Document:

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                                                                    EXHIBIT 10.1

                     CONTRIBUTION, CONVEYANCE AND ASSUMPTION
                                    AGREEMENT

      THIS CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT (this "Agreement")
is entered into as of December __, 2006, effective as of the Effective Times
referred to below, among Teekay Shipping Corporation, a Marshall Islands
corporation ("Teekay"); Teekay Offshore GP L.L.C., a Marshall Islands limited
liability company ("MLP GP"); Teekay Offshore Partners L.P., a Marshall Islands
limited partnership ("MLP"); Teekay Offshore Operating GP L.L.C. , a Marshall
Islands limited liability company ("OPCO GP"); Teekay Offshore Operating L.P., a
Marshall Islands limited partnership ("OPCO"); and Teekay Offshore Holdings
L.L.C., a Marshall Islands limited liability company ("TOH"). The foregoing
shall be referred to individually as a "Party" and collectively as the
"Parties." Certain capitalized terms have the meanings assigned to them in
Article I hereof.

                                    RECITALS

      A. Teekay and MLP GP have formed MLP pursuant to the Marshall Islands
Limited Partnership Act for the purpose of, among other things, acquiring,
owning and operating a 26% interest in substantially all the assets of certain
subsidiaries of Teekay used in the offshore oil transportation, processing and
storage sectors. The respective Board's of Directors of Teekay, MLP GP and OPCO
GP have prior to this Agreement authorized the Parties to effect the actions set
forth below at the times and in the order set forth below.

      B. To accomplish the objectives and purposes in the preceding recital, the
following actions have been taken prior to the date hereof:

      1.    Teekay formed MLP GP under the terms of the Marshall Islands Limited
            Liability Company Act (the "Marshall Islands LLC Act") and
            contributed $1,000 in exchange for all of the member interests in
            MLP GP.

      2.    MLP GP and Teekay formed MLP under the terms of the Marshall Islands
            Limited Partnership Act (the "Marshall Islands LP Act"), to which
            MLP GP contributed $20 and Teekay contributed $980 in exchange for a
            2.0% general partner interest and 98.0% limited partner interest,
            respectively.

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      3.    MLP made an election to be classified as an association taxable as a
            corporation for U.S. federal income tax purposes, effective as of
            formation.

      4.    Teekay formed OPCO GP pursuant to the Marshall Islands LLC Act and
            contributed $1,000 in exchange for all of the member interests in
            OPCO GP.

      5.    OPCO GP made an election to be classified as disregarded entity for
            U.S. federal income tax purposes, effective as of formation.

      6.    OPCO GP and Teekay formed OPCO, to which OPCO GP contributed $0.10
            and Teekay contributed $999.90 in exchange for a 0.01% general
            partner interest and 99.99% limited partner interest, respectively.

      7.    OPCO made an election to be classified as a partnership for U.S.
            federal income tax purposes, effective as of formation.

      8.    (a) Teekay conveyed a 0.01% undivided interest in the stock of, or
            beneficial interest in, Teekay Navion Offshore Loading Pte. Ltd.
            (directly or through indirect ownership), Norsk Teekay Holding Ltd.,
            Teekay Offshore Australia Trust, Pattani Spirit L.L.C. and Teekay
            Nordic Holdings Inc. (collectively, the "Initial TKO Assets") to
            OPCO GP as a capital contribution;

            (b) Teekay conveyed a 99.99% undivided interest in the Initial TKO
            Assets to OPCO as a capital contribution; and

            (c) OPCO GP conveyed its 0.01% interest in the Initial TKO Assets to
            OPCO as a capital contribution.

      C. Effective _______, 2006, Teekay conveys a 0.52% limited partner
interest in OPCO to MLP GP in part as a capital contribution and in part in
exchange for a $_________ note to Teekay from MLP GP (which represents 2.0% of
the total cash to be paid to Teekay from the IPO Proceeds) (the "GP Interest
Note").

      D. Effective _________, 2006, each of the following transactions occur in
the following order in accordance with this Agreement:

      1.    Each of the entities listed on Schedule A files an election to be
            disregarded for United States federal tax purposes.

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      2.    (a) MLP GP conveys the 0.52% limited partner interest in OPCO to MLP
            (a) as an additional capital contribution to continue its 2.0% MLP
            general partner interest; and (b) in exchange for (i) the Incentive
            Distribution Rights and (ii) the assumption of the GP Interest Note
            by MLP; and

            (b) Teekay conveys its entire interest in OPCO GP and a 25.47%
            limited partner interest in OPCO to MLP (a) as an additional capital
            contribution to continue its 98.0% MLP limited partner interest and
            (b) in exchange for a $___ million note (which represents 98.0% of
            the total cash to be paid to Teekay from the IPO Proceeds) (the "LP
            Interest Note," and together with the GP Interest Note, the
            "Notes").

      3.    Teekay transfers all of its interests in MLP GP, MLP and OPCO after
            the foregoing to TOH.

      E. Effective _______, 2006, each of the following transactions occur in
accordance with this Agreement (or, with respect to E.2., an Underwriting
Agreement with respect to the Offering, dated December __, 2006, among MLP, the
underwriters of the Offering (the "Underwriters") and the other parties
thereto):

      1.    TOH's limited partner interest in MLP is converted to (a) 2,800,000
            Common Units, representing a 14% limited partner interest, and (b)
            9,800,000 Subordinated Units, representing a 49.0% limited partner
            interest, for an aggregate 63.0% limited partner interest, and MLP
            GP is issued 400,000 General Partner Units to represent its 2.0% MLP
            general partner interest.

      2.    The public, through the Underwriters, contributes $_________ million
            (the "IPO Proceeds") in cash to MLP in exchange for 7,000,000 Common
            Units in MLP, representing a 35.0% limited partner interest.

      3.    MLP uses the IPO Proceeds (a) to pay the underwriting discounts and
            commissions of $________ and (b) to pay other transaction expenses
            incurred by MLP in connection with the Offering of approximately
            $____ million and (c) with respect to the remaining IPO Proceeds to
            repay the Notes.

      4.    The agreements of limited partnership and the limited liability
            company agreements of the aforementioned entities are amended and
            restated to the extent necessary to reflect the applicable matters
            set forth above and in Article II and Article III of this Agreement.

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                                    AGREEMENT

      NOW, THEREFORE, in consideration of their mutual undertakings and
agreements hereunder, the Parties undertake and agree as follows:

                                    ARTICLE I
                            DEFINITIONS; RECORDATION

      1.1 DEFINITIONS. In addition to terms defined above or elsewhere in this
Agreement, the following capitalized terms have the meanings given below.

      "Acts" shall mean collectively the Marshall Islands LP Act and the
Marshall Islands LLC Act.

      "Assets" means the assets, rights and interests contributed and conveyed
(or intended so to be) as reflected in this Agreement.

      "Common Units" has the meaning assigned to such term in the Partnership
Agreement.

      "Effective Time" means the time when the transactions contemplated by this
Agreement are deemed to have been consummated.

      "Incentive Distribution Rights" has the meaning assigned to such term in
the Partnership Agreement.

