited Partnership of

Teekay Offshore Partners L.P.

Certificate Evidencing Common Units

Representing Limited Partner Interests in

Teekay Offshore Partners L.P.

			
	No.                     
	 	_____  Common Units

     In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited
Partnership of Teekay Offshore Partners L.P., as amended, supplemented or restated from time to
time (the “Partnership Agreement”), Teekay Offshore Partners L.P., a Marshall Islands limited
partnership (the “Partnership”), hereby certifies that (the “Holder”) is the
registered owner of Common Units representing limited partner interests in the Partnership (the
“Common Units”) transferable on the books of the Partnership, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and
limitations of the Common Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to the terms and provisions of,
the Partnership Agreement. Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at, the principal office
of the Partnership located at Bayside House, Bayside Executive Park, West Bay Street and Blake
Road, P.O. Box AP-59212, Nassau, Commonwealth of the Bahamas. Capitalized terms used herein but not
defined shall have the meanings given them in the Partnership Agreement.

     The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv)
made the waivers and given the consents and approvals contained in the Partnership Agreement.

     This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.

	 	 	 	 	 	 	 	 	 	 

	Dated:                     	 	 	 	Teekay Offshore Partners L.P.	 
	 
	 	 	 	 	 	 	 	 	 
	Countersigned and Registered by:	 	 	 	By:	 	Teekay Offshore GP L.L.C.,	 
	 

	 	 	 	 	 	 	 	its General Partner	 
	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 
	 	 	 	 	 	 	 	 
	as Transfer Agent and Registrar	 	 	 	 	 	Title:	 
	 
	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 
	 

	 	 
	 	 	 	 	 	 	 
	 

	 	Authorized Signature
	 	 	 	 	 	Secretary	 

55

 

[Reverse of Certificate]

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:

	 	 	 	 	 	 	 

	TEN COM

	 	—
	 	as tenants in common
	 	UNIF GIFT/TRANSFERS MIN ACT
	 

	 	 	 	 	 	_______________ Custodian
                    
	 

	 	 	 	 	 	(Cust)             
    
                   
          (Minor)
	TEN ENT

	 	—
	 	as tenants by the entireties	 	 
	 
	 	 	 	 	 	 
	JT TEN

	 	—
	 	as joint tenants with right
of survivorship and under Uniform Gifts /Transfers to CD Minors Act
(State)

not as tenants in common 

Additional abbreviations, though not in the above list, may also be used.

ASSIGNMENT OF COMMON UNITS

in

TEEKAY OFFSHORE PARTNERS L.P.

FOR VALUE RECEIVED, _____________ hereby assigns, conveys, sells
and transfers unto

	 	 	 

	 

	 	 
	(Please print or typewrite name and address of Assignee)

	 	(Please insert Social Security or other identifying number of Assignee)

_____________ Common Units representing limited partner interests evidenced by
this Certificate, subject to the Partnership Agreement, and does hereby irrevocably constitute and
appoint     as its attorney-in-fact with full power of substitution to transfer the
same on the books of Teekay Offshore Partners L.P.

	 	 	 	 	 	 

	Date: ____________________________

	 	NOTE:  

	The signature to any endorsement hereon must correspond with the
name as written upon the face of this Certificate in every particular,
without alteration, enlargement or change.	 
	THE SIGNATURE(S) MUST BE
GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT
UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO

S.E.C. RULE 17Ad-15

	 	 	 	 
 

(Signature)

 
 
 

(Signature)	 

     No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer.

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