      "Laws" means any and all laws, statutes, ordinances, rules or regulations
promulgated by a governmental authority, orders of a governmental authority,
judicial decisions, decisions of arbitrators or determinations of any
governmental authority or court.

      "Offering" means the initial public offering and transfer of title of
7,000,000 Common Units by MLP to the public.

      "Omnibus Agreement" means the Amended and Restated Omnibus Agreement dated
of even date herewith, among Teekay, Teekay GP L.L.C., Teekay LNG Partners L.P.
and Teekay LNG Operating L.L.C., and MLP GP, MLP, OPCO GP and OPCO.

      "Partnership Agreement" means the First Amended and Restated Agreement of
Limited Partnership of MLP, as it may be amended from time to time.

      "Registration Statement" means the registration statement on Form F-1
(File No. 333-___________) filed by MLP relating to the Offering, as may be
amended.

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      "Subordinated Units" has the meaning assigned to such term in the
Partnership Agreement.

                                   ARTICLE II
                          THE STRUCTURAL CONTRIBUTIONS

      2.1 The Parties acknowledge and agree that the following actions hereby
occur effective ______, 2006.

            2.1.1 CONTRIBUTION BY TEEKAY TO MLP GP OF A PARTIAL INTEREST IN
      OPCO. Teekay's conveys a 0.52% limited partner interest in OPCO to MLP GP
      in part as a capital contribution and in part in exchange for the issuance
      to Teekay of the GP Interest Note by MLP GP.

      2.2 The Parties acknowledge and agree that the following actions hereby
occur in the following order effective ______, 2006.

            2.2.1 CONTRIBUTION BY MLP GP TO MLP OF ITS INTEREST IN OPCO. MLP GP
      contributes its 0.52% limited partner interest in OPCO to MLP (a) as an
      additional contribution to the capital of MLP to continue its 2.0% general
      partner interest in MLP and (b) in exchange for (i) the Incentive
      Distribution Rights in MLP and (ii) the assumption of the GP Interest Note
      by MLP.

            2.2.2 CONTRIBUTION BY TEEKAY TO MLP OF ITS OPCO GP INTEREST AND
      CERTAIN LIMITED PARTNER INTERESTS IN OPCO. Teekay contributes its entire
      interest in OPCO GP and a 25.47% limited partner interest in OPCO to MLP
      (a) as an additional contribution to the capital of MLP to continue its
      98.0% limited partner interest in MLP and (b) in exchange for the issuance
      of the LP Interest Note by MLP.

            2.2.3 CONTRIBUTION BY TEEKAY TO TOH OF ALL OF ITS REMAINING
      INTEREST. Teekay contributes its entire remaining interests in MLP GP, MLP
      and OPCO to TOH.

                                   ARTICLE III
                    THE OFFERING AND CONCURRENT TRANSACTIONS

      The Parties acknowledge and agree that each of the following transactions
hereby occur on ________, 2006 and concurrently with the closing of the
Offering.

      3.1 CONVERSION OF TEEKAY'S LIMITED PARTNER INTEREST. MLP converts TOH's
limited partner interest in MLP into (a) 2,800,000 Common Units and

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(b) 9,800,000 Subordinated Units, and MLP issues MLP GP 400,000 General Partner
Units to represent MLP GP's 2.0% MLP general partner interest.

      3.2 MLP RECEIPT OF CASH CONTRIBUTION. The Parties acknowledge MLP's
issuance of 7,000,000 Common Units in exchange for the IPO Proceeds in cash as a
capital contribution to MLP, and MLP's use of the IPO Proceeds (a) to pay the
Underwriters' discounts and commissions of $_________ (which may be withheld by
the Underwriters from the IPO Proceeds as payment thereof), (b) to pay other
Offering expenses incurred by MLP of approximately $__ million and (c) with
respect to the remaining IPO Proceeds, to repay the Notes.

                                   ARTICLE IV
                        ASSUMPTION OF CERTAIN LIABILITIES

      Notwithstanding anything to the contrary contained in this Agreement, none
of the Parties shall be deemed to have assumed, and none of the Assets have been
or are being contributed subject to, (a) any liens or security interests
securing consensual indebtedness covering any of the Assets or (b) any of the
liabilities covered by the indemnities set forth in the Omnibus Agreement to the
extent such liabilities are covered by such indemnities.

                                    ARTICLE V
                             ADDITIONAL TRANSACTION

      5.1 EXERCISE OF THE OVER-ALLOTMENT OPTION. The Parties agree that if the
Underwriters exercise their over-allotment option with respect to the Offering,
MLP shall redeem Common Units from TOH with the net proceeds therefrom after the
Underwriters' discount and commissions but before other expenses; the number of
Common Units redeemed equal to the number of Common Units for which the
Underwriters exercise their over-allotment option.

                                   ARTICLE VI
                                  TITLE MATTERS

      6.1 ENCUMBRANCES.

      (a) Except to the extent provided in Article IV or any other document
executed in connection with this Agreement or the Offering, including, without
limitation, the Omnibus Agreement, the contribution and conveyance (by operation
of law or otherwise) of the various Assets are made expressly subject to all
Laws of

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governmental authorities or tribunals having or asserting jurisdiction over the
Assets and operations conducted thereon or therewith, in each case to the extent
the same are valid and enforceable and affect the Assets.

      (b) To the extent that certain jurisdictions in which the Assets are
located or deemed to be located may require that documents be recorded in order
to evidence the transfers of title reflected in this Agreement, then the
provisions set forth in Section 6.1(a) immediately above shall also be
applicable to the conveyances under such documents.

      6.2 DISCLAIMER OF WARRANTIES; SUBROGATION; WAIVER OF BULK SALES LAWS.

      (a) EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT
LIMITATION, THE OMNIBUS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE
OF THE PARTIES HAS MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES
AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS
OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR
STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE, NATURE,
QUALITY OR CONDITION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, THE
ENVIRONMENTAL CONDITION OF THE ASSETS GENERALLY, INCLUDING, WITHOUT LIMITATION,
THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON THE ASSETS, (B)
THE INCOME TO BE DERIVED FROM THE ASSETS, (C) THE SUITABILITY OF THE ASSETS FOR
ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON OR THEREWITH, (D)
THE COMPLIANCE OF OR BY THE ASSETS OR THEIR OPERATION WITH ANY LAWS (INCLUDING
WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE
LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS), OR (E) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE ASSETS. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT
EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING
INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, EACH PARTY ACKNOWLEDGES
AND AGREES THAT SUCH PARTY HAS HAD THE OPPORTUNITY TO INSPECT THE RESPECTIVE
ASSETS, AND SUCH PARTY IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE
RESPECTIVE ASSETS AND NOT ON ANY INFORMATION PROVIDED OR TO

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BE PROVIDED BY ANY OF THE OTHER PARTIES. EXCEPT TO THE EXTENT PROVIDED IN ANY
OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE
OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, NONE OF THE
PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS,
REPRESENTATIONS OR INFORMATION PERTAINING TO THE ASSETS FURNISHED BY ANY AGENT,
EMPLOYEE, SERVANT OR THIRD PARTY. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE
OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, EACH OF THE
PARTIES ACKNOWLEDGES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
CONTRIBUTION OF THE ASSETS AS PROVIDED FOR HEREIN IS MADE IN AN "AS IS," "WHERE
IS" CONDITION WITH ALL FAULTS, AND THE ASSETS ARE CONTRIBUTED AND CONVEYED
SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS SECTION SHALL
SURVIVE SUCH CONTRIBUTION AND CONVEYANCE OR THE TERMINATION OF THIS AGREEMENT.
THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE
CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY
REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH
RESPECT TO THE ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN
EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT OR ANY OTHER
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE
OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT.

      (b) To the extent that certain jurisdictions in which the Assets are
located or deemed to be located may require that documents be recorded in order
to evidence the transfers of title reflected in this Agreement, then the
disclaimers set forth in Section 6.2(a) immediately above shall also be
applicable to the conveyances under such documents.

      (c) The contributions of the Assets made under this Agreement are made
with full rights of substitution and subrogation of the respective Parties
receiving such contributions, and all persons claiming by, through and under
such Parties, to the extent assignable, in and to all covenants and warranties
by the predecessors-in-title of the Parties contributing the Assets, and with
full subrogation of all rights accruing under applicable statutes of limitation
and all rights of action of warranty against all former owners of the Assets.

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      (d) Each of the Parties agrees that the disclaimers contained in this
Section 6.2 are "conspicuous" disclaimers. Any covenants implied by Law by the
use of the words "grant," "convey," "bargain," "sell," "assign," "transfer,"
"deliver," or "set over" or any of them, or any other words used in this
Agreement or any exhibits hereto, are hereby expressly disclaimed, waived and
negated.

      (e) Each of the Parties hereby waives compliance with any applicable bulk
sales law or any similar law in any applicable jurisdiction in respect of the
transactions contemplated by this Agreement.

                                   ARTICLE VII
                               FURTHER ASSURANCES

      7.1 FURTHER ASSURANCES. From time to time after the date hereof, and
without any further consideration, the Parties agree to execute, acknowledge and
deliver all such additional deeds, assignments, bills of sale, conveyances,
instruments, notices, releases, acquittances and other documents, and will do
all such other acts and things, all in accordance with applicable Law, as may be
necessary or appropriate (a) more fully to assure that the applicable Parties
own all of the properties, rights, titles, interests, estates, remedies, powers
and privileges granted by this Agreement, or which are intended to be so
granted, (b) more fully and effectively to vest in the applicable Parties and
their respective successors and assigns beneficial and record title to the
interests contributed and assigned by this Agreement or intended so to be and
(c) to more fully and effectively carry out the purposes and intent of this
Agreement.

      7.2 POWER OF ATTORNEY. Each Party that has conveyed any Assets (the
"Conveyed Assets") as reflected by this Agreement (collectively, the "Conveying
Parties") hereby constitutes and appoints MLP GP (the "Attorney-in-Fact") its
true and lawful attorney-in-fact with full power of substitution for it and in
its name, place and stead or otherwise on behalf of the applicable Conveying
Party and its successors and assigns, and for the benefit of the
Attorney-in-Fact to demand and receive from time to time the Conveyed Assets
contributed and conveyed by this Agreement (or intended so to be) and to execute
in the name of the applicable Conveying Party and its successors and assigns
instruments of conveyance, instruments of further assurance and to give receipts
and releases in respect of the same, and from time to time to institute and
prosecute in the name of the applicable Conveying Party for the benefit of the
Attorney-in-Fact, any and all proceedings at law, in equity or otherwise which
the Attorney-in-Fact may deem proper in order to (a) collect, assert or enforce
any claims, rights or titles of any kind in and to the Conveyed Assets, (b)
defend and compromise any and all actions, suits or proceedings in respect of
any of the Conveyed Assets, and (c) do any and all such acts and things in
furtherance of this

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Agreement as the Attorney-in-Fact shall deem advisable. Each Conveying Party
hereby declares that the appointment hereby made and the powers hereby granted
are coupled with an interest and are and shall be irrevocable and perpetual and
shall not be terminated by any act of any Conveying Party or its successors or
assigns or by operation of law.

      7.3 OTHER ASSURANCES. From time to time after the date hereof, and without
any further consideration, each of the Parties shall execute, acknowledge and
deliver all such additional instruments, notices and other documents, and will
do all such other acts and things, all in accordance with applicable Law, as may
be necessary or appropriate to more fully and effectively carry out the purposes
and intent of this Agreement. It is the express intent of the Parties that MLP
or its subsidiaries own all assets necessary to operate the Assets that are
identified in this Agreement and in the Registration Statement. To the extent
any assets were not identified but are necessary to the operation of such Assets
that were identified, then the intent of the Parties is that all such
unidentified assets are intended to be conveyed to the appropriate Parties to
this Agreement or their subsidiaries. To the extent such assets are identified
at a later date, the Parties shall take the appropriate actions required in
order to convey all such assets to the appropriate Parties to this Agreement or
their subsidiaries. Likewise, to the extent that assets are identified at a
later date that were not intended by the parties to be conveyed as reflected in
this Agreement or the Registration Statement, the Parties shall take the
appropriate actions required in order to convey all such assets to the
appropriate party.

                                  ARTICLE VIII
                                  MISCELLANEOUS

      8.1 ORDER OF COMPLETION OF TRANSACTIONS. The transactions provided for in
Articles II, III and V of this Agreement shall be completed on the dates
specified in this Agreement and in the following order:

      First, the transactions provided for in Article II shall be completed in
the order set forth therein;

      Second, the transactions provided for in Article III shall be completed in
the order set forth therein; and

      Fourth, the transactions provided for in Article V shall be completed in
the order, if any, set forth therein.

      8.2 CONSENTS; RESTRICTION ON ASSIGNMENT. If there are prohibitions against
or conditions to the contribution and conveyance of one or more of the Assets
without the prior written consent of third parties, including, without
limitation, governmental

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agencies (other than consents of a ministerial nature which are normally granted
in the ordinary course of business), which if not satisfied would result in a
breach of such prohibitions or conditions or would give an outside party the
right to terminate rights of the Party to whom the applicable Assets were
intended to be conveyed (the "Beneficial Owner") with respect to such portion of
the Assets (herein called a "Restriction"), then any provision contained in this
Agreement to the contrary notwithstanding, the transfer of title to or interest
in each such portion of the Assets (herein called the "Restriction Asset")
pursuant to this Agreement shall not become effective unless and until such
Restriction is satisfied, waived or no longer applies. When and if such a
Restriction is so satisfied, waived or no longer applies, to the extent
permitted by applicable Law and any applicable contractual provisions, the
assignment of the Restriction Asset subject thereto shall become effective
automatically as of the Effective Time (in the appropriate order indicated by
Section 8.1), without further action on the part of any Party. Each of the
applicable Parties that were involved with the conveyance of a Restriction Asset
agree to use commercially reasonable efforts to obtain on a timely basis
satisfaction of any Restriction applicable to any Restriction Asset conveyed by
or acquired by any of them. The description of any portion of the Assets as a
"Restriction Asset" shall not be construed as an admission that any Restriction
exists with respect to the transfer of such portion of the Assets. In the event
that any Restriction Asset exists, the applicable Party agrees to continue to
hold such Restriction Asset in trust for the exclusive benefit of the applicable
Party to whom such Restriction Asset was intended to be conveyed and to
otherwise use commercially reasonable efforts to provide such other Party with
the benefits thereof, and the party holding such Restriction Asset will enter
into other agreements, or take such other action as it may deem necessary, in
order to ensure that the applicable Party to whom such Restriction Asset was
intended to be conveyed has the assets and concomitant rights necessary to
enable the applicable Party to operate such Restriction Asset in all material
respects as it was operated prior to the Effective Time. Furthermore, in such
event the applicable Party to whom such Restriction Asset was intended to be
conveyed agrees to assume such liabilities and perform such obligations relating
to such Restriction Asset as if it had been conveyed at the Effective Time.

      8.3 COSTS. MLP shall pay any and all sales, use and similar taxes arising
out of the contributions, conveyances and deliveries to be made hereunder, and
shall pay all documentary, filing, recording, transfer, deed, and conveyance
taxes and fees required in connection therewith. In addition, MLP shall be
responsible for all costs, liabilities and expenses (including, without
limitation, court costs and reasonable attorneys' fees) incurred in connection
with the satisfaction or waiver of any Restriction pursuant to Section 8.2 to
the extent such Restriction was disclosed to MLP on or before the date of this
Agreement.

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      8.4 HEADINGS; REFERENCES; INTERPRETATION. All Article and Section headings
in this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any of the provisions hereof. The words
"hereof," "herein" and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references herein to Articles and
Sections shall, unless the context requires a different construction, be deemed
to be references to the Articles and Sections of this Agreement, respectively.
All personal pronouns used in this Agreement, whether used in the masculine,
feminine or neuter gender, shall include all other genders, and the singular
shall include the plural and vice versa. The use herein of the word "including"
following any general statement, term or matter shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," "but not limited to," or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within
the broadest possible scope of such general statement, term or matter.

      8.5 SUCCESSORS AND ASSIGNS. The Agreement shall be binding upon and inure
to the benefit of the Parties and their respective successors and assigns.

      8.6 NO THIRD PARTY RIGHTS. The provisions of this Agreement are intended
to bind the Parties as to each other and are not intended to and do not create
rights in any other person or confer upon any other person any benefits, rights
or remedies and no person is or is intended to be a third party beneficiary of
any of the provisions of this Agreement.

      8.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
the parties hereto.

      8.8 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of New York, United States of America,
applicable to contracts made and to be performed wholly within such jurisdiction
without giving effect to conflict of law principles thereof other than Section
5-1401 of the New York General Obligations Law, except to the extent that it is
mandatory that the law of some other jurisdiction, wherein the Assets are
located, shall apply.

      8.9 SEVERABILITY. If any of the provisions of this Agreement are held by
any court of competent jurisdiction to contravene, or to be invalid under, the
laws of any governmental body having jurisdiction over the subject matter
hereof, such contravention or invalidity shall not invalidate the entire
Agreement. Instead, this

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Agreement shall be construed as if it did not contain the particular provision
or provisions held to be invalid, and an equitable adjustment shall be made and
necessary provision added so as to give effect, as nearly as possible, to the
intention of the Parties as expressed in this Agreement at the time of execution
of this Agreement.

      8.10 DEED; BILL OF SALE; ASSIGNMENT. To the extent required and permitted
by applicable Law, this Agreement shall also constitute a "deed," "bill of sale"
or "assignment" of the Assets.

      8.11 AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
from time to time only by the written agreement of all the Parties hereto.

      8.12 INTEGRATION. This Agreement and the instruments referenced herein
supersede all previous understandings or agreements among the Parties, whether
oral or written, with respect to its subject matter hereof. This Agreement and
such instruments contain the entire understanding of the Parties with respect to
the subject matter hereof and thereof. No understanding, representation, promise
or agreement, whether oral or written, is intended to be or shall be included in
or form part of this Agreement unless it is contained in a written amendment
hereto executed by the Parties hereto after the date of this Agreement.

                  [Remainder of Page Intentionally Left Blank]

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      IN WITNESS WHEREOF, this Contribution, Conveyance and Assumption Agreement
has been duly executed by the parties set forth below.

                                    TEEKAY SHIPPING CORPORATION, a
                                    Marshall Islands corporation

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Executive Vice President and Chief
                                    Financial Officer

                                    TEEKAY OFFSHORE GP L.L.C., a
                                    Marshall Islands limited liability company

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Chief Executive Officer and Chief
                                    Financial Officer

                                    TEEKAY OFFSHORE PARTNERS L.P., a
                                    Marshall Islands limited partnership

                                    By: Teekay Offshore GP L.L.C., its general
                                    partner

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Chief Executive Officer and Chief
                                    Financial Officer

                                    TEEKAY OFFSHORE OPERATING GP
                                    L.L.C., a Marshall Islands limited liability
                                    company

                                    By: Teekay Shipping Corporation, its sole
                                    member (before its contribution to MLP)

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Executive Vice President and Chief
                                    Financial Officer

                                                                         Page 14

<PAGE>

                                    TEEKAY OFFSHORE OPERATING GP
                                    L.L.C., a Marshall Islands limited liability
                                    company

                                    By: Teekay Offshore Partners L.P., its sole
                                    member (after its contribution to MLP)

                                    By: Teekay Offshore GP L.L.C., its general
                                    partner

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Chief Executive Officer and Chief
                                    Financial Officer

                                    TEEKAY OFFSHORE OPERATING L.P.,
                                    a Marshall Islands limited partnership

                                    By: Teekay Offshore GP L.L.C., its general
                                    partner

                                    By: Teekay Shipping Corporation, its sole
                                    member (before its contribution to MLP)

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Executive Vice President and Chief
                                    Financial Officer

                                                                         Page 15

<PAGE>

                                    TEEKAY OFFSHORE OPERATING L.P.,
                                    a Marshall Islands limited partnership

                                    By: Teekay Offshore GP L.L.C., its general
                                    partner

                                    By: Teekay Offshore Partners L.P., its sole
                                    member (after its contribution to MLP)

                                    By: Teekay Offshore GP L.L.C., its general
                                    partner

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Chief Executive Officer and Chief
                                    Financial Officer

                                    TEEKAY OFFSHORE HOLDINGS L.L.C.,
                                    a Marshall Islands limited liability company

                                    By: Teekay Shipping Corporation, its sole
                                    member

                                    By: ________________________________________
                                    Name: Peter Evensen
                                    Title: Executive Vice President and Chief
                                    Financial Officer

                                                                         Page 16<PAGE>

                                                                    EXHIBIT 10.2

                          TEEKAY OFFSHORE PARTNERS L.P.
                          2006 LONG-TERM INCENTIVE PLAN

SECTION 1.  PURPOSE OF THE PLAN

     The Teekay Offshore Partners L.P. 2006 Long-Term Incentive Plan (the
"PLAN") is intended to promote the interests of Teekay Offshore Partners L.P., a
Marshall Islands limited partnership (the "PARTNERSHIP"), by providing incentive
awards to employees, consultants, and directors of Teekay Offshore GP L.L.C., a
Marshall Islands limited liability company (the "COMPANY"), and its Affiliates
who perform services for the Partnership or its subsidiaries. The Plan is also
contemplated to enhance the ability of the Company and its Affiliates to attract
and retain the services of individuals who are essential for the growth and
profitability of the Partnership and to encourage them to devote their best
efforts to advancing the business of the Partnership and its subsidiaries.

SECTION 2. DEFINITIONS

     As used in the Plan, the following terms shall have the meanings set forth
below:

     "ACQUISITION PRICE" means the higher of (a) the highest reported sales
price, regular way, of a Unit in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which the Units are listed
or on Nasdaq during the 60-day period prior to and including the date of a
Change of Control or (b) if the Change of Control is the result of a tender or
exchange offer or a negotiated acquisition of Units, the highest price per Unit
paid in such tender or exchange offer or acquisition. To the extent that the
consideration paid in any such transaction described above consists all or in
part of securities or other noncash consideration, the value of such securities
or other noncash consideration shall be determined by the Board in its sole
discretion.

     "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.

     "AWARD" means an Option, Restricted Unit, Phantom Unit, Unit Appreciation
Right, cash-based award or other incentive payable in cash or in Units as may be
designated by the Committee from time to time, and shall include any tandem DERs
granted with respect to a Phantom Unit.

     "AWARD AGREEMENT" means the written agreement by which an Award shall be
evidenced.

     "BOARD" means the Board of Directors of the Company.

     "CAUSE" unless otherwise defined in the instrument evidencing the Award or
in a written employment, services or other agreement between the Participant and
the Company or its

<PAGE>

Affiliate, means dishonesty, fraud, serious misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conduct prohibited
by criminal law (except minor violations), in each case as determined by the
Committee, whose determination shall be conclusive and binding.

     "CHANGE OF CONTROL" means, and shall be deemed to have occurred upon the
consummation of one or more of the following events: (i) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Partnership or
the Company to any Person and/or its Affiliates, other than to the Partnership,
the Company and/or any of their Affiliates; (ii) the consolidation,
reorganization, merger or other transaction pursuant to which more than 50% of
the combined voting power of the outstanding equity interests in the Company
cease to be owned by the Persons who own such interests as of [_________]; or
(iii) the general partner (whether the Company or any other Person) of the
Partnership ceases to be an Affiliate of Teekay or (iv) a "Change in Control" or
a "Company Transaction" that is not a "Related Party Transaction," as provided
in the Teekay Shipping Corporation 2003 Equity Incentive Plan.

     "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.

     "COMMITTEE" means the Corporate Governance Committee of the Board or such
other committee of the Board appointed by the Board to administer the Plan,
which shall be composed of two or more directors, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3(b)(3) promulgated under
the Exchange Act, or any successor rule.

     "CONSULTANT" means an individual who performs services for the Partnership
or its subsidiaries and is not an Employee or a Director.

     "DER" means a contingent right, granted in tandem with a specific Phantom
Unit, to receive an amount in cash equal to, and at the same time as, the cash
distributions made by the Partnership with respect to a Unit during the period
such Phantom Unit is outstanding.

     "DIRECTOR" means a member of the Board who is not an Employee.

     "DISABILITY" unless otherwise defined by the Committee or in the instrument
evidencing the Award or in a written employment, services or other agreement
between the Participant and the Company or its Affiliate, means a mental or
physical impairment of the Participant that is expected to result in death or
that has lasted or is expected to last for a continuous period of 12 months or
more and that causes the Participant to be unable to perform his or her material
duties for the Company or its Affiliate and to be engaged in any substantial
gainful activity, in each case as determined by the Committee, whose
determination shall be conclusive and binding.

     "EMPLOYEE" means any employee of the Company or an Affiliate who performs
services for the Partnership or its subsidiaries.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

                                      -2-

<PAGE>

     "FAIR MARKET VALUE" means the closing sales price of a Unit on the date of
determination (or if there is no trading in the Units on such date, on the next
preceding date on which there was trading) as reported in The Wall Street
Journal (or other reporting service approved by the Committee). In the event
Units are not publicly traded at the time a determination of Fair Market Value
is required to be made hereunder, the determination of Fair Market Value shall
be made in good faith by the Committee.

     "GOOD REASON" unless otherwise defined by the Committee or in the
instrument evidencing the Award or in a written employment, services or other
agreement between the Participant and the Company or its Affiliate, means the
Participant's voluntary resignation following any of the following events or
conditions and the failure of the Successor Company to cure such event or
condition within 30 days after receipt of written notice from the Participant:
(a) a change in the Participant's position which materially reduces the
Participant's level of responsibility; (b) a reduction in the Participant's
level of compensation (including base salary, fringe benefits or participation
in any corporate performance based bonus or incentive programs) by more than
15%; or (c) a relocation of the Participant's place of employment by more than
50 miles; provided and only if such change, reduction or relocation is effected
without the Participant's consent.

     "OPTION" means an option to purchase Units granted under the Plan.

     "PARTICIPANT" means any Employee, Consultant or Director granted an Award
under the Plan.

     "PERSON" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, association,
government agency or political subdivision thereof or other entity.

     "PHANTOM UNIT" means a phantom (notional) Unit granted under the Plan which
upon vesting entitles the Participant to receive a Unit or an amount of cash
equal to the Fair Market Value of a Unit, as determined by the Committee in its
discretion.

     "RESTRICTED PERIOD" means the period established by the Committee with
respect to an Award during which the Award remains subject to forfeiture and is
either not exercisable by or payable to the Participant, as the case may be.

     "RESTRICTED UNIT" means a Unit granted under the Plan that is subject to a
Restricted Period.

     "RETIREMENT" unless otherwise defined in the instrument evidencing the
Award or in a written employment, services or other agreement between the
Participant and the Company or its Affiliate, means "RETIREMENT" as defined for
purposes of the Plan by the Committee or, if not so defined, means Termination
of Service on or after the date the Participant reaches the Company's normal
retirement age.

     "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time.

                                      -3-

<PAGE>

     "SEC" means the Securities and Exchange Commission, or any successor
thereto.

     "SUCCESSOR COMPANY" means the surviving company or the successor company,
as applicable, in connection with a Change of Control.

     "TEEKAY" means Teekay Shipping Corporation, a Marshall Islands corporation.

     "TERMINATION OF SERVICE" means a termination of employment or service
relationship with the Company or its Affiliates for any reason, whether
voluntary or involuntary, including by reason of death, Disability or
Retirement. Any question as to whether and when there has been a Termination of
Service for the purposes of an Award and the cause of such Termination of
Service shall be determined by the Committee, whose determination shall be
conclusive and binding. Transfer of a Participant's employment or service
relationship between the Company and any Affiliate shall not be considered a
Termination of Service for purposes of an Award. Unless the Committee determines
otherwise, a Termination of Service shall be deemed to occur if the
Participant's employment or service relationship is with an entity that has
ceased to be an Affiliate.

     "UDR" means a distribution made by the Partnership with respect to a
Restricted Unit.

     "UNIT" means a Common Unit of the Partnership.

     "UNIT APPRECIATION RIGHT" means an Award that, upon exercise, entitles the
holder to receive the excess of the Fair Market Value of a Unit on the exercise
date over the base price established for such Unit Appreciation Right. Such
excess may be paid in cash and/or in Units, as determined by the Committee in
its discretion.

SECTION 3.  ADMINISTRATION

     The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
of the Committee who are present at any meeting thereof at which a quorum is
present, or acts unanimously approved by the members of the Committee in
writing, shall be the acts of the Committee. Subject to the following and any
applicable law, the Committee, in its sole discretion, may delegate any or all
of its powers and duties under the Plan, including the power to grant Awards
under the Plan, to the Chief Executive Officer of the Company, subject to such
limitations on such delegated powers and duties as the Committee may impose, if
any. Upon any such delegation all references in the Plan to the "COMMITTEE",
other than in Section 8, shall be deemed to include the Chief Executive Officer;
provided, however, that such delegation shall not limit the Chief Executive
Officer's right to receive Awards under the Plan. Notwithstanding the foregoing,
the Chief Executive Officer may not grant Awards to, or take any action with
respect to any Award previously granted to, himself or herself or to any other
person who would be subject to Rule 16b-3 or who is a member of the Board.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii)
determine the number of Units to be covered by Awards; (iv) determine the terms
and conditions of any Award; (v) determine whether, to what extent, and under
what circumstances Awards may be

                                      -4-

<PAGE>

settled, exercised, canceled, or forfeited; (vi) interpret and administer the
Plan and any instrument or agreement relating to an Award made under the Plan;
(vii) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, the Partnership, any Affiliate of the Company or
the Partnership, any Participant, and any beneficiary of any Award.

SECTION 4.  UNITS

     (a) LIMITS ON UNITS DELIVERABLE

     Subject to adjustment as provided in Section 4(c), the number of Units
available for delivery under the Plan is 1,000,000. There shall not be any
limitation on the number of Awards that may be granted and paid in cash. If any
Award is forfeited or otherwise terminates or is canceled without the delivery
of Units, then the Units covered by such Award, to the extent of such
forfeiture, termination, or cancellation, shall again be Units with respect to
which Awards may be granted.

     (b) SOURCES OF UNITS DELIVERABLE UNDER AWARDS

     Any Units delivered pursuant to an Award shall consist, in whole or in
part, of Units acquired in the open market, from any Affiliate, the Partnership
or any other Person, or any combination of the foregoing.

     (c) ADJUSTMENTS

     In the event any distribution (other than a normal cash dividend),
recapitalization, split, reverse split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Units or other
securities of the Partnership, or other similar transaction or event results in
(i) the outstanding Units, or any securities exchanged therefor or received in
their place, being exchanged for a different number or kind of securities of the
Partnership or any other company or (ii) new, different or additional securities
of the Partnership or any other company being received by the holders of Units,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (1) the number and type of Units (or other securities or property) with
respect to which Awards may be granted, (2) the number and type of Units (or
other securities or property) subject to outstanding Awards, and (3) the grant
or exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided,
that the number of Units subject to any Award shall always be a whole number.

     Notwithstanding the foregoing, the issuance by the Partnership of Units, or
securities convertible into Units, for cash or property, or for labor or
services rendered, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of Units or obligations of
the Partnership convertible into such Units or other securities, shall not
affect,

                                      -5-

<PAGE>

and no adjustment by reason thereof shall be made with respect to, outstanding
Awards. Also notwithstanding the foregoing, a Change of Control shall not be
governed by this Section 4(c) but shall be governed by Section 7.

SECTION 5.  ELIGIBILITY

     Any Employee, Consultant or Director shall be eligible to be designated a
Participant and receive an Award under the Plan.

SECTION 6.  AWARDS

     (a) OPTIONS

     The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Options shall be granted, the number of Units
to be covered by each Option, the purchase price therefor and the conditions and
limitations applicable to the exercise of the Option, including the following
terms and conditions and such additional terms and conditions, as the Committee
shall determine, that are not inconsistent with the provisions of the Plan.

          (i) Exercise Price. The exercise price per Unit purchasable under an
Option shall be determined by the Committee at the time the Option is granted
and may be equal to or more than the Fair Market Value of a Unit as of the date
of grant.

          (ii) Time and Method of Exercise. The Committee shall determine the
Restricted Period, i.e., the time or times at which an Option may be exercised
in whole or in part, which may include, without limitation, accelerated vesting
upon the achievement of specified performance goals, and the method or methods
by which payment of the exercise price with respect thereto may be made or
deemed to have been made, which may include, without limitation, (1) cash, (2)
check acceptable to the Company, (3) to the extent permitted by law, a
"broker-assisted cashless exercise" through procedures approved by the Company,
(4) tendering Units owned by the Participant for at least six months (or any
shorter period necessary to avoid a charge for financial reporting purposes),
other securities or other property, or (5) any combination thereof, having a
Fair Market Value on the exercise date equal to the relevant exercise price.

          (iii) Termination of Service. The Committee shall establish and set
forth in each instrument that evidences an Option whether the Option shall
continue to be exercisable, and the terms and conditions of such exercise, after
a Termination of Service, any of which provisions may be waived or modified by
the Committee at any time. If not so established in the instrument evidencing
the Option, the Option shall be exercisable according to the following terms and
conditions, which may be waived or modified by the Committee at any time:

               (A) Any portion of an Option that is not vested and exercisable
on the date of a Participant's Termination of Service shall expire on such date.

               (B) Any portion of an Option that is vested and exercisable on
the date of a Participant's Termination of Service shall expire on the earliest
to occur of

                                      -6-

<PAGE>

                    (1) if the Participant's Termination of Service occurs for
reasons other than Cause, Retirement, Disability or death, the date that is
three months after such Termination of Service;

                    (2) if the Participant's Termination of Service occurs by
reason of Retirement or Disability, the five-year anniversary of such
Termination of Service;

                    (3) if the Participant's Termination of Service occurs by
reason of death, the two-year anniversary of such Termination of Service; and

                    (4) the last day of the maximum term of the Option (the
"OPTION EXPIRATION DATE").

               Notwithstanding the foregoing, if a Participant dies after his or
her Termination of Service but while an Option is otherwise exercisable, the
portion of the Option that is vested and exercisable on the date of such
Termination of Service shall expire upon the earlier to occur of (y) the Option
Expiration Date and (z) the two-year anniversary of the date of death, unless
the Committee determines otherwise.

               Also notwithstanding the foregoing, in case a Participant's
Termination of Service occurs for Cause, all Options granted to the Participant
shall automatically expire upon first notification to the Participant of such
termination, unless the Committee determines otherwise. If a Participant's
employment or service relationship with the Company is suspended pending an
investigation of whether the Participant shall be terminated for Cause, all the
Participant's rights under any Option shall likewise be suspended during the
period of investigation. If any facts that would constitute termination for
Cause are discovered after a Participant's Termination of Service, any Option
then held by the Participant may be immediately terminated by the Committee, in
its sole discretion.

               (C) A Participant's change in status from an employee to a
consultant, advisor or independent contractor or a change in status from a
consultant, advisor or independent contractor to an employee shall not be
considered a Termination of Service for purposes of this Section 6(a)(iii).

     (b) RESTRICTED UNITS AND PHANTOM UNITS

     The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Restricted Units or Phantom Units shall be
granted, the number of Restricted Units or Phantom Units to be granted to each
such Participant, the duration of the Restricted Period, the conditions under
which the Restricted Units or Phantom Units may become vested or forfeited,
which may include, without limitation, the accelerated vesting upon the
achievement of specified performance goals, and such other terms and conditions
as the Committee may establish with respect to such Awards, including whether
DERs are granted with respect to the Phantom Units and whether UDRs are attached
to the Restricted Units.

          (i) DERs. To the extent provided by the Committee, in its discretion,
a grant of Phantom Units may include a tandem DER grant, which may provide that
such DERs shall be paid directly to the Participant, be credited to a
bookkeeping account (with or without interest in

                                      -7-

<PAGE>

the discretion of the Committee) subject to the same vesting restrictions as the
tandem Phantom Unit Award, or be subject to such other provisions or
restrictions as determined by the Committee in its discretion.

          (ii) UDRs. To the extent provided by the Committee, in its discretion,
a grant of Restricted Units may provide that distributions made by the
Partnership with respect to the Restricted Units shall be subject to the same
forfeiture and other restrictions as the Restricted Unit and, if restricted,
such distributions shall be held, without interest, until the Restricted Unit
vests or is forfeited with the UDR being paid or forfeited at the same time, as
the case may be. Absent such a restriction on the UDRs in the grant agreement,
UDRs shall be paid to the holder of the Restricted Unit without restriction.

          (iii) Lapse of Restrictions

               (A) Phantom Units. Unless a different payment time is specified
in the Award Agreement, upon or as soon as reasonably practical following the
vesting of each Phantom Unit, subject to the provisions of Section 9(b), the
Participant shall be entitled to receive from the Company one Unit or cash equal
to the Fair Market Value of a Unit, as determined by the Committee in its
discretion.

               (B) Restricted Units. Upon or as soon as reasonably practical
following the vesting of each Restricted Unit, subject to the provisions of
Section 9(b), the Participant shall be entitled to have the restrictions removed
from his or her Unit certificate or book entry so that the Participant then
holds an unrestricted Unit.

     (c) UNIT APPRECIATION RIGHTS

     The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Unit Appreciation Rights shall be granted, the
number of Units to be covered by each grant, the base price thereof and the
conditions and limitations applicable to the exercise of the Unit Appreciation
Right, including the following terms and conditions and such additional terms
and conditions, as the Committee shall determine, that are not inconsistent with
the provisions of the Plan.

          (i) Base Price. The base price per Unit Appreciation Right shall be
determined by the Committee at the time the Unit Appreciation Right is granted
and may be equal to or more than the Fair Market Value of a Unit as of the date
of grant.

          (ii) Time of Exercise. The Committee shall determine the Restricted
Period, i.e., the time or times at which a Unit Appreciation Right may be
exercised in whole or in part, which may include, without limitation,
accelerated vesting upon the achievement of specified performance goals.

     (d) OTHER UNIT OR CASH-BASED AWARDS

     Subject to the terms of the Plan and such other terms and conditions as the
Committee deems appropriate, the Committee may grant other incentives payable in
cash or in Units under the Plan.

                                      -8-

<PAGE>

     (e) GENERAL

          (i) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award granted under the Plan or
any award granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or awards granted under
any other plan of the Company or any Affiliate may be granted either at the same
time as or at a different time from the grant of such other Awards or awards.

          (ii) Limits on Transfer of Awards

               (A) Except as provided in (C) below or as provided in the Award
Agreement, each Option and Unit Appreciation Right shall be exercisable only by
the Participant during the Participant's lifetime, or by the person to whom the
Participant's rights shall pass by will or by the applicable laws of descent and
distribution.

               (B) Except as provided in (C) below, no Award and no right under
any such Award may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant otherwise than by will or by the
applicable laws of descent and distribution.

               (C) To the extent specifically provided by the Committee with
respect to an Option or Unit Appreciation Right grant, an Option or Unit
Appreciation Right may be transferred by a Participant without consideration to
immediate family members or related family trusts, limited partnerships or
similar entities or on such terms and conditions as the Committee may from time
to time establish.

          (iii) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee

          (iv) Unit Certificates/Book Entry. All certificates for Units or other
securities of the Partnership delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
such Units or other securities are then listed, and any applicable federal or
state laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions. In lieu of
delivering certificates for Units, the Committee may, in its sole discretion,
effect the issuance of Units under the Plan in book entry.

          (v) Consideration for Grants. Awards may be granted for such
consideration, including services, as the Committee determines.

          (vi) Delivery of Units or other Securities and Payment by Participant
of Consideration. Notwithstanding anything in the Plan or any grant agreement to
the contrary, delivery of Units pursuant to the exercise or vesting of an Award
may be deferred for any period during which, in the good faith determination of
the Committee, the Company is not reasonably able to obtain Units to deliver
pursuant to such Award without violating the rules or regulations of any
applicable law or securities exchange. No Units or other securities shall be
delivered

                                      -9-

<PAGE>

pursuant to any Award until payment in full of any amount required to be paid
pursuant to the Plan or the applicable Award Agreement (including, without
limitation, any exercise price or tax withholding) is received by the Company.

SECTION 7.  CHANGE OF CONTROL

     (a) EFFECT OF A CHANGE OF CONTROL

     Notwithstanding any other provision of the Plan to the contrary, unless the
Committee shall determine otherwise at the time of grant with respect to a
particular Award, in the event of a Change of Control:

          (i) All outstanding Awards shall become fully and immediately vested
and exercisable, and all applicable deferral and restriction limitations shall
lapse immediately prior to the Change of Control, unless such Awards are
converted, assumed, or replaced by the Successor Company. Notwithstanding the
foregoing, with respect to Options or Unit Appreciation Rights, the Committee,
in its sole discretion, may instead provide that a Participant's outstanding
Options and Unit Appreciation Rights shall terminate upon consummation of such
Change of Control and that each such Participant shall receive, in exchange
therefor, a cash payment equal to the amount (if any) by which (a) the
Acquisition Price multiplied by the number of Units subject to such outstanding
Options or Unit Appreciation Rights (whether or not then exercisable) exceeds
(b) the aggregate exercise price for such Options or Unit Appreciation Rights.

          (ii) For the purposes of this Section 7(a), an Award shall be
considered converted, assumed or replaced by the Successor Company if following
the Change of Control the option or right confers the right to purchase or
receive, for each Unit subject to the Award immediately prior to the Change of
Control, the consideration (whether units, cash, or other securities or
property) received in the Change of Control by holders of Units for each Unit
held on the effective date of the Change of Control (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Units); provided, however, that if such
consideration received in the Change of Control is not solely equity of the
Successor Company, the Committee may, with the consent of the Successor Company,
provide for the consideration to be received upon the exercise of the Option or
the vesting of the right, for each Unit subject thereto, to be solely equity of
the Successor Company substantially equal in fair market value to the per Unit
consideration received by holders of Units in the Change of Control. The
determination of such substantial equality of value of consideration shall be
made by the Committee and its determination shall be conclusive and binding.

     (b) CHANGE OF CONTROL CASH-OUT

     Notwithstanding any other provision of the Plan, during the 60-day period
from and after a Change of Control (the "EXERCISE PERIOD"), if the Committee
shall so determine at, or at any time after, the time of grant, a Participant
holding an Option or Unit Appreciation Right shall have the right, whether or
not the Option or Unit Appreciation Right is fully exercisable and in lieu of
the payment of the purchase price for the Units being purchased under the
Option, and by giving notice to the Company, to elect to surrender all or part
of the Option or Unit Appreciation

                                      -10-

<PAGE>

Right to the Company and to receive cash, within 30 days of such notice, in an
amount equal to the amount by which the Acquisition Price per Unit on the date
of such election shall exceed the exercise price per Unit under the Option or
Unit Appreciation Right multiplied by the number of Units granted under the
Option or Unit Appreciation Right as to which the right granted under this
Section 7(b) shall have been exercised.

     (c) ACCELERATION AND EXERCISE FOLLOWING A CHANGE OF CONTROL

     If following a Change of Control, a Participant's employment is
subsequently terminated without Cause or for Good Reason within 24 months of the
Change of Control, any such Awards that remain unvested shall become fully and
immediately vested and exercisable upon the date of the Participant's
termination, all applicable deferral and restriction limitations shall lapse,
and an Award that is an Option or a Unit Appreciation Right shall remain
exercisable until the later of the date five years after the date of such
termination and the date the Award would have expired by its terms if the
Participant's employment had not been terminated.

SECTION 8.  AMENDMENT AND TERMINATION

     Except to the extent prohibited by applicable law:

     (a) AMENDMENTS TO THE PLAN

     Except as required by the rules of the principal securities exchange on
which the Units are traded, the Board or the Committee may amend, alter,
suspend, discontinue, or terminate the Plan in any manner, including increasing
the number of Units available for Awards under the Plan, without the consent of
any partner, Participant, other holder or beneficiary of an Award, or other
Person.

     (b) AMENDMENTS TO AWARDS

     The Committee may waive any conditions or rights under, amend any terms of,
or alter any Award theretofore granted, provided no change, other than pursuant
to Section 8(c), in any Award shall materially reduce the benefit to Participant
without the consent of such Participant.

     (c) ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
         NONRECURRING EVENTS

     The Committee is hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards theretofore granted (i) in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(c) of the Plan) affecting the Partnership or
the financial statements of the Partnership, or of changes in applicable laws,
regulations, or accounting principles or (ii) to ensure that an Award is not
subject to additional taxes under Section 409A of the Code.

                                      -11-

<PAGE>

SECTION 9.  GENERAL PROVISIONS

     (a) NO RIGHTS TO AWARD

     No Person shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants. The terms
and conditions of Awards need not be the same with respect to each recipient.

     (b) TAX WITHHOLDING

     The Company or any Affiliate is authorized to withhold from any Award, from
any payment due or transfer made under any Award or from any compensation or
other amount owing to a Participant the amount (in cash, Units, other
securities, Units that would otherwise be issued pursuant to such Award or other
property) of any applicable taxes payable in respect of the grant of an Award,
its exercise, the lapse of restrictions thereon, or any payment or transfer
under an Award or under the Plan and to take such other action as may be
necessary in the opinion of the Company to satisfy its withholding obligations
for the payment of such taxes.

     (c) NO RIGHT TO EMPLOYMENT OR SERVICES

     The grant of an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any Affiliate, to continue
as a Consultant, or to remain on the Board, as applicable. Further, the Company
or an Affiliate may at any time dismiss a Participant from employment or
terminate a consulting relationship, free from any liability or any claim under
the Plan, unless otherwise expressly provided in the Plan, any Award Agreement
or other agreement.

     (d) GOVERNING LAW

     The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the Republic of the Marshall Islands without regard to its conflict of laws
principles.

     (e) SEVERABILITY

     If any provision of the Plan or any award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to conform
to the applicable laws, or if it cannot be construed or deemed amended without,
in the determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or award and the remainder of the Plan and any such Award shall remain in
full force and effect.

     (f) OTHER LAWS

     The Committee may refuse to issue or transfer any Units or other
consideration under an Award if, in its sole discretion, it determines that the
issuance or transfer of such Units or such other consideration might violate any
applicable law or regulation, the rules of the principal

                                      -12-
<PAGE>

securities exchange on which the Units are then traded, or entitle the
Partnership or an Affiliate to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or beneficiary.

     (g) NO TRUST OR FUND CREATED

     Neither the Plan nor any award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company or any participating Affiliate and a Participant or any other Person. To
the extent that any Person acquires a right to receive payments from the Company
or any participating Affiliate pursuant to an Award, such right shall be no
greater than the right of any general unsecured creditor of the Company or any
participating Affiliate.

     (h) NO FRACTIONAL UNITS

     No fractional Units shall be issued or delivered pursuant to the Plan or
any Award, and the Committee shall determine whether cash, other securities, or
other property shall be paid or transferred in lieu of any fractional Units or
whether such fractional Units or any rights thereto shall be canceled,
terminated, or otherwise eliminated.

     (i) HEADINGS

     Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan or
any provision thereof.

     (j) FACILITY PAYMENT

     Any amounts payable hereunder to any person under legal disability or who,
in the judgment of the Committee, is unable to properly manage his financial
affairs, may be paid to the legal representative of such person, or may be
applied for the benefit of such person in any manner which the Committee may
select, and the Company and its Affiliates shall be relieved of any further
liability for payment of such amounts.

     (k) PARTICIPATION BY AFFILIATES

     In making Awards to Consultants and Employees employed by an entity other
than by the Company, the Committee shall be acting on behalf of the Affiliate,
and to the extent the Partnership has an obligation to reimburse the Company for
compensation paid to Consultants and Employees for services rendered for the
benefit of the Partnership, such payments or reimbursement payments may be made
by the Partnership directly to the Affiliate, and, if made to the Company, shall
be received by the Company as agent for the Affiliate.

     (l) GENDER AND NUMBER

     Words in the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.

                                      -13-

<PAGE>

SECTION 10.  TERM OF THE PLAN

     The Plan shall be effective on the date of its approval by the Board and
shall continue until the earlier of (a) the date terminated by the Board and (b)
the date Units are no longer available for the payment of Awards under the Plan.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award granted prior to such termination, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under such Award,
shall extend beyond such termination date.

                                      -14-

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